Beijing, September 30th / PRNewswire / -- Recon Technology, Ltd (Nasdaq ticker: RCON, hereinafter referred to as “Recon” or “the Company”) today announced its financial results for the fiscal year ending June 30, 2026. Recon is an independent solutions integrator headquartered in China, serving the oilfield services, environmental protection, power, and coal chemical industries.

Key financial figures for the fiscal year ending June 30, 2026:

• The total annual revenue was approximately 109.9 million yuan (16.2 million US dollars), which is an increase of about 43.6 million yuan (6.4 million US dollars) compared to 66.3 million yuan (9.8 million US dollars) during the same period in 2025, representing a growth rate of 65.8%.
• The annual gross profit increased to 36.5 million yuan (5.4 million US dollars), compared to 15.2 million yuan (2.2 million US dollars) in the same period last year.
• Gross profit margin increased from 23.0% in the same period of the previous year to 33.2%.
• The annual net loss amounted to 31.6 million RMB (4.7 million USD), which is a reduction of 12.1 million RMB (1.8 million USD) compared to 43.7 million RMB (6.4 million USD) during the same period in 2025.

Management Commentary

Recon Founder and CEO Shen Pingyin stated: "The fiscal year 2026 represents a significant turning point for Recon. Revenue increased by 65.8% to 109.9 million yuan, and the gross margin rose to 33.2%. These factors combined contributed to a reduction in our net loss compared to the previous year. The main driving force for growth came from our strategic expansion in overseas oilfield projects."

We are delighted to announce that we have achieved an important milestone that we have been working towards for many years. On September 28, 2026, we held a ceremony marking the commencement of operations at a waste plastic chemical recycling plant located in Weifang City, Shandong Province. The plant is designed to process 40,000 tons of low-value waste plastic per year and is expected to produce 30,000 tons of pyrolysis oil and 6,000 tons of carbon slag annually. This strategic partnership lays a solid foundation for Recon in the field of circular economy, providing new growth opportunities beyond its core oilfield services.

Looking ahead to the fiscal year 2027, our strategic focus is very clear: to drive the commercialization of chemical recycling plants, expand our business in overseas and offshore oil fields, and rebuild our domestic service capabilities. Oil price fluctuations and the broader macroeconomic environment still present challenges, but we enter this new year with a more diversified business portfolio, stronger profit margins, and a prudent cost structure. We believe that these factors will support shareholders in achieving sustainable, long-term growth.

Financial results for the fiscal year 2026

Income

For the year ending June 30, 2026, the total revenue was approximately 109.9 million yuan (16.2 million US dollars), which represents an increase of about 43.6 million yuan (6.4 million US dollars) compared to the same period in 2025, when it was 66.3 million yuan (9.8 million US dollars), representing a growth rate of 65.8%.

• Automated products and software revenue increased by 35.6 million yuan (5.3 million US dollars), a growth of 104.5%. The increase was mainly driven by an increase in revenue from overseas oilfield projects of 44.2 million yuan, but this was offset by a decrease of 8.6 million yuan in domestic business. The growth in overseas revenue benefited from the second phase of capacity construction for a large-scale overseas automation maintenance project. The decline in domestic business was mainly due to the company shifting its focus to overseas projects during that period, resulting in reduced maintenance efforts in the domestic market. In the future, the company will reallocate personnel to strengthen maintenance services in the domestic market.
• Revenue from equipment and spare parts increased by 9.4 million yuan (1.4 million US dollars), representing a growth of 51.2%. The increase in revenue from equipment and spare parts was mainly driven by rising demand for new purchases and maintenance, which is due to domestic oilfield customers continuing to maintain a stable level of production.
• The revenue from oilfield environmental protection services increased by 2 million yuan (300,000 US dollars), representing a growth of 19.4%, mainly due to the rise in settlement prices with some sewage treatment customers.
• The platform's revenue from outsourced services decreased by 3.5 million RMB (500,000 USD), a decline of 100.00%. The operations of FGS were significantly adversely affected by strategic adjustments in the business decisions of its major clients, who terminated their online cooperation with third-party companies. At the same time, there were also unfavorable changes in domestic industry policies. As a result, the revenue and active business activities of FGS plummeted, leading to no revenue in the fiscal year 2026.

Cost of sales

For the fiscal years ending June 30, 2025, and June 30, 2026, operating costs increased from 51 million RMB to 73.4 million RMB (10.8 million USD) respectively.

The operating costs for automation products and software were approximately RMB 28.6 million in the fiscal year 2025 and RMB 47.2 million in the fiscal year 2026 (US$ 7 million), representing an increase of about RMB 18.6 million (US$ 2.7 million), or a growth rate of 65.0%. The rise in costs is mainly related to the increase in revenue from automation products and software.

The operating costs for equipment and accessories were approximately RMB 13.2 million in the fiscal year 2025 and RMB 20.4 million in the fiscal year 2026 (US$ 3 million), representing an increase of about RMB 7.2 million (US$ 1.1 million), or a growth rate of 54.7%. The rise in costs is mainly driven by the expansion of business activities, which is consistent with the reasons for the revenue growth.

The operating costs of the oilfield environmental protection business were approximately 8.5 million RMB in fiscal year 2025 and 5.7 million RMB (800,000 USD) in fiscal year 2026, representing a reduction of about 2.8 million RMB (400,000 USD), or a decrease of 33.1%. Despite limited market opportunities, the company actively sought new business opportunities and launched test projects. Due to the high uncertainty associated with these projects, the costs of related equipment were fully recognized as expenses when purchased in the previous period, hence the costs in this period are lower than those in the previous period.

The operating costs of the platform's outsourced services were approximately 600,000 RMB in the fiscal year 2025 and zero in the fiscal year 2026, representing a reduction of about 600,000 RMB (100,000 USD), or a decrease of 100.0%. The reason for this is consistent with the decline in revenue.

Gross profit

For the year ending June 30, 2026, gross profit increased to 36.5 million RMB (5.4 million USD), compared to 15.2 million RMB (2.2 million USD) in the same period of the previous year. The gross profit margin rose from 23.0% in the same period of the previous year to 33.2%.

• The gross profit of automation products and software was approximately 5.5 million RMB in the fiscal year 2025 and 22.5 million RMB in the fiscal year 2026 (3.3 million US dollars), representing an increase of about 17 million RMB (2.5 million US dollars) or a growth rate of 310.4%. The gross margin expanded to 32.3%, mainly driven by overseas oilfield projects with higher profit margins, which contributed 44.2 million RMB to revenue, accounting for about 63% of the automation segment's revenue in the fiscal year 2026. Excluding overseas projects, the gross margin of the domestic automation business remained relatively stable overall.
• The gross profit from equipment and accessories was approximately RMB 5.2 million in the fiscal year 2025 and RMB 7.4 million in the fiscal year 2026 (US$ 1.1 million), representing an increase of about RMB 2.2 million (US$ 300,000), or a growth rate of 42.4%. The growth in gross profit is consistent with changes in revenue, and the gross profit margin remained relatively stable during this period.
• The gross profit from the oilfield environmental protection business was approximately RMB 1.7 million in fiscal year 2025 and RMB 6.6 million (US$ 1 million) in fiscal year 2026, representing an increase of RMB 4.9 million (US$ 0.7 million) or a growth rate of 288.2%. The lower gross profit in fiscal year 2025 was mainly due to the full inclusion of costs related to testing projects during their implementation, while there was still uncertainty regarding the revenue recognition for those projects at that time. The gross margin increased from 16.9% to 53.4%, primarily because there were no one-time testing project costs in fiscal year 2026 as there were in 2025. Additionally, the settlement prices with some sewage treatment customers were more favorable, and the project portfolio was also better in 2026. Excluding these one-time testing costs, the standardized gross margin in fiscal year 2025 should have been even higher. The 53.4% gross margin in fiscal year 2026 reflects a more normal level of settlement prices and a more advantageous project portfolio.
• The gross profit from the platform's outsourced services was approximately 2.8 million RMB in the fiscal year 2025 and zero in the fiscal year 2026, representing a decrease of about 2.8 million RMB (400,000 US dollars), or a 100.0% decline. The decrease in gross profit is consistent with changes in revenue.

Operating expenses

Selling expenses decreased by 43.6% from 9.3 million RMB (1.4 million USD) in the fiscal year 2025 to 4.1 million RMB (600,000 USD), and then to 5.2 million RMB (800,000 USD) in the fiscal year 2026.

General and administrative expenses increased by 11.8%, from RMB 49.6 million (US$ 7.3 million) in the fiscal year 2025 to RMB 55.4 million (US$ 8.2 million) in the fiscal year 2026, an increase of RMB 5.8 million (US$ 900,000).

In the fiscal year 2025, the net recovery of credit losses was 2.9 million RMB (400,000 USD), while in the fiscal year 2026, a net provision for credit losses of 4.1 million RMB (600,000 USD) was made.

R&D expenses decreased by 21.7% from 16.4 million RMB (2.4 million USD) in the fiscal year 2025 to 12.9 million RMB (1.9 million USD) in the fiscal year 2026.

Operational losses

For the fiscal year 2026, the operating loss was 41.2 million RMB (6.1 million USD), compared to 57.3 million RMB (8.4 million USD) in the fiscal year 2025. The reduction in operating loss by 16.1 million RMB (2.4 million USD) is mainly due to the aforementioned higher gross profit.

Change in fair value of warrant liabilities

The company accounts for warrants related to the issuance of common stock as a liability and re-measures them at fair value at each reporting period. This liability is re-measured on each balance sheet date until exercise, and any changes in fair value are recognized in the income statement. For the fiscal years 2025 and 2026, the gains from changes in the fair value of the warrant liability were $6,226 and $671, respectively. The main reason for this decrease in fair value gains was a change in the fair value assessment price.

Interest income

For the fiscal year 2026, net interest income amounted to RMB 10.9 million (US$ 1.6 million), compared to RMB 12.3 million (US$ 1.8 million) in the fiscal year 2025. The net interest income decreased by RMB 1.4 million (US$ 0.2 million), mainly due to the company receiving repayments on some third-party loans during the fiscal year 2026, while some of the outstanding third-party loans continued to generate interest income.

Net amount of other income (expenses)

For the fiscal year 2026, other net expenses amounted to 1.3 million RMB (200,000 USD), while for the fiscal year 2025, other net income was also 1.3 million RMB (200,000 USD). Other net income decreased by 2.6 million RMB (400,000 USD), mainly due to the closure of BHD in Qinghai and the sale of 51% of the equity in MSJ, which resulted in a total equity investment loss of 1.1 million RMB. In addition, after the closure of the office in Qinghai, accounts payable amounting to 600,000 RMB that could not be settled were recognized as income, and accounts receivable amounting to 200,000 RMB that could not be recovered were written off as losses. Furthermore, due to exchange rate fluctuations between the RMB and the USD during the fiscal year 2026, foreign exchange transaction costs increased by 1 million RMB.

Net Loss

Affected by the aforementioned factors, the net loss for the fiscal year 2026 was 31.6 million RMB (4.7 million USD), which is a reduction of 12.1 million RMB (1.8 million USD) compared to 43.7 million RMB (6.4 million USD) in the fiscal year 2025.

Cash and short-term investments

As of June 30, 2026, the company held approximately RMB 29.7 million (US$ 4.4 million) in cash and about RMB 9 million (US$ 1.3 million) in short-term investments in bank fixed-income products. As of June 30, 2025, the company held approximately RMB 98.9 million (US$ 14.6 million) in cash and about RMB 3.6 million (US$ 500,000) in short-term investments in bank fixed-income products.

Regarding Recon Technology, Ltd ( RCON )

Recon Technology, Ltd (Nasdaq: RCON) is the first non-state-owned oil and gas field services company in the People's Republic of China to list on NASDAQ. Recon provides advanced automation technology, efficient gathering and transportation equipment, as well as reservoir enhancement measures to improve oil production levels, reduce impurities, and lower production costs to China's largest oil exploration companies. Over the years, RCON has held a leading position in multiple sub-markets of the oil and gas field services industry and has established stable long-term cooperative relationships with major customers. Since 2023, Recon has also entered the business of chemical recycling of waste plastics. For more information, please visit: http:// www.recon.cn.

Forward-looking Statements

Recon This press release contains various "forward-looking statements" as defined by the Federal Securities Law. Readers can identify these forward-looking statements by the use of words such as "plans," "may," "will," "can," "should," "would," "expect," "believe," "anticipate," "intend," "project," "estimate," "predict," "target," "purpose," "commit," "intend to," "continue," or "is likely to result in," among others. These statements relate to Recon's strategies, plans, intentions, or views regarding future events or outcomes. Forward-looking statements are subject to risks, uncertainties, and other factors and may change at any time, which could lead to significant differences between actual results and those anticipated by Recon. Many of these statements are based on Recon's operating budgets and forecasts, which are based on various assumptions that Recon deems reasonable, or on assumptions regarding certain plans, activities, or events that may occur in the future. However, it is extremely difficult to predict the impact of known factors, and Recon cannot foresee all important factors that may affect actual results. All forward-looking information should be evaluated in light of these risks, uncertainties, and other factors, including those disclosed in the "Risk Factors" section of Recon's most recent 20-F annual report submitted to the U.S. Securities and Exchange Commission (SEC) and subsequent 6-K semi-annual financial filings. All forward-looking statements made by Recon in its filings with the SEC and in public communications are subject to the limitations of such cautionary statements. Recon cannot guarantee to readers that the expected results or developments will occur, and even if such results or developments do occur to a large extent, it cannot guarantee that they will have the intended consequences or effects on Recon or its business in the manner anticipated by Recon.Forward-looking statements are only valid as of the date they are made. Unless otherwise required by law, Recon assumes no obligation to update or revise any forward-looking statements to reflect events or circumstances that occur after their issuance. Due to these risks and uncertainties, readers are advised not to rely too heavily on this document or any other forward-looking statements made from time to time by Recon.