What changed in this filing

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Item 5. Other Information

2015-11-13 compared with 2015-05-15 · 751 added, 830 removed, 371 unchanged (81% of the section changed)

1 unchanged sentence

The following exhibits are filed herewith:

Amended and Restated Articles of Association

of the Registrant (1)

Amended and Restated Memorandum of

Association of the Registrant (1)

Amended and Restated Articles of Association of the Registrant (1)

Amended and Restated Memorandum of Association of the Registrant (1)

Specimen Share Certificate (1)

Translation of Exclusive Technical

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

Translation of Exclusive Technical Consulting Service Agreement between Recon Technology (Jining) Co., Ltd.

and Beijing BHD Petroleum Technology Co., Ltd.

Translation of Power of Attorney for

rights of Chen Guangqiang in Beijing BHD Petroleum Technology Co., Ltd.

Translation of Power of Attorney for

rights of Yin Shenping in Beijing BHD Petroleum Technology Co., Ltd.

Translation of Power of Attorney for

rights of Li Hongqi in Beijing BHD Petroleum Technology Co., Ltd.

Translation of Exclusive Equity Interest

Purchase Agreement between Recon Technology (Jining) Co.

Translation of Power of Attorney for rights of Chen Guangqiang in Beijing BHD Petroleum Technology Co., Ltd.

Translation of Power of Attorney for rights of Yin Shenping in Beijing BHD Petroleum Technology Co., Ltd.

Translation of Power of Attorney for rights of Li Hongqi in Beijing BHD Petroleum Technology Co., Ltd.

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

Ltd., Chen Guangqiang and Beijing BHD Petroleum Technology Co., Ltd.

Translation of Exclusive Equity Interest

Purchase Agreement between Recon Technology (Jining) Co.

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

Ltd., Yin Shenping and Beijing BHD Petroleum Technology Co., Ltd.

Translation of Exclusive Equity Interest

Purchase Agreement between Recon Technology (Jining) Co.

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

Ltd., Li Hongqi and Beijing BHD Petroleum Technology 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.

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., 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.

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.

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.

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.

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.

Employment Agreement between Recon

Technology (Jining) 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.

Employment Agreement between Recon Technology (Jining) Co., Ltd.

Yin Shenping (1)

Employment Agreement between Recon

Technology (Jining) Co., Ltd.

Employment Agreement between Recon Technology (Jining) Co., Ltd.

Chen Guangqiang (1)

Operating Agreement among Recon Technology

Employment Agreement between Recon Technology (Jining) Co., Ltd.

Li Hongqi (1)

Operating Agreement among Recon Technology (Jining) Co.

Ltd., Nanjing Recon Technology Co., Ltd.

2 unchanged sentences

Li Hongqi (1)

Operating Agreement among Recon Technology

Operating Agreement among Recon Technology (Jining) Co.

Ltd., Jining ENI Energy Technology Co., Ltd., and Mr.

2 unchanged sentences

Li Hongqi (1)

Operating Agreement among Recon Technology

Operating Agreement among Recon Technology (Jining) Co.

Ltd., Beijing BHD and Mr.

2 unchanged sentences

Li Hongqi (1)

Form of Warrant Exchange Agreement dated February 13, 2015 Incorporated by reference to

Exhibit 10.36 to the Company’s Form 10-Q for quarter ended December 31, 2014 filed on February 13, 2015

Placement Agent Warrant Exchange Agreement dated April 15, 2015 (3)

Subsidiaries of the Registrant (2)

1 unchanged sentence

Code of Business Conduct and Ethics (1)

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.

8 unchanged sentences

XBRL Taxonomy Extension Definition Linkbase Document (3)

Incorporated by reference to the Company’s Registration Statement

on Form S-1, Registration No.

Incorporated by reference to the Company’s Quarterly Report

on Form 10-Q/A, filed on January 31, 2012.

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

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

Filed herewith.

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,

In accordance with the requirements

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

RECON TECHNOLOGY, LTD

November 13, 2015

Chief Financial Officer

(Principal Financial and Accounting

(Principal Financial and Accounting Officer)

In accordance with the requirements of

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

RECON TECHNOLOGY,

RECON TECHNOLOGY, LTD

November 13, 2015

/s/ Yin Shen ping

Yin Shen ping

1 unchanged sentence

RECON TECHNOLOGY,

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited Condensed Consolidated Balance Sheets as of June 30, 2014 and March 31, 2015

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the nine and three months ended March 31, 2014 and 2015

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2014 and 2015

Notes to Unaudited Condensed Consolidated Financial Statements

RECON TECHNOLOGY,

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Unaudited Condensed

Consolidated Balance Sheets as of June 30, 2015 and September 30, 2015

Unaudited Condensed

Consolidated Statements of Operations and Comprehensive Loss for the three months ended September 30, 2014 and 2015

Unaudited Condensed

Consolidated Statements of Cash Flows for the three months ended September 30, 2014 and 2015

Notes to Unaudited

Condensed Consolidated Financial Statements

RECON TECHNOLOGY, LTD

CONSOLIDATED BALANCE SHEETS

As of June 30,

As of March 31,

As of Jun 30,

As of September 30,

Current assets

14 unchanged sentences

Long-term trade accounts receivable, net

Long-term trade accounts receivable - related parties, net

Long-term other receivable

3 unchanged sentences

Trade accounts payable

Trade accounts payable- related parties

Other payables

7 unchanged sentences

Deferred tax liability

Warrants liability

Total current liabilities

Commitments and Contingency

Common stock, ($ 0.0185 U.S.

dollar par value,25,000,000 and 100,000,000 shares authorized as of June 30,2014 and March 31, 2015, respectively;

4,717,336 and 5,022,436 shares issued and outstanding as of June 30, 2014 and March 31, 2015, respectively)

dollar par value, 100,000,000 shares authorized;

5,427,946 and 5,438,763 shares issued and outstanding as of June 30, 2015 and September 30, 2015, respectively)

Additional paid-in capital

1 unchanged sentence

Unappropriated retained earnings

(23,024,935 )

(31,873,541 )

Accumulated other comprehensive loss

2 unchanged sentences

Total Liabilities and Equity

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements

RECON TECHNOLOGY,

Consolidated Statements of OPERATIONS and Comprehensive Income (LOSS)

For the nine months ended

For the three months

Consolidated Statements of OPERATIONS and Comprehensive LOSS

For the three months ended

September 30,

Hardware and software

Hardware and software - related parties

Total revenues

1 unchanged sentence

Hardware and software

Hardware and software - related parties

Provision for slow moving inventories

Total cost of revenues

3 unchanged sentences

Operating expenses

Income (loss) from

Loss from operations

Other income (expenses)

2 unchanged sentences

Interest expense

Loss from investment

Change in fair value of warrants liability

Loss from foreign currency exchange

Loss from warrant redemptions

Other expense

Income (loss) before income tax

Other income(expense)

Loss before income tax

Provision (benefit) for income tax

Net Income (loss)

Net income attributable to non-controlling

Net Income (loss)

attributable to Recon Technology, Ltd

Comprehensive income (loss)

Net income (loss)

Net loss attributable to non-controlling interest

Net loss attributable to Recon Technology, Ltd

$ (1,392,649 )

Comprehensive loss

Foreign currency translation adjustment

Comprehensive income (loss)

Comprehensive income attributable to

non-controlling interest

Comprehensive

income (loss) attributable to Recon Technology, Ltd

Earnings (loss)

per common share - basic

Earnings (loss)

per common share - diluted

Comprehensive loss

Comprehensive loss attributable to non-controlling interest

Comprehensive loss attributable to Recon Technology, Ltd

$ (1,375,715 )

Loss per common share - basic

Weighted - average shares -basic

Weighted - average shares -diluted

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements

RECON TECHNOLOGY,

Consolidated Statements of Cash Flows

For the nine months ended

For the three months ended September

Cash flows from operating activities:

Adjustments to reconcile net income to net cash used in operating activities:

(Gain)/loss from disposal of equipment

Provision for doubtful accounts

$ (1,392,649 )

Adjustments to reconcile net loss to net cash used in operating activities:

Provision for (recovery of) doubtful accounts

Provision for slow moving inventories

Share based compensation

Loss from investment

Deferred tax benefit

Deferred tax benefit (provision)

Change in fair value of warrants liability

Restricted shares issued for services

Loss from warrants redemption

Changes in operating assets and liabilities:

1 unchanged sentence

Trade accounts receivable

(17,127,239 )

(29,115,292 )

Trade accounts receivable-related parties

2 unchanged sentences

Purchase advance, net

Tax recoverable

Purchase advance-related party, net

Prepaid expense

4 unchanged sentences

Other payables-related parties

Deferred revenue

Deferred income

Advances from customers

3 unchanged sentences

Net cash used in operating activities

(15,283,478 )

(16,219,350 )

Cash flows from investing activities:

Purchase of property and equipment

Proceeds from disposal of equipment

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from short-term bank loans

Repayments of short-term bank loans

(12,870,000 )

Proceeds from short-term borrowings-related parties

Repayment of short-term borrowings

Repayment of short-term borrowings-related parties

Proceeds from sale of common stock, net of issuance costs

Net cash provided by financing activities

Net cash used in financing activities

Effect of exchange rate fluctuation on cash and cash equivalents

1 unchanged sentence

(12,064,475 )

Cash and cash

equivalents at beginning of period

Cash and cash

equivalents at end of period

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental cash flow information

2 unchanged sentences

Non-cash investing and financing activities

Cancelation of prior issuance of 40,625 shares of common stock for Advisoring services

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements.

Cancelation of prior issuance of 40,625 shares of common stock for professional services

Non-cash transaction for AR and loan payable offset

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements

RECON TECHNOLOGY, LTD

1 unchanged sentence

FINANCIAL STATEMENTS

ORGANIZATION AND NATURE OF OPERATIONS

AND NATURE OF OPERATIONS

Organization –

Recon Technology, Ltd (the

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

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

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

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

was incorporated on September 6, 2007 in Hong Kong.

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

or conduct any operations.

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.

(“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 Company conducts its business through

the following PRC legal entities that were consolidated as variable interest entities (“VIEs”) and operate in the

Chinese oilfield equipment & service industry:

BHD Petroleum Technology Co., Ltd.

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.

(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

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

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

19, 2010 , Recon-CI established one wholly owned subsidiary, Recon Investment Ltd.

(“Recon-IN”) under the laws

Other than 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.

Other 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.

(“BHD”), and

Recon Technology Co., Ltd.

Nanjing Recon Technology Co., Ltd.

(“Nanjing Recon”).

1 unchanged sentence

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

Nature of Operations –

Company engaged in (1) providing equipment, tools and other hardware related to oilfield production and management, including

simple installations in connection with some projects;

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

and (3) developing and selling its own specialized industrial automation control and information solutions.

The products and services

provided by the Company include:

High-Efficiency Heating Furnaces -

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

carrying crude petroleum.

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

the petroleum can be sold.

Multi-Purpose Fissure Shaper -

Multipurpose fissure shapers improve the extractors’

ability to test for and extract petroleum which requires perforation

into the earth before any petroleum extractor can test for the presence of oil.

Horizontal Multistage Fracturing related

Service - The Company mainly uses Baker Hughes FracPoint™

Chinese laws and regulations currently do not prohibit or restrict

foreign ownership in petroleum businesses.

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

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

of these entities by entering into certain exclusive agreements with Recon-JN, which entitles Recon-JN to receive a majority of

the residual returns.

On May 29, 2009 Recon-JN and BHD and Nanjing Recon entered into an operating agreement to provide full guarantee

for the performance of such contracts, agreements or transactions entered into by BHD and Nanjing Recon.

As a result of the new

agreement, Recon-JN absorbs 100% of the expected losses and receives 90% of the expected gains of BHD and Nanjing Recon, which

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 Service Agreement.

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

Recon-JN and BHD and Nanjing Recon, states that Recon-JN will provide technical consulting services to BHD and Nanjing Recon in

exchange for 90% of their annual net profits as a service fee, which is to be paid quarterly.

In addition, Recon-HK entered into Option Agreements to allow Recon-HK

to acquire the Founders’

interest in these entities if or when permitted by the PRC laws.

Based on these exclusive agreements, the Company consolidated BHD

and Nanjing Recon as VIEs as required by Accounting Standards Codification (“ASC”) Topic 810, Consolidation 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.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

interest in BHD which was organized under the laws of the PRC on June 29, 1999.

Through December 15, 2010, the Founders held a

67.5% ownership interest in BHD.

From December 16, 2010 to June 30, 2012, Messers.

Yin Shenping and Chen Guangqiang held an 86.24%

ownership interest of BHD.

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.

The Company allocates profits and losses 90% and

100%, respectively, based upon the control agreements.

Profits allocated to the minority interest are the remaining amount (10%).

On July 4, 2003, Nanjing Recon was organized under the laws

On August 27, 2007, the Founders of the Company purchased a majority ownership of Nanjing Recon from a related party

who was a majority owner of Nanjing Recon.

Through December 15, 2010, the Founders held an 80% ownership interest in Nanjing Recon.

From December 16, 2010 to June 30, 2012, Messers.

Yin Shenping and Chen Guangqiang held an 80% ownership interest in Nanjing Recon.

Nanjing Recon is combined with the Company through the date of the exclusive agreements, and is consolidated following January

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

The Company allocates profits and losses 90% and 100%, respectively,

based upon the control agreements.

Profits allocated to the non-controlling interest are the remaining amount (10%).

Nature of Operations –The Company engaged in (1) providing

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

with some projects;

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

own specialized industrial automation control and information solutions.

The products and services provided by the Company include:

High-Efficiency Heating Furnaces - High-Efficiency Heating

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

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

Multi-Purpose Fissure Shaper - Multipurpose fissure shapers

improve the extractors’

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

extractor can test for the presence of oil.

Horizontal Multistage Fracturing related Service - The Company

mainly uses Baker Hughes FracPoint™

system and provides related service to oilfield companies.

The Baker Hughes FracPoint™

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

and frac sleeves to direct the frac treatment to the desired stage.

The use of this type of completion eliminated the need for

cementing the liner, coiled tubing operations, and wireline operations, while significantly reducing overall pumping time.

Supervisory Control and Data Acquisition

System (“SCADA”) - SCADA is an industrial computerized process control system for monitoring, managing and controlling

petroleum extraction.

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

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

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

treatment to the desired stage.

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

and wireline operations, while significantly reducing overall pumping time.

Supervisory Control and Data Acquisition System (“SCADA”)

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

integrates underground and aboveground activities of the petroleum extraction industry.

This system can help to manage the oil

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

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation -

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles

Basis of presentation - The

accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles

generally accepted in the United States of America for interim financial information pursuant to the rules of the SEC and have

4 unchanged sentences

financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended June 30, 2015.

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

the Company’s fiscal year ending June 30, 2015.

results of operations for the interim periods presented may not be indicative of the operating results to be expected for the

Company’s fiscal year ending June 30, 2016..

Principles of Consolidation –

The unaudited

condensed consolidated financial statements include the accounts of the Company, all the subsidiaries and VIEs of the Company.

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

RECON TECHNOLOGY, LTD

1 unchanged sentence

FINANCIAL STATEMENTS

Variable Interest Entities - A

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

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

A VIE is consolidated

by its primary beneficiary.

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

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

could potentially be significant to the VIE.

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

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

Assets recognized as a result of consolidating

VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets.

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

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

Currency Translation - The

Company’s functional currency is the Chinese Yuan (“RMB”) and the accompanying consolidated financial statements

have been expressed in Chinese Yuan.

The statements as of and for the nine months period ended March 31, 2015 have been translated

into United States dollars (“U.S.

dollars”) solely for the convenience of the readers.

The translation has been made

at the rate of ¥6.1091 = US$1.00, the approximate exchange rate prevailing on March 31, 2015.

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.

Currency Translation - The Company’s functional

currency is the Chinese Yuan (“RMB”) and the accompanying unaudited condensed consolidated financial statements have

been expressed in Chinese Yuan.

The unaudited condensed consolidated financial statements as of and for the three months ended

September 30, 2015 have been translated into United States dollars (“U.S.

dollars”) solely for the convenience of the

The translation has been made at the rate of ¥6.3538 = US$1.00, the approximate exchange rate prevailing on September

These translated U.S.

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

Estimates and assumptions -

The preparation of the consolidated financial statements in conformity with U.S.

GAAP requires that management make estimates

and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities

at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

are adjusted to reflect actual experience when necessary.

Significant estimates include revenue recognition, allowance for doubtful

accounts, inventory valuation, warrants liability, the useful lives of property and equipment and the fair value of stock based

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 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.

The three levels of inputs are defined

dollar amounts should not be construed as representing Chinese Yuan amounts or that the Chinese

Yuan amounts have been or could be converted into U.S.

Estimates and assumptions - The preparation of the

consolidated financial statements in conformity with U.S.

GAAP requires that management make estimates and assumptions that affect

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

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

Estimates are adjusted to reflect

actual experience when necessary.

Significant 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 US 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.

The three levels of inputs are defined as follows:

Level 1 inputs to the valuation

3 unchanged sentences

asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to the valuation

methodology are unobservable.

The carrying amounts reported in the consolidated

balance sheets for trade accounts receivable, other receivables, purchase advances, trade accounts payable, accrued liabilities,

advances from customers, short-term bank loan and short-term borrowings approximate fair value because of the immediate or short-term

maturity of these financial instruments.

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

the market rate.

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

investment is carried at fair value, which was value determined using level 1 inputs.

Level 3 inputs to the

valuation methodology are unobservable.

The carrying amounts reported in the consolidated balance sheets for trade accounts receivable, other

receivables, purchase advances, trade accounts payable, accrued liabilities, advances from customers, short-term bank loan and

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

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

Long-term other receivables approximate

fair value because interest rate approximates the market rate.

Long-term investment is measured at fair value

which was determined to be zero during the three months ended September 30, 2015 using level 1 inputs.

(See Note 8.)

The fair value of the warrants liability

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

Cash and Cash Equivalents -

Cash and cash equivalents are comprised of cash on hand, demand deposits and highly liquid short-term debt investments with stated

original maturities of no more than three months.

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

are uninsured.

RECON TECHNOLOGY, LTD

1 unchanged sentence

FINANCIAL STATEMENTS

Trade Accounts, Notes and Other

Receivables –

Accounts and notes receivable are generates from products sold to or services provided to customers.

Accounts receivable are carried at original invoiced amount less a provision for any potential uncollectible amounts.

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

Provision is made against trade accounts and other

receivables to the extent they are considered to be doubtful.

The fair value of the warrants liability was

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

Cash and Cash Equivalents -

Cash and cash equivalents are comprised of cash on hand, demand deposits

and highly liquid short-term debt investments with stated original maturities of no more than six months.

Since a majority of

the company’s bank accounts are located in the PRC, those bank balances are uninsured.

Trade Accounts and Other Receivables - Accounts

receivable are carried at original invoiced amounts less a provision for any potential uncollectible amounts.

Accounts are considered

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

Provision is made against trade accounts and other receivables

to the extent they are considered to be doubtful.

Accounts are written off after extensive efforts at collection.

Other receivables arise from transactions with non-trade customers.

Notes receivable represents trade accounts receivable due

from various customers where the customers’

banks have guaranteed the payments.

The notes are non-interest bearing and normally

paid within three to six months.

Purchase Advances - Purchase

advances are the amounts prepaid to suppliers for purchases of inventory and are recognized as inventory when the final amount

is paid to the suppliers and the inventory is delivered.

Inventories - Inventories

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

Inventories are stated at the lower of cost

or market value, on a first-in-first-out basis for Nanjing Recon and ENI.

The methods of determining inventory costs are used

consistently from year to year.

Allowance for inventory obsolescence is provided when the market value of certain inventory items

are lower than the cost.

Property and Equipment -

Property and equipment are stated at cost.

Depreciation on motor vehicles and office equipment is computed using the straight-line

method over the estimated useful lives of the assets, which range from two to ten years.

Leasehold improvements are amortized

over the shorter of the lease term or the estimated useful life of the assets.

Long-Lived Assets - The

Company applies the ASC Topic 360 “Property, plant and equipment.”

ASC Topic 360 requires that long-lived assets,

such as property and equipment be reviewed for impairment whenever events or changes in circumstances indicate that the carrying

amount of an asset or asset group may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison

of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.

If the carrying

amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by

which the carrying amount of the asset exceeds the fair value of the asset.

Fair value is determined based on the estimated discounted

future cash flows expected to be generated by the asset.

There were no impairments at June 30, 2014 and March 31, 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.

Revenue from hardware sales is generally

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

final acceptance of the arrangement.

Other receivables

arise from transactions with non-trade customers.

Purchase Advances - Purchase advances are the amounts

prepaid to suppliers for purchases of inventory and are recognized as inventory when the final amount is paid to the suppliers

and the inventory is delivered.

Inventories - Inventories are stated at the lower

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

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

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

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.

Property and Equipment - Property and equipment

are stated at cost.

Depreciation on motor vehicles and office equipment is computed using the straight-line method over the estimated

useful lives of the assets, which range from two to ten years.

Leasehold improvements are amortized over the shorter of the lease

term or the estimated useful life of the assets.

Motor vehicles

Office equipment

Leasehold improvement

Long-term investment –

Long-term investment

in equity over which the Company has the ability to exercise significant influence but not control, and that, in general, are 20-50

percent owned, are stated at cost plus equity in undistributed net income (loss) of the investee.

These investments are evaluated

for impairment, in which an impairment loss would be recorded whenever a decline in the value of an equity investment below its

carrying amount is determined to be “other than temporary.”

In judging “other than temporary,”

would consider the length of time and extent to which the fair value of the investment has been less than the carrying amount of

the investment, the near-term and longer-term operating and financial prospects of the investee, and the Company’s longer-term

intent of retaining the investment in the investee.

Long-Lived Assets - The Company applies the ASC Topic

360 “Property, plant and equipment.”

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

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

may not be recoverable.

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

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

If the carrying amount of an asset exceeds its

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

asset exceeds the fair value of the asset.

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

to be generated by the asset.

There were no impairments at June 30, 2015 and September 30, 2015.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Revenue Recognition - The Company recognizes revenue

when the following four criteria are met:

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

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

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

completion and acceptance report, risk of loss has transferred to the customers, customers’

acceptance provisions have lapsed,

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

acceptance provisions have been satisfied.

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

Revenue from hardware sales is generally recognized when the product

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

of the arrangement.

The Company sells self-developed software.

6 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.

Deferred revenue represents unearned amounts

billed to customers related to sales contracts.

The Company provides services to improve software function and

systems operation on separated fixed-price contracts.

Revenue is recognized on the completed contract method when acceptance is

determined by a completion report signed by the customer.

Deferred revenue represents unearned amounts billed to customers

related to sales contracts.

Subsidy Income - Grants are given by the government

to support local software companies’

operation and research and development.

Grants related to research and development projects

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

Grants in the

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

Share-Based Compensation - The Company accounts for

share-based compensation in accordance with ASC Topic 718, Share-Based Payment .

Under the fair value recognition provisions

of this topic, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized

as expense with graded vesting on a straight–line basis over the requisite service period for the entire award.

has elected to recognize compensation expenses using the Binomial Lattice valuation model estimated at the grant date based on

the award’s fair value.

Income Taxes - Income taxes are provided based upon

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

Provisions for income taxes are

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

Deferred taxes are provided on differences between

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

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

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

As changes in tax laws or rates are enacted,

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

The Company has not been subject to any

income taxes in the United States or the Cayman Islands.

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

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

authorities, based on the technical merits of the position.

The tax benefits recognized in the financial statements from such a

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

ultimate settlement.

Income tax returns for the year prior to 2010 are no longer subject to examination by tax authorities.

RECON TECHNOLOGY, LTD

1 unchanged sentence

FINANCIAL STATEMENTS

Subsidy Income - Grants

are given 1) by the government to support local software companies’

operation and research and development and 2) by some

local government to support development of selected middle and small-sized enterprises.

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

Under the fair

value recognition provisions of this topic, share-based compensation cost is measured at the grant date based on the fair value

of the award and is recognized as expense with graded vesting on a straight–line basis over the requisite service period

for the entire award.

The Company has elected to recognize compensation expenses mainly using the Black-Scholes valuation model

estimated at the grant date based on the award’s fair value.

Income Taxes - Income taxes

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

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

Deferred taxes are provided

on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements, and tax

carry forwards.

Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates

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

As changes in

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

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

Under ASC Topic 740, the Company may recognize

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

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

The tax benefits recognized in the financial statements

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

realized upon ultimate settlement.

Income tax returns for the years prior to 2010 are no longer subject to examination by tax

Earnings per Share (“EPS”)

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

ordinary shares outstanding.

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

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

Potentially dilutive ordinary shares consist

of ordinary shares issuable upon the conversion of ordinary stock options, restricted shares and warrants (using the treasury

stock method).

For the nine months ended March 31, 2014, there were 57,725 restricted shares included in the weighted average

dilutive shares calculation.

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 nine months ended March 31,

2015 and three months ended March 31, 2014 and 2015.

Earnings (loss) per Share (“EPS”) - Basic

EPS is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding.

Diluted EPS are computed

by dividing net income (loss) by the weighted-average number of ordinary shares and dilutive potential ordinary share equivalents

Potentially dilutive ordinary shares consist of ordinary shares

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

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 three months ended September 30, 2014 and 2015.

Recently Issued Accounting Pronouncements -

In January 2015, the

FASB issued ASU 2015-02, "Consolidation (Topic 810) –

Amendments to the Consolidation Analysis".

The ASU concludes

the FASB’s project to rescind the indefinite deferral of the VIE guidance in ASU 2009-17 for reporting entities with variable

interests in legal entities that have the attributes of an investment company that meet certain criteria (ASU 2010-103).

also makes changes to the VOE consolidation model.

The ASU does not change the general order in which the consolidation models

A reporting entity that holds an economic interest in, or is otherwise involved with, another legal entity (has a

“variable interest”) should first determine if the VIE model applies, and if so, whether it holds a controlling financial

interest under that model.

If the entity being evaluated for consolidation is not a VIE, then the VOE model should be applied

to determine whether the entity should be consolidated by the reporting entity.

Since consolidation is only assessed for legal

entities, the determination of whether there is a legal entity is important.

It is often clear when the entity is incorporated,

but unincorporated structures can also be legal entities and judgment may be required to make that determination.

The amendments

in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years,

beginning after December 15, 2015.

For all other entities, the amendments in this Update are effective for fiscal years beginning

after December 15, 2016, and for interim periods within fiscal years beginning after December 15, 2017.

Early adoption is permitted,

including adoption in an interim period.

Management is evaluating the significant impact, if any, on the Company’s consolidated

financial statements.

In August 2015, the FASB issued Accounting

Standards Update No.

2015-14, Revenue from Contracts with Customers (Topic 606):

Deferral of the Effective Date, or ASU 2015-14.

This amendment defers the effective date of the previously issued Accounting Standards Update No.

2014-09, Revenue from Contracts

with Customers (Topic 606), or ASU 2014-09, until the interim and annual reporting periods beginning after December 15, 2017.

application is permitted for interim and annual reporting periods beginning after December 15, 2016.

The Company is evaluating

the effect of this standard the Company's consolidated financial position, results of operations and cash flows.

In August 2015, the FASB has issued Accounting

Standards Update (ASU) No.

2015-15, Interest - Imputation of Interest (Subtopic 835-30):

Presentation and Subsequent Measurement

of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement

at June 18, 2015 EITF Meeting.

This ASU adds SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015, Emerging

Issues Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit

arrangements.

Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit

arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently

amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there

are any outstanding borrowings on the line-of-credit arrangement.

The Company does not expect this update will have a material

impact on the Company's consolidated financial position, results of operations and cash flows.

In September 2015, the FASB issued ASU 2015-16,

Business Combinations (Topic 805):

Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement

to retrospectively account for changes to provisional amounts initially recorded in a business acquisition opening balance sheet.

Prior to the issuance of ASU 2015-16, an acquirer was required to restate prior period financial statements as of the acquisition

date for adjustments to provisional amounts.

This guidance is effective for fiscal years beginning after December 15, 2015, including

interim periods within fiscal years.

The Company does not expect this update will have a material impact on the Company's consolidated

financial position, results of operations and cash flows.

RECON TECHNOLOGY, LTD

4 unchanged sentences

June 30, 2015

March 31, 2015

September 30, 2015

Trade accounts receivable

2 unchanged sentences

June 30, 2015

March 31, 2015

Third Party –

Beijing Yabei Nuoda Science and Technology Co.

Allowance for doubtful accounts

Total - long-term trade accounts receivable, net

The receivable from 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 beginning 2016, with each installment of ¥4,015,644.

* One of the Founders, Mr.

Yin Shenping,

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

Ltd (“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 does not have any equity interest

in this company currently.

June 30, 2014

March 31, 2015

September 30, 2015

Related Party

Beijing Yabei Nuoda Science and Technology Co.

Beijing Langchen Construction Company

2 unchanged sentences

Total - related-parties, net

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

June 30, 2015

March 31, 2015

September 30, 2015

Third Party –

2 unchanged sentences

Total - long-term trade accounts receivable, net

* The receivable

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

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.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

OTHER RECEIVABLES, NET

1 unchanged sentence

June 30, 2015

March 31, 2015

September 30, 2015

Current Portion

5 unchanged sentences

June 30, 2015

March 31, 2015

September 30, 2015

Non-Current Portion

Due from ENI (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.

four payments are RMB 1.2 million each.

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

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

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

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.

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.

due on March 30, 2015 was received on April 08, 2015.

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

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 ($110,036).

Company has continued to receive payments under the agreement.

(B) Loans to third-parties are mainly used for short-term funding to

support cooperative companies.

These loans are due on demand bearing no interest.

2 unchanged sentences

and acceptance.

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

Such advances

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

RECON TECHNOLOGY, LTD

1 unchanged sentence

FINANCIAL STATEMENTS

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

Such advances

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

Below is a summary of other receivables - related parties which

2 unchanged sentences

June 30, 2015

March 31, 2015

September 30, 2015

Name of Related Party

Beijing Yabei Nuoda Science and Technology Co.

Beijing Langchen Construction Company

Other-business advances

* Not a related party after October

PURCHASE ADVANCES

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

Purchase advances

consisted of the following:

June 30, 2014

March 31, 2015

The Company purchased products and services from a third-party

and a related party during the normal course of business.

Purchase advances consisted of the following:

Prepayment for inventory purchase

Allowance for doubtful accounts

is a summary of purchase advances to related party.

June 30, 2014

March 31, 2015

Below is a summary of purchase advances to related party.

Related Party

Xiamen Huasheng Hitek Computer Network Co.

The Company entered into a purchase agreement with Xiamen Huasheng

Hitek in September, 2014 and planned to offset the purchase advance.

At September 30, 2014, remaining amount to be paid was ¥797,585,

which was included in accounts payable-related party.

In October, 2014, the Company didn’t offset the advance payment and

paid the whole contract amount in cash.

of the Founders and a family member collectively own 57% of Xiamen Huasheng Hitek Computer

Current ending balance of the purchase advances to Xiamen Huasheng Hitek

is expect to be settled before year end.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Xiamen Huangsheng Hitek Computer Network Co.

Inventories consisted of the following:

June 30, 2014

March 31, 2015

September 30,

Small component parts

Purchased goods and raw materials

Work in process

Work in process and goods on site

Finished goods

Total inventories

was no inventory obsolescence reserve at June 30, 2014 and March 31, 2015.

Allowance for slow moving inventory

Total inventories, net

for slow moving inventory was ¥7,700,836 and ¥2,846,559 ($448,008) at June 30, 2015 and September 30, 2015,

respectively.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following:

June 30, 2014

March 31, 2015

Motor vehicles

Office equipment and fixtures

Leasehold improvement

Total property and equipment

1 unchanged sentence

Property and equipment, net

Depreciation expense was ¥156,098

and ¥94,773 ($15,513) for the three months ended March 31, 2014 and 2015, respectively.

Depreciation expense was ¥457,439

and ¥369,284 ($60,448) for the nine months ended March 31, 2014 and 2015, respectively.

Depreciation expense was ¥121,347 and ¥

259,768 ($40,884) for the three months ended September 30, 2014 and 2015, respectively.

LONG-TERM INVESTMENT

On June 28, 2013, the Company purchased

2,800,000 restricted shares of Avalon Oil and Gas, Inc.

On June 28, 2013, the Company purchased 2,800,000 restricted

shares of Avalon Oil and Gas, Inc.

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

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

The investment was accounted for using the equity method and no gain or loss from equity investment was recorded for the

year ended June 30, 2013 due to immateriality.

As of June 30, 2014 and March 31, 2015, Recon owned 24.02% and 23.61 %

of Avalon’s outstanding shares, respectively.

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, the stock is not actively traded and, based on 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 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.

the shares are restricted for two years, the Company was able to acquire the shares at 50% of the market value.

The investment

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

due to immateriality.

As of June 30, 2015 and September 30, 2015, Recon owned 16.92% and 16.00% of Avalon’s outstanding

shares, respectively.

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

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

available information and discussion with the management team of Avalon, the Company believes 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 and has written 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.

Based on mutual

agreements, BHD shall not enjoy voting right until the payment of investment is on position.

As of November 13, 2015, no payment

was made to HHBHD for this investment and BHD did not have control or significant influence over HHBHD.

RECON TECHNOLOGY, LTD

3 unchanged sentences

Other payables consisted of the following:

June 30, 2014

March 31, 2015

Consulting services

Distributors and employees

June 30, 2014

March 31, 2015

Related Party

1 unchanged sentence

Expenses paid by the major shareholders

Due to family member of one owner on behalf on Recon

Due to management staff on behalf of Recon

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

working capital.

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

TAXES PAYABLE

2 unchanged sentences

June 30, 2015

March 31, 2015

September 30, 2015

Enterprise income tax payable

1 unchanged sentence

Total taxes payable

SHORT-TERM BANK LOANS

SHORT-TERM BANK LOAN

Short-term bank loans consisted of the following:

June 30, 2015

March 31, 2015

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

September 30, 2015

Industrial and Commercial Bank, floating interest rate at 6.0%, due on June 19, 2016

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FINANCIAL STATEMENTS

expense was ¥277,445 and ¥162,000 ($26,518) for the three months ended March 31, 2014 and 2015, respectively.

expense was ¥754,202 and ¥400,178 ($65,505) for the nine months ended March 31, 2014 and 2015, respectively.

SHORT-TERM BORROWINGS DUE

TO RELATED PARTIES

Short-term borrowings due to related parties are generally

extended upon maturity and consisted of the following:

June 30, 2014

March 31, 2015

Interest expense

for the short-term bank loan was ¥157,511 and ¥108,407 ($17,062) for the three months ended September 30, 2014 and 2015,

respectively.

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, 7.0% annual interest, due on October 22, 2015

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

Short-term borrowing from a Founder, 6.2% annual interest, due on October 12, 2015

Short-term borrowings due to related

September 30,

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

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

Short-term borrowing from a Founder, 5.13% annual interest, due on October 12, 2015.(C)

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

Short-term borrowing from a Founder, 7.2% annual interest, due on September 25, 2016

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

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Total short-term borrowings due to related parties

Interest expense for short-term borrowings

due to related parties was none and ¥177,109 ($28,991) for the three months ended March 31, 2014 and 2015, respectively.

Interest expense for short-term borrowings

due to related parties was ¥1,441 and ¥407,887 ($66,767) for the nine months ended March 31, 2014 and 2015, respectively.

Note 13 –WARRANT LIABILITY

In connection with the stock offering

in November 2013, the Company issued warrants to certain institutional investors and placement agent to purchase 218,600 ordinary

shares at exercise price of $5.38.

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

Based on the stock price of $2.11 and fair value of warrants liability on February 23, 2015, the Company recorded a loss on warrant redemption of ¥1,913,262 ($313,182) for the three and nine months ended March 31, 2015.

According to ASC 815-40, if the strike

price of the warrants is denominated in a currency other than the Company’s functional currency, the warrants are not considered

indexed to the entity’s own stock.

The Company’s functional currency is RMB and the strike price of the warrants is

denominated in USD, as a result, the warrants are classified as liabilities with all future changes in the fair value of these

warrants recognized in earnings until such time as the warrants are exercised or expired.

These common stock purchase warrants do

not trade in an active securities market, and as such, their fair value is estimated by using the Black–Scholes Option Pricing

Model using the following assumptions:

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Annual dividend yield

Exercised price

Underlying stock price at valuation date

Expected life (years)

Risk-free interest rate

Expected volatility

Expected volatility is based on the historical

volatility of the Company’s common stock.

The Company has no reason to believe future volatility over the expected remaining

life of these warrants is likely to differ materially from historical volatility.

The expected life is based on the remaining

term of the warrants.

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

Treasury securities according to the remaining term of the

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

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

Warrants liability

Fair Value Measurement at

Carrying Value at

March 31, 2015

Warrants liability

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

basis for nine months ended March 31, 2015:

Change of warrants liability

Beginning balance - June 30, 2014

Warrant redemption

Change of warrant liability

Ending balance -March 31, 2015

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

following is the warrant activities:

Exercise Price

Outstanding as of June 30, 2014

Warrants redemption

Outstanding as of March 31, 2015

October 20, 2015, ¥

1,800,000 ( $283,295 )

was paid back.

September 30, 2015, the principle of ¥3,400,000 ( $535,113 )

was paid back, and the interest was paid as scheduled on October 2, 2015.

October 12, 2015, the Company repaid ¥1,600,000 ($251,818) of short-term borrowing

with an interest of ¥5,749 ($905).

Interest expense for short-term borrowings due to related parties

was ¥84,333 and ¥171,448 ($26,984) for the three months ended September 30, 2014 and 2015, respectively.

SHAREHOLDERS’

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).

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

2 unchanged sentences

shares in the aggregate were issued to the investors.

The warrants will be exercisable immediately as of the date of issuance

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.

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.

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 exercise date.

The warrants are 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.

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.

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

the Company granted warrants for 170,000 shares in connection with its IPO offering, and none of these warrants was exercised

during this period.

Appropriated Retained Earnings

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

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

In accordance with the

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

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

of the companies.

As of June 30, 2014 and March 31, 2015, the balance of total statutory reserves was ¥4,148,929 and ¥4,725,803

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 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:

the Company granted 170,000 shares of warrants on connection with its IPO offering, and none of these warrants was exercised during

the years ended June 30, 2015 and September 30, 2015.

RECON TECHNOLOGY, LTD

1 unchanged sentence

FINANCIAL STATEMENTS

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.

cash proceeds received from the stock offering, after deducting ¥1,294,922 ($212,673) in underwriter commission and other associated

fees, were ¥2,392,027 (approximately $0.6 million).

During the three months ended September 30, 2015, the Company

sold 15,874 ordinary shares under the same purchase agreement.

The net cash proceeds received from the stock offering were ¥165,823

(approximately $26,098).

Appropriated Retained

Earnings - According to the Memorandum and Articles of Association, the Company is required to transfer a certain

portion of its net profit, as determined under PRC accounting regulations, from current net income to the statutory reserve

In accordance with the PRC Company Law, companies are required to transfer 10% of their profit after tax, as determined

in accordance with PRC accounting standards and regulations, to the statutory reserves until such reserves reach 50% of the

registered capital or paid-in capital of the companies.

As of June 30, 2015 and September 30, 2015, the balance of total

statutory reserves was ¥4,148,929 and ¥4,148,929 ($681,403), respectively.

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 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 risk-free interest rate is based

on the Chinese international bond denominated in U.S.

** The life of options represents the period

the option is expected to be outstanding.

*** The risk-free interest rate is based on

the Chinese international bond denominated in U.S.

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

**** Forfeiture rate is the estimated

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

The Company recognizes compensation cost

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

The grant date

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

**** Forfeiture rate is the estimated percentage

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

The Company recognizes compensation cost for

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

The grant date fair

value of the options was ¥30.17 ($4.42) per share.

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 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.

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.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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 –

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

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

The grant date fair value of the options was ¥10.13 ($1.65) per share.

following is a summary of the stock options activity:

The Company granted options

to purchase 400,000 ordinary shares to its employees and non-employee directors 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 and will be subject to the terms and conditions of the Plan.

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 ¥10.13 ($1.65) per share.

The following is a summary of the stock options activity:

Stock Options

Weighted Average Exercise Price Per

Outstanding as of July 1, 2014

Outstanding as of March 31, 2015

following is a summary of the status of options outstanding and exercisable at March 31, 2015:

Weighted Average Exercise Price

Outstanding as of June 30, 2015

Outstanding as of September 30, 2015

The following

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

Outstanding Options

1 unchanged sentence

Average Exercise

Contractual life

Average Exercise

Restricted Shares

As of September 30, 2015, the Company had granted restricted

shares of common stock, which are still vesting, to senior management and consultants as follows:

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

to a non-affiliate as compensation for certain consulting services.

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.

RECON TECHNOLOGY, LTD

1 unchanged sentence

FINANCIAL STATEMENTS

During the nine months ending March 31,

2015, the Company granted restricted shares of common stock to consultants and executive officers as follows:

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 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.

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

shares, which had been issued to Expert Asia Investment Ltd.

on May 8, 2014, as the services had not been 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.

The first one third was vested on December 13, 2014 and are

now non-restricted.

31, 2015, the Company granted 150,000 restricted shares to Mr.

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 vested on December 13, 2014.

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.

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.

Following is a summary of the non-vested

restricted stock grants to executive officers:

Non-vested restricted stock grants

Non-vested as of June 30, 2014

Non-vested adjustment

Non-vested as of March 31, 2015

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 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 of $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 services.

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

for restricted shares granted was ¥418,553 and ¥1,226,745 ($199,696) for the nine months ended March 31, 2014 and 2015,

for stock options granted were ¥247,141 and ¥509,528 ($80,193) for the three months ended September 30, 2014 and

2015, respectively.

Total unrecognized share-based compensation expense for these shares as of March 31, 2015 was approximately ¥5.2

million ($0.9 million), which is expected to be recognized over a weighted average period of approximately 2.32 years.

The total unrecognized share-based compensation expense for stock options as of September 30, 2015 was approximately

¥4.3 million ($0.67 million), which is expected to be recognized over a weighted average period of approximately 2.14 years.

The Share-based compensation expense recorded

for stock options granted were ¥1,241,591 and ¥797,016 ($129,742) for the nine months ended March 31, 2014 and 2015, respectively.

The total unrecognized share-based compensation expense for stock options as of March 31, 2015 was approximately ¥5.5 million

($0.9 million), which is expected to be recognized over a weighted average period of approximately 2.58 years.

for restricted shares granted were ¥353,437 and ¥617,024 ($97,111) for the three months ended September 30, 2014

and 2015, respectively.

The total unrecognized share-based compensation expense for restricted shares granted as of September 30,

2015 was approximately ¥4.2 million ($0.66 million), which is expected to be recognized over a weighted average period of approximately

The following is a summary of the restricted

stock grants:

Restricted stock grants

Non-vested as of June 30, 2015

Non-vested adjustment

Non-vested as of September 30, 2015

RECON TECHNOLOGY, LTD

1 unchanged sentence

FINANCIAL STATEMENTS

28, 2015, the Company signed the “At-The-Market”

offering agreement with Maxim Group LLC (“Maxim”).

will serve as the exclusive agent for the Company in connection with the Company’s an at-the-market offering program for

up to $10,000,000 of its registered common stock.

The Company is not subject to any income

taxes in the United States or the Cayman Islands and had minimal operations in jurisdictions other than the PRC domestic companies.

The Company follows Implementing Rules for the Enterprise Income Tax Law (“Implementing Rules”), which took effect

on January 1, 2008 and unified the income tax rate for domestic-invested and foreign-invested enterprises at 25%.

The Company reapplied for high-technology

enterprise approval and has passed all relevant reviews.

Thus, for the calendar years 2013 and 2014, Nanjing Recon is subject

to an income tax rate of 15%.

As approved by the domestic tax authority

in the PRC, BHD was recognized as a government-certified high technology company on November 25, 2009 and is subject to an income

tax rate of 15% through November 2015.

Deferred tax assets are comprised of the following:

June 30, 2014

March 31, 2015

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

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

BHD and Nanjing Recon are subject to PRC’s

income taxes as PRC domestic companies.

The Company follows Implementing Rules for the Enterprise Income Tax Law (“Implementing

Rules”), which took effect on January 1, 2008 and unified the income tax rate for domestic-invested and foreign-invested

enterprises at 25%.

The Company reapplied for high-technology enterprise approval and

has passed all relevant reviews.

Thus, for the calendar years 2014 and 2015, Nanjing Recon is subject to an income tax rate of

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

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

November 2015.

Deferred tax asset is comprised of the following:

September 30,

Allowance for doubtful receivables

Net operating loss carry forward

Total deferred income tax assets

Deferred tax liability is comprised of the following:

June 30, 2014

March 31, 2015

Income tax cost due to unpayable accounts

Total deferred income tax liability

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

the following:

For the three months ended March 31,

Current income tax provision (benefit)

Deferred income taxes benefit

Provision (benefit) for income tax

For the nine months ended March 31,

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

For the three months ended September 30,

Current income taxes

Deferred income taxes benefit

Deferred income taxes provision (benefit)

Provision for income tax

9 unchanged sentences

Accumulated other comprehensive loss

Total non-controlling interest

As of March 31, 2015

Total noncom-trolling interest

As of September 30, 2015

Paid-in capital

3 unchanged sentences

CONCENTRATIONS

For the three months ended March 31, 2014

and 2015, our two largest customers, China National Petroleum Corporation (“CNPC”) and China Petroleum & Chemical

Corporation Limited (“SINOPEC”), represented 13.80%, and 24.80% and 29.65%, and 6.18% of the Company’s revenue,

respectively.

For the nine months ended March 31, 2014

and 2015, our two largest customers, China National Petroleum Corporation (“CNPC”) and China Petroleum & Chemical

Corporation Limited (“SINOPEC”), represented 46.62%, and 19.64% and 44.89%, and 7.70% of the Company’s revenue,

respectively.

For the three months ended March 31, 2014,

three major suppliers accounted for 66.4% of the company’s total purchases.

For the three months ended March 31, 2015,

one major supplier accounted for 56% of the company’s total purchases.

For the nine months ended March 31, 2014,

two major suppliers accounted for 33.7% of the company’s total purchases.

For the nine months ended March 31, 2015, one major

supplier accounted for 21% of the company’s total purchases.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

For the three months ended September 30, 2014 and 2015,

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

Limited (“SINOPEC”), represented approximately 46.65%, 1.64% , and 57.58%, 23.63% of the Company’s revenue, respectively.

For the three months ended September 30, 2014, two major suppliers

accounted for 25% of the company’s total purchases.

For the three months ended September 30, 2015, four major suppliers

accounted for 60% of the company’s total purchases.

COMMITMENTS AND CONTINGENCY

(a) Office Leases

The Company leased three

offices in Beijing (two for BHD;

The Company leases three offices in Beijing (two

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

Future payments under such leases

are as follows as March 31, 2015:

Twelve months ending March 31,

Future payments under such leases are as follows as of

September 30, 2015:

Twelve months ending September 30,

Office lease payment

In January 2015, BHD renewed its lease agreements

which amounted to ¥840,000 ($136,841) for one more year.

(b) Contingency

The Labor Contract Law of the PRC requires

employers to assure the liability of severance payments if employees are terminated and have been working for the employers for

at least two years prior to January 1, 2008.

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

service provided by the employees.

As of March 31, 2015, the Company estimated its severance payments of approximately ¥1.6

million ($0.3 million) which has not been reflected in its unaudited condensed consolidated financial statements because the Company

has determined that the likelihood to make these payments is remote.

RELATED PARTY TRANSACTIONS

Sales to related parties –

to related parties consisted of the following:

For the three months ended March 31,

Beijing Yabei Nuoda Science and Technology Co.

Xiamen Henda Haitian computer network Inc

Xiamen Huangsheng Hitek Computer Network Co.

Revenues from related parties

For the nine months ended March 31,

Beijing Yabei Nuoda Science and Technology Co.

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).

RECON TECHNOLOGY, LTD

1 unchanged sentence

FINANCIAL STATEMENTS

(b) Contingency

The Labor Contract Law of the PRC requires employers to assure

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

prior to January 1, 2008.

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

the employees.

As of September 30, 2015, the Company estimated its severance payments of approximately ¥1.6 million ($0.26

million) which has not been reflected in its unaudited condensed consolidated financial statements, because management cannot predict

what the actual payment, if any, will be in the future.

RELATED PARTY TRANSACTIONS AND

Purchases from related parties –

from related parties consisted of the following:

For the nine months ended March 31,

Xiamen Hengda Hitek Computer Network Co.

the three months ended September 30,

Huanghua Xiang Tong Manufacture

Xiamen Huangsheng Hitek Computer Network Co.

Purchase from related parties

There was no purchases from related parties for the three

months ended March 31, 2014 and 2015.

Leases from related parties - The

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

of the agreement state that the Company will continue to lease the property for two years at a monthly rent of ¥95,000 with

the annual rental expense at approximately ¥1.1 million ($0.2 million).

The two-year lease agreements between Nanjing Recon

Yin and his family member started from July 10, 2014, the one-year lease agreements between BHD and Mr.

Chen Guangqiang

and his family member started from January 1, 2015 and the annual lease between the Company and Mr.

Chen Guangqiang’s family

member started from July 1, 2014.

Short-term borrowings from related

parties - The Company borrowed ¥5,207,728 and ¥10,218,308 ($1,672,637) from the Founders, their family members

and senior officers as of June 30, 2014 and March 31, 2015, respectively.

For the specific terms and interest rates of the borrowings,

please see Note 12.

Leases from related parties - The Company has

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

The terms of the agreement

state that the Company will continue to lease the property at a monthly rent of ¥95,000 with annual rental expense at

approximately ¥1.1 million ($0.2 million).

The two-year lease agreements between Nanjing Recon and Mr.

Yin and his family member

started from July 10, 2014, the one-year lease agreements between BHD and Mr.

Chen Guangqiang and his family member started from

January 1, 2015 and the annual lease between the Company and Mr.

Chen Guangqiang’s family member started from July 1, 2015.

Short-term borrowings from related parties -

The Company borrowed ¥16,916,905 and ¥9,405,714 ($1,480,329) from the Founders and their family members as of June 30,

2015 and September 30, 2015, respectively.

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

Expenses paid by the owner on behalf of Recon - One

1 unchanged sentence

Yin and the major owner of BHD, Mr.

Chen paid certain operating expenses for the Company.

30, 2014 and March 31, 2015, ¥284,370 and ¥974,964 ($159,592) was due to them, respectively.

Chen paid certain operating expense for the Company.

30, 2015 and September 30, 2015, ¥1,558,738 and ¥1,592,981 ($250,713) was due to them, respectively.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Variable Interest Entities

The Company reports its VIEs’

of consolidated net income and stockholders’

equity as non-controlling interests in the condensed consolidated financial

portion of unaudited condensed

consolidated net income and stockholders’

equity as non-controlling interests in the unaudited condensed consolidated financial

Summary information regarding consolidated VIEs is as follows:

June 30, 2015

March 31, 2015

September 30,

Current Assets

Cash and cash equivalents

Notes receivable

Trade accounts receivable, net

7 unchanged sentences

Total Liabilities

The financial performance of VIEs reported in the

unaudited condensed consolidated statement of operations and comprehensive income for the three months ended September 30, 2015

includes revenues of ¥3,593,960 ($565,639), operating expenses of ¥4,362,377 ($686,578), and net loss of ¥6,242,390

RECON TECHNOLOGY, LTD

1 unchanged sentence

FINANCIAL STATEMENTS

financial performance of VIEs reported in the unaudited condensed consolidated statement of operations and comprehensive income

(loss) for the three months ended March 31, 2015 includes revenues of ¥20,018890 ($3,276,897), gross profit of ¥6,248,840

($1,022,874), operating expenses of ¥3,156,785 ($516,735), other expense of ¥142,664($23,353) and

a net income of ¥3,130,319($512,403).

financial performance of VIEs reported in the unaudited condensed consolidated statement of operations and comprehensive income

(loss) for the nine months ended March 31, 2015 includes revenues of ¥45,651,862 ($7,472,764), gross profit of ¥15,842,084

($2,593,194), operating expenses of ¥9,281,759 ($1,519,333), other expense of ¥54,739($8,960) and

a net income of ¥6,037,582 ($988,293).

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

For the three months ended September 30,

Weighted average number of common shares outstanding used in

computing basic earnings (loss) per share

Net income (loss) attributable to common stockholders

$ (1,392,649 )

Earnings (loss) per share attributable to common stockholders

Weighted average number of common shares outstanding 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

$ (1,392,649 )

Earnings (loss) per share attributable to common stockholders

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

SUBSEQUENT EVENTS

2, 2015, the Company borrowed ¥1.0 million ($163,690) from its Chief Technology Officer to supplement the Company’s working

This loan is due on October 12, 2015 with an annual interest rate of 6.16%.

8, 2015, the Company entered into a service agreement with an investor relations firm with

a consideration of 40,000 restricted shares for a one-year period of consulting services.

April 15, 2015, the Company entered into certain warrant exchange agreements with a certain holder (the “Holder”)

of warrants to purchase 54,650 ordinary shares of the Company (the “Warrants”) issued in the Company’s

November 2013 registered offering for the Holder’s underwriting service.

The Holder agreed to exchange the Warrants for

68,313 ordinary shares (the “Exchange Shares”), which equal one hundred and twenty five percent (125%) of the

shares issuable upon exercise of the Warrants.

The Exchange Shares will be issued to the Holder in exchange for the Warrant

and without the payment of any other consideration by the Holder.

Upon completion of the transaction contemplated in the

Exchange Agreement on May 13, 2015, the Warrants have been automatically canceled and terminated.

Based on the stock price

of $1.94 and fair value of warrants liability on April 15, 2015, the Company recorded a one-time loss on warrant redemption

of ¥585,276 ($95,804) on April 15, 2015.

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 agent.

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.

On May 13, 2015, the Company filed a Prospectus Supplement relating to the ATM

Offering with the Securities and Exchange Commission.

10, 2015, the Company borrowed ¥2,400,000 ($377,727) of short-term borrowing with an annual interest rate of 5.75% .

12, 2015, the Company repaid ¥1,600,000 ($251,818) of short-term borrowing with an interest of ¥5,749 ($905).

20, 2015, the Company repaid ¥1,800,000 ($283,295) of short-term borrowing with an interest of ¥

10,800 ($1,700).

On October 18, 2015, the Company’s board approved an incentive plan under its 2015 incentive option

pool to grant 800,000 restricted shares to management.

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

What changed 10-Q

Item 5. Other Information