Reconditioned Systems, Inc.                                                                             News Release

444 West Fairmont

Tempe, Arizona 85282                                                                                       Contact:  Investor Relations

(480) 968-1772 (Telephone)

(480) 894-1907 (Fax)

 

“RSI reports First Quarter 2005 results”

Tempe, Arizona, August 5, 2004                                                                    Pink Sheet Symbol:  RESY

 

Dear Fellow Shareholders:

 

I am happy to report that Reconditioned Systems, Inc. (“RSI”) had a profitable quarter.  Although the economy seems to have turned, sales in our industry remain sluggish, especially in our Arizona market.  This has resulted in heavy discounting by the OEM’s and our other competitors.  While we have been able to increase our sales significantly, the discounting has hurt our margins.  We are hopeful that we can make this a profitable year.

 

For the three months ended June 30, 2004, RSI made $23 thousand on sales of $4.4 million.  This compares to a loss of $131 thousand on sales of $3.3 million for the quarter ended June 30, 2003.  We still expect to capitalize on any increase in industry sales.  We continue to be pleased with our merger with Beck Office Systems, which was largely responsible for RSI’s profitability this quarter. 

 

At this year’s annual meeting, which was held June 9, 2004, we discussed at length the impact on our shareholders of our decision to become a non-reporting company.  As I reported to you many times, the costs and increasing burden of remaining a public company are disproportionately onerous on a small company, and we had not been able to benefit from being public, because our stock price remained so low.  However, we were sensitive to the fact that becoming non-reporting disadvantaged many of our existing shareholders.  That is why we approved the tender offer to buy back up to 20% or 273,426 shares of our common stock.  A total of 313,620 shares were tendered at various prices from $1.25 to $2 per share.  We elected to buy all of the shares tendered at a price of $2 for every share tendered.  We feel that this was the right thing to do for all concerned.  I hope that those remaining shareholders will understand the future lack of liquidity and expect to remain shareholders for some time.  We will continue to attempt to increase shareholder value.

 

Please keep track of our financial results and outlook on our website, www.resy.net, under Investor Relations.  We will continue to post a quarterly letter there.

 

 

Scott W. Ryan

Chairman of the Board

 

 

For the Three Months Ended

 

June 30, 2004

(Unaudited)

June 30, 2003

 (Unaudited)

Sales

$4,409,826

$3,338,281

Net income before provision for income taxes

$31,529

$(174,636)

Net income

$23,647

$(130,977)

Basic earnings per share

$0.02

$(0.09)

Basic weighted average number of common shares outstanding

1,367,154

1,329,428

Diluted earnings per common and equivalent share

$0.01

$(0.09)

Diluted weighted average number of common and equivalent shares outstanding

 

1,474,628

 

1,329,428

 

 

Reconditioned Systems, Inc.

New Release

August 5, 2004

Page -2-

 

Summary Balance Sheet as of

 

June 30, 2004

(Unaudited)

June 30, 2003 (Unaudited)

 

June 30, 2004

(Unaudited)

June 30, 2003 (Unaudited)

Assets

 

 

Liabilities and Equity

 

 

Cash

$1,018,295

$1,222,686

Accounts payable & credit line

 

$743,201

 

$1,274,121

Accounts receivable

1,651,958

1,483,092

Customer deposits

465,912

534,513

Inventory

1,851,963

1,984,857

Other current liabilities

610,822

464,391

Property & equipment

673,011

873,563

Treasury stock

(862,014)

(865,305)

 

Other assets

 

467,955

 

557,825

Common stock & retained earnings/(accumulated deficit)

 

4,705,261

 

4,714,303

Total

$5,663,182

$6,122,023

Total

$5,663,182

$6,122,023