What changed in this filing

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Item 9A. Controls and Procedures

2015-09-25 compared with 2014-09-29 · 1031 added, 916 removed, 941 unchanged (67% of the section changed)

Controls and Procedures.

and Procedures.

Disclosure Controls and Procedures

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Included in this Annual Report on Form 10-K, the chief executive officer and chief financial officer concluded

that our Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange

Act of 1934) were ineffective.

that our Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities

Exchange Act of 1934) were ineffective in timely alerting them to information required to be included in the Company’s periodic

Securities and Exchange Commission (the “Commission”) filings.

Changes in Internal Control over Financial Reporting

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As of June 30, 2015, the Company has completed certain documentation of our internal controls

and implemented the following remedial initiatives:

and will be implementing the following remedial initiatives:

the design and documentation related to multiple levels of review over financial statements included in our SEC filings;

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that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;

(2) provide reasonable assurance that

transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

GAAP, and that the

Company’s receipts and expenditures are being made only in accordance with the authorization of its management and directors;

(2) provide reasonable assurance

that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

GAAP, and that

the Company’s receipts and expenditures are being made only in accordance with the authorization of its management and directors;

(3) provide reasonable assurance regarding

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material effect on the financial statements.

The Company’s management assessed

the effectiveness of its internal control over financial reporting as of June 30, 2014.

In making this assessment, management

used the 1992 framework set forth in the report entitled Internal Control—Integrated Framework issued by

the Committee of Sponsoring Organizations of the Treadway Commission, or COSO.

The COSO framework(old) summarizes each of the components

of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control

activities, (iv) information and communication, and (v) monitoring.

Based on this assessment, the Company’s management

believes that, as of June 30, 2014, its internal control over financing reporting is not effective based on those criteria.

The Company’s management

assessed the effectiveness of its internal control over financial reporting as of June 30, 2015.

In making this

assessment, management used the 2013 framework set forth in the report entitled Internal Control—Integrated

Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO.

The 2013 COSO

framework summarizes each of the components of a company’s internal control system, including (i) the control

environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and

(v) monitoring.

Based on this assessment, the Company’s management believes that, as of June 30, 2015, its

internal control over financing reporting was not effective based on those criteria.

The specific material weaknesses identified

by the Company’s management as of June 30, 2015 are described as follows:

We did not have sufficient skilled accounting personnel who are either qualified as Certified Public Accountants

We did not have sufficient skilled accounting

personnel who are either qualified as Certified Public Accountants in the U.S.

or who have received education from U.S.

institutions or other educational programs that would provide enough relevant

education relating to U.S.

The Company’s CFO have limited experience with U.S.

or other educational programs that would provide enough relevant education relating to U.S.

The Company’s CFO and

Controller have limited experience with U.S.

GAAP and are not U.S.

Certified Public

Further, our operating subsidiaries are based in China, and in accordance with PRC laws and regulations, are required

to comply with PRC GAAP, rather than U.S.

Thus, the accounting skills and understanding necessary to fulfill the requirements

GAAP-based reporting, including the preparation of consolidated financial statements, are inadequate, and determined to

be a material weakness.

We completed our designs of our internal controls

and assessments for all of our financial reporting cycles during fiscal year 2013, and we are unable to declare effectiveness of

our controls due to lack of sufficient time to obtain evidence of operating effectiveness as of June 30, 2014 due to lack of monitoring

of our internal controls (lack of self-testing of internal controls).

Therefore, we determined that the lack of time to evaluate

our design and operating effectiveness is a material weakness.

It should be noted, however, that (a) many actions had been undertaken

to enhance the control environment during the year;

and (b) there are other remedial activities that are scheduled to be take place

in fiscal 2015.

Certified Public Accountants.

Further, our operating subsidiaries

are based in China, and in accordance with PRC laws and regulations, are required to comply with PRC GAAP, rather than U.S.

Thus, the accounting skills and understanding necessary to fulfill the requirements of U.S.

GAAP-based reporting, including the

preparation of consolidated financial statements, are inadequate, and determined to be a material weakness.

We recently completed our designs of our

internal controls and assessments for all of our financial reporting cycles during fiscal year 2015, and we are unable to declare

effectiveness of our controls due to lack of sufficient time to obtain evidence of operating effectiveness as of June 30, 2015

due to lack of monitoring of our internal controls (lack of self-testing of internal controls).

Therefore, we determined that

the lack of time to evaluate our design and operating effectiveness is a material weakness.

It should be noted, however, that

(a) many actions had been undertaken to enhance the control environment during the year;

and (b) there are other remedial activities

that are scheduled to be take place in fiscal 2016.

As a result, the Company has developed

remedial actions to strengthen its accounting and financial reporting functions as well as the related disclosure controls and

Such plan will require the hiring of additional resources and the deployment of other corporate resources for the accounting

department in relation to the financial reporting process.

Such additional resources will include the establishment of a work force

dedicated to the task of correcting past financial irregularities and maintaining correct financial reporting on an on-going basis.

To strengthen the Company’s internal control over financial reporting, the Company engaged outside consultants that are skilled

in SEC reporting and Section 404 compliance to assist in the implementation of the following remedial actions, which have been

completed as of the date of this report:

● Enhancement of existing disclosures policies and procedures;

● Formalization of periodic communication between management

and the audit committee;

● Implementation of policies and procedures intended

to enhance management monitoring and oversight by the Audit Committee.

● Formalization

of a periodic staff training program to enhance their awareness of the key internal control activities.

In addition to the foregoing efforts, the Company expects to implement the following remedial

actions during fiscal year 2015:

● Develop a comprehensive training and development plan,

for our finance, accounting and internal audit personnel, including our Chief Financial Officer, Controller, and others, in the

principles and rules of U.S.

Such plan will require the hiring of additional resources and the deployment of other corporate resources for the

accounting department in relation to the financial reporting process.

Such additional resources will include the establishment

of a work force dedicated to the task of correcting past financial irregularities and maintaining correct financial reporting

on an on-going basis.

To strengthen the Company’s internal control over financial reporting, the Company needs to engage

outside consultants that are skilled in SEC reporting and Section 404 compliance to assist in the implementation of the following

remedial actions as of the date of this report:

Development and formalization of

key accounting and financial reporting policies and procedures;

Identification and documentation

of key controls by business process;

Enhancement of existing

disclosures policies and procedures;

Formalization of periodic

communication between management and the audit committee;

Implementation of policies

and procedures intended to enhance management monitoring and oversight by the Audit Committee.

In addition to the foregoing efforts, the

Company expects to implement the following remedial actions during fiscal year 2016:

Formalization of a periodic

staff training program to enhance their awareness of the key internal control activities.

Develop a comprehensive

training and development plan, for our finance, accounting and internal audit personnel, including our Chief Financial Officer,

Controller, and others, in the principles and rules of U.S.

GAAP, SEC reporting requirements and the application thereof.

● Hire a full-time employee who possesses the requisite

Hire a full-time employee

who possesses the requisite U.S.

GAAP experience and education.

● Monitoring of internal controls by performing self-testing

of various key controls.

Monitoring of internal

controls by performing self-testing of various key controls.

Despite the material weaknesses and deficiencies

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rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual

Other Information.

Directors, Executive Officers and Corporate Governance.

Executive Officers and Corporate Governance.

Regulation S-K Item 401:

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officers and directors, their ages and the positions held by them:

Position Held

Chief Executive Officer and Director

Chief Financial Officer

Chen Guangqiang

Chief Technology Officer and Director

Independent Director (Nominating Committee Chair)

Independent Director (Audit Committee Chair)

Independent Director (Compensation Committee Chair)

Independent Director

Independent Director (Audit Committee

Independent Director

Yin Shenping.

been our Chief Executive Officer and director since our inception.

Yin founded Nanjing Recon, a Chinese company

that provides services to automate and enhance the extraction of petroleum in China, and has been the Chief Executive Officer since

has been our Chief Executive Officer and a director since the Company’s inception.

Yin founded Nanjing

Recon, a Chinese company that provides services to automate and enhance the extraction of petroleum in China, and has been the

Chief Executive Officer since that time.

Prior to founding Nanjing Recon, Mr.

Yin served as a sales manager for Fujian Haitian Network Company from 1992

through 1994.

Yin served as a sales manager for Fujian Haitian

Network Company from 1992 through 1994.

Yin has founded and operated a number of companies engaged in the IT industry

Xiamen Hengda Haitian Computer

Network Co., Ltd.

Xiamen Hengda Haitian Computer Network Co., Ltd.

(1994), Baotou Hengda Haitian Computer Network Co., Ltd.

(1997) and Beijing Jingke Haitian Electronic Technology

Development Co., Ltd.

Beijing Jingke Haitian Electronic Technology Development Co., Ltd.

(1999), and Jingsu Huasheng Information Technology Co., Ltd.

Yin received his bachelor’s

degree in 1991 from Nanjing Agricultural University in information systems.

Yin has been chosen as a director because

he is one of the founders of the Company and we believe his knowledge of the Company and years of experience in our industry give

him the ability to guide the Company as a director.

Liu has served

as our Chief Financial Officer since 2008.

Liu assisted Heilongjiang Province Jintian Group with financial due

diligence, field surveys and data analysis.

Yin merged the former Nanjing Kingsley Software Engineering Co., Ltd.

into Nanjing Recon.

received his bachelor’s degree in 1991 from Nanjing Agricultural University in information systems.

Yin was chosen

as a director of the Company because as one of the founders of the Company, we believe his knowledge of the Company and years

of experience in our industry give him the ability to guide the Company as a director in its development.

served as our Chief Financial Officer since 2008.

Liu assisted Heilongjiang Province Jintian Group with financial

due diligence, field surveys and data analysis.

While in college Ms.

Liu served internships in Xinghua Certified Public Accountants,

Liu interned at Xinghua Certified Public Accountants,

Ltd., Beijing Zhongweihuahao Accountants Affairs Office, Tiantong Securities Co., Ltd.

and Industrial and Commercial Bank of China,

which internships focused on auditing, accounting and data analysis.

Liu received her bachelor’s degree in 2006

from Beijing University of Chemical Technology, School of Economics and Management and her master’s degree in industrial

economics in 2009 from Beijing Wuzi University.

focused on the areas of auditing, accounting and data analysis.

Liu received her bachelor’s degree in 2006 from

Beijing University of Chemical Technology, School of Economics and Management and her master’s degree in industrial economics

in 2009 from Beijing Wuzi University.

Chen Guangqiang.

has served as our Chief Technology Officer and director since our inception.

Chen founded BHD and has been the General

Manager since then.

Chen was a geological engineer for the Fourth

Oil Extraction Plant of Huabei Oil Field from 1985 through 1993.

From 1993 through 1999, Mr.

Chen was a chief engineer for

Xinda Company, CNPC Development Bureau.

From 1999 through 2003, Mr.

Chen served as the general manager of Beijing Adar.

From 1993 through 1999,

Chen was a chief engineer for Xinda Company, CNPC Development Bureau.

Chen was a geological engineer for the

Fourth Oil Extraction Plant of Huabei Oil Field from 1985 through 1993.

Chen received his bachelor’s degree in 1985

from Southwest Petroleum Institute.

Chen has been chosen as a director because he is one of the founders of the Company

and we believe we can benefit from his years of engineering experience and management experience in the oil extraction industry.

received his bachelor’s degree in 1985 from Southwest Petroleum Institute.

Chen was appointed to the position of

director because he is one of the founders of the Company and we believe we can benefit from his many years of engineering experience

and management experience in the oil extraction industry.

joined our Board of Directors in 2008.

Prior to joining our Board, in1990 Mr.

Wong joined the Vigers Group, a real estate

company that provides services in valuation, corporate property services, investment advisory services, general practice surveying,

building surveying, commercial, in both retail and industrial agency, and property and facilities management.

the Vice Chairman and CEO of the Vigers Group in 1993.

Wong established the ACN Group, a business consulting

firm, where he has worked continuously and continues to serve as the Chairman and Managing Partner.

Wong received a bachelor’s

degree in arts from the PLA Institute of International Relations in Nanjing in 1983.

Wong was appointed to the position

of director because we believe we can benefit from his leadership skills and management experience.

our Board of Directors in 2008.

Wong joined the Vigers Group, a real estate company that provides services in

valuation, corporate property services, investment advisory services, general practice surveying, building surveying, commercial,

retail and industrial agency, and property and facilities management.

Wong became the Vice Chairman and CEO of the Vigers

Group in 1993.

Wong established the ACN Group, a business consulting firm, where he has worked continuously and

continues to serve as the Chairman and Managing Partner.

Wong received a bachelor’s degree in arts from the PLA

Institute of International Relations in Nanjing in 1983.

Wong has been chosen as a director because we believe we can

benefit from his leadership skills and management experience.

Hu joined our

Board of Directors in 2008.

From 1988 to 2003, Mr.

Hu served in a variety of positions at our No.

2 test-drill plant,

including technician of installation, assets equipment work, electrical installation, control room production dispatcher, Deputy

Chief Engineer of the Technology Battalion, and Deputy Director of Production.

From 2003 to 2005 he served as Head of the Integrated

Battalion and he is currently the Head of the Transport Battalion, Senior Electric Engineer.

Hu graduated as an automated

professional from the China University of Petroleum in 1988.

Hu has been chosen as a director because we believe his years

of experience and knowledge gained while working at our No.

2 test-drill plant will prove beneficial to the guidance of the

Prior to joining our Board, from 1988 to 2003, Mr.

Hu served in a variety of positions

at Sinopec No.

2 test-drill plant, including technician of installation, assets equipment work, electrical installation,

control room production dispatcher, Deputy Chief Engineer of the Technology Battalion, and Deputy Director of Production.

From 2003 to 2005 he served as Head of the Integrated Battalion and he is currently the Head of the Transport Battalion,

Senior Electric Engineer.

Hu graduated as an automated professional from the China University of Petroleum in 1988.

Hu was appointed to the position of a director because we believe his years of experience and knowledge gained while

working at our No.

2 test-drill plant will prove beneficial to the guidance of the Company.

Zhao Shudong .

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Board of Directors in 2013.

Before retiring in 2006, Mr.

Zhao spent over 30 years working in the oilfield industry.

Zhao spent over 30 years working in the oilfield industry prior to retiring from full-time work

From 1970 to 1976, Mr.

Zhao worked as a technician in the Daqing oilfield.

From 1976 to 1982, Mr.

Zhao served as the vice director of the Hubei

Oilfield Generalized Geologic Technical Research Institute.

Zhao then spent 11 years as a director and section chief at the

Scientific and Technological Development Department of the Huabei Petroleum Administrative Bureau.

He was subsequently appointed

Chief Geologist of the bureau, a position he held from 1993 to 1999.

Zhao served as the

vice director of the Hubei Oilfield Generalized Geologic Technical Research Institute.

Zhao then spent 11 years as a director

and section chief at the Scientific and Technological Development Department of the Huabei Petroleum Administrative Bureau.

was subsequently appointed Chief Geologist of the bureau, a position he held from 1993 to 1999.

From 1999 to 2006, Mr.

Zhao served as the General Manager

of the Huabei Oilfield Company of CNPC.

Zhao studied at the Northeast Petroleum Institute from 1965 to 1970.

Zhao has been

chosen as a director nominee because of his extensive experience in the oilfield industry.

as the General Manager of the Huabei Oilfield Company of CNPC.

Zhao studied at the Northeast Petroleum Institute from 1965

Zhao has been chosen as a director nominee because of his extensive experience in the oilfield industry.

Employment Agreements

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may be terminated (1) if the employee gives written notice of his or her intention to resign, (2) the employee is absent

from three consecutive meetings of the Board of Directors, without special leave of absence from the other members of the Board

of Directors, and the Board of Directors passes a resolution that such employee has vacated his office, or (3) the death,

bankruptcy or mental incapacity of the employee.

The employment agreement for our Chief Financial Officer provides for a one-year

term, currently expiring on March 12, 2015.

Such employment agreement may be terminated if the employee gives thirty days’

written notice of her intention to resign, or if the Board of Directors determines she can no longer perform her duties as Chief

Financial Officer and provides her with thirty days’

from three consecutive meetings of the Board of Directors, without having obtained special leave of absence from the other members

of the Board of Directors, and the Board of Directors passes a resolution that such employee has vacated his office, or (3) the

death, bankruptcy or mental incapacity of the employee.

The employment agreement for our Chief Financial Officer provides for

a one-year term, currently expiring on March 12, 2016.

Such employment agreement may be terminated if the employee gives

thirty days’

written notice of her intention to resign, or if the Board of Directors determines she can no longer perform

her duties as Chief Financial Officer and provides her with thirty days’

written notice of termination.

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Share Option Pool

In connection with our initial public offering,

we established a pool for share options for the Domestic Companies’

and our employees.

This pool contains options to purchase

up to 790,362 of our ordinary shares.

The options will vest at a rate of 20% per year for five years and have an exercise

price of the market price of our shares on the date the options are granted.

To date, we issued 564,000 options out of our employee

share option pool.

connection with our initial public offering, we established a pool for share options for the Domestic Companies’

This pool contains options to purchase up to 790,362 of our ordinary shares.

The options will vest at a rate of 20% per

year for five years and have an exercise price of the market price of our shares on the date the options are granted.

we issued 564,000 options out of our employee share option pool.

We initially granted 293,000 options in 2009.

We held a shareholder meeting in December 2010 and announced the

resignation of three directors, and as a result, 100,000 options were forfeited and went back to the pool.

In 2012, we granted

an additional 415,000 options and 44,000 options were forfeited and went back to the pool.

In the three months ended June 30, 2014,

148,400 vested options for 2012 grants were exercised.

We held a shareholder

meeting in December 2010 and announced the resignation of three directors, and as a result, 100,000 options were forfeited and

went back in the pool.

In 2012, we granted an additional 415,000 options and 44,000 options were forfeited and went back to the

In the three months ended June 30, 2014, and 148,400 vested options from 2012 grants were exercised.

granted options to purchase 400,000 ordinary shares to its employees and non-employee director on January 31, 2015 under the 2015

As of June 30, 2015, we have 815,600 options outstanding.

On July 11, 2015, the Company’s

board approved to reserve 800,000 shares and options under the 2015 option plan.

As of September 25, 2015, no option is granted.

Executive Stock Grants

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($688,782), based on the stock closing price of $2.99 at December 13, 2013.

These restricted shares will be vested over three years

with one third of the shares vesting every year from the grant date.

As of June 30, 2014, we have 230,362 non-vested restricted

stocks outstanding.

These restricted shares will be vested over three

years with one third of the shares vesting every year from the grant date.

Of these 76,787 restricted shares vested and were issued

Yin Shenping and Mr.

Chen Guangqiang on March 24, 2015.

On January 31, 2015, the Company granted

150,000 restricted shares to Mr.

Yin Shenping and 150,000 restricted shares to Mr.

Chen Guangqiang at an aggregate value of ¥3,038,558($495,000),

based on the stock closing price of $1.65 at January 31, 2015.

These restricted shares will vest over three years with one third

of the shares vesting every year from the grant date.

As of June 30, 2015, we have 453,575 non-vested restricted stocks outstanding.

Board of Directors and Board Committees

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as nearly equal in number as the then total number of directors permits.

Class I directors shall face re-election at our annual

general meeting of shareholders during fiscal year ending June 30, 2016 and every three years thereafter.

Class II directors shall

face re-election at our annual general meeting of shareholders during fiscal year ending June 30, 2014 and every three years thereafter.

Class III directors shall face re-election at our annual general meeting of shareholders during fiscal year ending June 30, 2015

and every three years thereafter.

Class I directors faced re-election at our annual general

meeting of shareholders in 2014 and every three years thereafter.

Class II directors

face re-election at our annual general meeting of shareholders in 2015 and every three years thereafter.

Class III directors face

re-election at our annual general meeting of shareholders in 2016 and every three years thereafter.

If the number of directors changes, any

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by making it difficult to replace members of our Board of Directors.

A director may vote in respect of any contract

or transaction in which he is interested, provided, however, that the nature of the interest of any director in any such contract

or transaction shall be disclosed by him at or prior to its consideration and any vote on that matter.

A general notice or disclosure

to the directors or otherwise contained in the minutes of a meeting or a written resolution of the directors or any committee thereof

that a director is a shareholder of any specified firm or company and is to be regarded as interested in any transaction with such

firm or company shall be sufficient disclosure and after such general notice it shall not be necessary to give special notice relating

to any particular transaction.

A director may vote in respect of any

contract or transaction in which he is interested, provided, however, that the nature of the interest of any director in any such

contract or transaction shall be disclosed by him at or prior to the Board of Directors consideration and any vote on that matter.

A general notice or disclosure to the directors, or otherwise contained in the minutes of a meeting or a written resolution of

the directors or any committee thereof that a director is a shareholder of any specified firm or company and is to be regarded

as interested in any transaction with such firm or company shall be sufficient disclosure and after such general notice it shall

not be necessary to give special notice relating to any particular transaction.

There are no membership qualifications

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Hu are our independent directors.

Yin Shenping currently holds both

the positions of Chief Executive Officer and Chairman of the Board.

These two positions have not been consolidated into one position;

Yin Shenping currently holds

both the positions of Chief Executive Officer and Chairman of the Board.

These two positions have not been consolidated into one

Yin simply holds both positions at this time.

We do not have a lead independent director because of the foregoing reason

and also because we believe our independent directors are encouraged to freely voice their opinions on a relatively small company

We believe this leadership structure is appropriate because we are a smaller reporting company that recently became listed

on a public exchange;

We do not have a lead independent director because of the foregoing

reason and also because we believe our independent directors are encouraged to freely voice their opinions on a relatively small

company board.

We believe this leadership structure is appropriate because we are a smaller reporting company that recently became

listed on a public exchange;

as such we deem it appropriate to be able to benefit from the guidance of Mr.

Yin as both our principal

executive officer and Chairman of the Board.

Yin as both our

principal executive officer and Chairman of the Board.

Our Board of Directors plays a significant

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in risk oversight matters.

Currently, three committees have been established

under the board:

Currently, three committees have been

established under the board:

the audit committee, the compensation committee and the nominating committee.

All of these committees consist

solely of independent directors.

All of these committees

consist solely of independent directors.

The audit committee is responsible for

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including the appointment, compensation and oversight of the work of our independent auditors.

Wong qualifies as the audit

committee financial expert and serves as the chair of the audit committee.

Wong qualifies as the

audit committee financial expert and serves as the chair of the audit committee.

The compensation committee of the board

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Hu serves as the chair of the compensation committee.

The nominating committee of the board of

directors is responsible for the assessment of the performance of the board, considering and making recommendations to the board

with respect to the nominations or elections of directors and other governance issues.

The nominating committee considers diversity

of opinion and experience when nominating directors.

The nominating committee of the board

of directors is responsible for the assessment of the performance of the board, considering and making recommendations to the

board with respect to the nominations or elections of directors and other governance issues.

The nominating committee considers

diversity of opinion and experience when nominating directors.

Zhao serves as the chair of the nominating committee.

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This duty has four essential elements:

a duty to act in good faith in the best interests of the Company;

a duty not to personally profit from opportunities that arise from the office of director;

a duty to act in good faith in the

best interests of the Company;

a duty not to personally profit from

opportunities that arise from the office of director;

a duty to avoid conflicts of interest;

a duty to exercise powers for the purpose for which such powers were intended.

a duty to exercise powers for the

purpose for which such powers were intended.

In general, Cayman Islands law imposes

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to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its shareholders.

addition, under Delaware law, a party challenging the propriety of a decision of the directors bears the burden of rebutting the

applicability of the presumptions afforded to directors by the “business judgment rule.”

If the presumption is not

rebutted, the business judgment rule protects the directors and their decisions, and their business judgments will not be second

If the presumption is rebutted, the directors bear the burden of demonstrating the entire fairness of the relevant transaction.

In addition, under Delaware law, a party challenging the propriety of a decision of the directors bears the burden of rebutting

the applicability of the presumptions afforded to directors by the “business judgment rule.”

If the presumption is

not rebutted, the business judgment rule protects the directors and their decisions, and their business judgments will not be

second guessed.

If the presumption is rebutted, the directors bear the burden of demonstrating the entire fairness of the relevant

Notwithstanding the foregoing, Delaware courts subject directors’

conduct to enhanced scrutiny in respect of defensive actions

taken in response to a threat to corporate control and approval of a transaction resulting in a sale of control of the corporation.

conduct to enhanced scrutiny in respect of

defensive actions taken in response to a threat to corporate control and approval of a transaction resulting in a sale of control

of the corporation.

Limitation of Director and Officer Liability

Pursuant to our Memorandum and Articles

of Association, every director or officer and the personal representatives of the same shall be indemnified and held harmless out

of our assets and funds against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or

sustained by him or her in or about the conduct of our business or affairs or in the execution or discharge of his or her duties,

powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses

or liabilities incurred by him in defending (whether successfully or otherwise) any civil proceedings concerning us or our affairs

in any court whether in the Cayman Islands or elsewhere.

Pursuant to our Amended Memorandum and

Articles of Association, every director or officer and the personal representatives of the same shall be indemnified and held

harmless out of our assets and funds against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities

incurred or sustained by him or her in or about the conduct of our business or affairs or in the execution or discharge of his

or her duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs,

expenses, losses or liabilities incurred by him in defending (whether successfully or otherwise) any civil proceedings concerning

us or our affairs in any court whether in the Cayman Islands or elsewhere.

No such director or officer will be liable for:

(a) the acts, receipts,

neglects, defaults or omissions of any other such Director or officer or agent;

or (b) any loss on account of defect of title

to any of our properties;

or (c) account of the insufficiency of any security in or upon which any of our money shall be invested;

acts, receipts, neglects, defaults or omissions of any other such Director or officer or agent;

or (b) any loss on account

of defect of title to any of our properties;

or (c) account of the insufficiency of any security in or upon which any of

our money shall be invested;

or (d) any loss incurred through any bank, broker or other similar person;

or (e) any loss occasioned by any negligence,

default, breach of duty, breach of trust, error of judgment or oversight on his or her part;

or (f) any loss, damage or misfortune

whatsoever which may happen in or arise from the execution or discharge of the duties, powers authorities, or discretions of his

or her office or in relation thereto, unless the same shall happen through his or her own dishonesty, gross negligence or willful

or (e) any loss

occasioned by any negligence, default, breach of duty, breach of trust, error of judgment or oversight on his or her part;

(f) any loss, damage or misfortune whatsoever which may happen in or arise from the execution or discharge of the duties,

powers authorities, or discretions of his or her office or in relation thereto, unless the same shall happen through his or her

own dishonesty, gross negligence or willful default.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our

directors or executive officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors,

To the best of our knowledge, none of

our directors or executive officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors,

or has been a party to any judicial or administrative proceeding during the past ten years that resulted in a judgment, decree

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except for matters that were dismissed without sanction or settlement.

Pursuant to Rule 3a12-3 of

Securities Exchange Act of 1934, as amended, directors, officers and beneficial owners of more than ten percent of the

Company’s equity services are exempted from Section 16 filings as the Company qualifies as a foreign private issuer.

Regulation S-K Item 406:

The Company has adopted a Code of Ethics

and has filed a copy of the Code of Ethics with the Commission.

Regulation S-K Item 407(c)(3):

Regulation S-K Item 407(d)(4) and (5):

The Board of Directors maintains a majority

4 unchanged sentences

Wong qualifies as the audit committee financial expert.

Company’s audit committee charter has been filed as Exhibit 99.1 to the Company’s annual report on Form 10-K

for the year ended June 30, 2009 and is available on the Company’s website (www.recon.cn).

Executive Compensation.

Company’s audit committee charter has been filed as Exhibit 99.1 to the Company’s annual report on Form

10-K for the year ended June 30, 2009 and is available on the Company’s website (www.recon.cn).

Compensation.

The following table shows the annual compensation

8 unchanged sentences

Principal Executive Officer

$ 129,239 (1,2)

Chief Financial Officer

Chen Guangqiang,

Chief Technology Officer

On December 13, 2013, the Company granted 95,181 restricted shares to Mr.

$ 169,105 (1,2)

(1) On December 13, 2013, the Company granted 95,181 restricted

shares to Mr.

Yin Shenping and 135,181 restricted shares to Mr.

Guangqiang at an aggregate value of ¥4,207,496 ($688,782), based on the stock closing price of $2.99 at December 13, 2013.

These restricted shares will be vested over three years with one third of the shares vesting every year from the grant date.

Chen Guangqiang at an aggregate value of ¥4,207,496 ($688,782),

based on the stock closing price of $2.99 at December 13, 2013.

These restricted shares will be vested over three years with one

third of the shares vesting every year from the grant date.

(2) On January 31, 2015, the Company granted 150,000 restricted

shares to Mr.

Yin Shenping and 150,000 restricted shares to Mr.

Chen Guangqiang at an aggregate value of ¥3,038,558($495,000),

based on the stock closing price of $1.65 at January 31, 2015.

These restricted shares will vest over three years with one third

of the shares vesting every year from the grant date.

On January 31, 2015, the Company granted 32,000 options to Ms.

Liu Jia , which

options vest over a period of three years, one third of which vest on January 31 of each year beginning in 2016.

The grant date

fair value of such options was $1.65.

Director Compensation

11 unchanged sentences

Summary Director Compensation Table

Fees earned or

Compensation for our directors Yin Shenping and Chen Guangqiang, who also serve as executive officers, is fully disclosed in the executive compensation table.

None of the directors received any ordinary share awards, nonqualified deferred compensation earnings or non-equity incentive plan compensation in fiscal year 2014.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Compensation for our directors Yin Shenping and Chen Guangqiang,

who also serve as executive officers, is fully disclosed in the executive compensation table.

None of the directors received any ordinary share awards, nonqualified

deferred compensation earnings or non-equity incentive plan compensation in fiscal year 2015.

On January 31, 2015, the Company granted 25,000 options to Mr.

Wong , which options vest over a period of three years, one third of which vest on January 31 of each year beginning in 2016.

The grant date fair value of such options was $1.65.

On January 31, 2015, the Company granted 25,000 options to Mr.

Hu Jijun , which options vest over a period of three years, one third of which vest on January 31 of each year beginning in 2016.

The grant date fair value of such options was $1.65.

On January 31, 2015, the Company granted 18,000 options to Zhao Shudong , which

options vest over a period of three years, one third of which vest on January 31 of each year beginning in 2016.

date fair value of such options was $1.65.

Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Plan category

12 unchanged sentences

column (a)) (c)

Equity compensation plans approved by

Equity compensation

plans approved by

security holders

Security Ownership of Certain Beneficial

Owners and Management

PRINCIPAL SHAREHOLDERS

The following table sets forth information

6 unchanged sentences

is based on 5,695,146 Shares, which consists of 5,427,946 Shares outstanding as of September 25, 2015 and 267,200 shares subject

to options that were exercisable within 60 days after September 23, 2014.

to options that are exercisable within 60 days after September 25, 2015.

Such shares subject to options are deemed to be outstanding

for the purposes of computing the percentage ownership of the individual holding such shares, but are not deemed outstanding for

purposes of computing the percentage of any other person shown in the table.

purposes of computing the percentage for any other person shown in the table.

Our major shareholders do not possess voting rights

that differ from our other shareholders.

Unless otherwise noted, the address of each of the below shareholders is c/o Recon Technology

Ltd, Room 1902, Building C, King Long International Mansion, 9 Fulin Road, Beijing 100107 China.

Directors and Officers

Yin Shenping (1)

Chen Guangqiang (2)

Nelson Wong (5)

The address of each of the below shareholders is c/o Recon Technology Ltd, Room 1902,

Building C, King Long International Mansion, 9 Fulin Road, Beijing 100107 China.

Guangqiang (2)

Zhao Shudong (5)

Directors and Officers as a Group (six persons)

Chen Yiquan (7)

(1) Includes 60,000 options to purchase ordinary shares that are exercisable

within 60 days after September 28, 2014.

Does not include 48,000 options that were not exercisable within 60 days after September

(2) Includes 50,000 options to purchase ordinary shares that are exercisable

within 60 days after September 28, 2014 and 16,000 options granted to Chen Guangqiang’s wife that are exercisable within

60 days after September 28, 2014.

Does not include 30,000 options that are not exercisable within 60 days after September 28, 2014.

(3) Includes 50,000 options to purchase ordinary shares that are exercisable

within 60 days after September 28, 2014.

(4) Includes 15,000 options to purchase ordinary shares that were exercisable

within 60 days after September 28, 2014.

(5) Includes 18,000 options to purchase ordinary shares that were exercisable

within 60 days after September 28, 2014.

(6) [Includes 6,000 options to purchase ordinary shares that were exercisable

within 60 days after September 28, 2014.]

(7) Includes 458,525 Shares held by Chen Yiquan and 375,156 Shares held

According to a jointly filed Schedule 13D dated December 27, 2010 (Accession No.

0001144204-10-068264), Chen Yiquan

and Liu Hui share beneficial ownership of and have joint voting and dispositive power over the aggregate 833,681 Shares.

has not been able to get in touch with either Chen Yiquan or Liu Hui and therefore the information listed here in is solely based

on the Schedule 13D filed on December 27, 2010.

Directors and Executive Officers as a Group (seven members)

76,000 options to purchase ordinary shares that were exercisable within 60 days after September 25, 2015.

Does not include

32,000 options that were not exercisable within 60 days after September 25, 2015.

Includes 60,000

options to purchase ordinary shares that were exercisable within 60 days after September 25, 2014.

Does not include 20,000

options that were not exercisable within 60 days after September 25, 2015.

Includes 15,000

options to purchase ordinary shares that were exercisable within 60 days after September 25, 2015.

Includes 18,000

options to purchase ordinary shares that were exercisable within 60 days after September 25, 2015.

Includes 9,000

options that were not exercisable within 60 days after September 25, 2015.

Includes 50,000

options to purchase ordinary shares that were exercisable within 60 days after September 25, 2015.

Includes 458,525

Shares held by Chen Yiquan and 375,156 Shares held by Liu Hui.

According to a jointly filed Schedule 13D dated December 27,

2010 (Accession No.

0001144204-10-068264), Chen Yiquan and Liu Hui share beneficial ownership of and have joint voting and

dispositive power over the aggregate 833,681 Shares.

Less than 1%.

Certain Relationships and Related Transactions, and Director Independence.

Relationships and Related Transactions, and Director Independence.

Transactions with Related Persons

we do not have access certification to Jidong Oilfield, Nanjing Recon, one of our Domestic Companies, conducted transactions with

Jidong Oilfield through Beijing Yabeinuoda Technology Development Co.

(“Yabeinuoda”), which has access certification

to the oilfield and wherein Mr.

Yin is the legal representative.

Yin does not have any equity interest in this company

In the year ended June 30, 2014, Nanjing Recon sold approximately

¥4.6 million ($0.8 million) of goods and services to Yabeinuoda.

During the same period, Nanjing Recon has accounts

receivables from Yabeinuoda in the amount of approximately ¥

23.5 million ($3.8 million)

as of June 30, 2014, and approximately ¥1.1 million was received as of September 28, 2014.

Below is a summary of trade accounts

receivable with related parties as of June 30, 2013 and 2014, respectively.

June 30, 2013

June 30, 2014

we do not have access certification to Jidong Oilfield, Nanjing Recon, one of our Domestic Companies, conducted

transactions with Jidong Oilfield through Beijing Yabei Nuoda Science and Technology Co.

(“Yabei Nuoda”), which has access certification to the oilfield and wherein one of the Founders, Mr.

Shenping, was the legal representative of before December 2013 and Chairman as of September 30, 2014.

On October 30, 2014, Mr.

Yin resigned from the chairman position

and at that point Yabei Nuoda was no longer a related party of the Company after October 30, 2014.

Yin does not have any

equity interest in this company currently.

Below is a summary of

trade accounts receivable with related parties as of June 30, 2014 and 2015, respectively.

Related Party

1 unchanged sentence

Beijing Langchen Construction Company

Xiamen Huangsheng Hitek Computer Network Co.

Xiamen Hengda Hitek Computer Network Co.

Allowance for doubtful accounts

Xiamen Huangsheng Hitek Computer Network Co.Ltd.

Xiamen Henda Hitek Computer Network Co.

Total - related-parties, net

Related Party

June 30, 2013

June 30, 2014

Non-current portion

2 unchanged sentences

Total - related-parties, net

Based on the repayment agreement signed on August 27, 2014,

the outstanding balance will be collected in four years with each installment of ¥4,015,644.

Below is a summary of purchase advances

to related parties as of June 30, 2014 and 2015, respectively

June 30, 2013

June 30, 2014

Related Party

Xiamen Huasheng Hitek Computer Network Co.

Current ending balance of the purchase advances to Xiamen Huasheng

Hitek is expect to be settled within one year,

Xiamen Huangsheng Hitek Computer Network Co.

addition, included in the Company’s other receivables as of June 30, 2015 were amounts “due from ENI”

ceased to be a VIE of the Company on December 16, 2010.

In January 2012, ENI agreed to repay the loan on a determined payment schedule,

and interest is accrued during the period at an annual rate of 4%.

In accordance with the payment schedule, the principal plus

accrued interest will be repaid over three years on a quarterly basis.

The first four payments are set at 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 and June 2013.

30, 2013, ENI proposed to extend the payment period and resigned an agreement with the Company.

According to the new agreement,

the remaining balance of this loan would be repaid over four years with installments of ¥

699,147 each quarter including

The payments required after one year are RMB 5,353,104 ($869,688).

Accordingly, the current and non-current

portion of the amount due from ENI at June 30, 2014 is determined to be RMB 2,523,145 ($409,921) and RMB 5,353,104 ($869,688),

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

In January 2012, ENI agreed to repay the loan on a determined payment

schedule, and interest is accrued during the period at an annual rate of 4%.

In accordance with the payment schedule, the principal

plus accrued interest was to be repaid over 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

RMB 4.8 million.

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

The Company 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

According to the new arrangement, the remaining balance of this loan will be repaid over four years with quarterly

installments of ¥699,147.

The Company has continued to receive the payments under the agreement.

Accordingly, the current and

non-current portion of the amount due from ENI at June 30, 2015 is RMB 2,624,071 ($430,967) and RMB 2,729,033 ($448,205),

respectively.

3 unchanged sentences

and 2015, respectively.

June 30, 2013

June 30, 2014

Short-term borrowings due to related parties:

Due-on-demand borrowings from Founders, no interest

Short-term borrowing from a Founder, 6.6% annual interest,due on

December 25, 2014

Short-term borrowing from a Founder's family member, 6% annual

interest, matures and paid off by December 21, 2013

Short-term borrowing from a Founder's family member, 6% annual

interest, matures and paid off by November 29, 2013

Short-term borrowings from Xiamen Huasheng Haitian Computer

Short-term borrowings

due to related parties:

Short-term borrowing from a Founder, 6.6% annual interest, due on December 25, 2014

Short-term borrowing from a Founder, 7.2% annual interest, due on October 20, 2015

Short-term borrowing from a Founder, 6.0% annual interest, due on October 2, 2015

Short-term borrowing from a Founder, 6.16% annual interest, due on October 12, 2015

Short-term borrowing from a Founder's family member, no interest, due on various dates.

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

Ltd., no interest, due on November 14, 2015

Short-term borrowings from management, 6% annual interest,

matures and paid off by December 7, 2013

Total short-term borrowings due to related parties

The Company also paid ¥366,000 and ¥230,000

($37,367) in advance for rental to Mr.

Chen and his family member as of June 30, 2013 and June 30, 2014.

Other than as described herein, no transactions

5 unchanged sentences

Zhao are our independent directors.

Principal Accountant Fees and Services.

Accountant Fees and Services.

Friedman LLP was appointed by the Company

1 unchanged sentence

Fees Paid To Independent Registered Public Accounting

During fiscal years 2013 and 2014, Friedman

LLP’s audit fees were $180,000and $185,000, respectively.

During fiscal years 2014 and 2015,

Friedman LLP’s audit fees were $185,000 and $190,000, respectively.

Audit-Related Fees

The Company has not paid Friedman LLP for

audit-related services in fiscal years 2013 and 2014.

The Company has not paid Friedman LLP for

tax services in fiscal years 2013 and 2014.

The Company has not paid Friedman LLP

for audit-related services in fiscal years 2014 and 2015.

The Company has not paid Friedman LLP

for tax services in fiscal years 2014 and 2015.

All Other Fees

The Company has not paid Friedman LLP for

any other services in fiscal years 2013 and 2014.

The Company has not paid Friedman LLP

for any other services in fiscal years 2014 and 2015.

Audit Committee Pre-Approval Policies

2 unchanged sentences

rendered by Friedman LLP have been so approved.

Exhibits, Financial Statement Schedules.

following documents are filed herewith:

Amended and Restated Articles of

Association of the Registrant (1)

Financial Statement Schedules.

The following documents are filed herewith:

Amended and Restated Articles

of Association of the Registrant (1)

Amended and Restated Memorandum

19 unchanged sentences

Ltd., Li Hongqi and Beijing BHD Petroleum Technology Co.,

Translation of Equity

Interest Pledge Agreement between Recon Technology (Jining) Co., Ltd., Chen Guangqiang and Beijing BHD Petroleum Technology

Translation of Equity Interest Pledge

Agreement between Recon Technology (Jining) Co., Ltd., Yin Shenping and Beijing BHD Petroleum Technology Co., Ltd.

Translation of Equity Interest Pledge

Agreement between Recon Technology (Jining) Co., Ltd., Li Hongqi and Beijing BHD Petroleum Technology Co., Ltd.

Translation of Exclusive Technical

Consulting Service Agreement between Recon Technology (Jining) Co., Ltd.

Translation of Equity Interest

Pledge Agreement between Recon Technology (Jining) Co., Ltd., Chen Guangqiang and Beijing BHD Petroleum Technology Co., Ltd.

Translation of Equity Interest

Pledge Agreement between Recon Technology (Jining) Co., Ltd., Yin Shenping and Beijing BHD Petroleum Technology Co., Ltd.

Translation of Equity Interest Pledge Agreement

between Recon Technology (Jining) Co., Ltd., Li Hongqi and Beijing BHD Petroleum Technology Co., Ltd.

Translation of Exclusive Technical Consulting Service Agreement

between Recon Technology (Jining) Co., Ltd.

and Jining ENI Energy Technology Co., Ltd.

Translation of Power of Attorney

for rights of Chen Guangqiang in Jining ENI Energy Technology Co., Ltd.

Translation of Power of Attorney

for rights of Yin Shenping in Jining ENI Energy Technology Co., Ltd.

Translation of Power of Attorney

for rights of Li Hongqi in Jining ENI Energy Technology Co., Ltd.

Translation of Exclusive Equity

Interest Purchase Agreement between Recon Technology (Jining) Co.

Ltd., Chen Guangqiang and Jining ENI Energy Technology Co.,

Translation of Exclusive Equity

Interest Purchase Agreement between Recon Technology (Jining) Co.

Ltd., Yin Shenping and Jining ENI Energy Technology Co.,

Translation of Exclusive Equity

Interest Purchase Agreement between Recon Technology (Jining) Co.

Translation of Power of Attorney for rights of Chen Guangqiang

in Jining ENI Energy Technology Co., Ltd.

Translation of Power of Attorney for rights of Yin Shenping in

Jining ENI Energy Technology Co., Ltd.

Translation of Power of Attorney for rights of Li Hongqi in Jining

ENI Energy Technology Co., Ltd.

Translation of Exclusive Equity Interest Purchase Agreement between

Recon Technology (Jining) Co.

Ltd., Chen Guangqiang and Jining ENI Energy Technology Co., Ltd.

Translation of Exclusive Equity Interest Purchase Agreement between

Recon Technology (Jining) Co.

Ltd., Yin Shenping and Jining ENI Energy Technology Co., Ltd.

Translation of Exclusive Equity Interest Purchase Agreement between

Recon Technology (Jining) Co.

Ltd., Li Hongqi and Jining ENI Energy Technology Co., Ltd.

Translation of Equity Interest Pledge

Agreement between Recon Technology (Jining) Co., Ltd., Chen Guangqiang and Jining ENI Energy Technology Co., Ltd.

Translation of Equity Interest Pledge

Agreement between Recon Technology (Jining) Co., Ltd., Yin Shenping and Jining ENI Energy Technology Co., Ltd.

Translation of Equity Interest Pledge

Agreement between Recon Technology (Jining) Co., Ltd., Li Hongqi and Jining ENI Energy Technology Co., Ltd.

Translation of Exclusive Technical

Consulting Service Agreement between Recon Technology (Jining) Co., Ltd.

Translation of Equity Interest Pledge Agreement between Recon

Technology (Jining) Co., Ltd., Chen Guangqiang and Jining ENI Energy Technology Co., Ltd.

Translation of Equity Interest Pledge Agreement between Recon

Technology (Jining) Co., Ltd., Yin Shenping and Jining ENI Energy Technology Co., Ltd.

Translation of Equity Interest Pledge Agreement between Recon

Technology (Jining) Co., Ltd., Li Hongqi and Jining ENI Energy Technology Co., Ltd.

Translation of Exclusive Technical Consulting Service Agreement

between Recon Technology (Jining) Co., Ltd.

and Nanjing Recon Technology Co., Ltd.

Translation of Power of Attorney

for rights of Chen Guangqiang in Nanjing Recon Technology Co., Ltd.

Translation of Power of Attorney

for rights of Yin Shenping in Nanjing Recon Technology Co., Ltd.

Translation of Power of Attorney

for rights of Li Hongqi in Nanjing Recon Technology Co., Ltd.

Translation of Exclusive Equity

Interest Purchase Agreement between Recon Technology (Jining) Co.

Ltd., Chen Guangqiang and Nanjing Recon Technology Co.,

Translation of Exclusive Equity

Interest Purchase Agreement between Recon Technology (Jining) Co.

Translation of Power of Attorney for rights of Chen Guangqiang

in Nanjing Recon Technology Co., Ltd.

Translation of Power of Attorney for rights of Yin Shenping in

Nanjing Recon Technology Co., Ltd.

Translation of Power of Attorney for rights of Li Hongqi in Nanjing

Recon Technology Co., Ltd.

Translation of Exclusive Equity Interest Purchase Agreement between

Recon Technology (Jining) Co.

Ltd., Chen Guangqiang and Nanjing Recon Technology Co., Ltd.

Translation of Exclusive Equity Interest Purchase Agreement between

Recon Technology (Jining) Co.

Ltd., Yin Shenping and Nanjing Recon Technology Co., Ltd.

Translation of Exclusive

Equity Interest Purchase Agreement between Recon Technology (Jining) Co.

Ltd., Li Hongqi and Nanjing Recon Technology Co.,

Translation of Equity Interest Pledge

Agreement between Recon Technology (Jining) Co., Ltd., Chen Guangqiang and Nanjing Recon Technology Co., Ltd.

Translation of Equity Interest Pledge

Agreement between Recon Technology (Jining) Co., Ltd., Yin Shenping and Nanjing Recon Technology

Translation of Equity Interest Pledge

Agreement between Recon Technology (Jining) Co., Ltd., Li Hongqi and Nanjing Recon Technology

Translation of Exclusive Equity Interest Purchase Agreement between

Recon Technology (Jining) Co.

Ltd., Li Hongqi and Nanjing Recon Technology Co., Ltd.

Translation of Equity Interest Pledge Agreement between Recon

Technology (Jining) Co., Ltd., Chen Guangqiang and Nanjing Recon Technology Co., Ltd.

Translation of Equity Interest Pledge Agreement between Recon

Technology (Jining) Co., Ltd., Yin Shenping and Nanjing Recon Technology Co., Ltd.

Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co., Ltd., Li Hongqi and Nanjing Recon Technology Co., Ltd.

Form of Warrant Exchange Agreement dated February 13, 2015 (incorporated by reference to Exhibit 10.36

of the Company’s Form 10-Q for the quarter ended December 31 2014, filed on February 13, 2015).

Form of Warrant Exchange Agreement dated February 15, 2015 (incorporated by reference to Exhibit 10.27

to the Company’s quarterly report on Form 10-Q for the period ended March 31, 2015).

Equity Distribution Agreement between Maxim Group LLC and Recon Technology, Ltd dated May 13, 2015 ( incorporated

by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed on May 14, 2015).

Code of Ethics of the Company.

List of subsidiaries of the Company.

Certifications pursuant to Rule

13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley

Certifications pursuant to Rule

13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley

Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certifications pursuant to 18 U.S.C.

7 unchanged sentences

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document XBRL

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

(Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement

or report for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section

18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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

Incorporated by reference to the Company’s Annual Report of Form 10-K for the fiscal year ended June 30, 2009, filed with the SEC on September 28, 2009.

*XBRL (Extensible Business Reporting Language) information

is furnished and not filed herewith, is not a part of a registration statement or report for purposes of sections 11 or 12 of

the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934,

as amended, and otherwise is not subject to liability under these sections.

Incorporated by reference to the Company’s Registration

Statement on Form S-1, Registration No.

Incorporated by reference to the Company’s Annual Report

of Form 10-K for the fiscal year ended June 30, 2009, filed with the SEC on September 28, 2009.

Filed herewith.

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

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,

September 25, 2015

Chief Financial Officer

(Principal Financial and Accounting Officer)

(Principal Financial and Accounting

Pursuant to the requirements of the Exchange

3 unchanged sentences

(Principal Executive Officer)

Chen Guangqiang

Chief Technology Officer and Director

8 unchanged sentences

Consolidated Balance Sheets as of June 30, 2014 and 2015

Consolidated Statements of Operations and Comprehensive Income for the years ended June 30, 2013 and 2014

Consolidated Statements of Operations and Comprehensive Income (loss) for the years ended June 30, 2014

Consolidated Statements of Equity for the years ended June 30, 2014 and 2015

8 unchanged sentences

(the “Company”) as of June 30, 2015 and 2014, and the related consolidated

statements of operations and comprehensive income, equity, and cash flows for each of the two years in the period ended June 30,

statements of operations and comprehensive income (loss), equity, and cash flows for each of the two years in the period ended

June 30, 2015.

Recon Technology, Ltd.’s management is responsible for these consolidated financial statements.

22 unchanged sentences

September 25, 2015

RECON TECHNOLOGY, LTD

CONSOLIDATED BALANCE SHEETS

As of June 30,

TECHNOLOGY, LTD

Balance Sheets

Current assets

2 unchanged sentences

Trade accounts receivable, net

Trade accounts receivable- related parties, net

Trade accounts receivable- related parties,

Inventories, net

3 unchanged sentences

Purchase advances- related parties

Tax recoverable

Prepaid expenses

3 unchanged sentences

Property and equipment, net

Long-term trade accounts receivable - related parties, net

Long-term investment

Long-term other receivable

Long-term trade accounts receivable,

Long-term trade accounts receivable

- related parties, net

Long-term other

LIABILITIES AND EQUITY

11 unchanged sentences

Short-term borrowings - related parties

Short-term borrowings- other

Deferred tax liability

Warrants liability

Total current liabilities

Commitments and Contingency

Total current

Common stock, ($ 0.0185 U.S.

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

3,951,811 and 4,717,336 shares issued and outstanding as of June 30, 2013

and June 30, 2014, respectively)

par value, 25,000,000 and 100,000,000 shares authorized as of June 30, 2014 and June 30, 2015, respectively);

4,717,336 and

5,427,946 shares issued and outstanding as of June 30, 2014 and June 30, 2015, respectively)

Additional paid-in capital

1 unchanged sentence

Unappropriated retained earnings

Accumulated other comprehensive loss

(23,024,935 )

Accumulated other

comprehensive loss

Total shareholders’

Non-controlling interest

Total Liabilities and Equity

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

RECON TECHNOLOGY, LTD

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Total Liabilities

The accompanying notes are an integral

part of these consolidated financial statements.

TECHNOLOGY, LTD

Statements of operations and Comprehensive INCOME (LOSS)

For the years ended

5 unchanged sentences

Hardware and software - related parties

Total cost of revenues

Provision for slow moving inventories

Total cost of

Selling and distribution expenses

2 unchanged sentences

Operating expenses

Income (loss) from operations

lncome (loss)

from operations

(35,516,233 )

Other income (expenses)

4 unchanged sentences

Change in fair value of warrants liability

Gain (loss) from foreign currency exchange

Loss from foreign currency exchange

Loss from warrants redemption

Other expense

Income before income tax

Provision for income tax

Income (loss) before income tax

(34,008,463 )

Provision (benefit) for income tax

Net Income (loss)

(31,456,388 )

Net income attributable to non-controlling interest

Net Income attributable to Recon Technology, Ltd

Comprehensive income

Net Income (loss)

attributable to Recon Technology, Ltd

(31,456,388 )

$ (5,166,272 )

Comprehensive income (loss)

Net income (loss)

(31,456,388 )

Foreign currency translation adjustment

Comprehensive income

Comprehensive income attributable to non-controlling interest

Comprehensive income attributable to Recon Technology, Ltd

Earnings per common share - basic

Earnings per common share - diluted

Comprehensive income (loss)

(31,494,664 )

Comprehensive income (loss) attributable to non-controlling interest

Comprehensive

income (loss) attributable to Recon Technology, Ltd

(31,492,682 )

$ (5,172,232 )

Earnings (loss)

per common share - basic

Earnings (loss)

per common share - diluted

Weighted - average shares -basic

Weighted - average shares -diluted

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

RECON TECHNOLOGY, LTD

CONSOLIDATED STATEMENTS OF EQUITY

Recon Technology, LTD

Ordinary Shares

Additional Paid-in Capital

Statutory Reserves

Retained Earnings

Accumulated Other Comprehensive loss

The accompanying notes are an integral

part of these consolidated financial statements.

TECHNOLOGY, LTD

Statements of equity

Comprehensive

Shareholders'

Non-controlling Interest

Number of Shares

Non-controlling

Balance, July 1, 2013

Capital contribution in VIE

Stock issuance

Restricted shares issued for services

Stock options exercised

Stock based payment

Net income for the year

Net income (loss) for the year

Appropriation of statutory reserves

1 unchanged sentence

Balance, June 30, 2014

Capital contribution in VIE

Stock issuance

Restricted shares issued for services

Stock options exercised

Restricted shares issued to redeem warrants

Stock based payment

Net income for the year

Appropriation of statutory reserves

Net income (loss) for the year

(31,456,388 )

Foreign currency translation adjustment

Balance, June 30, 2015

accompanying notes are an integral part of these consolidated financial statements.

RECON TECHNOLOGY, LTD

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended June 30,

(23,024,935 )

(82,268,844 )

The accompanying notes are an integral

part of these consolidated financial statements.

TECHNOLOGY, LTD

Statements of Cash flows

For the years ended

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by

(used in) operating activities:

Loss from disposal of equipment

Provision/(recovery of) for doubtful accounts

Net income (loss)

(31,456,388 )

$ (5,166,272 )

Adjustments to reconcile net income

(loss) to net cash used in operating activities:

Loss (Gain) from disposal of equipment

Provision for doubtful accounts

Provision for slow moving inventories

Share based compensation

Loss from investment

Deferred tax provision/(benefit)

Deferred tax benefit (provision)

Change in fair value of warrants liability

Restricked shares issued for services

Restricted shares issued for services

Loss from warrants redemption

Income tax benefit

Changes in operating assets and liabilities:

5 unchanged sentences

Purchase advance, net

Purchase advance-related party, net

Tax recoverable

10 unchanged sentences

Taxes payable

Net cash provided by (used in) operating activities

Net cash used

in operating activities

(15,102,337 )

Cash flows from investing activities:

Purchase of property and equipment

Long-term investment

Proceeds from disposal of equipment

Net cash used in investing activities

Net cash used

in investing activities

Cash flows from financing activities:

3 unchanged sentences

(10,000,000 )

Proceeds from short-term borrowing

Proceeds from borrowings-related parties

Proceeds from short-term borrowings-related parties

Repayment of short-term borrowings

2 unchanged sentences

Proceeds from stock options exercised

Capital contribution in VIE

Net cash provided by (used in) financing activities

(13,796,718 )

Effect of exchange rate fluctuation on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Net cash provided

by financing activities

Effect of exchange

rate fluctuation on cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash

equivalents at beginning of year

Cash and cash

equivalents at end of year

Supplemental cash flow information

Interest paid

Income taxes paid

Cash paid during

the period for interest

Cash paid during

the period for taxes

Non-cash investing and financing activities

Issurance of common stock to prepay professional services

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

RECON TECHNOLOGY,

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND NATURE OF OPERATIONS

Issuance of common stock to prepay professional services

Issuance of common stock to redeem warrants

The accompanying notes are an integral

part of these consolidated financial statements.

TECHNOLOGY, LTD

to the consolidated financial statements

AND NATURE OF OPERATIONS

Organization –

Recon Technology, Ltd

(the “Company”) was incorporated under the laws of the Cayman Islands on August 21, 2007 by Mr.

Recon Technology, Ltd (the

“Company”) was incorporated under the laws of the Cayman Islands on August 21, 2007 by Mr.

Yin Shenping, Mr.

Chen Guangqiang and Mr.

Li Hongqi (the “Founders”) as a company with limited liability.

The Company provides

oilfield specialized equipment, automation systems, tools, chemicals and field services to petroleum companies mainly 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 a wholly owned

subsidiary, Jining Recon Technology Ltd.

Guangqiang and Mr.

Li Hongqi (the “Founders”) as a limited liability company.

The Company provides specialized

oilfield equipment, automation systems, tools, chemicals and field services to petroleum companies mainly 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.

On November 19, 2011, the Company established one

wholly owned subsidiary, Recon Investment Ltd.

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

or conduct any operations.

On November 19, 2010 ,

Recon-CI established one wholly owned subsidiary, Recon Investment Ltd.

(“Recon-IN”) under the laws of HK.

Other than the equity interest

in Recon-IN, The Company does not own any assets or conduct any operations.

the equity interest in Recon-IN, Recon-CI does not own any assets or conduct any operations.

On January 18, 2014, Recon-IN established

one wholly owned subsidiary, Recon Hengda Technology (Beijing) Co., Ltd.

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

than the equity interest in Recon-BJ, Recon-IN does not own any assets or conduct any operations.

The Company conducts its business through the following PRC

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

& service industry:

Beijing BHD Petroleum Technology Co., Ltd.

legal entities that are consolidated as variable interest entities

(“VIEs”) and operate in the Chinese oilfield equipment & service industry:

Beijing BHD Petroleum

Technology Co., Ltd.

(“BHD”), and

1 unchanged sentence

(“Nanjing Recon”).

On January 29, 2015, the Company increased its authorized shares

from 25,000,000 to 100,000,000 ordinary shares.

Chinese laws and regulations currently do not prohibit or restrict

1 unchanged sentence

However, Chinese laws and regulations do prevent direct foreign investment in certain

On January 1, 2008, to protect the Company’s shareholders from possible future foreign ownership restrictions,

However, on January 1, 2008, to protect the Company’s shareholders from possible future foreign ownership restrictions,

the Founders, who also held the controlling interest of BHD and Nanjing Recon, reorganized the corporate and shareholding structure

6 unchanged sentences

resulted in Recon-JN being the primary beneficiary of these Companies.

Recon-JN also entered into Share Pledge Agreements with the Founders, who pledged all their equity interest

in these entities to Recon-JN.

The Share Pledge Agreements, which were entered into by each Founder, pledged each of the Founders’

equity interest in BHD and Nanjing Recon as a guarantee for the service payment under the Exclusive

Technical consulting Services Agreement (the “Services Agreement”).

Recon-JN also entered into Share Pledge Agreements with the

Founders, who pledged all their equity interest in these entities to Recon-JN.

The Share Pledge Agreements, which were entered

into by each Founder, pledged each of the Founders’

equity interest in BHD and Nanjing Recon as a guarantee for the service

payment under the Service Agreement.

The Service Agreement, entered into on January 1, 2008, between

7 unchanged sentences

because the Company was the primary beneficiary of the VIEs.

Management makes ongoing reassessment of whether Recon-JN is the

primary beneficiary of BHD and Nanjing Recon.

Management makes ongoing reassessment of whether Recon-JN is

the primary beneficiary of BHD and Nanjing Recon.

RECON TECHNOLOGY,

to the consolidated financial statements

On August 28, 2000, a Founder of the Company purchased a controlling

5 unchanged sentences

ownership interest of BHD.

BHD is combined with the Company through the date of the exclusive agreements, and has been consolidated

BHD was combined with the Company through the date of the exclusive agreements, and has been consolidated

following January 1, 2008, the date of the agreements based on ASC Topic 810.

15 unchanged sentences

The Company engaged in

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:

(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

1 unchanged sentence

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™

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 the 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.

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

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.

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

6 unchanged sentences

between the Company and its subsidiaries and VIEs have been eliminated upon consolidation.

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.

The Company performs 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 the Company continues to be the primary

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.

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.

The Company performs 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 the Company continues

to be the primary beneficiary.

RECON TECHNOLOGY,

to the consolidated financial statements

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;

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

Currency Translation - The Company’s functional

12 unchanged sentences

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 accounting estimates reflected in the Company’s consolidated financial statements

include revenue recognition, allowance for doubtful accounts, deferred taxes, warrants liability, the useful lives of property

and equipment and the fair value of share- 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 US

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 accounting estimates reflected in the Company’s consolidated financial

statements include revenue recognition, allowance for doubtful accounts, allowance for inventory, deferred taxes, warrants liabilities,

the useful lives of property and equipment and the fair value of share- 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 U.S.

GAAP accounting standards regarding fair value of financial instruments and related fair value measurements define fair value,

establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use

of unobservable inputs when measuring fair value.

establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the

use of unobservable inputs when measuring fair value.

The three levels of inputs are defined

12 unchanged sentences

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

investment is measured at fair value on a non-recurring basis at June 30, 2014, since the Company recorded an impairment loss during

investment is carried measured at fair value on a non-recurring basis at June 30, 2014, since the Company recorded an impairment

loss during 2014;

the fair value was determined to be zero using level 1 inputs.

2 unchanged sentences

was determined using the Black-Scholes Model, as Level 2 inputs (See Note 13).

RECON TECHNOLOGY,

to the consolidated financial statements

Cash and Cash Equivalents - Cash and cash equivalents

16 unchanged sentences

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

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

a first-in-first-out basis for Nanjing Recon.

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 (“VAT”) on purchases in the PRC amounting to ¥575,650 at June 30, 2013.

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

Property and Equipment - Property and equipment

11 unchanged sentences

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.”

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,”

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.

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

1 unchanged sentence

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 June 30, 2014.

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.

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

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, 2014 and 2015.

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.

RECON TECHNOLOGY,

to the consolidated financial statements

Revenue from hardware sales is generally recognized when the

9 unchanged sentences

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.

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

3 unchanged sentences

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.

Grants related to research and development

projects are recognized as subsidy income in the unaudited condensed consolidated statements of operations when received.

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

Share-Based Compensation - The Company accounts

31 unchanged sentences

For the year ended June 30, 2014, there were 64,207 restricted shares included in the weighted average dilutive shares calculation.

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 years ended

June 30, 2013 and 2014.

Reclassification –

Certain accounts

from prior period have been reclassified to confirm to the current period presentation.

Recently Issued Accounting Pronouncements - In

April 2014, the FASB issued ASU 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of

an Entity,”

(“ASU 2014-08”).

Under ASU 2014-08, only disposals representing a strategic shift in operations that

have a major effect on the Company’s operations and financial results should be presented as discontinued operations.

Additionally,

ASU 2014-08 requires expanded disclosures about discontinued operations that will provide financial statement users with more information

about the assets, liabilities, income, and expenses of discontinued operations.

The amendments in ASU 2014-08 are effective for

fiscal years, and interim periods within those years, beginning after December 15, 2014.

However, ASU 2014-08 should not be

applied to a component that is classified as held for sale before the effective date even if the component is disposed of after

the effective date.

Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been

reported in financial statements previously issued.

The effects of ASU 2014-08 will depend on any future disposals by the Company.

In May 2014, the FASB issued ASU 2014-09, “Revenue from

Contracts with Customers,”

(“ASU 2014-09”).

Previous revenue recognition guidance in U.S.

GAAP comprised broad

revenue recognition concepts together with numerous revenue requirements for particular industries or transactions, which sometimes

resulted in different accounting for economically similar transactions.

The core principle of the guidance is that an entity should

recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration

to which the entity expects to be entitled in exchange for those goods or services.

To achieve this core principal, five steps

are required to be applied.

In addition, ASU 2014-09 expands and enhances disclosure requirements which require disclosing sufficient

information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash

flows arising from contracts with customers.

This includes both qualitative and quantitative information.

The amendments in ASU

2014-09 are retrospectively effective for annual reporting periods beginning after December 15, 2016, including interim periods

within that reporting period.

Early application is not permitted.

Management is evaluating the effect, if any, the Company’s

financial positions and results of operations.

The effect from options, restricted shares and warrants would have been anti-dilutive due to the fact that we incurred a net loss

during the year ended June 30, 2015.

RECON TECHNOLOGY,

to the consolidated financial statements

Recently Issued Accounting Pronouncements -

In June 2015, the Financial Accounting Standards Board (“FASB”)

issued Accounting Standards Updates (“ASU”) 2015-10, “Technical Corrections and Improvements.”

corrects for differences between original guidance and the Accounting Standards Codification (“ASC”) and makes minor

improvements affecting several topics.

We are currently in the process of evaluating this standard, but do not expect its adoption

to have a material impact on our consolidated financial statements.

The amendments in this Update will apply to all reporting

entities within the scope of the affected accounting guidance.

In July 2015, the Financial Accounting Standards Board (“FASB”)

issued Accounting Standards Updates (“ASU”) 2015-11, “Inventory (Topic 330) - Simplifying the Measurement of

Inventory.”

The amendments in this Update do not apply to inventory that is measured using last-in, first-out (LIFO) or

the retail inventory method.

The amendments apply to all other inventory, which includes inventory that is measured using first-in,

first-out (FIFO) or average cost.

An entity should measure inventory within the scope of this Update at the lower of cost and

net realizable value.

Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably

predictable costs of completion, disposal, and transportation.

The amendments in this Update more closely align the measurement

of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS).

For public business

entities, The amendments in this Update are effective for fiscal years beginning after December 15, 2016, including interim periods

within those fiscal years.

We are currently in the process of evaluating this standard, but do not expect its adoption to have

a material impact on our consolidated financial statements.

TRADE ACCOUNTS RECEIVABLE, NET

6 unchanged sentences

Total - third- party, net

RECON TECHNOLOGY,

to the consolidated financial statements

Related Party

Beijing Yabei Nuoda Science and Technology Co.

Beijing Langchen Construction Company **

Xiamen Huangsheng Hitek Computer Network Co.Ltd.

Xiamen Henda Hitek Computer Network Co.

Total - related-parties, net

June 30, 2014

1 unchanged sentence

June 30, 2015

Related Party

Related Party –

Beijing Yabei Nuoda Science and Technology Co.

Beijing Langchen Construction Company

Xiamen Huangsheng Hitek Computer Network Co.

Xiamen Hengda Hitek Computer Network Co.

Allowance for doubtful accounts

Total - related-parties, net

Related Party

Total - long-term trade accounts receivable, net

June 30, 2014

1 unchanged sentence

June 30, 2015

Non-current portion

Third Party –

Beijing Yabei Nuoda Science and Technology Co.

Allowance for doubtful accounts

Total - related-parties, net

One of the Founders, Mr.

Yin Shen ping, was

the legal representative of Beijing Yabei Nuoda Science and Technology Co.

Ltd (“Yabei Nuoda”) before December 2013.

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

The receivable from Yabei Nuoda was generated primarily

Total - long-term trade accounts receivable, net

The receivable from Beijing Yabei Nuoda Science and Technology Co.

(“Yabei Nuoda”) was recognized primarily

from the sale of automation system and services based on written contracts.

Based on the repayment agreement signed on August

27, 2014, the outstanding balance will be collected in four years with each installment of ¥4,015,644.

Based on the repayment agreement signed on

September 2, 2015, the outstanding balance will be collected in two years beginning 2017, with each installment

of ¥2,467,036.

of the Founders, Mr.

Yin Shenping, was the legal representative of Yabei Nuoda before December 2013 and Chairman as of September 30, 2014.

On October 30, 2014, Mr.

Yin resigned from the chairman

position and thus Yabei Nuoda is not a related party of the Company after October 30, 2014.

Yin no longer has any equity interest

in this company.

** This receivable was settled between August 10, 2015 and

September 1, 2015.

***On August 13, 2015, all of the outstanding balance was offset

against the related payable (See Note 9) and the remaining balance was repaid.

OTHER RECEIVABLES, NET

9 unchanged sentences

Allowance for doubtful accounts

RECON TECHNOLOGY,

to the consolidated financial statements

June 30, 2014

3 unchanged sentences

Due from ENI (A)

(A) After ENI ceased to be a VIE of the Company, ENI in January 2012

agreed to repay the loan on a payment schedule, with interest accrued 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.

ENI ceased to be a VIE of the Company, ENI in January 2012 agreed to repay the loan on

a payment schedule, with interest accrued 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 RMB 4.8 million.

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

The Company received

the payments on time quarterly since March, 2013.The payments after one year are RMB5,353,104 ($ 869,688).

(B) Loans to third-parties

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

In March, June, September and December

of 2012, the Company received RMB 4.8 million.

Starting March 2013, installments for

each quarter would be ¥1,777,653.

The Company 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 Company has continued to receive the payments under the agreement.

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

These loans are due on demand bearing no interest.

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.

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

11 unchanged sentences

Beijing Langchen Construction Company **

Other-travel advances

Other - business advances

a related party after October 31, 2014.

was repaid on August 6, 2015.

PURCHASE ADVANCES

2 unchanged sentences

Purchase advances consisted of the following:

RECON TECHNOLOGY,

to the consolidated financial statements

June 30, 2014

9 unchanged sentences

Xiamen Huangsheng Hitek Computer Network Co.

One of the Founders of the Company and his family member collectively own 57% of Xiamen Huasheng Haitian

Computer Network Co.

Current ending balance of the purchase advances

to Xiamen Huasheng Hitek is expect to be settled within one year.

One of the Founders of the Company and his family member collectively

own 57% of Xiamen Huasheng Haitian Computer Network Co.

Between August 10, 2015 and September 1, 2015, materials purchased

have been delivered to the Company and this balance was settled in full.

Inventories consisted of the following:

June 30, 2013

June 30, 2014

Small component parts

Raw materials

Work in process

Purchased goods and raw materials

Work in process and goods on site

Finished goods

Total inventories

was no inventory obsolescence reserve at June 30, 2013 and 2014.

Allowance for slow moving inventory

Total inventories, net

for slow moving inventory was ¥0 and ¥7,700,836 ($1,264,754) at June 30, 2014 and 2015, respectively.

PROPERTY AND EQUIPMENT, NET

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Property and equipment, net

RECON TECHNOLOGY,

to the consolidated financial statements

Depreciation expense was ¥595,647 and ¥526,046 ($86,396)

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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.

However, based on the available information and discussion

with the management team of Avalon, we believe Avalon’s operating loss would not be recovered in the foreseeable future,

therefore, the Company believes the investment is impaired and recorded an investment loss of ¥

( $250,000) for the year ended June 30, 2014.

Avalon engages

in the acquisition, exploration and development of oil and gas producing properties in the US.

Based on the available information

and discussion with the management team of Avalon, the Company believe Avalon’s operating loss would not be recovered in

the foreseeable future, therefore, the Company considered the investment to be impaired and recorded an investment loss of ¥1,535,250

($250,000) for the year ended June 30, 2014 to write its investment down to zero.

On April 13, 2015, BHD reached an agreement to invest RMB 80

million in Huanghua Heng Da Xiang Tong Manufacture Ltd (“HHBHD”) for a 54.05% ownership interest.

BHD’s board

of Directors and shareholders approved the transaction to invest in HHBHD.

The investment is to enhance cooperation with HHBHD

and protect BHD’s design copyright.

BHD does not have control or significant impact or voting rights over HHBHD.

report, no payment was made to HHBHD for this investment.

OTHER PAYABLES

Other payables consisted of the following:

June 30, 2013

June 30, 2014

Consulting services

Due to ENI (A)

Distributors and employees

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

June 30, 2013

June 30, 2014

Related Party

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Expenses paid by the major shareholders

Due to family member of an owner of Recon

Due to family member of one owner on behalf on Recon

Due to management staff on behalf of Recon

(1) Primarily includes an advance from Yabei Nuoda for RMB 61,301

and an advance from Xiamen Hengda Haitek for RMB 2,499,347 to supplement the Company’s working capital.

The advance is payable

on demand and non-interest bearing.

an advance from Xiamen Henda Haitek for RMB 2,499,347 to supplement the Company’s

working capital.

The advance is payable on demand and non-interest bearing.

was off set with accounts receivable on September 3, 2015 (See Note 3).

RECON TECHNOLOGY,

to the consolidated financial statements

TAXES PAYABLE

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consisted of the following:

June 30, 2013

June 30, 2014

Business tax payable

Enterprise income tax payable

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Short-term bank loans consisted of the following:

June 30, 2013

June 30, 2014

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

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

Beijing Bank,5.75% annual interest, matured and paid off by February 25, 2014

Beijing Bank, 5.75 % annual interest, matured and paid off by February 27, 2014

Beijing Bank, 5.75 % annual interest, paid off on April 9, 2014

Beijing Bank, 5.75 % annual interest, paid off on April 16, 2014

Beijing Bank,5.75 % annual interest, matured and paid off by March 11, 2014

Industrial and commercial bank, floating interest rate at 5.6%, due on December 24, 2014

Industrial and commercial bank, floating interest rate at 6.0%, due on June 24, 2015

Industrial and commercial bank, floating interest rate at 5.6%, paid off on December

Industrial and commercial bank, floating interest rate at 6.0%, due

on June 19, 2016

Total short-term bank loans

expense for the short-term bank loan was ¥624,096 and ¥516,567 ($84,839) for the years ended June 30, 2014 and

2015, respectively.

SHORT-TERM BORROWINGS DUE

TO RELATED PARTIES

Short-term borrowings

Short-term borrowings are generally extended upon maturity and

consisted of the following:

June 30, 2013

June 30, 2014

Short-term borrowings due to non-related parties:

Short-term borrowing, 6% annual interest, matured and paid off by November 9, 2013

Short-term borrowings with no interest, beginning April 22, 2013, paid

off on January 31, 2014

Total short-term borrowings due to non-related parties

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

parties was ¥47,360 and ¥1,525 ($248) for the year ended June 30, 2013 and 2014, respectively.

June 30, 2013

June 30, 2014

Short-term borrowings due to related parties:

Due-on-demand borrowings from Founders, no interest

Short-term borrowing from a Founder's family member, 6% annual interest, matured and paid off by December 21, 2013

Short-term borrowing from a Founder, 6.6% annual interest, due on

November 25, 2014.

Short-term borrowing from a Founder's family member, 6% annual interest, matured and paid off by November 29, 2013

Short-term borrowings from Xiamen Huasheng Haitian Computer

Ltd., no interest, due on November 14, 2014

Short-term borrowings from management, 6% annual interest, matured and

paid off by December 7, 2013

due to related parties:

Short-term borrowing from a Founder, 6.6% annual interest, due on December 25, 2014

Short-term borrowing from a Founder, 7.2% annual interest, due on October 20, 2015(B)

Short-term borrowing from a Founder, 6.0% annual interest, due on October 2, 2015

Short-term borrowing from a Founder, 6.16% annual interest, due on October 12, 2015

Short-term borrowing from a Founder's family member, no interest, due on various dates.(A)

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

Ltd., no interest, due on November 14, 2015 (C)

Total short-term borrowings due to related parties

RECON TECHNOLOGY,

to the consolidated financial statements

August 20, 2015, ¥

1,500,000 ( $246,354 )

was paid back to the Founder’s family member.

August 19, 2015, the Company repaid ¥1,800,000 ($295,625) of short-term borrowing

with an interest of ¥37,200 ($6,110).

August 31, 2015, this obligation was satisfied.

Interest expense for short-term borrowings due to related parties

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Company issued warrants to certain institutional investors and placement agent to purchase 218,600 ordinary shares (see details

On February 13, 2015, the Company redeemed 163,950 warrants

by issuing 204,938 ordinary shares (1.25 shares of ordinary shares to exchange one warrant) to institutional investors.

15, 2015, the Company redeemed the remaining 54,650 warrants by issuing 68,313 ordinary shares (1.25 shares of ordinary shares

to exchange one warrant) to institutional investors.

As a result, the Company recorded a loss on warrant redemption of ¥2,496,375

($409,995) for the year ended June 30, 2015.

According to ASC 815-40, if the strike price of the warrants

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These common stock purchase warrants do not trade in an active

securities market, and as such, their fair value is estimated by using the Cox-Ross-Rubinstein (CRR) Binomial Model using the following

securities market, and as such, their fair value is estimated by using the Cox-Ross-Rubinstein (CRR) Binomial Model using the

following assumptions:

Annual dividend yield

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dividend yield was based on the Company’s current and expected dividend policy.

RECON TECHNOLOGY,

to the consolidated financial statements

The following table sets forth by level within the fair value

hierarchy the warrants liability that was accounted at fair value on a recurring basis.

Fair Value Measurement at

Carrying Value at

June 30, 2014

Fair Value Measurement

Carrying Value

Warrants liability

The following

is a reconciliation of the beginning and ending balance of the warrants liability measured at fair value on a recurring basis for

the year ended June 30, 2014:

Change of warrants liability

Beginning balance –

July 1 2012 and June 30, 2013

Initial measurement of warrants liability on November 29, 2013

Change of warrant liability from November 29, 2013 to June 30, 2014

following is a reconciliation of the beginning and ending balance of the warrant liability measured at fair value on a recurring

basis for the year ended June 30, 2015:

of warrants liability

Beginning balance - June 30, 2014

Warrant redemption

Change of warrant liability

Ending balance -June 30, 2015

SHAREHOLDERS’

Registered direct offering –

November 25, 2013, the Company entered into a securities purchase agreement (“Purchase Agreement”) with certain

institutional investors for the sale of 546,500 ordinary shares in a registered direct offering at the price of $4.81 per

ordinary share (amended to $4.30 per ordinary share on November 29, 2013).

The net cash proceeds received from the stock

offering, after deducting underwriter commission and other associated fees, were ¥12,132,882 (approximately $2.0

In addition, warrants to purchase 163,950 ordinary shares in the aggregate were issued to the investors.

warrants are exercisable immediately at an exercise price of $6.01 per ordinary share (amended to $5.38 per ordinary share

on November 29, 2013) and expire three years from the date of issuance.

The Company also issued warrants to purchase 54,650

ordinary shares to the placement agent (“Placement Agent Warrant”).

The Placement Agent Warrants are on

substantially the same terms as the warrants issued pursuant to the Purchase Agreement, except that these warrants are not

exercisable for a period of six months and will expire three years from the initial issuance date.

Stock offering –

On November 25, 2013,

the Company entered into a securities purchase agreement (“Purchase Agreement”) with certain institutional investors

for the sale of 546,500 ordinary shares in a registered direct offering at the price of $4.81 per ordinary share (amended to $4.30

per ordinary share on November 29, 2013).

The net cash proceeds received from the stock offering, after deducting underwriter

commission and other associated fees, were ¥12,132,882 (approximately $2.0 million).

In addition, warrants to purchase 163,950

ordinary shares in the aggregate were issued to the investors.

The warrants were exercisable at an exercise price of $6.01 per

ordinary share (amended to $5.38 per ordinary share on November 29, 2013) and expire three years from the date of issuance.

Company also issued warrants to purchase 54,650 ordinary shares to the placement agent (“Placement Agent Warrant”).

The Placement Agent Warrants are on substantially the same terms as the warrants issued pursuant to the Purchase Agreement, except

that these warrants are not exercisable for a period of six months and will expire three years from the initial issuance date.

In addition to the above warrants issued to the placement agent,

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the years ended June 30, 2014 and 2015.

In June 2015, the Company entered into a securities purchase

agreement with certain institutional investors for the sale of 297,197 ordinary shares in a registered direct offering (4,000

shares at an average of $1.64 on June 9, 2015;

288,105 shares at an average of $2.12 on June 10, 2015;

5,092 shares at an average

of $2.00 on June 11, 2015).

The net cash proceeds received from the stock offering, after deducting ¥1,294,922 ($212,673)

underwriter commission and other associated fees, were ¥2,392,027 (approximately $0.6 million).

Appropriated Retained Earnings

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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

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

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($681,403), respectively.

1, 2014, shareholders of BHD and a representative of Recon-JN approved the resolution to increase the registered capital of BHD

from RMB 12 million to RMB 15 million.

BHD has provided the documents to the registration authority for approval.

in the registered capital will be paid for by Mr.

Chen Guangqiang, CTO of the Company, and the funds should be in place no

later than December 31, 2014.

RECON TECHNOLOGY,

to the 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, 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 20% vesting on each anniversary to the grant

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 assumptions:

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 assumptions:

Stock price at grant date

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of PHLX Oil Service Sector index.

** The life of options represents the period

the option is expected to be outstanding.

** The life of options represents the

period the option is expected to be outstanding.

*** The risk-free interest rate is based

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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.

**** Forfeiture rate is the estimated

percentage of options forfeited by employees by leaving or being terminated before vesting.

The Company recognizes compensation cost

3 unchanged sentences

Options Plan –

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

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 20% vesting each anniversary of the grant date.

The options will expire

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

The 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 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 ($1.49) per share.

2015 Options Plan –

The Company granted options

to purchase 400,000 ordinary shares to its employees and non-employee director on January 31, 2015.

The options have an excise

price of $1.65, which was equal to the share price of the Company’s ordinary shares at January 31, 2015, and will vest equally

over a period of three years, with the one third vesting on January 31, 2016.

The options expire ten years after the date of grant,

on January 31, 2025.

The Company recognizes compensation cost for awards with graded

2 unchanged sentences

was ¥10.13 ($1.65) per share.

RECON TECHNOLOGY,

to the consolidated financial statements

The following is a summary of the stock options activity:

Stock Options

Weighted Average Exercise Price Per Share

Outstanding as of July 1, 2012 and June 30, 2013

Exercised (1)

Weighted Average Exercise Price Per

Outstanding as of June 30, 2014

(1) On April 22, 2014, the Chief Executive Office and Chief Technology

Officer of the Company exercised their stock options to purchased 52,000 shares of the Company’s common stock for RMB 948,559

The transaction was completed on May 13, 2014.

On June 30, 2014, other employees exercised their stock options to purchased

96,400 shares of the Company’s common stock for RMB 1,756,349 ($285,344).

Outstanding as of June 30, 2015

following is a summary of the status of options outstanding and exercisable at June 30, 2015:

1 unchanged sentence

Exercisable Options

Average Exercise Price

Average Remaining Contractual life

Average Exercise Price

Average Remaining Contractual life

Average Exercise

Restricted Shares

For the year ended June 30, 2015, the Company has granted restricted

shares of common stock to senior management and consultants as follows:

On September 30 2013, the Company granted 30,000 restricted

shares to a consulting firm for consulting services.

The total value amounted to ¥407,972 ($66,420), based on the stock closing

price of $2.21 at September 30, 2013.

On May 7, 2014, the Company granted 40,625 restricted shares

to a consulting firm for consulting services.

The total value amounted to ¥1,002,362 ($162,906), based on the stock closing

price of $4.01 at May 7, 2014.

On December 13, 2013, the Company granted

95,181 restricted shares to Mr.

On July 19, 2014, the Company granted 50,000 restricted

shares to a non-affiliate as compensation for certain consulting service.

The fair value of the restricted shares was

$190,000 based on the closing stock price $3.8 at July 18, 2014.

On January 29, 2015, 10,000 of those restricted shares were

canceled based on the agreement with the consultant.

On July 19, 2014, the Company decided to cancel 40,625 restricted

shares, which was issued to Expert Asia Investment Ltd.

on May 8, 2014, as the services were not provided pursuant to the agreement

it had with the Company.

On December 13, 2013, the Company granted 95,181 restricted

shares to Mr.

Yin Shenping and 135,181 restricted shares to Mr.

1 unchanged sentence

based on the stock closing price of $2.99 at December 13, 2013.

These restricted shares will vest over three years

with one third of the shares vesting every year from the grant date.

Share-based compensation expense recorded for restricted shares

granted to the Company’s officers were ¥771,549 ($125,639) for the year ended June 30, 2014.

Total unrecognized share-based

compensation expense for these shares as of June 30, 2014 was approximately ¥3.5 million ($0.6 million), which are expected

to be recognized over a weighted average period of approximately 2.46 years.

These restricted shares will vest over three years with one third

of the shares vesting every year from the grant date.

The first one third was vested on December 13, 2014 and are now non-restricted.

On January 31, 2015, the Company granted 150,000 restricted

shares to Mr.

Yin Shenping and 150,000 restricted shares to Mr.

Chen Guangqiang at an aggregate value of ¥3,038,558($495,000),

based on the stock closing price of $1.65 at January 31, 2015.

These restricted shares will vest over three years with one third

of the shares vesting every year from the grant date.

RECON TECHNOLOGY,

to the consolidated financial statements

On February 2, 2015, the Company issued 24,000

restricted shares to Maxim Group LLC (“Maxim”) for certain consulting service.

The fair value of the restricted

shares was $43,440 based on the closing stock price $1.81 at February 2, 2015.

On April 8, 2015, the Company granted 40,000

restricted shares to a non-affiliate as compensation for certain consulting service.

The fair value of the restricted shares was

$62,400 based on the closing stock price $1.56 at April 8, 2015.

The Share-based compensation expense recorded

2 unchanged sentences

($0.8 million), which is expected to be recognized over a weighted average period of approximately 2.33 years.

The Share-based compensation expense recorded

for restricted shares granted were ¥771,549 and ¥1,828,790 ($298,344) for the years ended June 30, 2014 and 2015, respectively.

The total unrecognized share-based compensation expense for restricted shares granted as of June 30, 2015 was approximately ¥4.6

million ($0.8 million), which is expected to be recognized over a weighted average period of approximately 2.09 years.

Following is a summary of the restricted

1 unchanged sentence

Restricted stock grants

Nonvested as of June 30, 2013

Nonvested as of June 30, 2014

Non-vested as of June 30, 2014

Non-vested adjustment

Non-vested as of June 30, 2015

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

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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.

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

June 30, 2014

Allowance for doubtful receivables

Net operating loss carry forward

Total deferred income tax assets

RECON TECHNOLOGY,

to the consolidated financial statements

Deferred tax liability is comprised of the following:

June 30, 2013

June 30, 2014

Temporary difference - accounts payable

Income tax cost due to unpayable accounts

Total deferred income tax liability

8 unchanged sentences

Income tax calculated at statutory rates

$ (1,003,276 )

Nondeductible expenses (non-taxable income)

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Benefit of revenue exempted from enterprise income tax

Deferred income taxes provision

Deferred income tax (benefit)

Provision for income tax

Over-accrued tax of prior year

Provision (benefit) for income tax

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

For the years ended June 30,

Current income tax provision

Deferred income taxes provision (benefit)

the years ended June 30,

Current income taxes

Deferred income taxes provision

Provision for income tax

RECON TECHNOLOGY,

to the consolidated financial statements

NON-CONTROLLING INTEREST

1 unchanged sentence

interest consisted of the following:

As of June 30, 2013

of June 30, 2014

Paid-in capital

2 unchanged sentences

Total non-controlling interest

As of June 30, 2014

of June 30, 2015

Paid-in capital

3 unchanged sentences

CONCENTRATIONS

For the year ended June 30, 2013, the two largest customers,

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

represented approximately 27.88%, and 45.99%.

For the year ended June 30, 2014, the three largest customers, China National Petroleum

Corporation (“CNPC”), China Petroleum & Chemical Corporation Limited (“SINOPEC”), and Wuhan Xin Tian

Network System Integration Co., Ltd., represented approximately 42.79%,19.63%, and 13.36% of the Company’s revenue.

For the year ended June 30, 2013, one supplier, Hebei Huanghua

Xiangtong Technical Co.

Ltd, accounted for 21.17% of the company’s total purchases.

For the year ended June 30, 2014,

two major suppliers accounted for 32.46% of the company’s total purchases.

For the years ended June 30, 2014 and 2015, the two largest

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

represented approximately 42.79%, 43.09% and 19.63%, 6.82% of the Company’s revenue, respectively.

For the year ended June 30, 2014, two major suppliers accounted

for 32.46% of the company’s total purchases.

For the year ended June 30, 2015, one major supplier accounted for 18% of the

company’s total purchases.

COMMITMENTS AND CONTINGENCY

5 unchanged sentences

are as follows as of June 30, 2015:

Twelve months ended June 30,

Office lease payment

months ending June 30,

lease payment

RECON TECHNOLOGY,

to the consolidated financial statements

(b) Contingency

10 unchanged sentences

to related parties consisted of the following:

For the years ended June 30,

the years ended June 30,

Beijing Yabei Nuoda Science and Technology Co.

Beijing Langchen Construction Company

Xiamen Hengda Haitian computer network Inc

Xiamen Henda Haitian computer network Inc

Xiamen Huangsheng Hitek Computer Network Co.

Revenues from related parties

* Not a related party after October 31, 2014, (See Note 3).

Purchases from related parties –

from related parties consisted of the following:

For the years ended June 30,

Huanghua Xiang Tong Manufacture

Beijing Yabei Nuoda Science and Technology Co.

the years ended June 30,

Huanghua Heng Da Xiang Tong Manufacture Ltd

Xiamen Huangsheng Hitek Computer Network Co.

Nanjing Youkong Information Technology Co., Ltd

Purchase from related parties

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Chen Guangqiang’s family member started from July 1, 2014.

Short-term borrowings from related parties - The

Company borrowed ¥5,503,279 and ¥5,207,728 ($846,070) from the Founders, their family members and senior officers as of

June 30, 2013 and 2014, respectively.

Short-term borrowings from related parties -

The Company borrowed ¥5,207,728 and ¥16,916,905 ($2,778,364) from the Founders, their family members and senior officers

as of June 30, 2014 and 2015, respectively.

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

Trade accounts payable to related parties - The

Company owed ¥3,994,718 and ¥0 to one related party as of June 30, 2013 and June 30, 2014.

Prepaid expenses - related parties - The Company

paid ¥366,000 and ¥230,000 ($37,367) in advance for rental to Mr.

Chen and his family member as of June 30, 2013 and June

RECON TECHNOLOGY,

to the consolidated financial statements

Expenses paid by the owner on behalf of Recon - One

4 unchanged sentences

Variable Interest Entities

The Company reports its VIEs’

portion of consolidated

net income and stockholders’

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

Summary information regarding consolidated VIEs is as follows:

June 30, 2013

June 30, 2014

Current Assets

Cash and cash equivalents

Trade accounts receivable, net

Notes receivable

Trade accounts receivable, net

Purchase advances

8 unchanged sentences

statement of operations and comprehensive income for the year ended June 30, 2015 includes revenues of ¥51,512,900 ($8,460,271),

operating expenses of ¥21,211,185 ($3,446,059), other income of ¥1,087,482 ($176,677) and net profit of ¥11,332,021

($1,841,048).

EARNINGS PER SHARE

computation of basic and diluted earnings per common share is as follows:

For the years ended June 30,

Weighted average number of common shares outstanding used in computing basic earnings per share

operating expenses of ¥34,257,359 ($5,626,291), and net loss of ¥21,882,903 ($3,593,960).

RECON TECHNOLOGY,

to the consolidated financial statements

EARNINGS PER SHARE

Weighted average number of common shares outstanding used in computing basic earnings per share

Assumed exercise of stock options, stock awards and warrants

The computation of basic and diluted

earnings per common share is as follows:

the years ended June 30,

Weighted average number of common shares

outstanding used in computing basic earnings (loss) per share

Net income (loss) attributable to common stockholders

(31,456,388 )

$ (5,166,272 )

Earnings (loss) per share attributable to common stockholders

Weighted average number of common shares outstanding

Earnings per share

Note 23 SUBSEQUENT EVENTS

On July 19, 2014, the Company

granted 50,000 restricted shares to a non-affiliate as compensation for certain consulting service.

The fair value of the restricted

shares was $190,000.

On July 19, 2014, the Company decided

to cancel 40,625 restricted shares, which was issued to Expert Asia Investment Ltd.

on May 8, 2014, as the services were not

provided pursuant to the agreement it had with the Company.

used in computing basic earnings (loss) per share

Assumed exercise

of stock options, stock awards and warrants

Weighted average number of common shares outstanding

Net income (loss) attributable to common stockholders

(31,456,388 )

$ (5,166,272 )

Earnings (loss) per share attributable to common stockholders

SUBSEQUENT EVENTS

On May 13, 2015, the Company entered into an Equity Distribution

Agreement with Maxim Group LLC to create an at-the-market equity program (the “ATM Offering”) under which it may sell

up to $10,000,000 worth of its ordinary shares (the “Shares”) from time to time through Maxim Group LLC, as sales

Shares will be issued pursuant to a base prospectus dated August 6, 2013 included in a previously filed and effective Registration

Statement on Form S-3.

Through September 16, 2015, 313,071 shares are issued under this agreement, among which 15,874 shares were

issued after June 30, 2015.

On July 11, 2015, the Company’s board approved to reserve

800,000 shares under the 2015 incentive plan.

As of September 25, 2015, no option is granted.

On July 29, 2015, the Company entered into an acquisition memorandum

of understanding with a Qinghai oilfield service company.

Negotiations are still on going and no official document is signed as

of the date of this report.

August 19, 2015, the Company repaid ¥

1,800,000 ($295,625)

of short-term borrowing with an interest of ¥37,200 ($6,110) .

August 20, 2015, the Company repaid ¥

1,500,000 ($246,354)

of short-term borrowing.

On September 22, 2015, the Company entered into an

amendment to the Letter Agreement (the “Agreement”) with Maxim dated January 28, 2015, extending the term of the

Agreement for an additional six months, or until February 29, 2016.

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-K

Item 9A. Controls and Procedures