SEC Comment Letter for Recon Technology, Ltd (RCON) (CIK 0001442620) (RCON) — May 24, 2018
Recon Technology, Ltd (RCON) (CIK 0001442620)
Date: May 24, 2018 · CIK: 0001442620 · Accession: 0000000000-18-016210
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-34409
Letter
Mail Stop 4628 May 24, 2018 Via Email Ms. Liu Jia Chief Financial Officer Recon Technology, Ltd. Room 1902, Building C, King Long International Mansion No. 9 Fulin Road, Beijing 100107 Peoples Republic of China
Re: Recon Technology, Ltd. Form 20-F for the Fiscal Year ended June 30, 2017 Response d ated May 9 , 2018 File No. 001-34409
Dear Ms. Jia :
We have reviewed your May 9 , 2018 response to our comment letter and have the following comment s. In some of our comments , we may ask you to provide us with information so we may better understand your disclosure.
Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments, we may have additional comments. Unless we note oth erwise, our references to prior comments are to comments in our April 25 , 2018 letter .
Form 20 -F for the Fiscal Year ended June 30, 2017
Note 7. Purchase Advances, Net, page F -14
1. We note your response to prior comment one, concerning your accounting for and disclosures about purchase advances. Based on your response, it remains unclear why you do not believe FASB ASC 605 -35-25-39 and 41 are applicable , as you previously indicated that purchase advances were incurred with the objective o f securing contracts to complete three customer -specific projects , and considering this guidance cover s costs incurred in anticipation of contracts , in advance of obtaining those contracts .
Liu Jia Recon Technology, Ltd. May 24, 2018 Page 2
If the purchase advances referenced in your prior response were not i ntended to result in obtaining contract s, provide further details about the arrangements and explain how the facts and circumstances are not characteristic of the work that would be performed in the arrangements outlined in FASB ASC 605 -35-15-2 and 3, and are inst ead encompassed in the arrangements outlined in FASB ASC 6 05-35-15-6, if this is your view . Otherwise, comply with the specific disclosure requirements referenced in our prior comment ; and disclose your method of accounting for contracts and pre-contract costs .
2. We believe that you will need to more clearly disclose the nature of and reasons for significant purchase advances , including a description of any related and expected future revenue generating activity , the timeframe in which such activity is planned, and any uncertainties regarding the prospect for recover ing the amounts . You should also expand your Critical Acc ounting Policies and Es timate s disclosur e to address the key assumptions underlying your accounting for material arrangements and the reasonably likely material effects of resolving any uncertainties on your financial statements . If you prefer to limit compliance to future filings, please submit the revisions that you propose and explain your rationale and view as to the materiality o f current arrangements .
You may contact Joseph Klinko, Staff Accountant, at (202) 551 -3824, John Cannarella, Staff Accountant, at (202) 551 -3337 or me at (202) 551 -3686 with any questions.
Sincerely,
/s/ Karl Hiller
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Mail Stop 4628 May 24, 2018 Via Email Ms. Liu Jia Chief Financial Officer Recon Technology, Ltd. Room 1902, Building C, King Long International Mansion No. 9 Fulin Road, Beijing 100107 Peoples Republic of China Re: Recon Technology, Ltd. Form 20-F for the Fiscal Year ended June 30, 2017 Response d ated May 9 , 2018 File No. 001-34409 Dear Ms. Jia : We have reviewed your May 9 , 2018 response to our comment letter and have the following comment s. In some of our comments , we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Unless we note oth erwise, our references to prior comments are to comments in our April 25 , 2018 letter . Form 20 -F for the Fiscal Year ended June 30, 2017 Note 7. Purchase Advances, Net, page F -14 1. We note your response to prior comment one, concerning your accounting for and disclosures about purchase advances. Based on your response, it remains unclear why you do not believe FASB ASC 605 -35-25-39 and 41 are applicable , as you previously indicated that purchase advances were incurred with the objective o f securing contracts to complete three customer -specific projects , and considering this guidance cover s costs incurred in anticipation of contracts , in advance of obtaining those contracts . Liu Jia Recon Technology, Ltd. May 24, 2018 Page 2 If the purchase advances referenced in your prior response were not i ntended to result in obtaining contract s, provide further details about the arrangements and explain how the facts and circumstances are not characteristic of the work that would be performed in the arrangements outlined in FASB ASC 605 -35-15-2 and 3, and are inst ead encompassed in the arrangements outlined in FASB ASC 6 05-35-15-6, if this is your view . Otherwise, comply with the specific disclosure requirements referenced in our prior comment ; and disclose your method of accounting for contracts and pre-contract costs . 2. We believe that you will need to more clearly disclose the nature of and reasons for significant purchase advances , including a description of any related and expected future revenue generating activity , the timeframe in which such activity is planned, and any uncertainties regarding the prospect for recover ing the amounts . You should also expand your Critical Acc ounting Policies and Es timate s disclosur e to address the key assumptions underlying your accounting for material arrangements and the reasonably likely material effects of resolving any uncertainties on your financial statements . If you prefer to limit compliance to future filings, please submit the revisions that you propose and explain your rationale and view as to the materiality o f current arrangements . You may contact Joseph Klinko, Staff Accountant, at (202) 551 -3824, John Cannarella, Staff Accountant, at (202) 551 -3337 or me at (202) 551 -3686 with any questions. Sincerely, /s/ Karl Hiller Karl Hiller Branch Chief Office of Natural Resources