What changed in this filing

/stocks — the workspaceLOADING

Item 5. Other Information

2013-11-14 compared with 2013-05-13 · 337 added, 556 removed, 343 unchanged (72% of the section changed)

76 unchanged sentences

Code of Business Conduct and Ethics (1)

Press release dated May 13, 2013 titled “Recon Technology Reports Third Quarter Fiscal

2013 Financial Results”

Press release dated November 14, 2013 regarding earnings for quarter ended September 30, 2013 (3)

XBRL Instance Document (4)

4 unchanged sentences

XBRL Taxonomy Extension Definition Linkbase Document (4)

Incorporated by reference to the Company’s Registration Statement on Form S-1, Registration No.

Incorporated by reference to the Company’s Quarterly Report on Form 10-Q/A, filed on January 31, 2012.

Incorporated by reference to the Company’s Registration Statement on Form S-1, Registration No.

Incorporated by reference to the Company’s Quarterly Report on Form 10-Q/A, filed on January 31, 2012.

Filed herewith.

Furnished herewith.

In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed”

for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

In accordance with the requirements of

the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

In accordance with the requirements of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RECON TECHNOLOGY, LTD

November 13, 2013

Chief Financial Officer

(Principal Financial and Accounting Officer)

In accordance with the requirements of the Exchange Act, the

Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

In accordance with the requirements of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RECON TECHNOLOGY, LTD

November 13, 2013

/s/ Yin Shen ping

1 unchanged sentence

Chief Executive Officer

RECON TECHNOLOGY,

RECON TECHNOLOGY, LTD

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited Condensed Consolidated Balance Sheets as of June 30, 2012 and March 31, 2013

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Nine and Three months ended March 31, 2012 and March 31, 2013

Unaudited Condensed Consolidated Statements of Cash Flows for the Nine months ended March 31, 2012 and March 31, 2013

Unaudited Condensed Consolidated Balance Sheets as of June 30, 2013 and September 30, 2013

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended September 30, 2012 and September 30, 2013

Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2012 and September 30, 2013

Notes to Unaudited Condensed Consolidated Financial Statements

RECON TECHNOLOGY, LTD

UNAUDITED CONDENSED CONSOLIDATED BALANCE

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of June 30,

As of March 31,

As of September 30,

Current assets

Cash and cash equivalents

Notes receivable

Trade accounts receivable, net

10 unchanged sentences

Property and equipment, net

Long-term investment

Long-term other receivable

17 unchanged sentences

dollar par value, 25,000,000 shares authorized;

3,951,811 shares issued and outstanding as of June 30, 2012 and March 31, 2013)

3,951,811 shares issued and outstanding as of June 30, 2013 and September 30, 2013)

Additional paid-in capital

2 unchanged sentences

Accumulated other comprehensive loss

Total controlling shareholders’

Total controlling shareholders’ equity

Non-controlling interest

Total Liabilities and Equity

The accompanying notes are an integral part of these unaudited

condensed consolidated financial statements.

RECON TECHNOLOGY,

condensed Consolidated Statements of operations and

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

RECON TECHNOLOGY, LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

nine months ended

three months ended

Software - related parties

Hardware - related parties

For the three months ended

September 30,

Hardware and software

Hardware and software - related parties

Total revenues

Cost of revenues

Hardware and software

Hardware and software - related parties

Total cost of revenues

Selling and distribution expenses

1 unchanged sentence

Research and development expenses

Income (loss)

from operations

Operating expenses

Income (loss) from operations

Other income (expenses)

2 unchanged sentences

Interest expense

Loss from equity method investment

Gain from foreign currency exchange

1 unchanged sentence

Income (loss) before income tax

Provision (benefit) for income

Provision for income tax

Net Income (loss)

Net income attributable

to non-controlling interest

(loss) attributable to Recon Technology, Ltd

Net income attributable to non-controlling interest

Net Income (loss) attributable to Recon Technology, Ltd

Comprehensive income (loss)

Net income (loss)

Foreign currency translation

Foreign currency translation adjustment

Comprehensive income (loss)

Comprehensive income

attributable to non-controlling interest

Comprehensive

income (loss) attributable to Recon Technology, Ltd

(loss) per common share - basic and diluted

Weighted - average shares

-basic and diluted

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements.

RECON TECHNOLOGY,

condensed Consolidated Statements of Cash Flows

For the nine months ended March 31,

Comprehensive income attributable to non-controlling interest

Comprehensive income (loss) attributable to Recon Technology, Ltd

Earnings (loss) per common share - basic

Earnings per common share - diluted

Weighted - average shares -basic

Weighted - average shares -diluted

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

RECON TECHNOLOGY, LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended September 30,

Cash flows from operating activities:

1 unchanged sentence

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Loss from disposal of equipment

Provision/(recovery of) for doubtful accounts

Stock based compensation

Loss from investment

Deferred tax (benifit)/provision

1 unchanged sentence

Trade accounts receivable

(16,718,352 )

Trade accounts receivable-related parties

3 unchanged sentences

Purchase advance, net

(10,691,586 )

Purchase advance-related party, net

13 unchanged sentences

Purchase of property and equipment

Proceeds from disposal of equipment

Net cash used in investing activities

1 unchanged sentence

Proceeds from short-term bank loans

Repayments of short-term bank loans

(21,652,952 )

Proceeds from short-term borrowings

Proceeds from borrowings-related parties

1 unchanged sentence

Repayment of short-term borrowings-related parties

Capital contribution in VIE

Net cash provided by (used in) financing activities

(14,133,091 )

Effect of exchange rate fluctuation on cash and cash equivalents

Net increase (decrease in) cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

3 unchanged sentences

Cash paid during the period for taxes

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND NATURE OF OPERATIONS

Organization –

Recon Technology, Ltd (the

“Company”) was incorporated under the laws of the Cayman Islands on August 21, 2007 as a company with limited liability.

The Company provides oilfield specialized equipment, automation systems, tools, chemicals and field services to petroleum companies

in the People’s Republic of China (the “PRC”).

Its wholly owned subsidiary, Recon Technology Co., Limited (“Recon-HK”)

was incorporated on September 6, 2007 in Hong Kong.

Other than the equity interest in Recon-HK, the Company does not own any assets

or conduct any operations.

Organization Recon Technology, Ltd (the “Company”) was incorporated under the laws of the Cayman Islands on August 21, 2007 as a company with limited liability.

The Company provides oilfield specialized equipment, automation systems, tools, chemicals and field services to petroleum companies in the People’s Republic of China (the “PRC”).

Its wholly owned subsidiary, Recon Technology Co., Limited (“Recon-HK”) was incorporated on September 6, 2007 in Hong Kong.

Other than the equity interest in Recon-HK, the Company does not own any assets or conduct any operations.

On November 15, 2007, Recon-HK established one wholly owned subsidiary, Jining Recon Technology Ltd.

(“Recon-JN”) under the laws of the PRC.

Other than the equity interest in Recon-JN, Recon-HK does not own any assets

or conduct any operations.

The Company conducts its business through the following PRC

legal entities that were consolidated as variable interest entities (“VIEs”) and operate in the Chinese oilfield equipment

& service industry:

(“Recon-JN”) under the laws of the PRC.

Other than the equity interest in Recon-JN, Recon-HK does not own any assets or conduct any operations.

The Company conducts its business through the following PRC legal entities that were consolidated as variable interest entities (“VIEs”) and operate in the Chinese oilfield equipment & service industry:

Beijing BHD Petroleum Technology Co., Ltd.

(“BHD”), and

Nanjing Recon Technology Co., Ltd.

(“Nanjing Recon”).

Nature of Operations –

The Company engaged in (1)

providing equipment, tools and other hardware related to oilfield production and management, including simple installations in

connection with some projects;

(2) service to improve production and efficiency of exploited oil wells, and (3) developing and

selling its own specialized industrial automation control and information solutions.

The products and services provided by the

Company include:

High-Efficiency Heating Furnaces - High-Efficiency Heating

Furnaces are designed to remove the impurities and to prevent solidification blockage in transport pipes carrying crude petroleum.

Crude petroleum contains certain impurities including water and natural gas, which must be removed before the petroleum can be

Multi-Purpose Fissure Shaper - Multipurpose fissure shapers

improve the extractors’

ability to test for and extract petroleum which requires perforation into the earth before any petroleum

extractor can test for the presence of oil.

Horizontal Multistage Fracturing related Service - The

Company mainly uses Baker Hughes FracPoint™

system and provides related service to oilfield companies.

The Baker Hughes FracPoint™

system provided a completion method using packers to isolate sections of the wellbore (stages) and frac sleeves to direct the frac

treatment to the desired stage.

The use of this type of completion eliminated the need for cementing the liner, coiled tubing operations,

and wireline operations, while significantly reducing overall pumping time.

Supervisory Control and Data Acquisition System (“SCADA”)

- SCADA is an industrial computerized process control system for monitoring, managing and controlling petroleum extraction.

integrates underground and aboveground activities of the petroleum extraction industry.

This system can help to manage the oil

extraction process in real-time to reduce the costs associated with extraction.

(“Nanjing Recon”).

Nature of Operations The Company engaged in (1) providing equipment, tools and other hardware related to oilfield production and management, including simple installations in connection with some projects;

(2) service to improve production and efficiency of exploited oil wells, and (3) developing and selling its own specialized industrial automation control and information solutions.

The products and services provided by the Company include:

High-Efficiency Heating Furnaces - High-Efficiency Heating Furnaces are designed to remove the impurities and to prevent solidification blockage in transport pipes carrying crude petroleum.

Crude petroleum contains certain impurities including water and natural gas, which must be removed before the petroleum can be sold.

Multi-Purpose Fissure Shaper - Multipurpose fissure shapers improve the extractors’ ability to test for and extract petroleum which requires perforation into the earth before any petroleum extractor can test for the presence of oil.

Horizontal Multistage Fracturing related Service - The Company mainly uses Baker Hughes FracPoint system and provides related service to oilfield companies.

The Baker Hughes FracPoint system provided a completion method using packers to isolate sections of the wellbore (stages) and frac sleeves to direct the frac treatment to the desired stage.

The use of this type of completion eliminated the need for cementing the liner, coiled tubing operations, and wireline operations, while significantly reducing overall pumping time.

Supervisory Control and Data Acquisition System (“SCADA”) - SCADA is an industrial computerized process control system for monitoring, managing and controlling petroleum extraction.

SCADA integrates underground and aboveground activities of the petroleum extraction industry.

This system can help to manage the oil extraction process in real-time to reduce the costs associated with extraction.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The accompanying unaudited

condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United

States of America (“U.S.

GAAP”).

The accompanying unaudited condensed consolidated financial statements include the

accounts of the Company, its subsidiaries, and VIEs for which the Company is the primary beneficiary.

All inter-company transactions

and balances between the Company, its subsidiaries and VIEs are eliminated upon consolidation.

In the opinion of management, the

accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring

entries, which are necessary for a fair presentation of the results for the interim periods presented.

These financial statements

should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Form 10-K

for the fiscal year ended June 30, 2012.

The results of operations for the interim periods presented may not be indicative

of the operating results to be expected for the Company’s fiscal year ending June 30, 2013.

Basis of Presentation - The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, its subsidiaries, and VIEs for which the Company is the primary beneficiary.

All inter-company transactions and balances between the Company, its subsidiaries and VIEs are eliminated upon consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring entries, which are necessary for a fair presentation of the results for the interim periods presented.

These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended June 30, 2013.

The results of operations for the interim periods presented may not be indicative of the operating results to be expected for the Company’s fiscal year ending June 30, 2014.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Variable Interest Entities - A VIE is an entity

that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial

support or (ii) has equity investors who lack the characteristics of a controlling financial interest.

A VIE is consolidated by

its primary beneficiary.

The primary beneficiary has both the power to direct the activities that most significantly impact the

entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could

potentially be significant to the VIE.

We perform ongoing assessments to determine whether an entity should be considered a VIE

and whether an entity previously identified as a VIE continues to be a VIE and whether we continue to be the primary beneficiary.

Assets recognized as a result of consolidating VIEs do not represent

additional assets that could be used to satisfy claims against the Company’s general assets.

Conversely, liabilities recognized

as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets;

represent claims against the specific assets of the consolidated VIEs.

Currency Translation - The Company’s functional

currency is the Chinese Yuan (“RMB”) and the accompanying consolidated financial statements have been expressed in

Chinese Yuan.

The statements as of and for the three months and nine months period ended March 31, 2013 have been translated into

United States dollars (“U.S.

dollars”) solely for the convenience of the readers.

The translation has been made at

the rate of ¥6.2816 = US$1.00, the approximate exchange rate prevailing on March 31, 2013.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Variable Interest Entities - A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest.

A VIE is consolidated by its primary beneficiary.

The primary beneficiary has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE.

We perform ongoing assessments to determine whether an entity should be considered a VIE and whether an entity previous identified as a VIE continues to be a VIE and whether we continue to be the primary beneficiary.

Assets recognized as a result of consolidating VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets.

Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets;

rather, they represent claims against the specific assets of the consolidated VIEs.

Currency Translation - The Company’s functional currency is the Chinese Yuan (“RMB”) and the accompanying consolidated financial statements have been expressed in Chinese Yuan.

The statements as of and for the three months period ended September 30, 2013 have been translated into United States dollars (“U.S.

dollars”) solely for the convenience of the readers.

The translation has been made at the rate of ¥6.1364 = US$1.00, the approximate exchange rate prevailing on September 30, 2013.

These translated U.S.

dollar amounts

should not be construed as representing Chinese Yuan amounts or that the Chinese Yuan amounts have been or could be converted into

Estimates - The preparation of the consolidated

financial statements in conformity with U.S.

GAAP requires that management make estimates and assumptions that affect the reported

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements

and the reported amounts of revenues and expenses during the reporting periods.

Estimates are adjusted to reflect actual experience

when necessary.

Significant estimates include revenue recognition, allowance for doubtful accounts, the useful lives of property

and equipment and the fair value of stock based payments.

Since the use of estimates is an integral component of the financial

reporting process, actual results could differ from those estimates.

Fair Values of Financial Instruments - The carrying

amounts reported in the consolidated balance sheets for trade accounts receivable, other receivables, purchase advances, trade

accounts payable, accrued liabilities, advances from customers, short-term bank loan and short-term borrowings approximate fair

value because of the immediate or short-term maturity of these financial instruments.

Long-term borrowings approximate fair value

because the interest rate charged approximates the market rate.

Long-term other receivables approximate fair value because interest

rate approximates the market rate.

Inventories - Inventories are stated at the lower

of cost or market value, on a weighted average basis for BHD.

Inventories are stated at the lower of cost or market value, on a

first-in-first-out basis for Nanjing Recon and ENI.

The methods of determining inventory costs are used consistently from year

dollar amounts should not be construed as representing Chinese Yuan amounts or that the Chinese Yuan amounts have been or could be converted into U.S.

Estimates and assumptions - The preparation of the consolidated financial statements in conformity with U.S.

GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Estimates are adjusted to reflect actual experience when necessary.

Significant estimates include revenue recognition, allowance for doubtful accounts, the useful lives of property and equipment and the fair value of stock based payments.

Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates.

Fair Values of Financial Instruments - The carrying amounts reported in the consolidated balance sheets for trade accounts receivable, other receivables, purchase advances, trade accounts payable, accrued liabilities, advances from customers, short-term bank loan and short-term borrowings approximate fair value because of the immediate or short-term maturity of these financial instruments.

Long-term borrowings approximate fair value because the interest rate charged approximates the market rate.

Long-term other receivables approximate fair value because interest rate approximates the market rate.

Long-term investment is carried at less than fair value, with fair value determined using level 1 inputs.

(See Note 8.)

Cash and Cash Equivalents - Cash and cash equivalents are comprised of cash on hand, demand deposits and highly liquid short-term debt investments with stated original maturities of no more than three months.

Since a majority of the bank accounts are located in the PRC, those bank balances are uninsured.

Trade Accounts and Other Receivables - Accounts receivable are carried at original invoiced amount less a provision for any potential uncollectible amounts.

Accounts are considered past due when the related receivables are more than a year old.

Provision is made against trade accounts and other receivables to the extent they are considered to be doubtful.

Accounts are written off after extensive efforts at collection.

Other receivables arise from transactions with non-trade customers.

Purchase Advances - Purchase advances are the amounts prepaid to suppliers for purchases of inventory and are recognized as inventory when the final amount is paid to the suppliers and the inventory is delivered.

Inventories - Inventories are stated at the lower of cost or market value, on a weighted average basis for BHD.

Inventories are stated at the lower of cost or market value, on a first-in-first-out basis for Nanjing Recon and ENI.

The methods of determining inventory costs are used consistently from year to year.

Allowance for inventory obsolescence is provided when the market value of certain inventory items are lower than the cost.

Tax Recoverable –

Tax recoverable represented

amounts paid for value added tax ( “

on purchases in the PRC amounting to RMB 2,790,722 at June 30, 2012.

The amount can be used to offset VAT payable on sales made

by the Company.

Long-Lived Assets - The Company applies the ASC

Topic 360 “Property, plant and equipment.”

ASC Topic 360 requires that long-lived assets, such as property and equipment

be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group

may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset

to estimated undiscounted future cash flows expected to be generated by the asset.

If the carrying amount of an asset exceeds its

estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the

asset exceeds the fair value of the asset.

Fair value is determined based on the estimated discounted future cash flows expected

to be generated by the asset.

There were no impairments at June 30, 2012 and March 31, 2013.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Revenue Recognition - The Company recognizes revenue

when the following four criteria are met:

(1) persuasive evidence of an arrangement, (2) delivery has occurred or services

have been provided, (3) the sales price is fixed or determinable, and (4) collectability is reasonably assured.

does not occur until products have been shipped or services have been provided to the customers and the customers have signed a

completion and acceptance report, risk of loss has transferred to the customers, customers acceptance provisions have lapsed, or

the Company has objective evidence that the criteria specified in customers’

acceptance provisions have been satisfied.

sales price is not considered to be fixed or determinable until all contingencies related to the sale have been resolved.

Revenue from hardware sales is generally recognized when the

product is shipped to the customer and when there are no unfulfilled company obligations that affect the customer’s final

acceptance of the arrangement.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Tax Recoverable Tax recoverable represented amounts paid for value added tax ( “ VAT ” ) on purchases in the PRC amounting to ¥ 575,650 at June 30, 2013 and ¥ 774,874 ($ 126,275 ) at September 30, 2013.

The amount can be used to offset VAT payable on sales made by the Company.

Property and Equipment - Property and equipment are stated at cost.

Depreciation on motor vehicles and office equipment is computed using the straight-line method over the estimated useful lives of the assets, which range from two to ten years.

Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the assets.

Long-term investment Long-term investment in equity over which the Company has the ability to exercise significant influence but not control, and that, in general, are 20-50 percent owned, are stated at cost plus equity in undistributed net income (loss) of the investee.

These investments are evaluated for impairment, in which an impairment loss would be recorded whenever a decline in the value of an equity investment below its carrying amount is determined to be “other than temporary.” In judging “other than temporary,” the Company would consider the length of time and extent to which the fair value of the investment has been less than the carrying amount of the investment, the near-term and longer-term operating and financial prospects of the investee, and the Company’s longer-term intent of retaining the investment in the investee.

Long-Lived Assets - The Company applies the ASC Topic 360 “Property, plant and equipment.” ASC Topic 360 requires that long-lived assets, such as property and equipment be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.

If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Fair value is determined based on the estimated discounted future cash flows expected to be generated by the asset.

There were no impairments at June 30, 2013 and September 30, 2013.

Revenue Recognition - The Company recognizes revenue when the following four criteria are met:

(1) persuasive evidence of an arrangement, (2) delivery has occurred or services have been provided, (3) the sales price is fixed or determinable, and (4) collectability is reasonably assured.

Delivery does not occur until products have been shipped or services have been provided to the customers and the customers have signed a completion and acceptance report, risk of loss has transferred to the customers, customers acceptance provisions have lapsed, or the Company has objective evidence that the criteria specified in customers’ acceptance provisions have been satisfied.

The sales price is not considered to be fixed or determinable until all contingencies related to the sale have been resolved.

Revenue from hardware sales is generally recognized when the product is shipped to the customer and when there are no unfulfilled company obligations that affect the customer’s final acceptance of the arrangement.

The Company sells self-developed software.

For software sales,

the Company recognizes revenues in accordance with ASC Topic 985 - 605 “Software Revenue Recognition”.

software is recognized according to project contracts.

Contract costs are accumulated during the periods of installation and testing

or commissioning.

For software sales, the Company recognizes revenues in accordance with ASC Topic 985 - 605 “Software Revenue Recognition”.

Revenue from software is recognized according to project contracts.

Contract costs are accumulated during the periods of installation and testing or commissioning.

Usually this is short term.

Revenue is not recognized until completion of the contracts and receipt of acceptance

The Company provides services to improve software function and

system operation on separated fixed-price contracts.

Revenue is recognized on the completed contract method when acceptance is

determined by a completion report signed by the customer.

Deferred revenue represents unearned amounts billed to customers

related to sales contracts.

Income Taxes - Income taxes are provided based

upon the liability method of accounting pursuant to ASC Topic 740, Accounting for Income Taxes .

Provisions for income taxes

are based on taxes payable or refundable for the current year and deferred taxes.

Deferred taxes are provided on differences between

the tax bases of assets and liabilities and their reported amounts in the financial statements, and tax carry forwards.

tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period

in which the deferred tax assets and liabilities are expected to be realized or settled.

As changes in tax laws or rates are enacted,

deferred tax assets and liabilities are adjusted through the provision for income taxes.

The Company has not been subject to any

income taxes in the United States or the Cayman Islands.

Under ASC Topic 740, the Company may recognize the tax benefit

from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the

taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the financial statements from

such a position would be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized

upon ultimate settlement.

Income tax returns for the years prior to 2009 are no longer subject to examination by tax authorities.

Earnings (loss) per Share (“EPS”)

- Basic EPS is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number of ordinary

shares outstanding.

Diluted EPS are computed by dividing net income (loss) attributable to ordinary shareholders by the weighted-average

number of ordinary shares and dilutive potential ordinary share equivalents outstanding.

Basic net income per share is computed by dividing net income

available to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted income

per share is computed by dividing net income by the weighted average number of shares of ordinary shares, ordinary shares equivalents

and potentially dilutive securities outstanding during each period.

Potentially dilutive ordinary shares consist of ordinary

shares issuable upon the conversion of ordinary stock options and warrants (using the treasury stock method).

effect from options and warrants would have been anti-dilutive due to the fact that the weighted average exercise price per share

of options and warrants is higher than the weighted average market price per ordinary share during the three months and nine months

ended March 31, 2012 and 2013.

Revenue is not recognized until completion of the contracts and receipt of acceptance statements.

The Company provides services to improve software function and system operation on separated fixed-price contracts.

Revenue is recognized on the completed contract method when acceptance is determined by a completion report signed by the customer.

Deferred revenue represents unearned amounts billed to customers related to sales contracts.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Subsidy Income - Grants are given by the government to support local software companies’ operation and research and development.

Grants related to research and development projects are recognized as subsidy income in the unaudited condensed consolidated statements of operations when received.

Grants in the form of value-added-tax refund for software products are recognized when received.

Share-Based Compensation - The Company accounts for share-based compensation in accordance with ASC Topic 718, Share-Based Payment .

Under the fair value recognition provisions of this topic, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straightline basis over the requisite service period for the entire award.

The Company has elected to recognize compensation expenses using the Binomial Lattice valuation model estimated at the grant date based on the award’s fair value.

Income Taxes - Income taxes are provided based upon the liability method of accounting pursuant to ASC Topic 740, Accounting for Income Taxes .

Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes.

Deferred taxes are provided on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements, and tax carry forwards.

Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled.

As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

The Company has not been subject to any income taxes in the United States or the Cayman Islands.

Under ASC Topic 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the financial statements from such a position would be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

Income tax returns for the years prior to 2009 are no longer subject to examination by tax authorities.

Earnings (loss) per Share (“EPS”) - Basic EPS is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding.

Diluted EPS are computed by dividing net income (loss) attributable to ordinary shareholders by the weighted-average number of ordinary shares and dilutive potential ordinary share equivalents outstanding.

Basic net income per share is computed by dividing net income available to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted income per share is computed by dividing net income by the weighted average number of shares of ordinary shares, ordinary shares equivalents and potentially dilutive securities outstanding during each period.

Potentially dilutive ordinary shares consist of ordinary shares issuable upon the conversion of ordinary stock options and warrants (using the treasury stock method).

However, the effect from options and warrants would have been anti-dilutive due to the fact that the weighted average exercise price per share of options and warrants is higher than the weighted average market price per ordinary share during the three months ended September 30, 2012 and 2013.

TRADE ACCOUNTS RECEIVABLE, NET

1 unchanged sentence

June 30, 2013

March 31, 2013

September 30,

Trade accounts receivable

1 unchanged sentence

Total - third- party, net

June 30, 2012

March 31, 2013

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30,

Related Party

3 unchanged sentences

One of the Founders, Mr.

Yin Shenping, is the legal representative

of Beijing Yabei Nuoda Science and Technology Co.

Ltd (“Yabei Nuoda”).

The founder does not have any equity interest

in this company currently.

The receivable from Yabei Nuoda was generated primarily from the sale of automation system and services

based on written contracts.

Yin Shenping, is the legal representative of Beijing Yabei Nuoda Science and Technology Co.

Ltd (“Yabei Nuoda”).

The founder does not have any equity interest in this company currently.

The receivable from Yabei Nuoda was generated primarily from the sale of automation system and services based on written contracts.

OTHER RECEIVABLES, NET

1 unchanged sentence

June 30, 2013

March 31, 2013

September 30,

Current Portion

5 unchanged sentences

June 30, 2013

March 31, 2013

September 30,

Non-Current Portion

Due from ENI represents a working capital loan to the Company’s former VIE.

The loan balance had been an intercompany

balance and was eliminated in the Company’s consolidated financial statements before the deconsolidation of ENI.

It was reclassified

to other receivables after ENI ceased to be a VIE of the Company on December 16, 2010.

In January 2012, ENI agreed to repay the

loan on a payment schedule, and interest is accruing during the period at an annual rate of 4%.

In accordance with the payment

schedule, the principal plus accrued interest is required to be repaid over approximately three years on a quarterly basis beginning

Due from ENI (A)

(A) Due from ENI represents a working capital loan to the Company’s former VIE.

In January 2012, ENI agreed to repay the loan on a payment schedule, and interest is accruing during the period at an annual rate of 4 %.

In accordance with the payment schedule, the principal plus accrued interest is required to be repaid over approximately three years on a quarterly basis beginning March 2012.

The first four payments are RMB 1.2 million each.

In March, June, September and December of 2012, the Company received

an aggregate of RMB 4.8 million.

Starting March 2013, installment for each quarter would be ¥1,777,653.

The Company has received

the payment on time in March 2013.

The payments required after 1 year are RMB 5,228,053.

Loans to third parties are mainly used for short-term funding to support cooperative companies.

These loans are due on demand

bearing no interest.

In March, June, September and December of 2012, the Company received an aggregate of RMB 4.8 million.

Starting March 2013, installments for each quarter would be ¥ 1,777,653 .

The Company has received the payments on time in March and June, 2013.

On September 30, 2013, ENI proposed to extend the payment period and signed a new contract with the Company.

According to the new arrangement, the remaining part of this loan will be repaid over four years with quarterly installments of ¥ 699,147 .

The payments after 1 year are RMB 7,254,709 ($ 1,182 , 242) .

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Business advance to staff represents advances for business travel and sundry expenses related to oilfield or on-site installation

and inspection of products through customer approval and acceptance.

Other receivables - related parties represent loans to related

parties for working capital advances to related entities.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Loans to third parties are mainly used for short-term funding to support cooperative companies.

These loans are due on demand bearing no interest.

Business advance to staff represents advances for business travel and sundry expenses related to oilfield or on-site installation and inspection of products through customer approval and acceptance.

Other receivables - related parties represent loans to related parties for working capital advances to related entities.

Such advances are due-on-demand and non-interest bearing.

Below is a summary of other receivables - related parties which

consisted of the following:

Below is a summary of other receivables - related parties which consisted of the following:

Related Party

June 30, 2012

March 31, 2013

September 30,

Name of Related Party

Chen Guangqiang (A)

Li Donglin (B)

Yin Shen ping (A)

Other-travel advances (C)

Chen Guang qiang and Mr.

Yin Shen ping are shareholders of the Company.

Li Donglin is management and one of the Company’s minority shareholders of the Company’s VIE.

Other travel advances were paid to the Company’s management.

Beijing Yabei Nuoda Science and Technology Co.

Other-travel advances (B)

(A) Non-interest bearing loan due on demand.

(B) Other travel advances were paid to the Company’s management.

These advances are short term and will be offset against travel and business expenses.

PURCHASE ADVANCES

The Company purchased products and services from a third-party

and a related party during the normal course of business.

The Company purchased products and services from a third-party and a related party during the normal course of business.

Purchase advances consisted of the following:

June 30, 2013

March 31, 2013

September 30,

Prepayment for inventory purchase

1 unchanged sentence

Below is a summary of purchase advances to related party.

June 30, 2012

March 31, 2013

September 30,

Related Party

Xiamen Huangsheng Hitek Computer Network Co.

One of the Founders and a family member collectively own 57%

of Xiamen Huasheng Haitian Computer Network Co.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

One of the Founders and a family member collectively own 57 % of Xiamen Huasheng Haitian Computer Network Co.

Inventories consisted of the following:

June 30, 2012

March 31, 2013

September 30,

Small component parts

Purchased goods and raw materials

Work in process

3 unchanged sentences

Property and equipment consisted of the following:

June 30, 2012

March 31, 2013

Motor vehicles

3 unchanged sentences

Property and equipment, net

Depreciation expenses were ¥86,685 and ¥152,757 ($24,592)

for the three months ended March 31, 2012 and 2013, respectively.

Depreciation expenses were ¥252,842 and ¥467,914 ($74,490)

for the nine months ended March 31, 2012 and 2013, respectively.

Depreciation expenses were ¥ 72,379 and ¥ 150,368 ($ 24,504 ) for the three months ended September 30, 2012 and 2013, respectively.

Long-term investment

On June 28, 2013, the Company purchased 2,800,000 restricted shares of Avalon Oil and Gas, Inc.

("Avalon") for $ 0.089 per share, or approximately ¥ 1.5 million ($ 250,000 ).

Since the restriction for the shares is for two years, the Company was able to acquire the shares at 50 % of the market value.

As a result, Recon owns 32.22 % of Avalon's outstanding shares.

The investment was accounted for using the equity method and no gain or loss from equity investment was recorded for the year ended June 30, 2013 due to immateriality.

As of September 30, 2013, Recon owns 27.43 % of Avalon’s outstanding shares due to Avalon issuing more shares.

Avalon is an independent US domestic oil and natural gas producer listed on the OTCBB under the ticker symbol AOGN.

Avalon is building a portfolio of oil and gas producing properties to generate asset growth.

For the three months ended September 30, 2013, Avalon had revenue of approximately $ 40,000 and net loss of $ 0.2 million.

The Company recorded a loss of ¥ 374,614 ($ 61,048 ) for its share of Avalon’s loss for the three months ended September 30, 2013.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OTHER PAYABLES

Other payables consisted of the following:

June 30, 2012

March 31, 2013

September 30,

Consulting services

Due to ENI (A)

Expenses paid by third-parties

Other payables to related parties consisted of the following:

June 30, 2012

March 31, 2013

(A) A former VIE of the Company, which ceased to be a VIE on December 16, 2010.

September 30,

Related Party

Due to related parties (A)

Due to related parties (1)

Expenses paid by the major shareholders

1 unchanged sentence

Due to management staff on behalf of Recon

Includes an advance from Yabei Nuoda for RMB 60,000 and an advance from Xiamen Henda Haitek for RMB 5,299,347 to supplement

the Company’s working capital.

(1) Includes an advance from Yabei Nuoda for RMB 61,477 and an advance from Xiamen Henda Haitek for RMB 1,799,347 to supplement the Company’s working capital.

The advances are payable on demand and non-interest bearing.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

TAXES PAYABLE

Taxes payable consisted of the following:

June 30, 2012

March 31, 2013

September 30,

Business tax payable

2 unchanged sentences

Total taxes payable

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SHORT-TERM BANK LOANS

Short-term bank loans consisted of the following:

June 30, 2012

March 31, 2013

CCB bank, 6.44% annual interest, paid off on December 11, 2012

Beijing Bank, 7.87% annual interest, paid off on February 28, 2013

Beijing Bank, 7.11% annual interest, paid off on March 8, 2013

Beijing Bank, 6.56% annual interest, paid off on March 29, 2013

Beijing Bank, 6.56% annual interest, paid off on April 5, 2013

Beijing Bank, 6.56% annual interest, paid off on May 7, 2013

Communication Bank, 6.6% annual interest, due on October 25, 2013

Communication Bank, 6.6% annual interest, due on October 25, 2013 (A)

Communication Bank, 6.6% annual interest, due on November 15, 2013

Beijing Bank, 6% annual interest, due on January 21, 2014

Beijing Bank,5.75% annual interest, due on February 25, 2014

Beijing Bank, 5.75 % annual interest, due on February 27, 2014

Beijing Bank, 5.75 % annual interest, due on April 9, 2014

Beijing Bank, 5.75 % annual interest, due on April 16, 2014

Beijing Bank,5.75 % annual interest, due on March 11, 2014

Industrial and commercial bank, float interest rate, due on December 31, 2013

Industrial and commercial bank, float interest rate, due on July 28, 2014

Industrial and commercial bank, float interest rate, due on August 8, 2014

Industrial and commercial bank, float interest rate, due on February 25, 2014

Total short-term bank loans

Interest expense for short-term bank loans was ¥30,721 and

¥437,436 ($69,638) for the three months ended March 31, 2012 and 2013, respectively.

Interest expense for short-term bank loans was ¥196,784

and ¥1,183,845 ($188,462) for the nine months ended March 31, 2012 and 2013, respectively.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(A) The Company paid off the loan of ¥ 3,090,000 from Communication Bank on October 25, 2013.

Interest expense for short-term bank loans was ¥ 474,125 and ¥ 219,672 ($ 35,798 ) for the three months ended September 30, 2012 and 2013, respectively.

SHORT-TERM BORROWINGS

Short-term borrowings are generally extended upon maturity and

consisted of the following:

June 30, 2012

March 31, 2013

Short-term borrowings are generally extended upon maturity and consisted of the following:

Short-term borrowings due to non-related parties:

Short-term borrowing, 6% annual interest, due on November 29, 2013

Short-term borrowing, 6% annual interest, paid in full in March 2013

Short-term borrowing with no interest, paid in full in August 2012

Short-term borrowings with no interest, beginning April 22,2013, due on April 21, 2014

Short-term borrowings with no interest, due on April 21, 2014

Total short-term borrowings due to non-related parties

Interest expense for short-term borrowings due to non-related

parties was ¥28,519 and ¥16,754 ($2,667) for the three months ended March 31, 2012 and 2013, respectively.

Interest expense for short-term borrowings due to non-related

parties was ¥96,153 and ¥56,890 ($9,057) for the nine months ended March 31, 2012 and 2013, respectively.

June 30, 2012

March 31, 2013

Interest expense for short-term borrowings due to non-related parties was ¥19,768 and ¥1,056 ($172) for the three months ended September 30, 2012 and 2013, respectively.

Short-term borrowings due to related parties:

Due-on-demand borrowings from Founders, no interest (A)

Due-on-demand borrowings from Founder’s family member, no interest

Short-term borrowing from a Founder's family member, 6% annual interest, due and paid on March 20, 2013 (B)

Short-term borrowing from a Founder's family member, 6% annual interest, due and paid on October 21, 2012 (B)

Short-term borrowing from a Founder's family member, 6% annual interest, due and paid on March 27, 2013 (B)

Short-term borrowing from a Founder's family member, 6% annual interest, due on December 21, 2013 (C)

Short-term borrowing from a Founder's family member, 6% annual interest, due on November 29, 2013

Short-term borrowings fromXiamen Huasheng Haitian Computer Network Co.

Due-on-demand borrowings from Founders, no interest

Short-term borrowing from a Founder's family member, 6% annual interest, due on December 21, 2013 (A)

Short-term borrowing from a Founder's family member, 6% annual interest, matures on November 29, 2013 (A)

Short-term borrowings from Xiamen Huasheng Haitian Computer Network Co.

Ltd., no interest, due on November 14, 2013

1 unchanged sentence

Total short-term borrowings due to related parties

¥40,000 of this borrowing was paid in cash on October 22, 2012.

Borrowings aggregating ¥

were refinanced on December 21, 2012 with (C).

Interest expense for short-term borrowings due to related parties

was ¥17,297 and ¥151,742 ($24,157) for the three months ended March 31, 2012 and 2013, respectively.

Interest expense for short-term borrowings due to related parties

are ¥59,895 and ¥265,649 ($42,290) for the nine months ended March 31, 2012 and 2013, respectively.

SHAREHOLDERS’

Appropriated Retained Earnings - According to

the Memorandum and Articles of Association, the Company is required to transfer a certain portion of its net profit, as determined

under PRC accounting regulations, from current net income to the statutory reserve fund.

In accordance with the PRC Company Law,

companies are required to transfer 10% of their profit after tax, as determined in accordance with PRC accounting standards and

regulations, to the statutory reserves until such reserves reach 50% of the registered capital or paid-in capital of the companies.

As of June 30, 2012 and March 31, 2013, the balance of total statutory reserves was ¥2,378,961 and ¥2,378,961 ($378,719),

respectively.

(A) The Company has repaid ¥ 5,230,000 by July 29, 2013.

Interest expense for short-term borrowings due to related parties was ¥ 55,117 and ¥ 532 ($ 87 ) for the three months ended September 30, 2012 and 2013, respectively.

SHAREHOLDERS’ EQUITY

Appropriated Retained Earnings - According to the Memorandum and Articles of Association, the Company is required to transfer a certain portion of its net profit, as determined under PRC accounting regulations, from current net income to the statutory reserve fund.

In accordance with the PRC Company Law, companies are required to transfer 10 % of their profit after tax, as determined in accordance with PRC accounting standards and regulations, to the statutory reserves until such reserves reach 50 % of the registered capital or paid-in capital of the companies.

As of June 30, 2013 and September 30, 2013, the balance of total statutory reserves was ¥ 3,023,231 and ¥ 3,310,881 ($ 539,548 ), respectively.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STOCK-BASED COMPENSATION

Stock-Based Awards Plan

2009 Options Plan - The Company granted options

to purchase 293,000 ordinary shares under the Stock Incentive 2009 Plan to its employees and non-employee directors on July 29,

The options have an excise price of $6.00, equal to the IPO price of the Company’s ordinary shares, and will vest over

a period of five years, with the first 20% vesting on July 29, 2010.

2009 Options Plan - The Company granted options to purchase 293,000 ordinary shares under the Stock Incentive 2009 Plan to its employees and non-employee directors on July 29, 2009 .

The options have an excise price of $ 6.00 , equal to the IPO price of the Company’s ordinary shares, and will vest over a period of five years, with the first 20% vesting on July 29, 2010 .

The options expire ten years after the date of grant, on July 29, 2019 .

The fair value was estimated on July 29, 2009 using the Binomial Lattice valuation model, with the following weighted-average

The fair value was estimated on July 29, 2009 using the Binomial Lattice valuation model, with the following weighted-average assumptions:

Stock price at grant date

4 unchanged sentences

Forfeiture rate****

* Volatility is projected using the performance of PHLX Oil

Service Sector index.

** The life of options represents the period the option is expected

to be outstanding.

*** The risk-free interest rate is based on the Chinese international

bond denominated in U.S.

* Volatility is projected using the performance of PHLX Oil Service Sector index.

** The life of options represents the period the option is expected to be outstanding.

*** The risk-free interest rate is based on the Chinese international bond denominated in U.S.

dollar, with a maturity that approximates the life of the option.

**** Forfeiture rate is the estimated percentage of options

forfeited by employees by leaving or being terminated before vesting.

The Company recognizes compensation cost for awards with graded

vesting on a straight-line basis over the requisite service period for the entire award.

The grant date fair value of the options

was ¥30.17 ($4.42) per share.

2012 Options Plan –

Company granted options to purchase 415,000 ordinary shares to its employees and non-employee director on March 26, 2012.

have an excise price of $2.96, which was equal to the share price of the Company’s ordinary shares at March 26, 2012, and

will vest over a period of five years, with the first 20% vesting on March 26, 2013.

The options expire ten years after the date

of grant, on March 26, 2022.

The Company recognizes compensation

cost for awards with graded vesting on a straight-line basis over the requisite service period for the entire award.

date fair value of the options was ¥10.06 ($1.59) per share.

**** Forfeiture rate is the estimated percentage of options forfeited by employees by leaving or being terminated before vesting.

The Company recognizes compensation cost for awards with graded vesting on a straight-line basis over the requisite service period for the entire award.

The grant date fair value of the options was ¥ 30.17 ($ 4.42 ) per share.

2012 Options Plan T he Company granted options to purchase 415,000 ordinary shares to its employees and non-employee director on March 26, 2012 .

The options have an excise price of $ 2.96 , which was equal to the share price of the Company’s ordinary shares at March 26, 2012, and will vest over a period of five years, with the first 20% vesting on March 26, 2013 .

The options expire ten years after the date of grant, on March 26, 2022 .

The fair value was estimated on March 26, 2012 using the black-scholes option-pricing model with the following assumptions:

Stock price at grant date

Exercise price (per share)

Discount Rate - Bond Equivalent Yield***

Dividend yield

Life of option (years) **

Forfeiture rate****

* Volatility is projected using the performance of PHLX Oil Service Sector index over past five years.

** The life of options represents the period the option is expected to be outstanding.

*** The risk-free interest rate is based on the U.S.

government bond, with a maturity that approximates the life of the option.

**** Forfeiture rate is the estimated percentage of options forfeited by employees by leaving or being terminated before vesting.

The Company recognizes compensation cost for awards with graded vesting on a straight-line basis over the requisite service period for the entire award.

The grant date fair value of the options was ¥ 10.06 ($ 1.59 ) per share.

In July 2013, three employees with 44,000 options resigned from the Company and their granted options were forfeited back to the Company’s incentive option pool.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of the stock options activity:

Weighted Average Exercise Price Per

Stock Options

Weighted Average Exercise Price Per Share

Outstanding as of July 1, 2013

Outstanding as of March 31, 2013

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The following is a summary of the status of options outstanding

and exercisable at March 31, 2013:

Outstanding as of September 30, 2013

The following is a summary of the status of options outstanding and exercisable at September 30, 2013:

Outstanding Options

1 unchanged sentence

Average Exercise

Average Remaining

Contractual life (Years)

Contractual life

Average Exercise

Average Remaining

Contractual life (Years)

The total share-based compensation expenses recorded for stock

options granted were ¥259,163 and ¥451,573 ($71,888) for the three months ended March 31, 2012 and 2013, respectively.

The total share-based compensation expenses recorded for stock options granted were ¥784,010 and ¥1,358,726 ($216,303)

for the nine months ended March 31, 2012 and 2013, respectively.

The total unrecognized share-based compensation expense as of

March 31, 2013 was approximately ¥4,751,241($756,374), which is expected to be recognized over a weighted average period of

approximately 3.17 years.

Contractual life

The total share-based compensation expenses recorded for stock options granted were ¥ 454,805 and ¥ 414,954 ($ 67,622 ) for the three months ended September 30, 2012 and 2013, respectively.

The total unrecognized share-based compensation expense as of September 30, 2013 was approximately ¥ 3.3 million ($ 0.5 million), which is expected to be recognized over a weighted average period of approximately 2.85 years.

Placement Agent Warrants

The Company had 170,000 of granted placement agent warrants

as of March 31, 2013 and no warrants were exercised during this period.

The Company is not subject to any income taxes in the United

States or the Cayman Islands and had minimal operations in jurisdictions other than the PRC.

BHD and Nanjing Recon are subject

to PRC’s income taxes as PRC domestic companies.

For the calendar years 2012 and 2013, Nanjing Recon is subject to an income

tax rate of 15%.

As approved by the domestic tax authority in the PRC, BHD was

recognized as a government-certified high technology company on November 25, 2009 and is subject to an income tax rate of 15% for

calendar year 2010 and 2011.

This qualification certificate will stay effective through November 2015.

The Company had 170,000 of granted placement agent warrants as of September 30, 2013 and no warrants were exercised during this period.

The Company is not subject to any income taxes in the United States or the Cayman Islands and had minimal operations in jurisdictions other than the PRC.

BHD and Nanjing Recon are subject to PRC’s income taxes as PRC domestic companies.

For the calendar years 2012 and 2013, Nanjing Recon is subject to an income tax rate of 15 %.

As approved by the domestic tax authority in the PRC, BHD was recognized as a government-certified high technology company on November 25, 2009 and is subject to an income tax rate of 15 % through November 2015.

Deferred tax asset is comprised of the following:

June 30, 2013

March 31, 2013

Allowances for doubtful receivables

September 30,

Allowance for doubtful receivables

Total deferred income tax assets

The Company’s tax provision (benefit) is comprised of

the following:

For the three months ended March 31,

Current income tax provision/(benefit)

Deferred income tax (benefit)/provision

Provision (benefit) for income tax

For the nine months ended March 31,

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company’s tax provision is comprised of the following:

For the three months ended September 30,

Current income tax provision

Deferred income tax (benefit)/provision

Deferred income taxes provision

Provision for income tax

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NON-CONTROLLING INTEREST

5 unchanged sentences

Total non-controlling interest

As of March 31, 2013

As of September 30, 2013

Paid-in capital

3 unchanged sentences

CONCENTRATIONS

For the three months ended March 31, 2012 and 2013, the two

largest customers, China National Petroleum Corporation (“CNPC”) and China Petroleum & Chemical Corporation Limited

(“SINOPEC”), represented 0%, 25.05% and 53.35%, 13.80% of the Company’s revenue, respectively.

For the nine months ended March 31, 2012 and 2013, the two largest

customers, China National Petroleum Corporation (“CNPC”) and China Petroleum & Chemical Corporation Limited (“SINOPEC”),

represented 8.34%, 27.86% and 22.38%, 46.62% of the Company’s revenue, respectively.

For the three months and nine months ended March 31, 2013, one

supplier, Hebei Huanghua Xiangtong Technical Co.

Ltd, accounted for 15.31% and 24.90% of the company’s

total purchases .

For the three months ended September 30, 2013, the two largest customers, China National Petroleum Corporation (“CNPC”) and China Petroleum & Chemical Corporation Limited (“SINOPEC”), represented 37.53 % and 34.16 % of the Company’s revenue, respectively.

For the three months ended September 30, 2012, China National Petroleum Corporation (“CNPC”) and China Petroleum & Chemical Corporation Limited (“SINOPEC”) represented 9.08 % and 13.23 % of the Company’s revenue, respectively.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended September 30, 2012, one supplier, Hebei Huanghua Xiangtong Technical Co.

Ltd, accounted for 30.54 % of the company’s total purchases .

For the three months ended September 30, 2013, four major suppliers accounted for 11.8 %, 20.1 %, 15.1 % and 24.9 % of the company’s total purchase.

COMMITMENTS AND CONTINGENCY

Office Leases

(a) Office Leases

The Company leased three offices in Beijing (two for BHD;

for Recon-JN), one office in Jining for Recon-JN and one office in Nanjing for Nanjing Recon.

Future payments under such leases

are as follows as of March 31, 2013:

Twelve months ending March 31,

one for Recon-JN), one office in Jining for Recon-JN and one office in Nanjing for Nanjing Recon.

Future payments under such leases are as follows as of September 30, 2013:

Twelve months ending September 30,

Office lease payment

(b) Contingency

The Labor Contract Law of the PRC requires employers to assure

the liability of severance payments if employees are terminated and have been working for the employers for at least two years

prior to January 1, 2008.

The employers will be liable for one month of severance pay for each year of the service provided by

the employees.

As of March 31, 2013, the Company estimated its severance payments of approximately ¥1.2 million ($0.2 million)

which has not been reflected in its unaudited condensed consolidated financial statements because the Company has determined that

the likelihood to make these payments is remote.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The Labor Contract Law of the PRC requires employers to assure the liability of severance payments if employees are terminated and have been working for the employers for at least two years prior to January 1, 2008.

The employers will be liable for one month of severance pay for each year of the service provided by the employees.

As of September 30, 2013, the Company estimated its severance payments of approximately ¥ 1.2 million ($ 0.2 million) which has not been reflected in its unaudited condensed consolidated financial statements because the Company has determined that the likelihood to make these payments is remote.

RELATED PARTY TRANSACTIONS AND BALANCES

Sales to related parties –

to related parties consisted of the following:

For the three months ended March 31,

Beijing Yabei Nuoda Science and Technology Co.

Beijing Adaer Oil Technology Co., Ltd.

Revenues from related parties

For the nine months ended March 31,

Sales to related parties sales to related parties consisted of the following:

For the three months ended September 30,

Beijing Yabei Nuoda Science and Technology Co.

Beijing Adaer Oil Technology Co., Ltd.

Xiamen Henda Haitian computer network Inc

Revenues from related parties

Purchases from related parties –

from related parties consisted of the following:

For the three months ended March 31,

Huanghua Xiang Tong Manufacture

Nanjing Youkong Information Technology Co., Ltd

Purchase from related parties

For the nine months ended March 31,

Purchases from related parties purchases from related parties consisted of the following:

For the three months ended September 30,

Huanghua Xiang Tong Manufacture

Beijing Yabei Nuoda Science and Technology Co.

Xiamen Huangsheng Hitek Computer Network Co.

Nanjing Youkong Information Technology Co., Ltd

Purchase from related parties

Leases from related parties - The Company has

various agreements for the lease of office space owned by the Founders and their family members.

The terms of the agreement

state that the Company will continue to lease the property through July 2014 at a monthly rent of ¥84,333 with the annual rental

expense at ¥1,012,000 ($161,105).

Short-term borrowings from related parties - The

Company borrowed ¥4,123,306 and ¥5,751,381 ($915,592) from the Founders, their family members and senior officers as of

June 30, 2012 and March 31, 2013, respectively.

For the specific terms and interest rates of the borrowings, please see Note 11.

Trade accounts payable to related parties - The

Company owed ¥5,339,231and ¥5,449,388 ($867,516) to one related party as of June 30, 2012 and March 31, 2013.

31, 2013, BHD held a 6.8% equity interest of this company.

Other payable to related parties - The Company

owed ¥0 and ¥5, 299,347 ($843,630) to an affiliate as of June 30, 2012 and March 31, 2013.

One of the Founders and his

family member collectively own 57% of this affiliate.

The Company owed ¥61,477 and ¥61,477 ($23,879) to another affiliate

as of June 30, 2012 and March 31, 2013, for which one of our shareholders is legal representative.

The Company owed ¥1,037,782

and ¥638,055 ($101,574) to its management staff as of June 30, 2012 and March 31, 2013.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Variable Interest

The Company reports its VIEs’

portion of consolidated

net income and stockholders’

equity as non-controlling interests in the condensed consolidated financial statements.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Leases from related parties - The Company has various agreements for the lease of office space owned by the Founders and their family members.

The terms of the agreement state that the Company will continue to lease the property for two years at a monthly rent of ¥ 84,333 with the annual rental expense at approximately ¥ 1 million ($ 0.2 million).

Short-term borrowings from related parties - The Company borrowed ¥ 5,503,279 and ¥ 266,902 ($ 43,495 ) from the Founders, their family members and senior officers as of June 30, 2013 and September 30, 2013, respectively.

For the specific terms and interest rates of the borrowings, please see Note 12.

Trade accounts payable to related parties - The Company owed ¥ 3,994,718 to one related party as of June 30, 2013.

As of September 30, 2013, BHD was not a related party to this supplier.

Expenses paid by the owners on behalf of Recon The major owner of Nanjing Recon, Mr.

Yin and the major owner of BHD, Mr.

Chen, paid certain operating expenses for the Company.

As of June 30, 2013 and September 30, 2013, ¥ 467,499 and ¥ 432,321 ($ 70,452 ) were due to them, respectively.

Variable Interest Entities

The Company reports its VIEs’ portion of consolidated net income and stockholders’ equity as non-controlling interests in the condensed consolidated financial statements.

Summary information regarding consolidated VIEs is as follows:

June 30, 2012

March 31, 2013

September 30,

Current Assets

1 unchanged sentence

Trade accounts receivable, net

Notes receivable

Purchase advances

6 unchanged sentences

Total Liabilities

The financial performance of VIEs reported in the condensed

consolidated statement of operations and comprehensive income (loss) for the three months ended March 31, 2013 includes revenues

of ¥7,501,795 ($1,194,250), operating expenses of ¥4,950,298 ($788,063), other expenses of ¥109,881 ($17,492) and a

net loss of ¥21,270($3,386).

The financial performance of VIEs reported in the condensed

consolidated statement of operations and comprehensive income (loss) for the nine months ended March 31, 2013 includes revenues

of ¥62,536,588 ($9,955,519), operating expenses of ¥15,279,023 ($2,432,346), other expenses of ¥118,297 ($18,832) and

a net income of ¥6,029,613 ($959,885).

The financial performance of VIEs reported in the condensed consolidated statement of operations and comprehensive income (loss) for the three months ended September 30, 2013 includes revenues of ¥ 11,512,710 ($ 1,876,134 ), operating expenses of ¥ 3,388,009 ($ 552,117 ), other expenses of ¥ 129 ($ 21 ) and a net income of ¥ 1,886,755 ($ 307,469 ).

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 5. Other Information