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Item 5. Other Information

2016-05-16 compared with 2016-02-16 · 589 added, 678 removed, 447 unchanged (74% 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

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.

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

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.

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 Exclusive

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

and Beijing BHD Petroleum Technology 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

Translation of Exclusive

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

Ltd., Yin Shenping and Beijing BHD Petroleum Technology

Translation of Exclusive

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

Ltd., Li Hongqi and Beijing BHD Petroleum Technology

Translation of Equity

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

Translation of Equity

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

Translation of Equity

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

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.

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.

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

Translation of Exclusive

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

Ltd., Li Hongqi and Jining ENI Energy Technology

Translation of Equity

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

Translation of Equity

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

Translation of Equity

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

Translation of Exclusive

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

and Nanjing Recon Technology Co., Ltd.

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

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

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

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

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

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

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

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

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

Translation of Exclusive

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

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

Translation of Exclusive

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

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

Translation of Equity

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

Translation of Equity

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

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

Employment Agreement

between Recon Technology (Jining) Co., Ltd.

Li Hongqi (1)

Operating Agreement among Recon Technology (Jining) Co.

Operating Agreement

among Recon Technology (Jining) Co.

Ltd., Nanjing Recon Technology Co., Ltd.

Yin Shenping, Mr.

Chen Guangqiang and Mr.

Chen Guangqiang and

Li Hongqi (1)

Operating Agreement among Recon Technology (Jining) Co.

Operating Agreement

among Recon Technology (Jining) Co.

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

Yin Shenping, Mr.

Chen Guangqiang and Mr.

Chen Guangqiang

Li Hongqi (1)

Operating Agreement among Recon Technology (Jining) Co.

Agreement among Recon Technology (Jining) Co.

Ltd., Beijing BHD and Mr.

1 unchanged sentence

Chen Guangqiang and Mr.

Li Hongqi (1)

Share Purchase Agreement, dated as of December 1, 2015, by and between Recon Technology Ltd., Recon Hengda

Technology (Beijing) Co., Ltd., Qinghai Hua You Downhole Technologies Co., Ltd.

and its shareholders.

Equity Interest Purchase Agreement, dated as of December 1, 2015, by and between Recon Hengda Technology (Beijing) Co., Ltd., Haung

Baokun, Shi Jing and Li Suzhen.

Equity Pledge

Agreement, dated as of December 1, 2015, by and among Recon Hengda Technology (Beijing) Co., Ltd., Huang Boakun, Shi Jing and Li

Attorney of Huang Baokun.

Attorney of Shi Jing.

Attorney of Li Suzhen.

Technical Consulting and Service Agreement, dated as of December 1, 2015, between Recon Hengda Technology (Beijing) Co., Ltd.

Qinghai Hua You Downhole Technologies Co., Ltd.

Subsidiaries of the Registrant (2)

Subsidiaries of

the Registrant (2)

Stock Option Plan

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 Act of 2002.

Certifications pursuant to 18 U.S.C.

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 Act of 2002.

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

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certifications pursuant to 18 U.S.C.

Certifications pursuant

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

1 unchanged sentence

XBRL Taxonomy Extension Schema Document (3)

XBRL Taxonomy Extension Calculation Linkbase Document (4)

XBRL Taxonomy Extension Calculation Linkbase

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document (4)

XBRL Taxonomy Extension Definition Linkbase Document (4)

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

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

(3) Incorporated by reference to the Company’s Current

Reprot on Form 8-K filed on December 7, 2015.

XBRL Taxonomy Extension Presentation Linkbase

XBRL Taxonomy Extension Definition Linkbase

Incorporated by

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

Incorporated by

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

Filed herewith.

Furnished herewith.

In accordance with the requirements of

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

RECON TECHNOLOGY, LTD

Chief Financial Officer

(Principal Financial and Accounting Officer)

TECHNOLOGY, LTD

Chief Financial

(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, LTD

February 16, 2016

/s/ Yin Shen ping

TECHNOLOGY, LTD

Yin Shen ping

Chief Executive Officer

Chief Executive

RECON TECHNOLOGY,

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the six and three months ended December 31, 2014 and 2015

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

Notes to Unaudited Condensed Consolidated Financial Statements

RECON TECHNOLOGY, LTD

CONDENSED CONSOLIDATED BALANCE SHEETS

INDEX TO UNAUDITED CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of June 30, 2015 and March 31, 2016

Unaudited Condensed Consolidated

Statements of Operations and Comprehensive Loss for the nine and three months ended March 31, 2015 and 2016

Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2015 and 2016

Notes to Unaudited Condensed

Consolidated Financial Statements

RECON TECHNOLOGY,

Consolidated Balance Sheets

As of Jun 30,

As of Dec 31,

As of Mar 31,

Current assets

Cash and cash equivalents

Notes receivable

8 unchanged sentences

Prepaid expenses - related parties

Deferred tax asset

Deferred tax assets

Total current assets

19 unchanged sentences

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

5,427,946 and 5,804,005 shares issued and outstanding as of June 30, 2015 and December 31, 2015, respectively)

5,427,946 and 5,804,005

shares issued and outstanding as of June 30, 2015 and March 31, 2016, respectively)

Additional paid-in capital

Appropriated retained earnings

Unappropriated retained earnings

Statutory reserve

Accumulated deficit

(23,024,935 )

6 unchanged sentences

part of these unaudited condensed consolidated financial statements

RECON TECHNOLOGY, LTD

CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS AND COMPREHENSIVE LOSS

For the six months ended

RECON TECHNOLOGY,

Consolidated Statements of OPERATIONS and Comprehensive LOSS

For the nine months ended

For the three months ended

17 unchanged sentences

Change in fair value of warrants liability

Loss from foreign currency exchange

Other income (expense)

Income (loss) from foreign currency exchange

Loss from warrants redemption

Other income (expense)

5 unchanged sentences

Net income attributable to non-controlling interest

Net Income (loss) attributable to Recon Technology, Ltd

Net Loss attributable to Recon Technology, Ltd

(20,995,182 )

$ (3,255,395 )

$ (1,492,771 )

Comprehensive income (loss)

5 unchanged sentences

Comprehensive income attributable to non-controlling interest

Comprehensive income (loss) attributable to Recon Technology, Ltd

Comprehensive loss attributable to Recon Technology,

(20,938,826 )

$ (3,246,657 )

$ (1,500,957 )

Earnings (loss) per common share - basic

4 unchanged sentences

part of these unaudited condensed consolidated financial statements.

RECON TECHNOLOGY, LTD

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

For the six months ended December 31,

RECON TECHNOLOGY,

Consolidated Statements of Cash Flows

For the nine months

ended March 31,

Cash flows from operating activities:

2 unchanged sentences

$ (3,255,395 )

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

Loss (Gain) from disposal of equipment

Adjustments to reconcile net income (loss) to net cash used in operating

Gain from disposal of equipment

Provision for doubtful accounts

Provision for slow moving inventories

Reversal of slow moving inventories

Share based compensation

2 unchanged sentences

Restricted shares issued for services

Loss from warrants redemption

Changes in operating assets and liabilities:

10 unchanged sentences

Trade accounts payable

Trade accounts payable-related parties

Other payables

Other payables-related parties

Deferred income

Deferred revenue

Advances from customers

2 unchanged sentences

Taxes payable

Net cash provided by (used in) operating activities

Net cash used in operating activities

(16,219,350 )

4 unchanged sentences

Cash flows from financing activities:

Proceeds from short-term bank loans

Repayments of short-term bank loans

4 unchanged sentences

Net cash provided by (used in) financing activities

Effect of exchange rate fluctuation on cash and cash equivalents

Net decrease in cash and cash equivalents

Effect of exchange rate fluctuation on cash and cash

Net decrease in cash

(13,428,717 )

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Cash at beginning of period

Cash at end of period

Supplemental cash flow information

3 unchanged sentences

Issuance of common stock to prepay 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.

Non-cash transaction for AR and short-term borrowings-related parties offset

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO THE UNAUDITED

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND NATURE OF OPERATIONS

Organization –

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

Shenping, Mr.

Chen Guangqiang and Mr.

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

Organization –Recon

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

Yin Shenping, Chen Guangqiang and Li Hongqi (the “Founders”) as a limited liability company.

The Company provides

1 unchanged sentence

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, 2010 , Recon-CI established one wholly owned subsidiary, Recon Investment

(“Recon-IN”) under the laws of HK.

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)

(“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:

BHD Petroleum Technology Co., Ltd.

(“BHD”), and

The Company, along with its wholly-owned

subsidiaries, Recon Technology Co., Limited (“Recon HK”), Jining Recon Technology Ltd.

(“Recon JN”), Recon

Investment Ltd.

(“Recon IN”) and Recon Hengda Technology (Beijing) Co., Ltd.

(“Recon BJ”), 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

(“BHD”),

Recon Technology Co., Ltd.

(“Nanjing Recon”).

(“Nanjing Recon”), and

BHD Petroleum equipment manufacturing Company, Ltd (“Hanghua BHD”).

On January 29, 2015, the Company increased

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

Chinese laws and regulations

currently do not prohibit or restrict foreign ownership in petroleum businesses.

However, Chinese laws and regulations do

prevent direct foreign investment in certain industries.

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, entitling Recon-JN to receive a majority of the residual returns.

On May 29, 2009 Recon-JN, 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.

December 15, 2010, the Founders held a 67.5% ownership interest in BHD.

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

and Chen 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.

Company allocates profits and losses of 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 of the PRC.

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

On December 1, 2015, the Company entered

into a share purchase agreement (the “SPA”) by and among Qinghai Hua You Downhole Technology Co., Ltd.

(“QHHY”),

China limited liability company, providing oilfield service in Qinghai province, the shareholders of QHHY, and Recon Hengda

Technology (Beijing) Co., Ltd., our wholly owned P.R.

China subsidiary (“Recon BJ”).

In conjunction with the SPA,

Recon BJ entered into a series of control agreements with QHHY and its shareholders related to the transfer of ownership in QHHY

The Control Agreements granting Recon BJ the right to provide exclusive technical consulting services to QHHY in

exchange for 100% of QHHY’s quarterly profit, among other things.

The Control Agreements will not become effective until

after the Company obtains shareholder approval of the transaction.

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:

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 -

3 unchanged sentences

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.

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™

Service - The Company mainly uses the Baker Hughes

FracPoint™

system and provides related service to oilfield companies.

The Baker Hughes FracPoint™

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

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

The use of this type of completion eliminated the need for

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

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

3 unchanged sentences

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

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

SIGNIFICANT ACCOUNTING POLICIES

3 unchanged sentences

been consistently applied.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary

for a fair presentation have been included.

These financial statements should be read in conjunction with the audited financial

statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended June 30, 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, 2016.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered

necessary for a fair presentation have been included.

These financial statements should be read in conjunction with the audited

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

3 unchanged sentences

consolidation.

Variable Interest Entities -

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

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

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

Variable Interest Entities - A

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

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

A VIE is consolidated

by its primary beneficiary.

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

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

could potentially be significant to the VIE.

The Company performs ongoing assessments to determine whether an entity should be

considered a VIE and whether an entity previously identified as a VIE continues to be a VIE and whether the Company continues

to be the primary beneficiary.

6 unchanged sentences

financial statements have been expressed in Chinese Yuan.

The unaudited condensed consolidated financial statements as of and for

the three months ended December 31, 2015 have been translated into United States dollars (“U.S.

The unaudited condensed consolidated financial statements as of and

for the nine months ended March 31, 2016 have been translated into United States dollars (“U.S.

dollars”) solely for

1 unchanged sentence

The translation has been made at the rate of ¥6.4494 = US$1.00, the approximate exchange rate

prevailing on December 31, 2015.

prevailing on March 31, 2016.

These translated U.S.

1 unchanged sentence

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.

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.

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.

5 unchanged sentences

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 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.

5 unchanged sentences

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

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Level 3 inputs to

6 unchanged sentences

this is due from the Company’s former VIE and there are no comparable markets for receivables with similar terms.

investment is measured at fair value which was determined to be zero during the six months ended December 31, 2015 using level

investment is measured at fair value which was determined to be zero during the nine months ended March 31, 2016 using level 1

(See Note 8.)

1 unchanged sentence

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 bank accounts are located in the PRC, those bank balances

are uninsured.

Trade Accounts and Other Receivables

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

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 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.

receivables arise from transactions with non-trade customers.

Other receivables arise from transactions with non-trade customers.

Purchase Advances - Purchase

13 unchanged sentences

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

Leasehold improvements are amortized

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

Long-term investment –

1 unchanged sentence

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

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.”

3 unchanged sentences

longer-term intent of retaining the investment in the investee.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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 December 31, 2015.

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 March 31, 2016.

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’

provisions have lapsed, or the Company has objective evidence that the criteria specified in customers’

(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 been satisfied.

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

have been resolved.

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

1 unchanged sentence

final acceptance of the arrangement.

The Company sells self-developed

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

Recognition.”

The Company sells self-developed software.

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

Revenue from software is recognized according to project contracts.

Contract costs are accumulated

during the periods of installation and testing or commissioning.

Contract costs are accumulated during the periods of installation

and testing or commissioning.

Usually this is short term.

Revenue is not recognized until

completion of the contracts and receipt of acceptance statements.

Revenue is not recognized until completion of the contracts and receipt

of acceptance statements.

The Company provides services to improve

4 unchanged sentences

billed to customers related to sales contracts.

Subsidy Income - Grants are

given by the government to support local software companies’

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

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.

1 unchanged sentence

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.

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 using the Binomial Lattice valuation model estimated

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

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Income Taxes - Income taxes

13 unchanged sentences

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.

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.

1 unchanged sentence

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

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

equivalents outstanding.

EPS are computed by dividing net income (loss) 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

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 and six months ended December 31, 2014 and 2015.

a net loss during the three months and nine months ended March 31, 2015 and 2016.

Recently Issued Accounting Pronouncements -

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

In August 2015, the FASB 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

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

In November 2015, the FASB issued Accounting

Standards Update (ASU) No.

2015-17, Income Taxes (Topic 740):

Balance Sheet Classification of Deferred Taxes, which changes how

deferred taxes are classified on organizations’

balance sheets.

The ASU eliminates the current requirement for organizations

to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet.

Instead, organizations

will be required to classify all deferred tax assets and liabilities as noncurrent.

The amendments apply to all organizations that

present a classified balance sheet.

For public companies, the amendments are effective for financial statements issued for annual

periods beginning after December 15, 2016, and interim periods within those annual periods.

The Company does not expect this update

will have a material impact on the presentation of the Company's consolidated financial position, results of operations and cash

In January 2016, the FASB issued Accounting

5 unchanged sentences

The new guidance makes targeted improvements to existing U.S.

(1) Requiring equity investments

to be measured at fair value with changes in fair value recognized in net income;

(2) Requiring separate presentation of financial

assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes

to the financial statements;

(3) Eliminating the requirement for public business entities to disclose the method(s) and significant

assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost

on the balance sheet;

(4) Requiring a reporting organization to present separately in other comprehensive income the portion

of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk.

The new guidance

is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal

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

financial position, results of operations and cash flows.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

(1) Requiring equity

investments to be measured at fair value with changes in fair value recognized in net income;

(2) Requiring separate presentation

of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the

accompanying notes to the financial statements;

(3) Eliminating the requirement for public business entities to disclose the method(s)

and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured

at amortized cost on the balance sheet;

(4) Requiring a reporting organization to present separately in other comprehensive

income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit

The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim

periods within those fiscal years.

The Company does not expect this update will have a material impact on the presentation of

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

In February 2016, the FASB issued ASU

2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840).

requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged.

The amendments in

this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years.

application is permitted for all entities.

ASU 2016-02 requires a modified retrospective approach for all leases existing at,

or entered into after, the date of initial application, with an option to elect to use certain transition relief.

is currently evaluating the impact of this new standard on its consolidated financial statements.

In March 2016, the FASB issued Accounting

Standards Update No.

2016-06, Derivatives and Hedging (Topic 815):

Contingent Put and Call Options in Debt Instruments.

The amendments

apply to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined

to have a debt host) with embedded call (put) options.

The amendments clarify what steps are required when assessing whether the

economic characteristics and risks of call (put) options are clearly and closely related to the economic characteristics and risks

of their debt hosts, which is one of the criteria for bifurcating an embedded derivative.

Consequently, when a call (put) option

is contingently exercisable, an entity does not have to assess whether the event that triggers the ability to exercise a call

(put) option is related to interest rates or credit risks.

Public business entities must apply the new requirements for fiscal

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

All other entities must apply the new requirements

for fiscal years beginning after December 15, 2017 and interim periods within fiscal years beginning after December 15, 2018.

All entities have the option of adopting the new requirements early, including adoption in an interim period.

If an entity early

adopts the new requirements in an interim period, it must reflect any adjustments as of the beginning of the fiscal year that

includes that interim period.

The Company does not expect any material impact of this new standard on its consolidated financial

In March 2016, the FASB issued Accounting

Standards Update No.

2016-07, Investments - Equity Method and Joint Ventures (Topic 323):

Simplifying the Transition to the Equity

Method of Accounting.

The amendments affect all entities that have an investment that becomes qualified for the equity method

of accounting as a result of an increase in the level of ownership interest or degree of influence.

The amendments eliminate the

requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership

interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively

on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held.

The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the

current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment

becomes qualified for equity method accounting.

Therefore, upon qualifying for the equity method of accounting, no retroactive

adjustment of the investment is required.

The amendments require that an entity that has an available-for-sale equity security

that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated

other comprehensive income at the date the investment becomes qualified for use of the equity method.

The amendments are effective

for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016.

The amendments

should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence

that result in the adoption of the equity method.

Earlier application is permitted.

The Company is currently evaluating the impact

of this new standard on its consolidated financial statements.

In April 2016, the FASB released ASU 2016-09,

Compensation - Stock Compensation (Topic 718):

Improvements to Employee Share-Based Payment Accounting .

The ASU includes

multiple provisions intended to simplify various aspects of the accounting for share-based payments.

While aimed at reducing the

cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income,

EPS, and the statement of cash flows.

Implementation and administration may present challenges for companies with significant

share-based payment activities.

The ASU is effective for public companies in annual periods beginning after December 15, 2016,

and interim periods within those years.

The Company is currently evaluating the impact of this new standard on its consolidated

financial statements.

In April 2016, FASB issued Accounting

Standards Update No.

2016-10, Revenue from Contracts with Customers (Topic 606):

Identifying Performance Obligations and Licensing .

The amendments clarify the following two aspects of Topic 606:

(a) identifying performance obligations;

licensing implementation guidance.

The amendments do not change the core principle of the guidance in Topic 606.

The effective

date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606.

Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim

reporting periods therein (i.e., January 1, 2018, for a calendar year entity).

Early application for public entities is permitted

only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting

The Company is currently evaluating the impact of this new standard on its consolidated financial statements.

TRADE ACCOUNTS RECEIVABLE, NET

Accounts receivable consisted of the following:

June 30, 2015

December 31, 2015

Trade accounts receivable

Allowance for doubtful accounts

Total - third- party, net

June 30, 2015

December 31, 2015

for doubtful accounts

third- party, net

Related Party

Beijing Langchen Construction Company

Xiamen Huangsheng Hitek Computer Network Co.Ltd.

Xiamen Henda Hitek Computer Network Co.

Total - related-parties, net

June 30, 2015

December 31, 2015

Beijing Langchen Construction

Xiamen Huangsheng Hitek Computer

Network Co.Ltd.

Hitek Computer Network Co.

related-parties, net

Third Party –

Beijing Yabei Nuoda Science and Technology Co.

Allowance for doubtful accounts

Total - long-term trade accounts receivable, net

Beijing Yabei Nuoda

Science and Technology Co.

for doubtful accounts

long-term trade accounts receivable, net

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 September 2, 2015, the outstanding balance will be collected in two years beginning

2017, with each installment of ¥2,467,036 ($380,000).

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Based on the repayment agreement signed on September 2, 2015, the outstanding balance was to be collected in two years beginning

in 2017, with each installment of ¥2,467,036 ($380,000).

During the nine months period ended March 31, 2016, the Company enhanced

collection of long aging accounts receivable and thus reduced the outstanding balance of Yabei Nuoda, significantly.

OTHER RECEIVABLES, NET

Other receivables consisted of the following:

June 30, 2015

December 31, 2015

Current Portion

3 unchanged sentences

Deposits for projects

Allowance for doubtful accounts

June 30, 2015

December 31, 2015

for doubtful accounts

Provision for other receivables were ¥93,500

and ¥309,000 ($47,912) for the nine months ended March 31, 2015 and 2016, respectively.

Non-Current Portion

Due from ENI (A)

(A) After ENI ceased to

be a VIE of the Company, ENI in January 2012 agreed to repay the loan on a payment schedule, with interest accrued during the

period at an annual rate of 4%.

In accordance with the payment schedule, the principal plus accrued interest is required to be

repaid over approximately three years on a quarterly basis beginning March 2012.

The first four payments were RMB 1.2 million

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

Starting March 2013, installments

for each quarter would be ¥1,777,653.

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

On September 30,

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

According to the new arrangement,

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

The Company has continued

to receive the payments under the agreement.

(B) Loans to third-parties

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

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 were RMB 1.2 million each.

In March, June, September and December

of 2012, the Company received RMB 4.8 million.

Starting March 2013, installments for

each quarter would be ¥1,777,653.

The Company received the payments on time in March

and June, 2013.

On September 30, 2013, ENI proposed to extend the payment period and

signed a new contract with the Company.

According to the new arrangement, the remaining

part of this loan will be repaid over four years with quarterly installments of ¥699,147.

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

to third-parties are mainly used for short-term funding to support the Company’s

external business partners.

These loans are due on demand bearing no interest.

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

products through customer approval and acceptance.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

advance to staff represents advances for business travel and sundry expenses related

to oilfield or on-site installation and inspection of products through customer approval

and acceptance.

PURCHASE ADVANCES

2 unchanged sentences

Purchase advances consisted of the following:

Prepayment for inventory purchase

Allowance for doubtful accounts

Prepayment for inventory

for doubtful accounts

Provision for purchase advances were ¥88,678

and ¥3,836,441 ($594,857) for the nine months ended March 31, 2015 and 2016, respectively.

Inventories consisted of the following:

3 unchanged sentences

Finished goods

Allowance for slow moving inventory

Total inventories, net

provision for slow moving inventory was ¥

87,558 ($13,490) for the six months ended December 31, 2015.

for slow moving inventory

Total inventories,

reversal of slow moving inventory was nil and ¥95,122 ($14,749) for the nine months ended March 31, 2015 and 2016.

PROPERTY AND EQUIPMENT, NET

2 unchanged sentences

Office equipment and fixtures

Leasehold improvement

Total property and equipment

Accumulated depreciation

Property and equipment, net

Depreciation expense was ¥153,164 and

¥236,303($36,406) for the three months ended December 31, 2014 and 2015, respectively.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

and equipment, net

Depreciation expense was ¥94,773 and

¥496,070 ($76,428) for the six months ended December 31, 2014 and 2015, respectively.

¥232,022 ($35,976) for the three months ended March 31, 2015 and 2016, respectively.

Depreciation expense was ¥369,284

and ¥728,092 ($112,894) for the nine months ended March 31, 2015 and 2016, respectively.

LONG-TERM INVESTMENT

On June 28, 2013, the Company purchased

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

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

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, 2015 and December 31, 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 AOGN.

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

Based on the 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 to write its investment down

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

("Avalon") for $0.089 per share,

or approximately ¥1.5 million ($250,000).

Since the restriction for the shares is for two years, the Company was able to acquire

the shares at 50% of the market value.

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 March 31, 2016, Recon owned

16.92% and 15.39% 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 engages in the acquisition, exploration and development of oil

and gas producing properties in the US.

Based on the available information and discussion with the management team of Avalon,

the Company 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 to

write its investment down to zero.

On April 13, 2015, BHD reached an agreement

to invest RMB 80 million in Huanghua Heng Da Xiang Tong Manufacture Ltd (“HHBHD”) for a 54.05% ownership interest.

to invest RMB 80 million in Huanghua Heng Da Xiang Tong Manufacture Ltd (“HHBHDXT”) for a 54.05% ownership interest.

BHD’s board of Directors and shareholders approved the transaction to invest in HHBHD.

3 unchanged sentences

of investment is on position.

As of February 16, 2016, no payment was made to HHBHD for this investment and BHD did not have

control or significant influence over HHBHD.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

On March 18, 2016, BHD decided to terminate this investment transaction with HHBHDXT, and was no

longer a shareholder of HHBHDXT.

As of this termination, no payment was ever made to HHBHDXT.

OTHER PAYABLES

Other payables consisted of the following:

June 30, 2015

Consulting services

1 unchanged sentence

Funds collected on behalf of others

June 30, 2015

Related Party

1 unchanged sentence

Expenses paid by the major shareholders

Due to management staff for costs incurred on behalf of Recon

Due to family member of one owner

Due to management

staff for costs incurred on behalf of Recon

TAXES PAYABLE

1 unchanged sentence

consisted of the following:

June 30, 2015

December 31, 2015

Enterprise income tax payable

Other taxes payable

Total taxes payable

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

SHORT-TERM BANK LOAN

SHORT-TERM BANK LOANS

Short-term bank loans consisted of the following:

June 30, 2015

December 31, 2015

Industrial and Commercial Bank, floating interest rate at 6.12 %, due on June 19, 2016

Total short-term bank loans

expense for the short-term bank loan was ¥80,667 and ¥106,242 ($16,368) for the three months ended December 31, 2014 and

Industrial and Commercial

Bank, floating interest rate at 6.12 %, due on June 19, 2016

and Commercial Bank, floating interest rate at 5.37 %, due on July 19, 2016

Total short-term

expense for the short-term bank loans was ¥162,000 and ¥108,239 ($16,783) for the three months ended March 31, 2015 and

2016, respectively.

expense for the short-term bank loan was ¥238,178 and ¥214,649 ($33,070) for the six months ended December 31, 2014 and

expense for the short-term bank loans was ¥400,178 and ¥322,888 ($50,065) for the nine months ended March 31, 2015 and

2016, respectively.

1 unchanged sentence

Short-term borrowings due to related

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

Short-term borrowing from a Founder, 6.06% annual interest, due on October 2, 2015

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

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

Short-term borrowing from a Founder, 5.75% annual interest, due on September 25, 2016

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

Short-term borrowing

from a Founder, 7.2% annual interest, due on October 20, 2015

Short-term borrowing from a Founder,

6.06% annual interest, due on October 2, 2015

Short-term borrowing from a Founder,

5.13% annual interest, due on October 12, 2015

Short-term borrowing from a Founder's

family member, no interest, due on various dates

Short-term borrowing from a Founder,

5.75% annual interest, due on September 25, 2016

Short-term borrowings from Xiamen

Huasheng Haitian Computer Network Co.

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

Short-term borrowing from a Founder, 5.75% annual interest,due on October 10, 2016

Short-term borrowing from a Founder, 5.43% annual interest,due on November 4, 2016

Total short-term borrowings due to related parties

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

expense for short-term borrowings due to related parties was ¥146,445 and ¥86,071 ($13,261) for the three months

ended December 31 , 2014 and 2015, respectively.

expense for short-term borrowings due to related parties was ¥230,778 and ¥257,519 ($39,675) for the six months

ended December 31 , 2014 and 2015, respectively.

Short-term borrowing from a Founder,

5.75% annual interest, due on October 10, 2016

Short-term borrowing from a Founder,

5.43% annual interest, due on November 4, 2016

borrowing from a Founder, 5.22% annual interest, due on March 10, 2017

Total short-term

borrowings due to related parties

Interest expense for short-term borrowings due to related parties

was ¥177,109 and ¥92,382 ($14,324) for the three months ended March 31, 2015 and 2016, respectively.

Interest expense for short-term borrowings

due to related parties was ¥407,887 and ¥349,901 ($54,254) for the nine months ended March 31, 2015 and 2016, respectively.

SHAREHOLDERS’

Stock offering –

the six months ended December 31, 2015, the Company offered 15,874 ordinary shares under the same purchase agreement from June

the nine months ended March 31, 2016, the Company offered 15,874 ordinary shares under the same purchase agreement from June 2015.

The net cash proceeds received from the stock offering were ¥168,319 ($26,098).

2 unchanged sentences

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

In accordance with the PRC

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

In accordance with the

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

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

of the companies.

As of June 30, 2015 and December 31, 2015, the balance of total statutory reserves was ¥4,148,929 and ¥4,148,929

As of June 30, 2015 and March 31, 2016, the balance of total statutory reserves was ¥4,148,929 and ¥4,148,929

($643,310), respectively.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

STOCK-BASED COMPENSATION

Stock-Based Awards Plan

The following

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

Outstanding Options

Exercisable Options

following is a summary of the status of options outstanding and exercisable at March 31, 2016:

Average Exercise

Remaining Contractual life (Years)

Average Exercise

Remaining Contractual life (Years)

Restricted Shares

As of December 31, 2015, the Company has

As of March 31, 2016, the Company has

granted restricted shares of common stock, which are still vesting, to senior management and consultants.

During the six months

ended December 31, 2015, the following grants were made:

On October 18, 2015, the Company agreed

to issue a total of 800,000 restricted shares to its employees and non-employee director as compensation cost for awards.

value of the restricted shares was $704,000 based on the closing stock price $0.88 at October 18, 2015.

On November 16, 2015, the Company agreed

to issue a total of 100,000 restricted shares to two investor relations firms in exchange for services.

During the nine months

ended March 31, 2016, the following grants were made:

October 18, 2015, the Company agreed to issue a total of 800,000 restricted shares to

its employees and non-employee director as compensation cost for awards.

The fair value

of the restricted shares was $704,000 based on the closing stock price $0.88 at October

November 16, 2015, the Company agreed to issue a total of 100,000 restricted shares to

two investor relations firms in exchange for services.

The fair value of the restricted

shares was $108,400 based on the closing stock price $1.08 at November 16, 2015.

On November 19, 2015, the Company issued

260,185 restricted shares to Bei Jing Tian Hong Tong Xin Technology Co.

(“BJTH”) for certain mold and software

November 19, 2015, the Company issued 260,185 restricted shares to Bei Jing Tian Hong

Tong Xin Technology Co.

(“BJTH”) for certain mold and software platform

development services.

The fair value of the restricted shares was $247,176 based on the closing stock price $0.95 at November

The Share-based compensation expense

recorded for stock options granted were ¥409,418 and ¥1,029,822 ($158,661) for the six months ended December 31, 2014

and 2015, respectively.

The Share-based compensation expense recorded for stock options granted were ¥162,277 and

¥520,294 ($80,160) for the three months ended December 31, 2014 and 2015, respectively.

The total unrecognized

share-based compensation expense for stock options as of December 31, 2015 was approximately ¥3.8 million ($0.59

million), which is expected to be recognized over a weighted average period of approximately 1.90 years.

The Share-based compensation expense

recorded for restricted shares granted were ¥705,612 and ¥1,543,756 ($237,841) for the six months ended December 31,

2014 and 2015, respectively.

The Share-based compensation expense recorded for restricted shares granted were ¥352,175

and ¥926,732 ($142,778) for the three months ended December 31, 2014 and 2015, respectively.

The total unrecognized

share-based compensation expense for restricted shares granted as of December 31, 2015 was approximately ¥7.92 million

($1.22 million), which is expected to be recognized over a weighted average period of approximately 2.27 years.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The fair value of the restricted shares was $247,176 based on the

closing stock price $0.95 at November 19, 2015.

The Share-based compensation expense recorded

for stock options granted were ¥797,016 and ¥1,564,094 ($242,519) for the nine months ended March 31, 2015 and 2016, respectively.

The Share-based compensation expense recorded for stock options granted were ¥387,598 and ¥534,277 ($82,842) for the three

months ended March 31, 2015 and 2016, respectively.

The total unrecognized share-based compensation expense for stock options

as of March 31, 2016 was approximately ¥3.3 million ($0.51 million), which is expected to be recognized over a weighted average

period of approximately 1.66 years.

The Share-based compensation expense recorded

for restricted shares granted were ¥1,226,745 and ¥2,569,948 ($398,482) for the nine months ended March 31, 2015 and 2016,

respectively.

The Share-based compensation expense recorded for restricted shares granted were ¥521,133 and ¥1,026,192

($159,116) for the three months ended March 31, 2015 and 2016, respectively.

The total unrecognized share-based compensation expense

for restricted shares granted as of March 31, 2016 was approximately ¥6.9 million ($1.1 million), which is expected to be

recognized over a weighted average period of approximately 2.07 years.

Following is a summary of the restricted

stock grants:

Restricted stock grants

Restricted stock

Non-vested as of June 30, 2015

Non-vested adjustment

Non-vested as of December 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

Non-vested as of March 31,

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 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.

BHD reapplied for high-technology enterprise approval and successfully got the approval

on November 25, 2015.

Nanjing Recon was approved as a government-certified high –technology

company on December 11, 2013 and is subject to a reduced income tax rate of 15% through December 11, 2016.

Nanjing Recon 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 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 a reduced income tax rate

of 15% through November 2015.

BHD reapplied for high-technology enterprise approval and successfully got the approval on November

Thus, the valid date of BHD’s high-technology enterprise certificate is extended to November 25, 2018.

Deferred tax asset is comprised of the following:

Allowance for doubtful receivables

Net operating loss carry forward

Total deferred income tax assets

Allowance for doubtful

Net operating

loss carry forward

Total deferred

income tax assets

Deferred tax liability is comprised of the following:

Income tax cost due to unpayable accounts

Total deferred income tax liability

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

tax cost due to unpayable accounts

Total deferred

income tax liability

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

For the three months

ended December 31,

Current income tax provision

For the three months ended March 31,

Current income tax

Adjust over accrued income taxes

Deferred income taxes provision (benefit)

Provision (benefit) for income tax

For the six months

ended December 31,

Current income tax provision

Adjust over accrued tax of prior years

Deferred income taxes provision (benefit)

Provision (benefit) for income tax

income taxes provision (benefit)

(benefit) for income tax

the nine months ended March 31,

Current income tax

Adjust over accrued tax of prior

income taxes provision (benefit)

(benefit) for income tax

NON-CONTROLLING INTEREST

1 unchanged sentence

interest consisted of the following:

As of June 30, 2015

of June 30, 2015

Paid-in capital

Unappropriated retained earnings

Accumulated other comprehensive loss

Total noncom-trolling interest

As of December 31, 2015

other comprehensive loss

Total noncom-trolling

of March 31, 2016

Paid-in capital

Unappropriated retained earnings

Accumulated other comprehensive loss

Total non-controlling interest

other comprehensive loss

Total non-controlling

CONCENTRATIONS

For the three months ended December 31,

2014 and 2015, the two largest customers, China National Petroleum Corporation (“CNPC”) and China Petroleum & Chemical

Corporation Limited (“SINOPEC”), represented approximately 58.83%, 10.35% and 76.76%, 10.03% of the Company’s

revenue, respectively.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

For the six months ended December

31, 2014 and 2015, the two largest customers, China National Petroleum Corporation (“CNPC”) and China Petroleum

& Chemical Corporation Limited (“SINOPEC”), represented approximately 56.79% and 8.89%, and 74.63% and

11.54% of the Company’s revenue, respectively.

For the three months ended December 31,

2014, one major supplier accounted for 20% of the company’s total purchases.

For the three months ended December 31, 2015,

two major suppliers accounted for 68% of the Company’s total purchases.

For the six months ended December 31, 2014,

For the three months ended March 31, 2015 and 2016, the one

largest customer, China National Petroleum Corporation (“CNPC”), represented approximately 29.65% and 71.17% of

the Company’s revenue, respectively.

the nine months ended March 31, 2015 and 2016, the two largest customers, China National Petroleum Corporation (“CNPC”)

and China Petroleum & Chemical Corporation Limited (“SINOPEC”), represented approximately 44.89%, and 7.70%, and

74.21% and 10.19% of the Company’s revenue,

respectively.

For the three months ended March 31, 2015, one major supplier

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

For the three months ended March 31, 2016, two major suppliers accounted

for 36% 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.

For the six months ended December 31, 2015, two major

For the nine months ended March 31, 2016, two major

suppliers accounted for 50% of the Company’s total purchases.

COMMITMENTS AND CONTINGENCY

(a) Office Leases

The Company leases three offices in Beijing

2 unchanged sentences

Future payments under such leases are as follows

as of December 31, 2015:

Twelve months ending December 31,

Office lease payment

as of March 31, 2016:

months ending March 31,

lease payment

(b) Contingency

4 unchanged sentences

service provided by the employees.

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

As of March 31, 2016, the Company estimated its severance payments of approximately ¥1.6

million ($0.25 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.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

RELATED PARTY TRANSACTIONS

Purchases from related parties –

from related parties consisted of the following:

the three months ended December 31,

Huanghua Xiang Tong Manufacture

Xiamen Huangsheng Hitek Computer Network Co.Ltd.

Purchase from related parties

the six months ended December 31,

Huanghua Xiang Tong Manufacture

Xiamen Huangsheng Hitek Computer Network Co.Ltd.

Purchase from related parties

There was no purchases from related party for the three month

periods ended March 31, 2015 and 2016.

the nine months ended March 31 ,

Huanghua Xiang Tong

Xiamen Huangsheng

Hitek Computer Network Co.Ltd.

from related parties

Account payable due to related parties

- The Company purchased automation products and heating furnaces from Xiamen Huangsheng Hitek Computer Network Co.Ltd and

Huanghua Xiang Tong, the ending balance of accounts payable due to the two related parties as of December 31, 2015 and June 30,

2015 is RMB 2,736,879 ($421,662) and RMB 3,528,705, respectively.

- The Company purchased automation products and heating furnaces from Xiamen Huangsheng Hitek Computer Network Co.Ltd

(Huangsheng Hitek) and Huanghua Xiang Tong, the ending balance of accounts payable due to Huangsheng Hitek as of March 31, 2016

and June 30, 2015 were both nil.

On March 18, 2016, the Company terminated its equity investment in Huanghua Xiang Tong and therefore

has no related-party relationship with this entity after March 18, 2016.

Leases from related parties

4 unchanged sentences

Yin and his family member

started from May 10, 2015.

started from April 1, 2016.

The one-year lease agreements between BHD and Mr.

4 unchanged sentences

parties - The Company borrowed ¥16,916,905 and ¥8,557,771 ($1,326,920) from the Founders and their family members

as of June 30, 2015 and December 31, 2015, respectively.

as of June 30, 2015 and March 31, 2016, respectively.

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

2 unchanged sentences

Yin and the major owner of BHD, Mr.

Chen paid certain operating expense for

As of June 30, 2015 and December 31, 2015, ¥1,558,738 and ¥1,220,503($188,039) was due to them, respectively.

RECON TECHNOLOGY, LTD

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Chen paid certain operating expenses for

As of June 30, 2015 and March 31, 2016, ¥1,558,738 and ¥2,764,390 ($428,631) was due to them, respectively.

Variable Interest Entities

4 unchanged sentences

Summary information regarding consolidated VIEs is as follows:

June 30, 2015

Current Assets

Cash and cash equivalents

Notes receivable

2 unchanged sentences

Total current assets

Non-current assets

Trade accounts payable

1 unchanged sentence

Other liabilities

Total current liabilities

Total Liabilities

The financial performance of VIEs reported

in the unaudited condensed consolidated statement of operations and comprehensive income for the three months ended December 31,

2015 includes revenues of ¥28,842,430 ($4,443,655), operating expenses of ¥7,404,066 ($1,140,719), and net loss of ¥1,142,211

Total current

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

for the three months ended March 31, 2016 includes revenues of ¥4,539,099 ($703,807), operating expenses of ¥4,780,316

($741,209), and net loss of ¥4,478,185 ($694,362).

The financial performance of VIEs reported

in the unaudited condensed consolidated statement of operations and comprehensive income for the six months ended December 31,

in the unaudited condensed consolidated statement of operations and comprehensive income for the nine months ended March 31, 2016

includes revenues of ¥36,975,489 ($5,733,212), operating expenses of ¥16,546,759 ($2,565,648), and net loss of ¥9,578,364

($1,485,167).

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