Recon Technology, Ltd.

Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
For the transition period from                        to                        
Commission file number 001-34409
RECON TECHNOLOGY, LTD
(Exact name of Registrant as specified in its charter)
 
Cayman Islands
(Jurisdiction of incorporation or organization)
 
Room 601, No. 1 Shui’an South Street
Chaoyang District, Beijing 100012
People’s Republic of China
(Address of principal executive offices)
 
Liu Jia, Chief Financial Officer
Telephone: +86 (10) 8494 5799
liujia@recon.cn; Fax: +86 (10) 8494 5792
Room 601, No. 1 Shui’an South Street
Chaoyang District, Beijing 100012
People’s Republic of China
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
    
Name of each exchange on which registered
Class A Ordinary Shares, $0.0001 par value per share
 
 NASDAQ Capital Market
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual
report: 7,987,959 Class A Ordinary Shares.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes    ☒ No

Table of Contents
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
☐ Yes    ☒ No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
☒ Yes    ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files).
☒ Yes    ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.
See definition of “large accelerated filer, “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
   
Accelerated filer ☐
    
Non-accelerated filer ☒
 
 
 
 
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected
not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the
Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting
Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b) by the registered public accounting firm that
prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☒
    
International Financial Reporting Standards as issued

by the International Accounting Standards Board ☐
    
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected
to follow.
☐ Item 17    ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act
of 1934).
☐ Yes    ☒ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
☐ Yes    ☐ No

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3
Table of Contents
    
     Page
PART I
5
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
8
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
8
ITEM 3.
KEY INFORMATION
8
ITEM 4.
INFORMATION ON THE COMPANY
38
ITEM 4A.
UNRESOLVED STAFF COMMENTS
65
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
65
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
81
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
89
ITEM 8.
FINANCIAL INFORMATION
91
ITEM 9.
THE OFFER AND LISTING
92
ITEM 10.
ADDITIONAL INFORMATION
92
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
102
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
103
PART II
103
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
103
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
103
ITEM 15.
CONTROLS AND PROCEDURES
103
ITEM 15T.
CONTROLS AND PROCEDURES
106
ITEM 16.
[RESERVED]
107
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
107
ITEM 16B.
CODE OF ETHICS
107
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
107
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
108
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
108
ITEM 16F.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
108
ITEM 16G.
CORPORATE GOVERNANCE
109
ITEM 16H.
MINE SAFETY DISCLOSURE
109
ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
109
ITEM 16J.
INSIDER TRADING POLICIES
110
ITEM 16K.
CYBERSECURITY
110
PART III
111
ITEM 17.
FINANCIAL STATEMENTS
111
ITEM 18.
FINANCIAL STATEMENTS
111
ITEM 19.
EXHIBITS
112

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4
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this annual report with respect to the Company’s current plans, estimates, strategies and beliefs and other statements that are
not historical facts are forward-looking statements about the future performance of the Company. Forward-looking statements include, but are not
limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,”
“aim,” “intend,” “seek,” “may,” “might,” “could” or “should,” and words of similar meaning in connection with a discussion of future operations,
financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials
released to the public. These statements are based on management’s assumptions, judgments and beliefs in light of the information currently
available to it. The Company cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from
those discussed in the forward-looking statements, including but not limited to, product and service demand and acceptance, changes in technology,
economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with
the Securities and Exchange Commission. Therefore, investors should not place undue reliance on such forward-looking statements. Actual results
may differ significantly from those set forth in the forward-looking statements.
All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by
the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company
disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

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5
PART I
We are a Cayman Islands holding company. We are not a Chinese operating company, and do not conduct business operations directly in
China. All China operations are conducted by our subsidiaries established in the People’s Republic of China (“PRC” or “China”) and in the Hong
Kong Special Administrative Region of the People’s Republic of China (“HKSAR” or “Hong Kong”), and by our contractual arrangements with
variable interest entities, or “VIEs,” and the VIEs’ subsidiaries located in China. This structure involves unique risks to investors. The VIE structure
provides contractual exposure to foreign investment in Chinese-based companies, pursuant to which U.S. GAAP accounting rules require us to
consolidate such VIEs’ financial results in our financial statements. VIE structures are generally used where Chinese law prohibits direct foreign
investment in the operating companies. Investors may never directly hold equity interests in the Chinese operating companies. Unless otherwise
stated, as used in this report and in the context of describing our operations and consolidated financial information, “we,” “us,” “Company,” or
“our,” refers to Recon Technology, Ltd, a Cayman Islands exempted limited company, together with our subsidiaries. “Our subsidiaries” refer to
Recon Investment Ltd., Recon Hengda Technology (Beijing) Co. Ltd., Shandong Recon Renewable Resources Technology Co., Ltd. and Guangxi
Recon Renewable Resources Technology Co., Ltd. or Recon-IN, Recon-BJ, Recon-SD, and Recon-GX, respectively. “VIEs” refers to the PRC
variable interest entities and their subsidiaries (Nanjing Recon Technology Co., Beijing BHD Petroleum Technology Co., Gan Su BHD
Environmental Technology Co. Ltd, Huang Hua BHD Petroleum Equipment Manufacturing Co. Ltd., and Qing Hai BHD New Energy Technology
Co. Ltd., Future Gas Station (Beijing) Technology, Ltd., or “Nanjing Recon,” “BHD,” “Gan Su BHD,” “HH BHD,” “Qing Hai BHD,” and “FGS”
respectively). You are not investing in Nanjing Recon, BHD, Gan Su BHD, HH BHD, Qing Hai BHD, or FGS. Instead, we entered into certain
contracts (the “VIE Agreements”) dated April 1, 2019, which are used to provide investors exposure to foreign investment in China-based
companies where Chinese law prohibits or restricts direct foreign investment in the operating companies. A wholly foreign-owned entity (“WFOE”)
is a limited liability company based in the People’s Republic of China but wholly owned by foreign investors. In our instance, Recon-BJ is a WFOE
wholly owned by us through our subsidiary, Recon-IN, a Hong Kong limited company. As a result of our direct ownership in the WFOE and the VIE
Agreements, we are regarded as the primary beneficiary of the VIE for accounting purposes.
We mainly conduct our business through the VIEs, Nanjing Recon, BHD and their respective subsidiaries by means of Contractual
Arrangements. Because we do not hold equity interests in the VIEs and their subsidiaries, we are subject to risks due to the uncertainty of the
interpretation and application of the PRC laws and regulations regarding VIEs and the VIE structure, including but not limited to regulatory review
of overseas listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the contractual arrangements with the
VIEs. We are also subject to the risk that the PRC government could disallow the VIE structure, which would likely result in a material change in
our operations and as a result the value of Securities may depreciate significantly or become worthless. At the time of this filing, the Contractual
Agreements have not been tested in a court of law.
For U.S. GAAP purposes, each VIE has its own operating cash flow. Cash flow between our Company and the VIEs primarily consists of
transfers from us to the VIEs for supplemental working capital, which is mainly used in purchase of materials and payment of operating expenses
and investments. In addition, the VIEs occasionally make payments on our behalf when we experience a cash shortage. For the fiscal years ended
June 30, 2024, 2023 and 2022, the net cash transferred from the Company to the VIEs were RMB84,211,565, RMB69,562,912 and RMB55,569,342,
respectively. There were no cash transferred from the VIEs to the Company or fees paid on behalf of the Company by the VIEs during the years
ended June 30, 2024, 2023 and 2022. Neither we nor the VIEs have present plans to distribute earnings or settle amounts owed under the Contractual
Agreements. Cash in the VIEs are expected to be retained for business growth and operation. No dividends or distributions have been declared to
pay to us from our subsidiaries or the VIEs. No dividends or distributions were made to any U.S. investors.

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6
We are also subject to legal and operational risks associated with being based in and having the majority of the Company’s and VIEs’
operations in China. These risks may result in a material change in our operations, or a complete hindrance of our ability to offer or continue to offer
our securities to investors and could cause the value of our securities to significantly decline or become worthless. Recently, the PRC government
initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on
illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structures,
adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.
On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council
jointly issued an announcement to crack down on illegal activities in the securities market and promote the high-quality development of the capital
market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and
judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial
application of the PRC securities laws. On July 10, 2021, the PRC State Internet Information Office issued the Measures of Cybersecurity Review
(Revised Draft for Comments, not yet effective), which requires cyberspace operators with personal information of more than 1 million users who
want to list abroad to file a cybersecurity review with the Office of Cybersecurity Review. Furthermore, the Chinese education sector is going
through a series of reforms and new laws and guidelines have been recently promulgated and released to regulate our industry. As of the date of this
report, these new laws and guidelines have not impacted the Company’s ability to conduct its business, accept foreign investments, or list on a U.S.
or other foreign exchange because the Company and the VIEs are not involved in the education industry and do not maintain data of more than 1
million users; however, there are uncertainties in the interpretation and enforcement of these new laws and guidelines, which could materially and
adversely impact our business and financial outlook. On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas
Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines, which came into effect on March 31,
2023. Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, shall complete
filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working days following its submission of initial
public offerings or listing application. If a domestic company fails to complete required filing procedures or conceals any material fact or falsifies
any major content in its filing documents, such domestic company may be subject to administrative penalties, such as order to rectify, warnings,
fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to
administrative penalties, such as warnings and fines.
On February 24, 2023, the CSRC, together with Ministry of Finance of the PRC, National Administration of State Secrets Protection and
National Archives Administration of China, revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas
Securities Offering and Listing which was issued by the CSRC, National Administration of State Secrets Protection and National Archives
Administration of China in 2009, or the Provisions. The revised Provisions is issued under the title the Provisions on Strengthening Confidentiality
and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, and came into effect on March 31, 2023 together
with the Trial Measures. One of the major revisions to the revised Provisions is expanding its application to cover indirect overseas offering and
listing, as is consistent with the Trial Measures. The revised Provisions require that, including but not limited to (a) a domestic company that plans
to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities
companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of
government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at
the same level; and (b) domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to
relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and
materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable
national regulations.
Any failure or perceived failure by the Company, the Company’s subsidiaries in China or the VIE to comply with the above confidentiality
and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in that the relevant entities
would be held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of
committing a crime. As there are still uncertainties regarding the interpretation and implementation of such regulatory guidance, we cannot assure
you that we will be able to comply with new regulatory requirements relating to our future overseas capital-raising activities. Notwithstanding the
foregoing, as of the date of this report, we are not aware of any Chinese laws or regulations in effect requiring that we obtain permission from any
Chinese authority to issue securities to foreign investors, and we have not received any inquiry, notice, warning, sanction or any regulatory objection
to our initial public offering from the CSRC.

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7
As advised by Jingtian & Gongcheng, our PRC counsel, as we completed our IPO and listing prior to September 30, 2023, we were not
required to complete the filing procedures pursuant to the Trial Measures for our initial public offering. However, as we are planning to conduct
further offerings in the U.S., we are now required to complete the filing procedures with the CSRC pursuant to the requirements of the Trial
Measures. Based on the above and our understanding of the Chinese laws and regulations currently in effect as of the date of this report, we are not
aware of any PRC laws or regulations in effect requiring that we obtain permission or approval from any PRC authorities for our subsidiaries or the
VIE’s operations and to issue securities to foreign investors, and we have not received any inquiry, notice, warning, sanction, or any regulatory
objection to our initial offerings from the CSRC, the CAC, or any other PRC authorities that have jurisdiction over our operations.  However, there
remains uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offerings and
other capital markets activities. Any failure to obtain or delay in obtaining such approval, complete required filing or procedures, or a rescission of
any such approval or filing obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities. These regulatory
agencies may impose fines and penalties on our operations in mainland China, limit our ability to pay dividends outside of China, limit our
operations in China, or take other actions that could have a material adverse effect on our business, financial condition, results of operations and
prospects, as well as the trading price of the Class A Ordinary Shares. Any uncertainties and/or negative publicity regarding such an approval
requirement could have a material adverse effect on the trading price of the Class A Ordinary Shares.
On February 24, 2023, the CSRC, together with Ministry of Finance of the PRC, National Administration of State Secrets Protection and
National Archives Administration of China, revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas
Securities Offering and Listing which was issued by the CSRC, National Administration of State Secrets Protection and National Archives
Administration of China in 2009, or the Provisions. The revised Provisions is issued under the title the Provisions on Strengthening Confidentiality
and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, and came into effect on March 31, 2023 together
with the Trial Measures. One of the major revisions to the revised Provisions is expanding its application to cover indirect overseas offering and
listing, as is consistent with the Trial Measures. The revised Provisions require that, including but not limited to (a) a domestic company that plans
to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities
companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of
government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at
the same level; and (b) domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to
relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and
materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable
national regulations.
Any failure or perceived failure by the Company, the Company’s subsidiaries in China or the VIE to comply with the above confidentiality
and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in that the relevant entities
would be held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of
committing a crime. As there are still uncertainties regarding the interpretation and implementation of such regulatory guidance, we cannot assure
you that we will be able to comply with new regulatory requirements relating to our future overseas capital-raising activities. Any failure or
perceived failure of us to fully comply with such new regulatory requirements could significantly limit or completely hinder our ability to offer or
continue to offer securities to investors, cause significant disruption to our business operations, and severely damage our reputation, which could
materially and adversely affect our financial condition and results of operations and could cause the value of our securities to significantly decline or
be worthless. See “Risk Factor — Risks Related to Doing Business in China — The Chinese government exerts substantial influence over the
manner in which we must conduct our business activities and may intervene or influence our operations at any time, which could result in a material
change in our operations and the value of our Class A Ordinary Shares.”

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8
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable for annual reports on Form 20-F.
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable for annual reports on Form 20-F.
ITEM 3.
KEY INFORMATION
A.
Selected Financial Data.
The following table presents the selected consolidated financial information for our company. The selected consolidated statements of
operations data for the three years ended June 30, 2022, 2023 and 2024 and the consolidated balance sheet data as of June 30, 2022, 2023 and 2024
have been derived from our audited consolidated financial statements set forth in “Item 18 – Financial Statements”. The selected consolidated
balance sheet data for the year ended June 30, 2022 have been derived from our audited consolidated balance sheet as of June 30, 2022, which is not
included in this annual report. Our historical results do not necessarily indicate results expected for any future periods. The selected consolidated
financial data should be read in conjunction with, and are qualified in their entirety by reference to, our audited consolidated financial statements and
related notes and “Item 5. Operating and Financial Review and Prospects” below. Our audited consolidated financial statements are prepared and
presented in accordance with Generally Accepted Accounting Principles in the United States of America, or U.S. GAAP.
Following the one-for-five reverse stock split of our Class A Ordinary Shares effective on December 27, 2019, and following the dual class
structure divided into Class A Ordinary Shares and Class B Ordinary Shares effective on April 5, 2021, and 2024 Reverse Split, all share and per
share amounts disclosed throughout this annual report, in the table below and in our consolidated financial statements have been retroactively
updated to reflect this change in capital structure, unless otherwise indicated. Please see “Item 4. Information on the Company—History and
Development of the Company”.
(All amounts in Renminbi, except for shares outstanding)
Statement of operations data:
    
For the years ended June 30,
2024
    
2023
    
2022
RMB¥
RMB¥
RMB¥
Revenue
 
 68,854,280  
 67,114,378  
 83,777,571
Loss from operations
 
 (71,637,911) 
 (69,332,735) 
 (82,313,417)
Net income (loss) attributable to Recon Technology, Ltd
 
 (49,871,259) 
 (59,167,301) 
 95,586,795
Earnings (loss) per share*
 
   
   
  
-Basic
 
 (9.88) 
 (27.43) 
55.52
-Diluted
 
 (9.88) 
 (27.43) 
55.52
Weighted average number of Class A and Class B Ordinary Shares used in computation*
 
   
   
  
-Basic
 
 5,048,952  
 2,157,158  
 1,721,529
-Diluted
 
 5,048,952  
 2,157,158  
 1,721,529
*Retrospectively restated for the 1-for-18 reverse stock split effective on May 1, 2024.

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9
Balance sheet data:
    
2024
    
2023
    
2022
RMB¥
RMB¥
RMB¥
Current assets
 506,485,249
 504,413,173
 445,617,041
Total assets
 552,389,514
 531,824,577
 490,242,084
Current liabilities
 47,477,363
 61,032,862
 52,878,284
Total liabilities
 61,455,617
 92,673,674
 77,357,323
Total shareholder’s equity
 502,554,537
 449,206,962
 420,631,729
Shares outstanding (Class A Ordinary Shares)*
 7,987,959
 2,306,295
 1,704,766
Shares outstanding (Class B Ordinary Shares)
 7,100,000
 7,100,000
 4,100,000
*Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.
B. Capitalization and Indebtedness
Not applicable by 20-F as an annual report.
C. Reasons for the Offer and Use of Proceeds
Not applicable by 20-F as an annual report.
D. Risk Factors
Investing in our Class A Ordinary Shares involves a high degree of risk. Before deciding whether to invest in our Class A Ordinary Shares,
you should consider carefully the risks and uncertainties described below. There may be other unknown or unpredictable economic, business,
competitive, regulatory or other factors that could have material adverse effects on our future results. If any of these risks actually occurs, our
business, business prospects, financial condition or results of operations could be seriously harmed. This could cause the trading price of our Class
A Ordinary Shares to decline, resulting in a loss of all or part of your investment. Please also read carefully the section above entitled “Special Note
Regarding Forward-Looking Statements.”
Risks Related to Our Business
We operate in a very competitive industry and may not be able to maintain our revenue and profitability.
Since the 1990s, several international companies engaged in supplying integrated automation services for the petroleum extraction industry
have been qualified in China. These competitors have significantly greater financial and marketing resources and name recognition than we have. In
addition, at least five domestic private competitors also compete with us, and more competitors may enter the market as Chinese petroleum
companies seek to reduce oil production costs and improve efficiencies. There can be no assurance that we will be able to compete effectively in our
industry.
In addition, our competitors may introduce new systems. If these new systems are more attractive to customers than the systems we
currently use or may develop, our customers may switch to our competitors’ services, and we may lose market share. We believe that competition
may become more intense as more integrated automation service providers, including Chinese/foreign joint ventures, are qualified to conduct
business. We cannot assure you that we will be able to compete successfully against any new or existing competitors, or against any new systems our
competitors may implement. Any of these competitive factors could have a material adverse effect on our revenue and profitability.

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10
We must continually research and develop new technologies and products to remain competitive.
Because our industry is so competitive, we will need to continually research, develop and refine new technologies and offer new products to
compete effectively. Many factors may limit our ability to develop and refine new products, including the availability of funds to dedicate to this
portion of our business and access to new products and technologies that we can incorporate into our products, as well as marketplace resistance to
new products and technologies. We believe that the Domestic Companies (defined in the following paragraph) and our products are able to compete
in the marketplace based upon, among other things, our intellectual property. We cannot assure investors that applications of our and the Domestic
Companies’ technologies or those of third parties, if developed, will not be rendered superfluous or obsolete by research efforts and technological
advances by others in these fields.
Our company and our subsidiaries, Recon Investment Ltd. (“Recon-IN”), Recon Hengda Technology (Beijing) Co., Ltd. (“Recon-BJ”),
Shandong Recon Renewable Resources Technology Co., Ltd. (“Recon-SD”) and Guangxi Recon Renewable Resources Technology Co., Ltd.
(“Recon-GX) are contractually engaged with the following PRC VIE companies and their subsidiaries: Beijing BHD Petroleum Technology Co.,
Ltd. (“BHD”), Future Gas Station (Beijing) Technology, Ltd. (“FGS”), Nanjing Recon Technology Co., Ltd. (“Nanjing Recon”), Gan Su BHD
Environmental Technology Co. Ltd. (“Gan Su BHD”), Huang Hua BHD Petroleum Equipment Manufacturing Co. Ltd. (“HH BHD”), and Qing Hai
BHD New Energy Technology Co. Ltd. (“Qing Hai BHD”) (collectively, the “Domestic Companies”). As new technologies are developed, the
Domestic Companies and we may need to adapt and change our products and services, our method of marketing or delivery or alter our current
business in ways that may adversely affect revenue and our ability to achieve our proposed business goals. Accordingly, there is a risk that the
Domestic Companies’ and our technology will not support a viable commercial enterprise.
Our financial performance is dependent upon the sale and implementation of petroleum mining and extraction software and hardware and
related services, a single, concentrated group of products.
We derive substantially all of our revenue from the license and implementation of software applications and hardware innovations for the
Chinese petroleum industry. The life cycle of our products and services is difficult to estimate due in large measure to the potential effect of new
software and hardware applications and enhancements, including those we introduce, and the maturation in both the Chinese petroleum and
software/hardware industries. If we are unable to continually improve our software and hardware to address the changing needs of the Chinese
petroleum industry, we may experience a significant decline in the demand for the Domestic Companies’ and our products and services. In such a
scenario, our revenue may significantly decline.
A failure by our third-party vendors to fulfill their obligations would negatively affect our ability to operate profitably.
In the ordinary course of business, our third-party vendors have historically required advance payments before they deliver goods and
services to us that enable our operations. These advance payments are often substantial, and we dedicate a material amount of our liquidity to
advance these to such third-party vendors. There is no guarantee that the services we require will be delivered, whether due to supply chain
disruptions or any other reason after we provide our advance payments, and many of our vendors lack sufficient insurance to protect us against such
failures to deliver. Moreover, if a third-party vendor declares bankruptcy or we engage in litigation, we be unable to recover the advance fees in their
entirety, if at all.
As a technology-oriented business, our ability to operate profitably is directly related to our ability to develop and protect our proprietary
technology.
We rely on a combination of trademark, trade secret, nondisclosure, copyright and patent law to protect the Domestic Companies’ and our
software and hardware, which may afford only limited protection.

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Although the Chinese government has issued Nanjing Recon and BHD over fifty copyrights on software and Nanjing Recon and BHD over
sixty patents on products, we cannot guarantee that competitors will be unable to develop technologies that are similar or superior to the Domestic
Companies’ and our technology. Despite our efforts to protect the Domestic Companies’ and our proprietary rights, unauthorized parties, including
customers, may attempt to reverse engineer or copy aspects of the Domestic Companies’ and our products or to obtain and use information that the
Domestic Companies and we regard as proprietary. Furthermore, our competitors may independently develop substantially equivalent or superior
proprietary information and techniques, reverse engineer information and techniques, or otherwise gain access to our proprietary technology. In the
future, we cannot guarantee that others will not use the Domestic Companies’ and our technology without proper authorization. In addition, under
the Chinese intellectual property law, the 50-year protection period for software copyright and 10-year patent protection period are not subject to
renewal upon expiration.
The Domestic Companies and we develop our software products on third-party middleware software programs that are licensed by our
customers from third parties, generally on a non-exclusive basis. The termination of any such licenses, or the failure of the third-party licensors to
adequately maintain or update their products, could result in delay in our ability to develop, market or ship certain of our products while we seek to
implement technology offered by alternative sources. While it may be necessary or desirable in the future to obtain other licenses, there can be no
assurance that they will be able to do so on commercially reasonable terms or at all.
In addition, the Domestic Companies and we may initiate claims or litigation against third parties for infringement of our proprietary rights
or to establish the validity, scope or enforceability of our proprietary rights. Any such claims could be time consuming, result in costly litigation,
cause product development or shipment delays or force the Domestic Companies or us to enter into royalty or license agreements rather than dispute
the merits of such claims, thereby impairing our financial performance by requiring the Domestic Companies or us to pay additional royalties and/or
license fees to third parties. There is always a risk that patents, if issued, may be subsequently invalidated, either in whole or in part and this could
diminish or extinguish protection for any technology we may license. In addition, the laws of China may not protect proprietary rights to the same
extent as U.S. law. Therefore, we may be unable to meaningfully protect our rights in trade secrets, technical know-how and other non-patented
technology. Any failure to enforce or protect the Domestic Companies’ and our rights could cause us to lose the ability to exclude others from
issuing technology to develop or sell competing products.
We may not be able to adequately protect our intellectual property, which could cause us to be less competitive and negatively impact our
business.
We rely on trademark, patent and trade secret law, as well as confidentiality agreements with certain of our employees to protect our
proprietary rights. The product patents owned by the Company are employee service patents invented by the Company’s key employees. We
generally require the Domestic Companies’ and our employees, consultants, advisors and collaborators to execute appropriate confidentiality
agreements with, as applicable, the respective Domestic Companies and us. These agreements typically provide that all material and confidential
information developed or made known to the individual during the course of the individual’s relationship with us is owned by the us and will be kept
confidential and not disclosed to third parties except in specific circumstances. These agreements may be breached, and in some instances, we may
not have an appropriate remedy available for breach of the agreements.
We may be accused of infringing the intellectual property rights of others.
In the future, the Domestic Companies and we may receive notices claiming that we are infringing the proprietary rights of third parties. We
cannot guarantee that the Domestic Companies and we will not become the subject of infringement claims or legal proceedings by third parties with
respect to the Domestic Companies’ and our current programs or future software developments. Our standard software license agreements contain an
infringement indemnity clause under which we agree to indemnify and hold harmless our customers and business partners against liability and
damages arising from claims of various copyright or other intellectual property infringement by our products. Neither the Domestic Companies nor
we have been the subject of an intellectual property claim since our formation.

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Our software products may contain integration challenges, design defects or software errors that could be difficult to detect and correct.
Despite extensive testing, we may, from time to time, discover defects or errors in the Domestic Companies’ and our software only after use
by a customer. We may also experience delays in shipment of our software during the period required to correct such errors. In addition, we may,
from time to time, experience difficulties relating to the integration of the Domestic Companies’ and our software products with other hardware or
software in the customer’s environment that are unrelated to defects in such software products. Such defects, errors or difficulties may cause future
delays in product introductions and shipments, result in increased costs and diversion of development resources, require design modifications or
impair customer satisfaction with the Domestic Companies’ and our software. Since these software products are used by our customers to perform
mission-critical functions related to petroleum mining and extraction, design defects, software errors, misuse of these products, incorrect data from
external sources or other potential problems within or out of our control that may arise from the use of the Domestic Companies’ and our products
could result in financial or other damages to our customers. We do not maintain product liability insurance. Although our license agreements with
customers contain provisions designed to limit our exposure to potential claims as well as any liabilities arising from such claims, such provisions
may not effectively protect us against such claims and the liability and costs associated therewith. To the extent we are found liable in a product
liability case, we could be required to pay substantial amount of damages to an injured customer, thereby impairing our financial condition.
We are dependent on the state of the PRC’s economy as the majority of our business is conducted in the PRC.
Currently, the majority of our business operations are conducted in the PRC, and most of our customers are also located in the PRC.
Accordingly, any significant slowdown in the PRC economy may cause our customers to reduce expenditures or delay the building of new facilities
or projects. This may in turn lead to a decline in the demand for our products and services. That would have a material adverse effect on our
business, financial condition and results of operations.
Our future success depends on our ability to help our customers find, develop and acquire petroleum reserves.
To remain competitive in our industry, our products must help our customers locate and develop or acquire new crude oil reserves to replace
those depleted by production. Without successful exploration or acquisition activities, our customers’ reserves, production and revenue will decline
rapidly. If the Domestic Companies’ and our technology is less well accepted for helping our customers locate additional reserves than our
competitors’ technology, our customers may terminate their relationships with us, which could have a material adverse effect on our financial
condition and future growth prospects.
Our customers are companies engaged in the petroleum industry and the greater energy industry, and, consequently, our financial performance
is dependent upon the economic conditions of those industries.
We have derived most of our revenue to date from providing integrated automation services to Chinese petroleum companies at oilfields
within China and other energy industry companies in China. Our customers’ success is intrinsically linked to economic conditions in China and in
the petroleum and energy industries in general and the volatility of prices of crude oil, refined oil products and coal chemical products in particular.
Each of the petroleum industry and energy industry is subject to intense competitive pressures and is affected by overall economic conditions.
Demand for our services could be harmed by volatility in those industries. There can be no assurance that we will be able to continue our historical
revenue growth or sustain our profitability on a quarterly or annual basis or that our results of operations will not be adversely affected by continuing
or future volatility in those industries.
Our revenue are highly dependent on a very limited number of customers, which subjects our business to high seasonality. Our contracts with
such customers may be terminated at any time, materially and adversely affecting our business.
Historically, we derived the majority of our revenue from two customers, (i)  China National Petroleum Corporation (“CNPC”) and
(ii) China Petroleum and Chemical Corporation (“Sinopec”).
Since the fiscal year ended June 30, 2017, Sinopec accounted for less than 10% of our revenue. A we developed new product lines, revenue
from Sinopec increased and account for 19%, 32% and 28% of our revenue in the fiscal years ended June 30, 2024, 2023 and 2022, respectively.

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We provide products and services to CNPC under a series of agreements, each of which is terminable without notice. We first began to
provide services to CNPC in 2000. CNPC accounted for approximately 48%, 43% and 50% of our revenue in the fiscal years ended June 30, 2024,
2023 and 2022, respectively, and any termination of our business relationships with CNPC would materially harm our operations.
In the fiscal year ended June 30, 2019, we had established a solid relationship with Shenhua Group Corporation Limited (“Shenhua
Group”) and revenue from it in the fiscal year 2022 accounted for approximately 10% of our revenue. For fiscal year 2023, revenue from Shenhua
accounted for 8% of our revenue as competition became fierce. For fiscal year 2024, affected by temporary changes in market participation
requirements from Shenhua Group, our business from this basis was temporary disrupted and revenue from Shenhua Group accounted for 0% of our
revenue.
Because we derive such a high percentage of our revenue from CNPC and a few new clients, our revenue has been subject to high
seasonality. We recognize revenue when it is realized and earned. Revenue is recognized based on the following five steps: (i) identify the contract(s)
with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to
the performance obligations; (v) recognize revenue when (or as) each performance obligation is satisfied. Because these matters depend on reaching
agreements with these clients, revenue recognition occurs, to a large extent, on their schedule. Accordingly, revenue recognized in the first quarter is
usually the smallest in proportion to that for the whole year, due to our clients’ budgeting and planning schedules. If these clients were to change
their budgeting or planning schedule our high and low quarters could also shift. This seasonality limits our ability to make accurate long-term
predictions about our performance and makes it difficult to compare our revenue across quarters.
Changes in environmental and regulatory factors may harm our business.
To date, the oil drilling industry in China to date has not been subject to the type and scope of regulation seen in Europe and the United
States. However, the Chinese government may implement new legislation or regulations or may enforce existing laws more stringently. For example,
the Energy Law of the People’s Republic of China (Draft), issued on April 26, 2024, is China’s first draft energy law that encourages the
optimization of the layout and structure of the petroleum processing and conversion industry through the use of advanced and intensive processing
methods, though it has not yet come into effect. Either of these scenarios may have a significant impact on our customers’ mining and extraction
operations and may require us or our customers to significantly change operations or to incur substantial costs. We believe that the Domestic
Companies’ and our operations in China are in compliance with China’s applicable legal and regulatory requirements. However, there can be no
assurance that China’s central or local governments will not impose new, stricter regulations or interpretations of existing regulations that would
require additional expenditures.
Petroleum reserve degradation and depletion may reduce our customers’ and our profitability.
Our profitability depends substantially on our ability to help our customers exploit their oil reserves at competitive costs. Replacement
reserves may not be available to our customers when required or, if available, may not be drilled at costs comparable to those characteristics of the
depleting oilfield. The Domestic Companies’ and our technology may not enable our customers to accurately assess the geological characteristics of
any new reserves, which may adversely affect their decision to use the Domestic Companies’ and our products in the future.
We are heavily dependent upon the services of experienced personnel who possess skills that are valuable in our industry, and we may have to
actively compete for their services.
Our company is much smaller than our main foreign competitors, including Schneider-electric, Siemens, Honeywell International, Emerson
Process Management and Rockwell Automation, and we compete in large part on the basis of the quality of services we are able to provide our
clients. As a result, we are heavily dependent upon our ability to attract, retain and motivate skilled personnel to serve our clients. Many of our
personnel possess skills that would be valuable to all companies engaged in the integrated automation services industry. Consequently, we expect
that we will have to actively compete for these employees. Some of our competitors may be able to pay our employees more than we are able to pay
to retain them. Our ability to profitably operate is substantially dependent upon our ability to locate, hire, train and retain our personnel. There can be
no assurance that we will be able to retain our current personnel, or that we will be able to attract or assimilate other personnel in the future. If we
are unable to effectively obtain and maintain skilled personnel, the development and quality of our technological products and the effectiveness of
installation and training could be materially impaired.

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We are substantially dependent upon our key personnel, particularly Mr. Yin Shenping, our Chief Executive Officer, Mr. Chen Guangqiang, our
Chief Technology Officer and Ms. Liu Jia, our Chief Financial Officer.
Our performance is substantially dependent on the performance of our executive officers and key employees. In particular, we rely on the
services of:
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Mr. Yin Shenping, Chief Executive Officer;
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Mr. Chen Guangqiang, Chief Technology Officer; and
●
Ms. Liu Jia, Chief Financial Officer.
Each of these individuals would be difficult to replace. We do not have in place “key person” life insurance policies on any of our
employees. The loss of the services of any of our executive officers or other key employees could substantially impair our ability to successfully
develop new systems and develop new programs and enhancements. In addition, we would need to spend considerable time and other resources to
seek suitable replacements, which might detract from our efforts to develop our business.
Our business is capital intensive and our growth strategy may require additional capital, which may not be available on favorable terms or at all.
We may require additional cash resources due to changed business conditions, implementation of our growth strategy or potential
investments or acquisitions we may pursue. To meet our capital needs, we may sell additional equity or debt securities or obtain additional credit
facilities. The sale of additional equity securities or other securities convertible into such equity securities could result in dilution of your holdings.
The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants
that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise
additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business
prospects.
We do not intend to pay dividends in the foreseeable future and there are certain restrictions on the payment of dividend under PRC laws.
We have not previously paid any cash dividends, and we do not anticipate paying any dividends on our Class A Ordinary Shares. As we
intend to remain in a growth mode, we intend to reinvest any profits in the foreseeable future to grow the business. We cannot assure you that our
operations will continue to result in sufficient revenue to enable us to operate at profitable levels or to generate positive cash flows. Furthermore,
there is no assurance our board of directors will declare dividends even if we are profitable. Dividend policy is subject to the discretion of our board
of directors and will depend on, among other things, our earnings, financial condition, capital requirements and other factors. If we decide to pay
dividends on any of our Class A Ordinary Shares in the future, we will be dependent, in large part, on receipt of funds from the Domestic
Companies.
We are a holding company with no operations of our own and substantially all of our operations are conducted through Nanjing Recon and
BHD, hereafter referred to as the Domestic Companies, which are established as variable interest entities (“VIEs”) under the laws of the PRC. Our
ability to pay dividends is dependent upon dividends and other distributions from the Domestic Companies. Chinese legal restrictions permit
payment of dividends to us by the Domestic Companies only out of their respective accumulated net profits, if any, determined in accordance with
Chinese accounting standards and regulations. Under Chinese law, the Domestic Companies are required to set aside a portion (at least 10%) of their
after-tax net income (after discharging all cumulated loss), if any, each year for compulsory statutory reserve until the amount of the reserve reaches
50% of the Domestic Companies’ registered capital. These funds may be distributed to shareholders at the time of each Domestic Company’s wind-
up. Payments of dividends by Domestic Companies to us are also subject to restrictions including primarily the restriction that foreign invested
enterprises may only buy, sell and/or remit foreign currencies at those banks authorized to conduct foreign exchange business after providing valid
commercial documents. There are no such similar foreign exchange restrictions in the Cayman Islands.

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Our certificates, permits, and license are subject to governmental control and renewal, and the failure to obtain renewal would cause all or part
of our operations to be suspended and may have a material adverse effect on our financial condition.
We are subject to various PRC laws and regulations pertaining to automation services for the petroleum extraction industry. We have
obtained certain certificates, permits, and licenses required for the operation of an automation services provider for the petroleum extraction industry
and the manufacturing and distribution of software and hardware products in the PRC.
During the application or renewal process for our licenses and permits, we will be evaluated and re-evaluated by the appropriate
governmental authorities and must comply with the prevailing standards and regulations, which may change from time to time. In the event that we
are not able to obtain or renew the certificates, permits and licenses, all or part of our operations may be suspended by the government, which would
have a material adverse effect on our business and financial condition. Furthermore, if escalating compliance costs associated with governmental
standards and regulations restrict or prohibit any part of our operations, it may adversely affect our results of operations and profitability.
Failure to renew expired Hazardous Waste Operating Permit and unutilized ICP License could adversely affect our operations and financial
performance
Gansu BHD operates a facility with an annual capacity of 60,000 tons for the comprehensive utilization and harmless treatment of oilfield
oily waste. This facility primarily handles oily sludge, which contains mineral oil components that pose significant environmental risks if not
properly managed. Therefore, compliance with the Solid Waste Sludge Environmental Protection Law and the Hazardous Waste Operating Permit
Management Regulations is mandatory for the proper treatment and disposal of oily sludge. However, the company’s Hazardous Waste Operating
Permit, which is essential for the legal operation of the facility, expired on July 26, 2023, and has not yet been renewed. While Gansu BHD ceased
relevant operations after the permit expired and is actively pursuing renewal, the expired permit could negatively impact the company’s revenue
streams and operational efficiency. Moreover, the timeline and outcome of the renewal process remain uncertain. Administrative delays or denial of
the renewal could further prevent the company from resuming hazardous waste management activities, adversely affecting its future operations and
financial stability.
In addition, Future Gas Station holds an ICP license that has been continuously renewed despite not being utilized. This situation may lead
to inefficiencies and additional costs without generating revenue, ultimately impacting the company’s profitability and financial health. The ongoing
renewal of the ICP license without active use may also raise concerns among regulatory authorities about the validity of the license and the
company’s intentions. This could lead to increased scrutiny or potential regulatory compliance issues.
Failure to comply with laws and regulations applicable to our business in China could subject us to fines and penalties and could also cause us
to lose customers or otherwise harm our business.
Our business is subject to regulation by various governmental agencies in China, including agencies responsible for monitoring and
enforcing compliance with various legal obligations, such as value-added telecommunication laws and regulations, privacy and data protection-
related laws and regulations, intellectual property laws, employment and labor laws, workplace safety, environmental laws, consumer protection
laws, governmental trade laws, import and export controls, anti-corruption and anti-bribery laws, and tax laws and regulations. In certain
jurisdictions, these regulatory requirements may be more stringent than in China. These laws and regulations impose added costs on our business.
Noncompliance with applicable regulations or requirements could subject us to:
●
investigations, enforcement actions, and sanctions;
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mandatory changes to our network and products;
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disgorgement of profits, fines, and damages;
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civil and criminal penalties or injunctions;
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claims for damages by our customers or channel partners;
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termination of contracts;

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loss of intellectual property rights;
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failure to obtain, maintain or renew certain licenses, approvals, permits, registrations or filings
●
necessary to conduct our operations; and
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temporary or permanent debarment from sales to public service organizations.
If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of
operations, and financial condition could be adversely affected. In addition, responding to any action will likely result in a significant diversion of
our management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could materially harm our
business, results of operations, and financial condition.
Additionally, companies in the technology industry have recently experienced increased regulatory scrutiny. Any similar reviews by
regulatory agencies or legislatures may result in substantial regulatory fines, changes to our business practices, and other penalties, which could
negatively affect our business and results of operations.
Changes in social, political, and regulatory conditions or in laws and policies governing a wide range of topics may cause us to change our
business practices. Further, our expansion into a variety of new fields also could raise a number of new regulatory issues. These factors could
negatively affect our business and results of operations in material ways.
Moreover, we are exposed to the risk of misconduct, errors and failure to functions by our management, employees and parties that we
collaborate with, who may from time to time be subject to litigation and regulatory investigations and proceedings or otherwise face potential
liability and penalties in relation to noncompliance with applicable laws and regulations, which could harm our reputation and business.
Risks Related to Our Corporate Structure
Our contractual arrangements with the Domestic Companies and their respective shareholders may not be as effective in providing control over
these entities as direct ownership.
We are a holding company incorporated in the Cayman Islands. As a holding company with no material operations of our own, we conduct
a substantial majority of our operations through our Wholly Foreign Owned Enterprise (“WFOE”) and the VIEs and their subsidiaries in China
providing certain technical and consultation services. A WFOE is a limited liability company based in the People’s Republic of China but wholly
owned by foreign investors. In our instance, Recon Hengda Technology (Beijing) Co., Ltd (“Recon-BJ”) is a WFOE wholly owned by Recon
Investment Ltd. (“Recon-IN”), a Hong Kong limited company, which in turn is wholly owned by us. We consolidated the financial results of BHD
and Nanjing Recon into our financial statements based on the VIE agreements entered into on April 1, 2019. Most, if not all, of our revenue derives
from operations of the VIEs and their subsidiaries. Our Ordinary Shares are shares of our offshore holding company instead of shares of the VIEs or
our PRC subsidiary. These Contractual Arrangements may not be as effective in providing us with control over the VIEs as direct ownership. For
example, BHD could fail to take actions required for our business or fail to pay dividends to Recon-BJ despite its contractual obligation to do so. If
the Domestic Companies fail to perform under their agreements with us, we may have to rely on legal remedies under PRC law, which may not be
effective. In addition, these agreements have not been tested in a court of law.
If we had direct ownership of the VIEs, we would be able to exercise our rights as a shareholder to effect changes in the board of directors
of the VIEs, which in turn could effect changes, subject to any applicable fiduciary obligations, at the management and operational level. However,
under the current Contractual Arrangements, we rely on the performance by the VIEs and their shareholders of their obligations under the contracts
to exercise control over the VIEs. We cannot assure you that any of the Domestic Companies’ shareholders would always act in our best interests.
Such risks exist throughout the period in which we intend to operate our business through the Contractual Arrangements with the VIEs. If any
dispute relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC law
and arbitration, litigation and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system. Therefore, our
Contractual Arrangements with the VIEs may not be as effective in ensuring our control over the relevant portion of our business operations as direct
ownership would be.

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We have no equity ownership interest in the Domestic Companies and rely on contractual arrangements to control and operate such
businesses. These contractual arrangements may not be as effective in providing control over the Domestic Companies as direct ownership.
We conduct our business through BHD, Nanjing Recon, FGS and their respective subsidiaries by means of Contractual Arrangements. If the
PRC courts or administrative authorities determine that these contractual arrangements do not comply with applicable regulations, we could be
subject to severe penalties and our business could be adversely affected. In addition, changes in such PRC laws and regulations may materially
and adversely affect our business.
There are uncertainties regarding the interpretation and application of PRC laws, rules and regulations, including the laws, rules and
regulations governing the validity and enforcement of the Contractual Arrangements between the Wholly Foreign Owned Enterprise (“WFOE”). A
WFOE is a limited liability company based in the People’s Republic of China but wholly owned by foreign investors. In our instance, Recon Hengda
Technology (Beijing) Co., Ltd (“Recon-BJ”) is a WFOE wholly owned by Recon Investment Ltd. (“Recon-IN”), a Hong Kong limited company,
which in turn is wholly owned by us. Recon-BJ and Nanjing Recon, BHD and their respective subsidiaries. We have been advised by our PRC
counsel, JingTian & GongCheng LLP, based on their understanding of the current PRC laws, rules and regulations, that (i) the structure for operating
our business in China (including our corporate structure and Contractual Arrangements with the Recon-BJ, Nanjing Recon, BHD and their
respective subsidiaries) will not result in any violation of PRC laws or regulations currently in effect; and (ii) the Contractual Arrangements among
the Recon-BJ and Nanjing Recon, BHD and their respective subsidiaries governed by PRC law are valid, binding and enforceable, and will not
result in any violation of PRC laws or regulations currently in effect. However, there are substantial uncertainties regarding the interpretation and
application of current or future PRC laws and regulations concerning foreign investment in the PRC, and their application to and effect on the
legality, binding effect and enforceability of the contractual arrangements. In particular, we cannot rule out the possibility that PRC regulatory
authorities, courts or arbitral tribunals may in the future adopt a different or contrary interpretation or take a view that is inconsistent with the
opinion of our PRC legal counsel. Therefore, the Contractual Arrangements may be determined by PRC authorities to be inconsistent with the laws
and regulations of the PRC, including those related to foreign investment in certain industries. Therefore, the relevant Chinese regulatory authorities
could disallow this structure and hinder our ability to exert contractual control over the Domestic Companies, which would likely result in a material
change in operations and/or value of the Company’s ordinary shares, including that it could cause the value of such securities to significantly decline
or become worthless.
If any of the Domestic Companies or their ownership structure or the Contractual Arrangements are determined to be in violation of any
existing or future PRC laws, rules or regulations, or any of our PRC entities fail to obtain or maintain any of the required governmental permits or
approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, including:
●
revoking the business and operating licenses;
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discontinuing or restricting the operations;
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imposing conditions or requirements with which the PRC entities may not be able to comply;
●
requiring us and our PRC entities to restructure the relevant ownership structure or operations, including termination of the contractual
agreements with the VIE and deregistering the equity pledge of the VIE, which in turn would affect our ability to consolidate, derive
economic interests from, or exert effective control the VIE;
●
imposing fines or confiscating the income from our PRC subsidiaries or the VIE.
The imposition of any of these penalties would severely disrupt our ability to conduct business and have a material adverse effect on our
financial condition, results of operations and prospects.

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Our majority stake in Future Gas Station (Beijing), which now consists of a large operating segment of our business, exposes us to risks related
to consumer energy consumption and online payment technologies.
As the energy consumption market opened to private and foreign companies, and as the online payment technology continually developed,
we began investing in the downstream oil industry. Over the years, we developed a close relationship with Future Gas Station (Beijing) (also referred
to as “FGS”) and we now own 51% of the equity of FGS. As such, our majority stake in FGS presents both a substantial investment in the
downstream of the oil industry and comprises a large part of our operations. As such, our controlling interest in FGS represents both a significant
investment in the downstream of the oil industry and a large part of our business. The development of FGS depends on its cooperation with gas
stations. At present, most of the gas stations in China are owned by the sales companies of PetroChina and Sinopec, so FGS’s business expansion is
largely dependent on the development of electronic payment systems and online settlement systems of these major oil companies and their
cooperation decisions. As these major oil companies gradually increase their efforts in research and development and deployment of self-built
systems, their willingness to cooperate with third-party service and operations support companies such as FGS will decrease or the depth of their
cooperation will decrease, resulting in FGS’s growth potential being limited and unable to meet our expectations at the time we acquired FGS. We
may suffer a significant loss on our substantial investment in FGS.
Our contractual arrangements with the Domestic Companies may result in adverse tax consequences to us.
As a result of our corporate structure and contractual arrangements between Recon-BJ and the Domestic Companies, we are effectively
subject to several PRC taxes on both revenue generated by Recon-BJ’s operations in China and revenue derived from Recon-BJ’s contractual
arrangements with the Domestic Companies. Moreover, we would be subject to adverse tax consequences if the PRC tax authorities were to
determine that the contracts between Recon-BJ and the Domestic Companies were not on an arm’s length basis and therefore constitute a favorable
transfer pricing. As a result, the PRC tax authorities could request that we adjust our taxable income upward for PRC tax purposes. If the PRC tax
authorities took such action, such authorities would be able to establish in its sole discretion the amount of tax payable by Recon-BJ, so we cannot
predict the effect of such action on our company other than the likely effect that our profits would decrease. Such a pricing adjustment could
adversely affect us by:
●
increasing our tax expenses, which could subject Recon-BJ to late payment fees and other penalties for under-payment of taxes; and/or
●
resulting in Recon-BJ’s loss of preferential tax treatment.
The shareholders of the VIEs may have actual or potential conflicts of interest with us, which may materially and adversely affect our business
and financial condition.
The shareholders of the VIEs may have actual or potential conflicts of interest with us. The shareholders may refuse to sign or breach, or
cause the VIEs to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIEs, which would have a material
and adverse effect on our ability to effectively control the VIEs and receive economic benefits from them. For example, the shareholders may be
able to cause our agreements with the VIEs to be performed in a manner adverse to us by, among other things, failing to remit payments due under
the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise the shareholder will act in the best
interests of our company or such conflicts will be resolved in our favor. Currently, we do not have any arrangements to address potential conflicts of
interest between the shareholders and our company. If we cannot resolve any conflict of interest or dispute between us and the shareholders, we
would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome
of any such legal proceedings.
The principal shareholders of the Domestic Companies have potential conflicts of interest with us, which may adversely affect our business.
Yin Shenping, our Chief Executive Officer, and Chen Guangqiang, our Chief Technology Officer, are significant shareholders in our
company. They are also the principal shareholders of each of the Domestic Companies and collectively control the Domestic Companies. Conflicts
of interests between their duties to our company and the respective Domestic Companies may arise. For example, Mr. Yin and Mr. Chen could cause
a Domestic Company to fail to take actions that are in the best interests of our Company or to fail to pay dividends to Recon-BJ despite its
contractual obligation to do so if making such payment would harm the Domestic Company.

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As Mr. Yin and Mr. Chen are also directors and executive officers of our company, they have duties of loyalty and care to us under Cayman
Islands law when there are any potential conflicts of interests between our company and the Domestic Companies. Each of Mr. Yin and Mr. Chen
has executed an irrevocable power of attorney to appoint the individual designated by us to be his attorney-in-fact to vote on his behalf on all matters
related to the Domestic Companies requiring shareholder approval. We cannot assure you, however, that if conflicts of interest arise, they will act
completely in our interests or that conflicts of interests will be resolved in our favor. In addition, Mr. Yin and Mr. Chen could violate their respective
employment agreements with us or their legal duties by diverting business opportunities from us to others. If we cannot resolve any conflicts of
interest between us and Mr. Yin and Mr. Chen, as applicable, we would have to rely on legal proceedings, which could result in the disruption of our
business.
Any deterioration of the relationship between Recon-BJ and the Domestic Companies could materially and adversely affect the overall business
operation of our company.
Our relationship with the Domestic Companies is governed by their agreements with Recon-BJ, which are intended to provide us, through
our indirect ownership of Recon-BJ, with effective control over the business operations of the Domestic Companies. However, these agreements
may not be effective in providing control over the applications for and maintenance of the licenses required for our business operations. The
Domestic Companies could violate these agreements, go bankrupt, suffer from difficulties in its business or otherwise become unable to perform its
obligations under these agreements and, as a result, our operations, reputation, business and stock price could be severely harmed.
If Recon-BJ exercises its purchase option of the Domestic Companies’ equity pursuant to the Exclusive Equity Interest Purchase Agreement,
payment of the purchase price could materially and adversely affect our financial position.
Under the Exclusive Equity Interest Purchase Agreement, Recon-BJ holds an option to purchase all or a portion of the equity of the
Domestic Companies at a price, based on the capital paid in by the Domestic Company shareholders. If applicable PRC laws and regulations require
an appraisal of the equity interest or provide other restriction on the purchase price, the purchase price shall be the lowest price permitted under the
applicable PRC laws and regulations. As the Domestic Companies are already contractually controlled affiliates to our company, Recon-BJ’s
purchase of the Domestic Companies’ equity would not bring immediate benefits to our company and the exercise of the option and payment of the
purchase prices could adversely affect our financial position and available working capital.
Our dual class structure may be dilutive to the voting power of Class A Ordinary Shareholders.
At the 2021 annual meeting, our shareholders approved a special resolution to implement a dual class structure establishing Class A and
Class B Ordinary Shares. The dual class structure of our ordinary shares has the effect of concentrating voting control with holders of Class B
Ordinary Shares. Our Class B Ordinary Shares have stronger voting power than our Class A Ordinary Shares and certain existing shareholders have
substantial influence over our Company and their interests may not be aligned with the interests of our other shareholders.
Our classified board structure may prevent a change in our control.
Our board of directors is divided into three classes of directors. The current terms of the directors expire in 2025, 2026 and 2027. Directors
of each class are chosen for three-year terms upon the expiration of their current terms, and each year one class of directors is elected by the
shareholders. The staggered terms of our directors may reduce the possibility of a tender offer or an attempt at a change in control, even though a
tender offer or change in control might be in the best interest of our shareholders.

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Shareholder rights under Cayman Islands law may differ materially from shareholder rights in the United States, which could adversely affect
the ability of us and our shareholders to protect our and their interests.
Our corporate affairs are governed by our Memorandum and Articles of Association, by the Companies Act (2023 Revision) and the
common law of the Cayman Islands. The right of shareholders to take action against the directors, actions by minority shareholders, and the
fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.
The common law in the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from
English common law, the decisions of whose courts are of persuasive authority but are not binding on a court in the Cayman Islands. In particular,
the Cayman Islands has a less developed body of securities laws as compared to the United States, and some states, such as Delaware, have more
fully developed and judicially interpreted bodies of corporate laws. Moreover, our company could be involved in a corporate combination in which
dissenting shareholders would have no rights comparable to appraisal rights which would otherwise ordinarily be available to dissenting
shareholders of United States corporations. However, Cayman Islands statutory law does provide a mechanism for a dissenting shareholder in a
merger or consolidation to apply to the Grand Court for a determination of the fair value of the dissenter’s shares if it is not possible for the dissenter
and the Company to agree a fair price within the time limits prescribed. Also, our Cayman Islands counsel is not aware of a significant number of
reported derivative actions having been brought in Cayman Islands courts. Class actions are not recognized in the Cayman Islands, but groups of
shareholders with identical interests may bring representative proceedings which are similar. Such actions are ordinarily available in respect of
United States corporations in U.S. courts. Finally, Cayman Islands companies may not have standing to initiate shareholder derivative action before
the federal courts of the United States. As a result, our public shareholders may face different considerations in protecting their interests in actions
against the management, directors or our controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the
United States, and our ability to protect our interests may be limited if we are harmed in a manner that would otherwise enable us to sue in a United
States federal court.
As we are a Cayman Islands company and most of our assets are outside the United States, it will be extremely difficult to acquire jurisdiction
and enforce liabilities against us and our officers, directors and assets based in China.
We are a Cayman Islands exempt company, and our corporate affairs are governed by our Memorandum and Articles of Association and by
the Cayman Islands Companies Act (2023 Revision) and other applicable Cayman Islands laws. Certain of our directors and officers reside outside
of the United States. In addition, the Company’s assets will be located outside the United States. As a result, it may be difficult or impossible to
effect service of process within the United States upon our directors or officers and our subsidiaries, or enforce against any of them court judgments
obtained in United States’ courts, including judgments relating to United States federal securities laws. In addition, there is uncertainty as to whether
the courts of the Cayman Islands and of other offshore jurisdictions would recognize or enforce judgments of United States’ courts obtained against
us predicated upon the civil liability provisions of the securities laws of the United States or any state thereof on the grounds that such provisions are
penal in nature, or be competent to hear original actions brought in the Cayman Islands or other offshore jurisdictions predicated upon the securities
laws of the United States or any state thereof. Our Cayman Islands’ counsel has advised us that although there is no statutory enforcement in the
Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign judgment of a
court of competent jurisdiction if such judgment is final, for a liquidated sum, provided it is not in respect of taxes or a fine or penalty, is not
inconsistent with a Cayman Islands’ judgment in respect of the same matters, and was not obtained in a manner which is contrary to the public
policy of the Cayman Islands. A Cayman Islands court may stay proceedings if concurrent proceedings are being brought elsewhere. Furthermore,
because the majority of our assets are located in China, it would also be extremely difficult to access those assets to satisfy an award entered against
us in United States court.
We may have difficulty in enforcing any rights we may have under the VIE Agreements in PRC.
As all of the VIE Agreements are governed by the PRC laws and provide for the resolution of disputes through arbitration in the PRC, they
would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal
environment in the PRC is not as developed as in the United States. As a result, uncertainties in the PRC legal system could further limit our ability
to enforce these VIE Agreements. Furthermore, these VIE Agreements may not be enforceable in China if PRC government authorities or courts
take a view that such VIE Agreements contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event
we are unable to enforce these VIE Agreements, we may not be able to exert effective control over the VIEs, and our ability to conduct our business
may be materially and adversely affected.

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Risks Related to Doing Business in China
The recent state government interference into business activities on U.S. listed Chinese companies may negatively impact our existing and future
operations in China.
Recently, the Chinese government announced that it would step up supervision of Chinese firms listed offshore. Under the new measures,
China will improve regulation of cross-border data flows and security, crack down on illegal activity in the securities market and punish fraudulent
securities issuance, market manipulation and insider trading, China will also check sources of funding for securities investment and control leverage
ratios. The Cyberspace Administration of China (“CAC”) has also opened a cybersecurity probe into several U.S.-listed tech giants focusing on anti-
monopoly, financial technology regulation and more recently, with the passage of the Data Security Law, how companies collect, store, process and
transfer data. If we are subject to such a probe or if we are required to comply with stepped-up supervisory requirements, valuable time from our
management and money may be expended in complying and/or responding to the probe and requirements, thus diverting valuable resources and
attention away from our operations. This may, in turn, negatively impact our operations.
Because of the VIEs and their subsidiaries in China and given the Chinese government’s significant oversight and discretion over the
conduct of our business operations there, the Chinese government may seek to affect our operations, including our ability to offer securities to
investors, list our securities on a U.S. or other foreign exchange, conduct our business or accept foreign investment. The Chinese government may
intervene or influence the Company’s current and future operations in China at any time, or may exert more control over offerings conducted
overseas and/or foreign investment in issuers likes ourselves.
If any or all of the foregoing were to occur, this could lead to a material change in the Company’s operations and/or the value of our
ordinary shares and/or significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of
such securities to significantly decline or be worthless.
We have engaged in transactions with related parties, and such transactions present possible conflicts of interest that could have an adverse
effect on our business and results of operations.
We entered into a number of transactions with related parties. All material related party transactions must be approved by our board of
directors. Such material related party transactions must be made or entered into on bona fide terms in the best interests of the Company and not with
the effect of constituting a fraud on the minority shareholders.
Transactions with related parties present potential for conflicts of interest, as the interests of related party may not align with the interests of
our shareholders. Although we believe these transactions were in our best interests, we cannot assure you that these transactions were entered into on
terms as favorable to us as those that could have been obtained in an arms-length transaction. We may also engage in transactions with related parties
in the future. Conflicts of interests arise when we transact business with related parties. These transactions, individually or in aggregate, may have an
adverse effect on our business and results of operations or may result in government enforcement actions or other litigation.
The Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or
influence our operations at any time, which could result in a material change in our operations and the value of our Class A Ordinary Shares.
The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy
through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those
relating to securities regulation, data protection, cybersecurity and mergers and acquisitions and other matters. The central or local governments of
these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and
efforts on our part to ensure our compliance with such regulations or interpretations.
Government actions in the future could significantly affect economic conditions in China or particular regions thereof and could require us
to materially change our operating activities or divest ourselves of any interests we hold in Chinese assets. Our business may be subject to various
government and regulatory interference in the provinces in which we operate. We may incur increased costs necessary to comply with existing and
newly adopted laws and regulations or penalties for any failure to comply. Our operations could be adversely affected, directly or indirectly, by
existing or future laws and regulations relating to our business or industry.

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Given recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are
conducted overseas and/or foreign investment in China-based issuers, any such action could significantly limit or completely hinder our ability to
offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless. It is uncertain
when and whether we will be required to obtain permission from the PRC government to offering securities in the U.S. in the future, and even when
such permission is obtained, whether we will be denied or rescinded. Although we are currently not required to obtain permission from any of the
PRC regulatory authorities to obtain such permission and has not received any denial regarding our listing on the Nasdaq Capital Market and the
entry into the VIE Agreements, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating
to our business or industry.
Trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act if the PCAOB determines that it cannot
inspect or investigate completed our auditors for two consecutive years.
The Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. The HFCA Act states if the SEC
determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB
for three consecutive years beginning in 2021, the SEC shall prohibit such shares from being traded on a national securities exchange or in the over-
the-counter trading market in the U.S.
On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation
requirements of the HFCAA. The interim final rule applies to registrants that the SEC identifies as having filed an annual report with an audit report
issued by a registered public accounting firm that is located in a foreign jurisdiction that the PCAOB is unable to inspect or investigate completely
because of a position taken by an authority in that jurisdiction. Consistent with the HFCAA, the interim final rule requires the submission of
documentation to the SEC establishing that such a registrant is not owned or controlled by a government entity in that foreign jurisdiction and also
requires disclosure in a foreign issuer’s annual report regarding the audit arrangements of, and government influence on, such registrants. On May
13, 2021, the PCAOB issued proposed PCAOB Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act for
public comment. The proposed rule provides a framework for making determinations as to whether PCAOB is unable to inspect an audit firm in a
foreign jurisdiction, including the timing, factors, bases, publication and revocation or modification of such determinations, and such determinations
will be made on a jurisdiction-wide basis in a consistent manner applicable to all firms headquartered in the jurisdiction. In November 2021, the
SEC approved PCAOB Rule 6100. On December 2, 2021, the SEC adopted amendments to final rules implementing the disclosure and submission
requirements of the HFCAA.
On June 22, 2021, the U.S. Senate passed a bill titled as the Accelerating Holding Foreign Companies Accountable Act, or AHFCA Act
which, if passed by the U.S. House of Representatives and signed into law, would reduce the number of consecutive non-inspection years required
for triggering the prohibitions under the Holding Foreign Companies Accountable Act from three years to two.
Further, the PCAOB adopted a final rule on September 22, 2021 implementing the HFCA Act. Such final rule, however, remains subject to
the SEC’s approval and it remains when the SEC will complete its rulemaking and when such rules will become effective and what, if any, of the
PWG recommendations and or PCAOB’s rule will be adopted.
On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the
Holding Foreign Companies Accountable Act.
On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-
registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by PRC and Hong Kong
authorities in those jurisdictions.
The PCAOB adopted a final rule on September 22, 2021 implementing the HFCA Act, subject to SEC approval. The final rules adopted by
the SEC relating to the HFCA Act became effective on January 10, 2022.

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On August 26, 2022, the PCAOB signed a SOP with the CSRC and the MOF of the PRC regarding cooperation in the oversight of
PCAOB-registered public accounting firms in the PRC and Hong Kong which establishes a method for the PCAOB to conduct inspections of
PCAOB-registered public accounting firms in the PRC and Hong Kong, as contemplated by the Sarbanes-Oxley Act. Under the agreement, (a) the
PCAOB has sole discretion to select the firms, audit engagements and potential violations it inspects and investigates without consultation with, or
input from, PRC authorities; (b) procedures are in place for PCAOB inspectors and investigators to view complete audit work papers with all
information included and for the PCAOB to retain information as needed; (c) the PCAOB has direct access to interview and take testimony from all
personnel associated with the audits the PCAOB inspects or investigates; and (d) the PCAOB shall have the unfettered ability to transfer information
to the SEC in accordance with the Sarbanes-Oxley Act, and the SEC can use the information for all regulatory purposes, including administrative or
civil enforcement actions. The PCAOB was required to reassess its determinations as to whether it is able to carry out inspections and investigations
completely and without obstruction by the end of 2022. On December 15, 2022, the PCAOB determined that the PCAOB was able to secure
complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and vacated its
previous determinations. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB will
consider the need to issue a new determination.
Congress passed fiscal year 2023 Omnibus spending legislation in December 2022, which contained provisions to accelerate the HFCAA
timeline for implementation of trading prohibitions from three years to two years. As a result, the SEC is required to prohibit an issuer’s securities
from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections or complete investigations for two consecutive years.
Our predecessor auditors, Marcum Asia CPAs LLP (“Marcum Asia”) and Friedman LLP (“Friedman”), both of which are independent
registered public accounting firms and which Friedman issued the audit report included elsewhere in this report, as auditors of companies that are
traded publicly in the United States and firms registered with the PCAOB, are subject to laws in the United States pursuant to which the PCAOB
conducts regular inspections to assess our auditor’s compliance with the applicable professional standards. Marcum Asia did not issue an audit
report.
On February 7, 2023, the Company’s Board of Directors determined and ratified the Audit Committee’s approval of the proposed
appointment of Marcum Asia as the Company’s independent registered public accounting firm. The services previously provided by Friedman are
now provided by Marcum Asia.
The Company was notified by Friedman, the Company’s then independent registered public accounting firm, that effective September 1,
2022, Friedman combined with Marcum LLP and continued to operate as an independent registered public accounting firm. Friedman continued to
serve as the Company’s independent registered public accounting firm through February 1, 2023. On February 1, 2023, the Audit Committee
approved the engagement of Marcum Asia to serve as the independent registered public accounting firm of the Company.
On August 22, 2023, we appointed Enrome LLP as its independent registered public accounting firm. Enrome LLP replaced Marcum Asia
which we dismissed on August 22, 2023. The appointment of Enrome LLP was made after careful consideration and evaluation process and has
been approved by our audit committee of our board of directors. Our decision to make this change was not the result of any disagreement between
the Company and Marcum Asia on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
The Company’s decision to terminate Marcum Asia was based on cost control concerns.
Marcum Asia and formerly Friedman are headquartered in New York, New York and have been subject to inspection by the PCAOB on a
regular basis. Our current auditor, Enrome LLP, an independent registered public accounting firm, has been retained to audit the financial statements
for the fiscal year ended June 30, 2024. Enrome LLP is subject to PCAOB inspections and the PCAOB is able to inspect our auditor. We cannot
assure you whether NASDAQ or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of
our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or
experience as it relates to the audit of our financial statements. In the event that there is a lack of inspection or if Enrome LLP, Marcum Asia or
Friedman are unable to permit an inspection by the PCAOB, however unlikely, our shares would be prohibited under the HFCA Act which may lead
a securities exchange to determine to delist our shares. Such potential delisting would substantially impair your ability to sell or purchase our shares
when you wish to do so, and such risk and uncertainty associated with a potential delisting due to a lack of inspection would have a negative impact
on the price of our shares.

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Additional compliance procedures may be required due to the promulgation of the new filing-based administrative rules for overseas offering
and listing by domestic companies in China, which could significantly limit or completely hinder our ability to offer or continue to offer our
Ordinary Shares to investors and could cause the value of our Ordinary Shares to significantly decline or become worthless.
On February 17, 2023, the CSRC promulgated the Trial Measures and five supporting guidelines, which went into effect on March 31,
2023. Pursuant to Article 16 of the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, shall
complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working days following its submission of
initial public offerings or listing application. Where an issuer offers securities in the same overseas market after overseas initial public offerings or
listing, it shall complete filing procedures with the CSRC within three working days after completion of offering. The required filing materials with
the CSRC in relation to the offering in the same overseas market include (without limitation): (i) record-filing reports and related undertakings; and
(ii) PRC legal opinions issued by domestic law firms (with related undertakings).
Pursuant to the Trial Administrative Measures, we have to file with the CSRC with respect to public offering, and the CSRC will conclude
the filing procedures and publish the filing results on the CSRC website within twenty working days after receiving the filing documents, if the filing
documents are complete and in compliance with stipulated requirements. However, during the filing process, the CSRC may request the Company to
supply additional documents or may consult with competent authorities, the time for which will not be counted in the twenty working days. As
advised by Jingtian & Gongcheng, our PRC counsel, we were not required to complete the filing procedures pursuant to the Trial Measures for our
initial public offering because we completed our IPO and listing prior to September 30, 2023. However, we are now required to complete the filing
procedures with the CSRC pursuant to the requirements of the Trial Measures for subsequent offerings conducted in the U.S. Based on the above
and our understanding of the Chinese laws and regulations currently in effect as of the date of this report, any failure or perceived failure of the
Company to fully comply with the filing requirements could significantly limit or completely hinder our ability to offer or continue to offer
securities to investors, cause significant disruption to our business operations, and severely damage our reputation, which could materially and
adversely affect our financial condition and results of operations, potentially causing the value of our securities to significantly decline or be
worthless.
PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC
subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries or limit our PRC subsidiaries’ ability to increase
their registered capital or distribute profits.
SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment
and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014, which replaced the former
circular commonly known as “SAFE Circular 75” promulgated by SAFE on October 21, 2005. SAFE Circular 37 requires PRC residents to register
with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas
investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests,
referred to in SAFE Circular 37 as a “special purpose vehicle.” SAFE Circular 37 further requires amendment to the registration in the event of any
significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer
or exchange, merger, division or other material event. In the event that a PRC resident holding interests in a special purpose vehicle fails to fulfill the
required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore
parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to
contribute additional capital into its PRC subsidiary. Moreover, failure to comply with the various SAFE registration requirements described above
could result in liability under PRC law for evasion of foreign exchange controls.
SAFE promulgated the Notice of SAFE on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct
Investment, or SAFE Circular 13, on February 13, 2015, which was effective on June 1, 2015. SAFE Circular 13 cancels two administrative
approval items: foreign exchange registration under domestic direct investment and foreign exchange registration under overseas direct investment,
instead. Banks shall directly examine and handle foreign exchange registration under domestic direct investment and foreign exchange registration
under overseas direct investment, and SAFE and its branch shall indirectly regulate the foreign exchange registration of direct investment through
banks.

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In 2008, to protect our shareholders from possible future foreign ownership restrictions, our Founders signed a series of agreements with
Recon-JN, BHD and Nanjing Recon, so Recon-JN became the primary beneficiary of BHD and Nanjing Recon for accounting purposes. On April 1,
2019, as part of our planned organizational restructuring, Recon-BJ entered into a series of VIE agreements with BHD and Nanjing Recon,
respectively, under the same terms and conditions as that of the VIE agreements previously entered into by Recon-JN. As a result, the VIEs were
effectively transferred from Recon-JN to Recon-BJ. Our beneficial owners, Mr. Chen Guangqiang and Mr. Yin Shenping, both PRC residents,
initially completed their SAFE registration at the Jining branch of SAFE. However, they failed to comply with the required procedures to update and
amend their SAFE registration in a timely manner.
Failure to register or comply with relevant requirements may subject Mr. Chen, Mr. Yin and our PRC subsidiaries to fines and legal
sanctions. The non-compliance could also limit our ability to contribute additional capital to our PRC subsidiaries and restrict their ability to
distribute dividends to our company. Additionally, it may constrain our PRC subsidiaries’ ability to increase their registered capital or distribute
profits. Such risks could have a material adverse effect on our business, financial condition, and results of operations. Due to the lack of
interconnection between the SAFE registration systems in Jining and Beijing, Mr. Chen and Mr. Yin have established two new BVI offshore
companies to transfer their previously held shares and update their SAFE registration. However, whether the amendment registration can be
completed remains uncertain. We urge investors to fully consider these associated risks.
PRC laws and regulations governing our current business operations are sometimes vague and uncertain and any changes in such laws and
regulations may impair our ability to operate profitably.
There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including, but not limited to,
the laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances.
The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve
substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and
regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a
manner different from our understanding of these laws and regulations. New laws and regulations that affect existing and proposed future businesses
may also be applied retroactively. Recon cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our
business.
The PRC legal system is a civil law system based on written statutes. Prior court decisions are encouraged to be used for reference but it
remains unclear to what extent the prior court decisions may impact the current court ruling as the encouragement policy is new and there is limited
judicial practice in this regard. Since a large number of laws and regulations are relatively new and the PRC legal system continues to rapidly
evolve, the interpretations of many laws, regulations and rules are not always uniform and the enforcement of these laws, regulations and rules
involves uncertainties.
In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in
general. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign
investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not
sufficiently cover all aspects of economic activities in China. In particular, the interpretation and enforcement of these laws and regulations involve
uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and
contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy.
These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. In
addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or
benefits from us.
Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely
basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime
after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of
resources and management attention.
From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC
administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more
difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal
systems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely
manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after
the violation. Such uncertainties, including uncertainty over the scope and effect of its contractual, property (including intellectual property) and
procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business
and impede our ability to continue our operations.

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We are also subject to the legal and operational risks associated with being based in and having substantially all operations in China. These
risks may result in material changes in operations, or a complete hindrance of Recon’s ability to offer or continue to offer its securities to investors,
and could cause the value of Recon’s securities to significantly decline or become worthless. Recently, the PRC government initiated a series of
regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in
the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new
measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. On July 6, 2021, the General Office
of the Communist Party of China Central Committee and the General Office of the State Council jointly issued an announcement to crack down on
illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the
relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over
China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. On
December 28, 2021, Cybersecurity Review Measures (2021 version) was issued, which became effective on February 15, 2022. As of the date of this
report, the above regulations have not impacted our ability to conduct the business, accept foreign investments, or list on a U.S. or other foreign
exchange; however, there are uncertainties in the interpretation and enforcement of these new laws and guidelines, which could materially and
adversely impact our overall business and financial outlook.
Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our future business
and operations.
The Chinese economy differs from the economies of most developed countries in many respects, including the level of government
involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has
implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and
the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the
government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial
policies.
The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment
of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.
While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and
among various sectors of the economy. Any adverse changes in economic conditions in China, in the policies of the Chinese government or in the
laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely
affect our future business and operating results, lead to reduction in demand for our services and adversely affect our competitive position. The
Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these
measures may benefit the overall Chinese economy but may have a negative effect on us. For example, our financial condition and results of
operations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in the past the
Chinese government has implemented certain measures, including interest rate adjustment, to control the pace of economic growth. These measures
may cause decreased economic activity in China, which may adversely affect our future business and operating results.
Adverse changes in China’s political, economic or social conditions or government policies could have a material adverse effect on the overall
economic growth of China, which could reduce the demand for our products and materially adversely affect our competitive position.
We conduct substantially all of our operations and generate most of our revenue in China. Accordingly, our business, financial condition,
results of operations and prospects are affected significantly by economic, political and legal developments in China. The PRC economy differs from
the economies of most developed countries in many respects, including:
●
the higher level of government involvement;
●
the early stage of development of the market-oriented sector of the economy;
●
the relatively rapid growth rate;

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●
the higher level of control over foreign exchange; and
●
the allocation policies of resources.
While the PRC economy has grown significantly since the late 1970s, the growth has been uneven, both geographically and among various
sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of
resources. Some of these measures benefit the overall PRC economy, but may also have a negative effect on our business. For example, our financial
condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are
applicable to us.
The PRC economy has been transitioning from a planned economy to a more market-oriented economy. The PRC government continues to
exercise significant control over economic growth in China through the allocation of resources, controlling payment of foreign currency-
denominated obligations, setting monetary policy and imposing policies that impact particular industries or companies in different ways.
We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law.
In connection with any future offering, we may be subjected to the U.S. Foreign Corrupt Practices Act (“FCPA”), and other laws that
prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as
defined by the statute for the purpose of obtaining or retaining business. We may also be subjected to Chinese anti-corruption laws, which strictly
prohibit the payment of bribes to government officials. Going forward, we may have operations, agreements with third parties, and make sales in
China, which may experience corruption. Our future activities in China may create the risk of unauthorized payments or offers of payments by one
of the employees of our Company, because sometimes these employees are out of our control. Violations of the FCPA or Chinese anti-corruption
laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating
results and financial condition. In addition, the government may seek to hold our Company liable for successor liability FCPA violations committed
by companies in which we invest or that we acquire.
The PRC government may issue further restrictive measures in the future.
We cannot assure you that the PRC’s government will not issue further restrictive measures in the future. The PRC government’s restrictive
regulations and measures could increase our existing and future operating costs in adapting to these regulations and measures, limit our access to
capital resources or even restrict our existing and future business operations, which could further adversely affect our business and prospects.
We may be subject to a variety of laws and other obligations regarding cybersecurity and data protection, and any failure to comply with
applicable laws and obligations could have a material and adverse effect on our business, financial condition and results of operations.
We may be subject relating various risks and costs associated with to the collection, use, sharing, retention, security, and transfer of
confidential and private information, such as personal information and other data. This data is wide ranging and relates to our investors, employees,
contractors and other counterparties and third parties. The relevant PRC laws apply not only to third-party transactions, but also to transfers of
information between us, the Domestic Companies, our subsidiaries and other parties with which we have commercial relations.
The PRC regulatory and enforcement regime with regard to privacy and data security is evolving. The PRC Cybersecurity Law which was
promulgated on November 7, 2016 and became effective on June 1, 2017 provides that personal information and important data collected and
generated by operators of critical information infrastructure in the course of their operations in the PRC should be stored in the PRC, and the law
imposes heightened regulation and additional security obligations on operators of critical information infrastructure. According to the Cybersecurity
Review Measures promulgated by the Cyberspace Administration of China and certain other PRC regulatory authorities in April 2020, which
became effective in June 2020, operators of critical information infrastructure must pass a cybersecurity review when purchasing network products
and services which do or may affect national security.

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On June 10, 2021, the Standing Committee of the National People’s Congress of China promulgated the Data Security Law which shall
take effect in September 1, 2021. The Data Security Law provides for data security and privacy obligations of entities and individuals carrying out
data activities, prohibits entities and individuals in China from providing any foreign judicial or law enforcement authority with any data stored in
China without approval from the competent PRC authority, and sets forth the legal liabilities of entities and individuals found to be in violation of
their data protection obligations, including rectification order, warning, fines of up to RMB10 million, suspension of relevant business, and
revocation of business permits or licenses.
On August 20, 2021, the Standing Committee of the National People’s Congress adopted the Personal Information Security Law, which
shall come into force as of November 1, 2021. The Personal Information Protection Law includes the basic rules for personal information
processing, the rules for cross-border provision of personal information, the rights of individuals in personal information processing activities, the
obligations of personal information processors, and the legal responsibilities for illegal collection, processing, and use of personal information.
In addition, on July 10, 2021, the Cyberspace Administration of China issued the Measures for Cybersecurity Review (Revision Draft for
Comments) for public comments, which proposes to authorize the relevant government authorities to conduct cybersecurity review on a range of
activities that affect or may affect national security, including listings in foreign countries by companies that possess personal data of more than one
million users. The PRC National Security Law covers various types of national security, including technology security and information security.
On December 28, 2021, the CAC, the National Development and Reform Commission (“NDRC”), and several other administrations jointly
issued the revised Measures for Cybersecurity Review, or the Revised Review Measures. According to the Revised Review Measures, if an “online
platform operator” that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a
cybersecurity review. Given the recency of the issuance of the Revised Review Measures, there is a general lack of guidance and substantial
uncertainties exist with respect to their interpretation and implementation.
We do not collect, process or use personal information of entities or individuals other than what is necessary for our business and do not
disseminate such information. We do not operate mobile apps and we do not possess information on more than a million entities/individuals.
Although we believe we currently are not required to obtain clearance from the Cyberspace Administration of China under the Measures for
Cybersecurity Review or the Opinions on Strictly Cracking Down on Illegal Securities Activities, we face uncertainties as to the interpretation or
implementation of such regulations or rules, and if required, whether such clearance can be timely obtained, or at all.
Compliance with the PRC Cybersecurity Law, the PRC National Security Law, the Data Security Law, the Personal Information Protection
Law, the Cybersecurity Review Measures, as well as additional laws and regulations that PRC regulatory bodies may enact in the future, including
data security and personal information protection laws, may result in additional expenses to us and subject us to negative publicity, which could
harm our reputation among users and negatively affect the trading price of our shares in the future. There are also uncertainties with respect to how
the PRC Cybersecurity Law, the PRC National Security Law and the Data Security Law will be implemented and interpreted in practice. PRC
regulators, including the Ministry of Public Security, the MIIT, the SAMR and the Cyberspace Administration of China, have been increasingly
focused on regulation in the areas of data security and data protection, including for mobile apps, and are enhancing the protection of privacy and
data security by rule-making and enforcement actions at central and local levels. We expect that these areas will receive greater and continued
attention and scrutiny from regulators and the public going forward, which could increase our compliance costs and subject us to heightened risks
and challenges associated with data security and protection. If we are unable to manage these risks, we could become subject to penalties, including
fines, suspension of business, prohibition against new user registration (even for a short period of time) and revocation of required licenses, and our
reputation and results of operations could be materially and adversely affected.

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It may be difficult for overseas shareholders and/or regulators to conduct investigation or collect evidence within China.
Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or
practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory
investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the
securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the
securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism.
Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities
regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. While detailed interpretation of
or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator, such as the Department of
Justice, the SEC, the PCAOB and other authorities, to directly conduct investigation or evidence collection activities within China may further
increase difficulties faced by you in protecting your interests.
Some of our business operations are conducted in Hong Kong and the PRC. In the event that the U.S. regulators carry out investigation on
us and there is a need to conduct investigation or collect evidence within the territory of the PRC, the U.S. regulators may not be able to carry out
such investigation or evidence collection directly in the PRC under the PRC laws. The U.S. regulators may consider cross-border cooperation with
securities regulatory authority of the PRC by way of judicial assistance, diplomatic channels or regulatory cooperation mechanism established with
the securities regulatory authority of the PRC.
Uncertainties with respect to the PRC legal system could limit the legal protections available to you and us.
We conduct substantially all of our business through our operating subsidiary in the PRC, Recon-BJ, which is a wholly foreign owned
enterprise in China. Recon-BJ is generally subject to laws and regulations applicable to foreign invested enterprises in China and intellectual
property protections. The PRC legal system is based on written statutes, and prior court decisions may be cited for reference but have limited
precedential value. Since the late 1970s, a series of new PRC laws and regulations have significantly enhanced the protections afforded to
intellectual property rights and various forms of foreign investments in China. However, since these laws and regulations are relatively new and the
PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of
these laws, regulations and rules involve uncertainties, which may limit legal protections available to you and us. In addition, any litigation in China
may be protracted and result in substantial costs and diversion of resources and management attention.
We do not have business interruption, litigation or natural disaster insurance.
The insurance industry in China is still at an early stage of development. In particular PRC insurance companies offer limited business
products. As a result, we do not have any business liability or disruption insurance coverage for our operations in China. Any business interruption,
litigation or natural disaster may result in our business incurring substantial costs and the diversion of resources.
We may be subject to foreign exchange controls in the PRC.
Our PRC subsidiary and affiliates are subject to PRC rules and regulations on currency conversion. In the PRC, the State Administration for
Foreign Exchange (“SAFE”) regulates the conversion of the RMB into foreign currencies. Currently, foreign investment enterprises (“FIEs”) are
required to apply to SAFE for “Foreign Exchange Registration Certificate for FIEs.” Recon-BJ is an FIE. With such registration certifications
(which need to be renewed annually), FIEs are allowed to open foreign currency accounts including the “recurrent account” and the “capital
account.” Currently, conversion within the scope of the “recurrent account” can be affected without requiring the approval of SAFE. However,
conversion of currency in the “capital account” (e.g. for capital items such as direct investments, loans, securities, etc.) still requires the approval of
SAFE. Accordingly, compliance with SAFE requirements may limit how we are able to use our funds, in ways that we would not be limited if we
operated in countries other than China.

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Fluctuations in exchange rates could adversely affect the value of our securities.
Changes in the value of the RMB against the U.S. dollar and other foreign currencies are affected by, among other things, changes in
China’s political and economic conditions. Any significant revaluation of the RMB may have a material adverse effect on the value of, and any
dividends payable on our shares in U.S. dollar terms. For example, if we decide to convert our RMB into U.S. dollars for the purpose of paying
dividends on our ordinary shares or for other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the
U.S. dollar amount available to us.
Since July 2005, the RMB is no longer pegged to the U.S. dollar. Although the People’s Bank of China regularly intervenes in the foreign
exchange market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly in value
against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future PRC authorities may lift restrictions on fluctuations in
the RMB exchange rate and lessen intervention in the foreign exchange market.
Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered
into any hedging transactions. We do not plan to enter into hedging transactions in the future, the availability and effectiveness of these transactions
may be limited, and we may not be able to successfully hedge our exposure at all. In addition, our foreign currency exchange losses may be
magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies.

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PRC regulations relating to the establishment of offshore special purpose vehicles by PRC residents, if applied to us, may subject our PRC
resident shareholders to personal liability and limit our ability to acquire PRC companies or to inject capital into Recon-IN and Recon-BJ, limit
Recon-IN’s and Recon-BJ’s ability to distribute profits to us or otherwise materially adversely affect us.
On October 21, 2005, SAFE issued a public notice, the Notice on Relevant Issues in the Foreign Exchange Control over Financing and
Return Investment Through Special Purpose Companies by Residents Inside China, or the SAFE notice, which requires PRC residents, including
both legal persons and natural persons, to register with the competent local SAFE branch before establishing or controlling any company outside of
China, referred to as an “offshore special purpose company,” for the purpose of overseas equity financing involving onshore assets or equity interests
held by them. In addition, any PRC resident that is the shareholder of an offshore special purpose company is required to amend its SAFE
registration with the local SAFE branch with respect to that offshore special purpose company in connection with any increase or decrease of capital,
transfer of shares, merger, division, equity investment or creation of any security interest over any assets located in China. Moreover, if the offshore
special purpose company was established and owned the onshore assets or equity interests before November 1, 2005, a retroactive SAFE registration
is required to have been completed before March 31, 2006. If any PRC shareholder of any offshore special purpose company fails to make the
required SAFE registration and amendment, the PRC subsidiaries of that offshore special purpose company (Recon-IN, Recon-BJ, Recon-SD and
Recon-GX for our company) may be prohibited from distributing their profits and the proceeds from any reduction in capital, share transfer or
liquidation to the offshore special purpose company. Moreover, failure to comply with the SAFE registration and amendment requirements described
above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.
Due to lack of official interpretation, some of the terms and provisions in the SAFE notice remain unclear and implementation by central
SAFE and local SAFE branches of the SAFE notice has been inconsistent since its adoption. Because of uncertainty over how the SAFE notice will
be interpreted and implemented, we cannot predict how it will affect our business operations or future strategies. For example, Recon-IN’s, Recon-
BJ’s, Recon-SD’s, Recon-GX’s and any prospective PRC subsidiaries’ ability to conduct foreign exchange activities, such as the remittance of
dividends and foreign currency-denominated borrowings, may be subject to compliance with the SAFE notice by our company’s PRC resident
beneficial holders. In addition, such PRC residents may not always be able to complete the necessary registration procedures required by the SAFE
notice. We also have little control over either our present or prospective direct or indirect shareholders or the outcome of such registration
procedures. A failure by our PRC resident beneficial holders or future PRC resident shareholders to comply with the SAFE notice, if SAFE requires
it, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiary’s ability to make
distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.
Under the PRC Enterprise Income Tax Law, or the EIT Law, we may be classified as a “resident enterprise” of China, which could result in
unfavorable tax consequences to us and our non-PRC shareholders.
The EIT Law and its implementing rules provide that enterprises established outside of China whose “de facto management bodies” are
located in China are considered “resident enterprises” under PRC tax laws. The implementing rules promulgated under the EIT Law define the term
“de facto management bodies” as a management body which substantially manages, or has control over the business, personnel, finance and assets
of an enterprise. In April 2009, the State Administration of Taxation, or SAT, issued a circular, known as Circular 82, which provides certain specific
criteria for determining whether the “de facto management bodies” of a PRC-controlled enterprise that is incorporated offshore is located in China.
However, there are no further detailed rules or precedents governing the procedures and specific criteria for determining “de facto management
body.” Although our board of directors and management are located in the PRC, it is unclear if the PRC tax authorities would determine that we
should be classified as a PRC “resident enterprise.”
If we are deemed a PRC “resident enterprise,” we will be subject to PRC enterprise income tax on our worldwide income at a uniform tax
rate of 25%, although dividends distributed to us from our existing subsidiaries in China or the VIE and any other subsidiaries in China or the VIE
which we may establish from time to time could be exempt from the PRC dividend withholding tax due to our PRC “resident recipient” status. This
could have a material and adverse effect on our overall effective tax rate, our income tax expenses and our net income. Furthermore, dividends, if
any, paid to our shareholders may be decreased as a result of the decrease in distributable profits. In addition, if we were considered a PRC “resident
enterprise”, any dividends we pay to our non-PRC investors, and the gains realized from the transfer of our Class A Ordinary Shares may be
considered income derived from sources within the PRC and be subject to PRC tax, at a rate of 10% in the case of non-PRC enterprises or 20% in
the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty). It is unclear whether holders of our Class A
Ordinary Shares would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are
treated as a PRC resident enterprise. This could have a material and adverse effect on the value of your investment in us and the price of our Class A
Ordinary Shares.

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Risk of potential adverse impact on our business and operations in China due to tax compliance issues in equity transfers of our PRC
subsidiaries.
Several of our PRC subsidiaries have undergone multiple equity transfers in the past. According to the Individual Income Tax Law of the
People’s Republic of China (IIT Law, 2018 Amendment), where an individual undergoes modification registration for transfer of equities, the
registration authority of the market participant shall verify the payment receipt of individual income tax related to the equity transaction. Since we
have successfully completed the modification registration processes, taxes related to the previous equity transfers have been duly paid. However, as
of the date of this prospectus, we are unable to provide tax certificates for all individual transferors involved in these transactions.
This lack of documentation could expose the company to potential risks, including tax investigations or penalties imposed by the tax
authorities. If the tax authorities determine that the transferors did not fully comply with their tax obligations, our PRC subsidiaries or the company
may be held liable for any unpaid taxes, penalties, or interest, which could have a material adverse effect on our financial condition and results of
operations. Additionally, the absence of such certificates may lead to further scrutiny by tax authorities, which could result in delays or additional
costs in completing future transactions involving equity transfers.
There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiary, and dividends payable by
our PRC subsidiary to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.
Under the PRC EIT Law and its implementation rules, the profits of a foreign invested enterprise generated through operations, which are
distributed to its immediate holding company outside the PRC, will be subject to a withholding tax rate of 10%. Pursuant to a special arrangement
between Hong Kong and the PRC, such rate may be reduced to 5% if a Hong Kong resident enterprise owns more than 25% of the equity interest in
the PRC company. Our PRC subsidiary is wholly-owned by our Hong Kong subsidiary. Moreover, under the Notice of the State Administration of
Taxation on Issues regarding the Administration of the Dividend Provision in Tax Treaties promulgated on February 20, 2009, the taxpayer needs to
satisfy certain conditions to enjoy the benefits under a tax treaty. These conditions include: (1) the taxpayer must be the beneficial owner of the
relevant dividends, and (2) the corporate shareholder to receive dividends from the PRC subsidiary must have continuously met the direct ownership
thresholds during the 12 consecutive months preceding the receipt of the dividends. Further, the State Administration of Taxation promulgated the
Notice on How to Understand and Recognize the “Beneficial Owner” in Tax Treaties on October 27, 2009, which limits the “beneficial owner” to
individuals, projects or other organizations normally engaged in substantive operations, and sets forth certain detailed factors in determining the
“beneficial owner” status. In current practice, a Hong Kong enterprise must obtain a tax resident certificate from the relevant Hong Kong tax
authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-
case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority. As of the date
of this prospectus, we have not commenced the application process for a Hong Kong tax resident certificate from the relevant Hong Kong tax
authority, and there is no assurance that we will be granted such a Hong Kong tax resident certificate.
Even after we obtain the Hong Kong tax resident certificate, we are required by applicable tax laws and regulations to file required forms
and materials with relevant PRC tax authorities to prove we can enjoy the 5% lower PRC withholding tax rate. Recon HK intends to obtain the
required materials and file with the relevant tax authorities when it plans to declare and pay dividends, but there is no assurance that the PRC tax
authorities will approve the 5% withholding tax rate on dividends received from Recon HK.
PRC regulations and potential registration requirements relating to acquisitions of PRC companies by foreign entities may create regulatory
uncertainties that could restrict or limit our ability to operate.
On August 8, 2006, six PRC regulatory agencies, including the PRC Ministry of Commerce (“MOC”), the State-owned Assets Supervision
and Administration Commission of the State Council, the State Administration of Taxation, the State Administration for Industry and Commerce, the
CSRC and SAFE, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules,
which came into effect on September  8, 2006 and was amended on June  22, 2009.  The M&A Rules significantly revised China’s regulatory
framework governing onshore-to-offshore restructurings and foreign acquisitions of domestic enterprises. These new rules signify greater PRC
government attention to cross-border merger, acquisition and other investment activities, by confirming MOC as a key regulator for issues related to
mergers and acquisitions in China and requiring MOC approval of a broad range of merger, acquisition and investment transactions. Further, the new
rules establish reporting requirements for acquisition of control by foreigners of companies in key industries and reinforce the ability of the Chinese
government to monitor and prohibit foreign control transactions in key industries.

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Among other things, the M&A Rules include new provisions that purport to require that an offshore SPV, formed for listing purposes and
controlled directly or indirectly by PRC companies or individuals must obtain the approval of the CSRC prior to the listing and trading of such
SPV’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website procedures specifying
documents and materials required to be submitted to it by SPVs seeking CSRC approval of their overseas listings. However, the application of this
PRC regulation remains unclear with no consensus currently existing among the leading PRC law firms regarding the scope and applicability of the
CSRC approval requirement.
If the PRC regulatory authorities take the view that the VIE Agreements constitute a reverse merger acquisition or round-trip investment in
related party transactions without the approval of the national offices of MOC, they could invalidate the VIE Agreements. Additionally, the PRC
regulatory authorities may take the view that any public offering plan will require the prior approval of CSRC. If we cannot obtain MOC or CSRC
approval in case we are required to do so, our business and financial performance will be materially adversely affected. We may also face regulatory
actions or other sanctions from the MOC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our
operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds of any other offering into the PRC,
or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as
well as the trading price of our Class A Ordinary Shares.
Also, if the CSRC later requires that we obtain its approval, we may be unable to obtain a waiver of the CSRC approval requirements, if
and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding this CSRC approval requirement
could have a material adverse effect on the trading price of our Class A Ordinary Shares.
The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued
the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities, which was available to the public on July 6, 2021. These opinions
emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based
companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the
risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. Moreover, the CAC
issued the Measures of Cybersecurity Review (Revised Draft for Comments) on July 10, 2021, which requires certain operators who wish to list
abroad to file a cybersecurity review with the Office of Cybersecurity Review, such as operators with personal information of more than one million
users. The Cybersecurity Administration of China issued the revised Measures for Cybersecurity Review (“Revised Review Measures”) on
December 28, 2021. The New Measures amends the Measures for Cybersecurity Review (Draft Revision for Comments) released on July 10, 2021.
The New Measures came into effect on February 15, 2022. The aforementioned policies and any related implementation rules to be enacted may
subject us to additional compliance requirement in the future. As these opinions were recently issued, official guidance and interpretation of the
opinions remain unclear in several respects at this time. We cannot assure you, however, that the regulators will not take a contrary view or will not
subsequently require us to undergo the approval procedures and subject us to penalties for non-compliance. Therefore, we cannot assure you that we
will remain fully compliant with all new regulatory requirements of these opinions or any future implementation rules on a timely basis, or at all.

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PRC registration requirements for stock option plans of overseas publicly-listed companies may restrict our ability to adopt equity compensation
plans for our directors and employees or otherwise limit our PRC subsidiaries’ ability to distribute profits to us.
In February 2012, SAFE promulgated the Notice on the Administration of Foreign Exchange Matters for Domestic Individuals
Participating in the Stock Incentive Plans of Overseas Listed Companies, or the Stock Option Notice, which replaced the Application Procedures of
Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Ownership Plans or Stock Option Plans of Overseas
Publicly-Listed Companies issued by SAFE on March 28, 2007. Under the Stock Option Notice and other relevant rules and regulations, PRC
residents who participate in stock incentive plan in an overseas publicly-listed company are required to register with SAFE or its local branches and
complete certain other procedures. Participants of a stock incentive plan who are PRC residents must collectively retain a qualified PRC agent,
which could be a PRC subsidiary of such overseas publicly listed company or another qualified institution selected by such PRC subsidiary, to
conduct the SAFE registration and other procedures with respect to the stock incentive plan on behalf of its participants. Such participants must also
collectively retain an overseas entrusted institution to handle matters in connection with their exercise of stock options, the purchase and sale of
corresponding stocks or interests and fund transfers. In addition, the PRC agent is required to amend the SAFE registration with respect to the stock
incentive plan if there is any material change to the stock incentive plan, the PRC agent or the overseas entrusted institution or other material
changes. We and our PRC employees who have been granted stock options are subject to these regulations. Failure of our PRC stock option holders
to complete their SAFE registrations may subject these PRC residents to fines and legal sanctions and may also limit our ability to compensate our
employees and directors through equity compensation, limited our PRC subsidiaries’ ability to distribute dividends to us, or otherwise materially
adversely affect our business.
The Chinese government could change its policies toward private enterprise or even nationalize or expropriate private enterprises, which could
result in the total loss of our investment in that country.
Our business is subject to significant political and economic uncertainties and may be adversely affected by political, economic and social
developments in China. Over the past several years, the Chinese government has pursued economic reform policies including the encouragement of
private economic activity and greater economic decentralization. The Chinese government may not continue to pursue these policies or may
significantly alter them to our detriment from time to time with little, if any, prior notice.
Changes in policies, laws and regulations or in their interpretation or the imposition of confiscatory taxation, restrictions on currency
conversion, restrictions or prohibitions on dividend payments to shareholders, devaluations of currency or the nationalization or other expropriation
of private enterprises could have a material adverse effect on our business. Nationalization or expropriation could even result in the total loss of our
investment in China and in the total loss of your investment in us.
We may be unable to establish and maintain an effective system of internal control over financial reporting, and as a result we may be unable to
accurately report our financial results or prevent fraud.
The PRC has historically lagged in western style management, governance and financial reporting concepts and practices, as well as in
modern banking, and other control systems. Our current management has little experience with western style management, governance and financial
reporting concepts and practices, and we may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC.
As a result of these factors, and especially given that we are a publicly listed company in the U.S. and subject to regulation as such, we may
experience difficulty in establishing management, governance, legal and financial controls, collecting financial data and preparing financial
statements, books of account and corporate records and instituting business practices that meet western standards. We may have difficulty
establishing adequate management, governance, legal and financial controls in the PRC. Therefore, we may, in turn, experience difficulties in
implementing and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002 and other applicable
laws, rules and regulations. This may result in significant deficiencies or material weaknesses in our internal controls which could impact the
reliability of our financial statements and prevent us from complying with SEC rules and regulations and the requirements of the Sarbanes-Oxley
Act of 2002. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our business and the public
announcement of such deficiencies could adversely impact our stock price.

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The recent joint statement by the SEC, proposed rule changes submitted by NASDAQ, and an act passed by the U.S. Senate and the U.S. House
of Representatives, all call for additional and more stringent criteria to be applied to emerging market companies. These developments could add
uncertainties to our future offerings, business operations share price and reputation.
U.S. public companies that have substantially all of their operations in China have been the subject of intense scrutiny, criticism and
negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative
publicity has centered on financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting,
inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud.
On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in
their oversight of financial statement audits of U.S.-listed companies with significant operations in China. On April 21, 2020, SEC Chairman Jay
Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated
with investing in companies based in or have substantial operations in emerging markets including China, reiterating past SEC and PCAOB
statements on matters including the difficulty associated with inspecting accounting firms and audit work papers in China and higher risks of fraud
in emerging markets and the difficulty of bringing and enforcing SEC, Department of Justice and other U.S. regulatory actions, including in
instances of fraud, in emerging markets generally.
On May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act requiring a foreign company to certify it is not
owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not
subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three consecutive years, the issuer’s securities are
prohibited to trade on a national exchange. On December 2, 2020, the U.S. House of Representatives approved the Holding Foreign Companies
Accountable Act. The PCAOB adopted a final rule on September 22, 2021 implementing the HFCA Act. The final rules adopted by the SEC relating
to the HFCA Act became effective on January 10, 2022.
On May 21, 2021, NASDAQ filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily
operating in a “Restrictive Market”, (ii) prohibit Restrictive Market companies from directly listing on NASDAQ Capital Market, and only permit
them to list on NASDAQ Global Select or NASDAQ Global Market in connection with a direct listing and (iii) apply additional and more stringent
criteria to an applicant or listed company based on the qualifications of the company’s auditors.
On August 26, 2022, the SEC announced that the PCAOB signed a Statement of Protocol with the CRSC and the Ministry of Finance of the
PRC, which sets out specific arrangements on conducting inspections and investigations by both sides over relevant audit firms within the
jurisdiction of both sides, including the audit firms based in mainland China and Hong Kong. This agreement marks an important step towards
resolving the audit oversight issue that concern mutual interests, and sets forth arrangements for both sides to cooperate in conducting inspections
and investigations of relevant audit firms, and specifies the purpose, scope and approach of cooperation, as well as the use of information and
protection of specific types of data.
On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered
public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations. However, should PRC
authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB will consider the need to issue a new determination.
In December 2022, Congress passed fiscal year 2023 Omnibus spending legislation, which contained provisions to accelerate the HFCAA
timeline for implementation of trading prohibitions from three years to two years. As a result of the legislation, the SEC is required to prohibit an
issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections or complete investigations for two
consecutive years.
The recent regulatory developments have resulted in additional regulatory compliance costs and uncertainties to our future capital raise
activities, business and our share price. In addition, any additional actions, proceedings or rules resulting from these efforts could create new
uncertainties for our shareholders, and the market price of our shares could be adversely affected,

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As a result of these scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese companies sharply
decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC
enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny,
criticism and negative publicity will have on us, our future offerings, business and our share price. If we become the subject of any unfavorable
allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations
and/or defend our Company. This situation will be costly and time consuming and distract our management from developing our growth. If such
allegations are not proven to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in
the value of our shares.
Risks Related to Our Ordinary Shares
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions
applicable to United States domestic public companies.
Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and
regulations in the United States that are applicable to U.S. domestic issuers, including:
●
the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;
●
the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under
the Exchange Act;
●
the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for
insiders who profit from trades made in a short period of time; and
●
the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish
our results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of the NASDAQ Capital Market. Press
releases relating to financial results and material events are also furnished to the SEC on Form 6-K. However, the information we are required to file
with or furnish to the SEC is less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result,
you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic issuer.
As a Cayman Islands company listed on the NASDAQ Capital Market, we are subject to the NASDAQ Capital Market corporate governance listing
standards. However, NASDAQ Capital Market rules permit a foreign private issuer like us to follow the corporate governance practices of its home
country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the NASDAQ
Capital Market corporate governance listing standards. To the extent that we choose to utilize the home country exemption for corporate governance
matters, our shareholders may be afforded less protection than they otherwise would under the NASDAQ Capital Market corporate governance
listing standards applicable to U.S. domestic issuers. We follow home country practice with respect to annual shareholders meetings.
You may experience future dilution as a result of future equity offerings.
In order to raise additional capital, we may in the future offer additional Class A Ordinary Shares or other securities convertible into or
exchangeable for our Class A Ordinary Shares at prices that may not be the same as the price per share you paid. We may sell shares or other
securities in any other offering at a price per share that is less than the price per share paid by existing investors, and investors purchasing shares or
other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additional Class A Ordinary
Shares, or securities convertible or exchangeable into Class A Ordinary Shares, in future transactions may be higher or lower than the price per share
paid by existing investors.
We do not intend to pay dividends in the foreseeable future.
We have never paid cash dividends on our Class A Ordinary Shares. We currently intend to retain our future earnings, if any, to finance the
operation and growth of our business and currently do not plan to pay any cash dividends in the foreseeable future.

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Future sales of a significant number of our Class A Ordinary Shares in the public markets, or the perception that such sales could occur, could
depress the market price of our Class A Ordinary Shares.
Future sales of a substantial number of our Class A Ordinary Shares in the public markets, or the perception that such sales could occur,
could depress the market price of our Class A Ordinary Shares and impair our ability to raise capital through the sale of additional equity securities.
If any existing shareholder or shareholders sell a substantial amount of our Class A Ordinary Shares, the prevailing market price for our Class A
Ordinary Shares could be adversely affected. In addition, if we pay for our future acquisitions in whole or in part with additionally issued Class A
Ordinary Shares, your ownership interests in our company would be diluted and this, in turn, could have a material and adverse effect on the price of
our Class A Ordinary Shares.
If we fail to satisfy applicable listing standards, our ordinary shares may be delisted from the NASDAQ Capital Market.
Since the Company effected an eighteen-for-one reverse stock split on May 1, 2024, the Company received a letter dated May 22, 2024
from the Listing Qualifications Hearings Department of Nasdaq notifying the Company that (i) the Company’s bid price deficiency had been cured
and (ii) the Company was in compliance with all applicable listing standards. Accordingly, the Compliance Letter provided that the Company’s
scheduled hearing had been determined to be moot and had been cancelled, and the Company’s ordinary shares will continue to be listed and traded
on The Nasdaq Capital Market. As previously reported, on April 27, 2023, Recon Technology Ltd. received a written notice (the “Initial Notice”)
from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that for 30 consecutive
business days preceding the date of the Notice, the bid price of the Company’s ordinary shares had closed below the $1.00 per share minimum
required for continued listing on The Nasdaq Capital Market pursuant to the Minimum Bid Price Rule. The Company was provided 180 calendar
days, or until October 24, 2023, to regain compliance with the Minimum Bid Price Rule. On October 25, 2023, the Staff granted an additional 180
calendar days, or until April 22, 2024 to regain compliance with the Minimum Bid Price Rule.
Additionally, as previously disclosed, on April 23, 2024 the Company received a subsequent written notice from the Staff indicating that the
Staff had determined to delist the Company’s securities from The Nasdaq Capital Market based upon the Company’s continued non-compliance with
the $1.00 bid price requirement unless the Company timely requested a hearing before the Nasdaq Hearings Panel. The Company timely requested a
hearing before the Panel, and a hearing was scheduled.
Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor
interest and fewer business development opportunities. If our common stock is delisted by the NASDAQ the price of our ordinary shares decline.
The market price for our securities may be volatile, which could result in substantial losses to investors.
The market price for our Class A Ordinary Shares has been, and is likely to remain, volatile and subject to wide fluctuations in response to
factors including the following:
●
actual or anticipated fluctuations in our quarterly operating results;
●
changes in the Chinese petroleum and energy industries;
●
changes in the Chinese economy;
●
announcements by our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
●
future sales of our Class A Ordinary Shares;
●
period to period fluctuations in our financial results;
●
low trading volume of our Class A Ordinary Shares;
●
additions or departures of key personnel; or
●
potential litigation.

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We expect that any other securities of our Company are likely to be similarly volatile. In addition, the securities markets have from time to
time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. As a result, to
the extent shareholders sell our securities in negative market fluctuation, they may not receive a price per share that is based solely upon our
business performance. We cannot guarantee that shareholders will not lose some of their entire investment in our securities.
There has been and may continue to be significant volatility in the volume and price of our ordinary shares on the Nasdaq Capital Market.
The market price of our ordinary shares has been and may continue to be highly volatile. Factors, including changes in the Chinese
petroleum and energy industry, changes in the Chinese economy, potential infringement of our intellectual property, relating to agreements, patents
or proprietary rights, may have a significant impact on the market volume and price of our shares. Unusual trading volume in our shares occurs from
time to time.
NASDAQ may apply additional and more stringent criteria for our continued listing.
NASDAQ Listing Rule 5101 provides NASDAQ with broad discretionary authority over the continued listing of securities in NASDAQ
and NASDAQ may use such discretion to deny apply additional or more stringent criteria for the continued listing of particular securities, or suspend
or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes continued listing of the securities on
NASDAQ inadvisable or unwarranted in the opinion of NASDAQ, even though the securities meet all enumerated criteria for continued listing on
NASDAQ. In addition, NASDAQ has used its discretion to deny continued listing or to apply additional and more stringent criteria in the instances,
including but not limited to where the company engaged an auditor that has not been subject to an inspection by PCAOB, an auditor that PCAOB
cannot inspect, or an auditor that has not demonstrated sufficient resources, geographic reach, or experience to adequately perform the company’s
audit. For the aforementioned concerns, we may be subject to the additional and more stringent criteria of NASDAQ for our continued listing.
ITEM 4.
INFORMATION ON THE COMPANY
A. History and Development of the Company
Recon Technology, Ltd (the “Company”) was incorporated under the laws of the Cayman Islands on August 21, 2007 by Mr. Yin Shenping,
Mr. Chen Guangqiang and Mr. Li Hongqi (the “Founders”) as a company with limited liability. We provide oilfield specialized equipment,
automation systems, tools, chemicals and field services to petroleum companies mainly in the PRC. The Company’s wholly owned subsidiary,
Recon Technology Co., Limited (“Recon-HK”) was incorporated on September 6, 2007 in Hong Kong. On November 15, 2007, Recon-HK
established one wholly owned subsidiary, Jining Recon Technology Ltd. (“Recon-JN”) under the laws of the PRC, and later dissolved on April 10,
2019 as part of our previously disclosed organizational restructuring. Recon-HK did not own any assets or conduct any operations and was dissolved
on May 15, 2020. On November 19, 2010, the Company established another wholly owned subsidiary, Recon Investment Ltd. (“Recon-IN”) under
the laws of HK. On December 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.
On October 10, 2023, the Company established wholly owned subsidiary, Shandong Recon Renewable Resources Technology Co., Ltd. (“Recon-
SD”) under the laws of HK. On February 22, 2024, Guangxi Recon Renewable Resources Technology Co., Ltd. (“Recon-GX”) was also established
under the laws of HK. Recon-SD and Recon-GX will carry out wasted plastic chemical recycling business to serve customers located in different
areas.
Currently, we mainly conduct our business through the following PRC legal entities that are consolidated as variable interest entities
(“VIEs”) and operate in the Chinese oilfield equipment & service industry and energy industry:
1.
Beijing BHD Petroleum Technology Co., Ltd. (“BHD”), and
2.
Nanjing Recon Technology Co., Ltd. (“Nanjing Recon”).

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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. On January 1, 2008, to protect our 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 entitled 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 absorbed 100%
of the expected losses and received 90% of the expected net income 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, obligated Recon-JN to provide
technical consulting services to BHD and Nanjing Recon in exchange for 90% of their annual net income as a service fee.
On April 1, 2019, as part of our planned organizational restructuring, Recon-BJ entered into a series of VIE agreements with BHD and
Nanjing Recon, respectively, under the same terms and conditions as that of the VIE agreements previously entered into by Recon-JN. As a result,
the VIEs were effectively transferred from Recon-JN to Recon-BJ. Accordingly, Recon-BJ bears all the economic risk of losses and receives 90% of
the expected profits of BHD and Nanjing Recon, and consequently becomes the primary beneficiary of the VIEs. As part of the plan of
reorganization, Recon-JN was dissolved on April 10, 2019. As Recon-JN’s parent company, Recon-HK did not own any assets or conduct any
operations, and therefore was dissolved on May 15, 2020.
Based on the VIE agreements, we consolidated BHD and Nanjing Recon as VIEs as required by Accounting Standards Codification
(“ASC”) Topic 810, Consolidation because we are the primary beneficiary of the VIEs. Management performed an ongoing reassessment of whether
Recon-BJ is the primary beneficiary of BHD and Nanjing Recon.
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,
Messrs. Yin Shenping and Chen Guangqiang held an 86.24% ownership interest of BHD. From June 30, 2012 to June 30, 2019, Mr. Chen
Guangqiang continued to devote his personal patent to BHD and increased his ownership interest of BHD. On September 16, 2020, Yin Shenping
transferred the ownership interest of ¥750,000 held by him to Chen Guangqiang. As of the date of this report, Mr. Chen Guangqiang hold a 95.47%
ownership interest of BHD. BHD is 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 net income 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 80% ownership interest in Nanjing Recon. From December 16, 2010 to June 30, 2012, Messrs. Yin Shenping and Chen Guangqiang held 80%
ownership interest of Nanjing Recon. On November 27, 2020, Chen Guangqiang transferred the ownership interest of ¥200,000 held by him to Yin
Shenping. As of the date of this report, Mr. Yin Shenping hold a 99.7501% ownership interest of 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 net income 90% and 100%, respectively, based upon the control agreements. Profits allocated to the non-
controlling interest are the remaining amount (10%).
On January 29, 2015, we increased our authorized shares from 25,000,000 to 100,000,000 Class A Ordinary Shares.
BHD, one VIE, controls following subsidiaries:
1)
On December 17, 2015, Huang Hua BHD Petroleum Equipment Manufacturing Co. LTD (“HH BHD”), a fully owned subsidiary
established by BHD was organized under the laws of the PRC, focusing on the production of high efficiency heating furnaces. As of
June 30, 2024, BHD had invested a total of ¥5.09 million to HH BHD. BHD owns an interest of 100% of HH BHD.

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2)
On May 23, 2017, Gan Su BHD Environmental Technology Co., Ltd (“Gan Su BHD”) was established by BHD and another investor
under the laws of the PRC, with registered capital of ¥50 million. It is focusing on oilfield sewage treatment and oily sludge disposal
projects. As of June 30, 2020, BHD had invested a total of ¥15.98 million Gan Su BHD. The paid in capital of Gan Su BHD
contributed by all investors was ¥20.74 million ($2.93 million) as of June 30, 2020. Based on its revised chapter dated August 11,
2017, BHD owns an interest of 51% of Gan Su BHD. The paid in capital was ¥22,935,000 ($3,551,489) as of June 30, 2021. On April
26, 2021, the minority shareholder of Gan Su BHD transferred 15.4% of the equity interest hold to BHD. On May 19, 2021, the
minority shareholder transferred 3.6% equity shares and BHD transferred 15.4% equity shares of Gan Su BHD to Nanjing Recon.
Thus, by June 30, 2021, BHD owns an interest of 51% and Nanjing Recon owns an interest of 19% of Gan Su BHD.
3)
On October 16, 2017, Qing Hai BHD New Energy Technology Co., Ltd. (“Qinghai BHD”) was established by BHD and a few other
investors under the laws of the PRC, with registered capital of ¥50 million. It is focusing on design and production and sales of solar
energy heating furnaces. As of June 30, 2020, BHD had invested a total of ¥4.2 million to Qinghai BHD. The paid in capital was ¥4.2
million ($0.59 million) as of June 30, 2020. BHD owns an interest of 55% of Qinghai BHD. The paid in capital was ¥4,200,000
($650,371) as of June 30,2021. BHD owned an interest of 55% of Qinghai BHD previously; however, based on an agreement signed
by the shareholders of Qinghai BHD dated October 23, 2018, each of the other two individual shareholders agreed to reduce 10% of
their equity interests. As a result, Qinghai BHD returned ¥200,000 paid in capital back to one of the individual shareholders. After the
new arrangement, BHD owns a total interest of 75% of Qinghai BHD.
On December 15, 2017, we, through VIEs, BHD and Nanjing Recon, entered into a subscription agreement with Future Gas Station
(Beijing) Technology, Ltd (“FGS”), pursuant to which we acquired an 8% equity interest in FGS. Established in January 2016, FGS is a service
company focusing on providing new technical applications and data operations to gas stations and provides solutions to gas stations to improve their
operations and their customers’ experience. On August 21, 2018, we entered into an investment agreement and a supplemental agreement
(collectively, the “Investment Agreement”) with FGS and the other shareholders of FGS. Pursuant to the Investment Agreement, our ownership
interest in FGS shall increase from 8% to 43%, in exchange for our investment in FGS for a total amount of RMB10 million in cash and the issuance
of 2,435,284 (135,294 shares post 2024 Reverse Split) restricted Class A Ordinary Shares to the other shareholders of FGS with certain conditions.
On September 24, 2019, the Company agreed to extend the agreement for six more months as negotiated with FGS to ensure the founding team can
better meet its obligations under the agreement. On March 17, 2020, the Company, FGS and the other shareholders of FGS signed the third
supplemental agreement to extend another 12 months to February 20, 2021 as the number of the gas stations was the only performance goal that was
not achieved. As of June 30, 2020, we had invested an aggregate amount of RMB35,579,586 ($5,032,666) in FGS and issued 487,057 (27,059
shares post 2024 Reverse Split) restricted shares in total to other shareholders of FGS, and our ownership interest in FGS has increased to 43%. On
February 4, 2021, Nanjing Recon and BHD, entered into the fourth supplemental agreement to the investment agreement with FGS and FGS’
founding shareholders to acquire 8% equity ownership of FGS. As a result, Nanjing Recon and BHD collectively own 51% interest of FGS, with
25.5% ownership interests to each of Nanjing Recon and BHD. Through the fourth supplemental agreement, the Nanjing Recon and BHD waived
the requirement on FGS’ performance goal about the number of gas stations. Accordingly, Nanjing Recon and BHD agreed to pay for the balance of
the investment and cancelled the related lock-up terms on the restricted shares, in exchange of additional 8% equity ownership of FGS. See “Our
Corporate Structure” for more information illustrating the ownership interests between Nanjing Recon and BHD.
On April 5, 2021, at the 2021 annual meeting, to implement a dual class structure, our shareholders approved (i) a special resolution that the
authorized share capital of the Company be amended from US$1,850,000, divided into 20,000,000 ordinary shares of a nominal or par value of
US$0.0925 each, to US$15,725,000, divided into 150,000,000 Class A ordinary shares of a nominal or par value of US$0.0925 each and 20,000,000
Class B ordinary shares of a nominal or par value of US$0.0925 each, and (ii) a special resolution that the Third Amended and Restated
Memorandum and Articles of Association of the Company to substitute the Second Amended and Restated Memorandum and Articles of
Association. On April 7, 2021, we filed the Third Amended and Restated Memorandum and Articles of Association with the Companies Register of
the Cayman Islands. Our Class A ordinary shares began to trade on the NASDAQ Capital Market on April 12, 2021 under the same symbol,
“RCON.”

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On December 5, 2021, our board of directors and its compensation committee approved issuances of a total of 2,500,000 Class B Ordinary
Shares from such shares reserved under the Company’s 2021 Equity Incentive Plan to directors and officers Shenping Yin and Guangqiang Chen.
The compensation committee recommended and the board approved the Class B Ordinary Shares grants to Shenping Yin and Guangqiang Chen,
each of whom has received a one-time share grant of 1,250,000 Class B Ordinary Shares. On February 28, 2022, our board approved an additional
grant of 1,600,000 Class B shares to Shenping Yin and Guangqiang Chen, each of whom has received a one-time share grant of 800,000 Class B
Ordinary Shares.
On March 9, 2023, our board approved an additional grant of 3,000,000 Class B shares to Shenping Yin and Guangqiang Chen, each of
whom has received a one-time share grant of 1,500,000 Class B Ordinary Shares. On March 15, 2023, the Company signed a consulting agreement
with a Company’s employee and some business consultants (the “Consultants”). As the service consideration, the Company issued 2,000,000
(111,111 shares post 2024 Reverse Split) restricted Class A Ordinary Shares to the Consultants as compensation for acting as advisors to the
Company on new business exploration.
On March 15, 2023, the “Company and certain institutional Investors entered into that certain securities purchase agreement, pursuant to
which the Company agreed to sell to such Investors an aggregate of 8,827,500(490,417 shares post 2024 Reverse Split) Class A ordinary shares, par
value $0.0925 (US$1.67 post 2024 Reverse Split) per share (the “Ordinary Shares”) and 1,175,000 (65,278 pre-funded warrants post 2024 Reverse
Split) pre-funded warrants (the “Pre-Funded Warrants”) to purchase ordinary shares in a registered direct offering, and warrants to purchase up to
10,002,500 (555,694 shares post 2024 Reverse Split) Class A Ordinary Shares in a concurrent private placement, for gross proceeds of
approximately $8.0 million before deducting the placement agent’s fees and other estimated offering expenses.
Ordinary share purchase warrants to purchase an aggregate of 7,950,769 (441,710 shares post 2024 Reverse Split) ordinary shares
previously issued by the Company to certain institutional investors on June 16, 2021 had the exercise price reduced to $0.80 ($14.40 post 2024
Reverse Split). A sticker amendment was filed on April 14, 2023 with the SEC to effectuate the reduced exercise price of $0.80 ($14.40 post 2024
Reverse Split) from $6.24 ($112.32 post 2024 Reverse Split).
On October 16, 2023, 1,175,000 (65,278 pre-funded warrants post 2024 Reverse Split) pre-funded warrants issued on March 15, 2023 were
exercised by investor and 1,175,000 (65,278 shares post 2024 Reverse Split) Class A Ordinary shares were issued and being outstanding.
On December 14, 2023, the Company entered into a Warrant Purchase Agreement with certain accredited investors pursuant to which the
Company agreed to buy back an aggregate of 17,953,269 (997,404 warrants post 2024 Reverse Split) warrants from the investors, and the investors
agreed to sell the Warrants back to the Company. The purchase price for each Warrant is $0.25 ($4.50 post 2024 Reverse Split).
On January 31, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”), pursuant to which
the Company agreed to sell securities to various purchasers (the “Purchasers”) in a private placement transaction (the “Private Placement”). Pursuant
to the Securities Purchase Agreement, the Company agreed to transfer, assign, set over and deliver to the Purchasers and the Purchasers agree,
severally and not jointly, to acquire from the Company in the aggregate 100,000,000 (5,555,559 shares post 2024 Reverse Split) of the Company’s
Class A ordinary shares (the “Shares”) at $0.11 ($1.98 post 2024 Reverse Split) per share for $11,000,000. On February 2, 2024, the Company
closed the Private Placement.
On February 26, 2024, the Company granted 6,255,483 (347,527 shares post 2024 Reverse Split, as defined below) restricted Class A
shares and 12,900,000 restricted Class B shares to its management and staff. The fair value of the Class A restricted shares was $988,366 based on
the fair value of share price $0.158 ($2.844 post 2024 Reverse Split) at February 26, 2024. The fair value of the Class B restricted shares was
$2,130,000 based on the fair value of share price $0.17 at February 26, 2024.
On March 29, 2024, the Company’s shareholders approved the reverse shares split of the Company’s Class A Ordinary Shares at the ratio of
one-for-eighteen with the market effective date of May 1, 2024 (the “2024 Reverse Split”). In connection with the reverse stock split, on March 29,
2024 the Company’s shareholder approved and authorized the Company’s registered office service agent to file the Fourth Amended and Restated
Memorandum and Articles of Association with local registry, and change its authorized share capital from: US$15,725,000 divided into 150,000,000
Class A Ordinary Shares of a nominal or par value of US$0.0925 each, and 20,000,000 Class B Ordinary Shares of a nominal or par value of
US$0.0925 each, to: US$58,000 divided into 500,000,000 Class A Ordinary Shares of a nominal or par value of US$0.0001 each and 80,000,000
Class B Ordinary Shares of a nominal or par value of US$0.0001 each (the “2024 change in capital structure”).

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42
Exclusive Technical Consulting Service Agreement
Pursuant to the exclusive technical consulting service agreement between Recon-BJ and each of BHD and Nanjing Recon, Recon-BJ has
the exclusive right to provide each of BHD and Nanjing Recon with technical support services, consulting services and other services, including
granting use rights of intellectual property rights, software services, network support, database support, hardware services, technical support,
employee training, research and development of technology and market information, business management consulting, marketing and promotion
services, customer management and services, lease hardware and device, and the others necessary for each of BHD and Nanjing Recon’s needs. In
exchange, Recon-BJ is entitled to a service fee that equals to all of the consolidated profit after offsetting the previous year’s accumulated deficit,
operating costs, expenses, taxes, and other contributions and reasonable operation profit of each of BHD and Nanjing Recon. In addition to the
services fees, each of BHD and Nanjing Recon will reimburse all reasonable costs, reimbursed payments and out-of-pocket expenses, paid or
incurred by Recon-BJ in connection with its performance.
Under the exclusive technical consulting service agreement, without Recon-BJ’s prior written consent, each of BHD and Nanjing Recon
agrees not to engage in any transaction which may materially affect its asset, business, employment, obligation, right or operation.
The exclusive technical consulting service agreement remains effective, unless terminated pursuant to the exclusive technical consulting
service agreement or upon the written notice of Recon-BJ.
Exclusive Equity Interest Purchase Agreement
Pursuant to the amended and restated exclusive equity interest purchase agreement, among Recon-BJ, each of BHD and Nanjing Recon and
the shareholder who owned all the equity interests of each of BHD and Nanjing Recon, such shareholders grant Recon-BJ an exclusive right to
purchase his equity interests in each of BHD and Nanjing Recon. The purchase price shall be the lowest price then permitted under applicable PRC
laws. Recon-BJ or its designated person may exercise such right at any time to purchase all or part of the equity interests in each of BHD and
Nanjing Recon until it has acquired all equity interests of each of BHD and Nanjing Recon, which is irrevocable during the term of the agreement.
The amended and restated exclusive equity interest purchase agreement remains in effect until all equity interests held by the shareholders
have been transferred or assigned to Recon-BJ and/or any other person designated by Recon-BJ. However, Recon-BJ has the right to terminate these
agreements unconditionally upon giving prior written notice to each of BHD and Nanjing Recon at any time.
Equity Interest Pledge Agreement
Pursuant to the amended and restated equity interest pledge agreement among the shareholders who owned all the equity interests of each
of BHD and Nanjing Recon, such shareholders pledge all of the equity interests in each of BHD and Nanjing Recon to Recon-BJ as collateral to
secure the obligations of each of BHD and Nanjing Recon under the exclusive technical consulting service agreement and the amended and restated
exclusive equity interest purchase agreement. The shareholders of each of BHD and Nanjing Recon are prohibited or may not transfer the pledged
equity interests without prior consent of Recon-BJ unless transferring the equity interests to Recon-BJ or its designated person in accordance with
the amended and restated exclusive equity interest purchase agreement.
The amended and restated equity interest pledge agreement shall come into force the date on which the pledged interests is recorded, under
each of BHD and Nanjing Recon’s register of shareholders and is registered with competent administration for industry and commerce of each of
BHD and Nanjing Recon until all of the liabilities and debts to Recon-BJ have been fulfilled completely by each of BHD and Nanjing Recon. Each
of BHD and Nanjing Recon and the shareholders who owned all the equity interest of each of BHD and Nanjing Recon shall not terminate this
agreement in any circumstance for any reason.

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43
Shareholders’ Power of Attorney
Pursuant to the shareholders’ amended and restated power of attorney, the shareholders of each of BHD and Nanjing Recon gives Recon-BJ
irrevocable proxies to act on their behaves on all matters pertaining to each of BHD and Nanjing Recon and to exercise all of their rights as
shareholders of each of BHD and Nanjing Recon, including the right to execute and deliver shareholder resolutions, to dispose any or all equity
interests, to nominate, elect, designate, or appoint officers and directors, to supervise company’s performance, to approve submission of any
registration documents, to attend shareholders meetings, to exercise voting rights and all of the other rights, to take legal actions against the harmful
actions by directors or officers, to approve the amendments to the articles of association of the company, and any other rights under the articles of
association of the company. The amended and restated power of attorney shall remain in effect while the shareholders of each of BHD and Nanjing
Recon hold the equity interests in each of BHD and Nanjing Recon.
Based on the foregoing Contractual Arrangements, which grant Recon-BJ effective control of each of BHD and Nanjing Recon and enable
Recon-BJ to receive all of their expected residual returns, we account for each of BHD and Nanjing Recon as a VIE. Accordingly, we consolidate
the accounts of each of BHD and Nanjing Recon, in accordance with Regulation S-X-3A-02 promulgated by the SEC and Accounting Standards
Codification (“ASC”) 810-10, Consolidation.
Because we do not directly hold equity interest in the VIEs, we are subject to risks due to uncertainty of the interpretation and the
application of the PRC laws and regulations, including limitation on foreign ownership of internet technology companies, regulatory review of
oversea listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the VIE Agreements. We are also subject to
the risks of uncertainty about any future actions of the PRC government in this regard that could disallow the VIE structure, which would likely
result in a material change in our operations and the value of Class A Ordinary Shares may depreciate significantly or become worthless.
Our Contractual Arrangements may be less effective in providing control over each of BHD and Nanjing Recon than direct ownership. See
“Risk Factors – Risks related to our Corporate Structure – We conduct our business through BHD, Nanjing Recon, FGS and their respective
subsidiaries by means of Contractual Arrangements. If the PRC courts or administrative authorities determine that these contractual arrangements
do not comply with applicable regulations, we could be subject to severe penalties and our business could be adversely affected. In addition,
changes in such PRC laws and regulations may materially and adversely affect our business.” for more details.
We may also be subject to sanctions imposed by PRC regulatory agencies including the Chinese Securities Regulatory Commission, or
CSRC, if we fail to comply with their rules and regulations. See “Risk Factors — PRC regulations and potential registration requirements relating to
acquisitions of PRC companies by foreign entities may create regulatory uncertainties that could restrict or limit our ability to operate.” for more
details.
We are subject to certain legal and operational risks associated with the VIEs’ operations in China. PRC laws and regulations governing our
current business operations are sometimes vague and uncertain, and therefore, these risks may result in a material change in the VIEs’ operations,
significant depreciation of the value of our Class A Ordinary Shares, or a complete hindrance of our ability to offer or continue to offer our securities
to investors. See “Risk Factors - We conduct our business through BHD, Nanjing Recon and their respective subsidiaries by means of Contractual
Arrangements. If the PRC courts or administrative authorities determine that these contractual arrangements do not comply with applicable
regulations, we could be subject to severe penalties and our business could be adversely affected. In addition, changes in such PRC laws and
regulations may materially and adversely affect our business.” Recently, the PRC government initiated a series of regulatory actions and statements
to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing
supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of
cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. Since these statements and regulatory actions are new, it is highly
uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed
implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations
will have on our daily business operation, the ability to accept foreign investments and list on an U.S. exchange.

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44
Permission Required from the PRC Authorities for the VIEs’ Operation
We are currently not required to obtain permission from any of the PRC authorities to operate and issue our Class A Ordinary Shares to
foreign investors. In addition, we, our subsidiaries, or the VIEs are not required to obtain permission or approval from the PRC authorities including
CSRC or Cyberspace Administration of China for the VIEs’ operation, nor have we, our subsidiaries, or the VIEs applied for or received any denial
for the VIEs’ operation. However, recently, the General Office of the Central Committee of the Communist Party of China and the General Office of
the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions,
which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities
activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the
construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and
cybersecurity and data privacy protection requirements and similar matters. The Opinions and any related implementing rules to be enacted may
subject us to compliance requirement in the future. Given the current regulatory environment in the PRC, we are still subject to the uncertainty of
interpretation and enforcement of the rules and regulations in the PRC, which can change quickly with little advance notice, and any future actions
of the PRC authorities.
Transfer of Cash in the VIEs
We are an exempted holding company incorporated in the Cayman Islands. If we determine to pay dividends on any of our Ordinary Shares
in the future, as an exempted holding company, we will be dependent on receipt of funds from our Wholly Foreign Owned Enterprise (“WFOE”). A
WFOE is a limited liability company based in the People’s Republic of China but wholly owned by foreign investors. In our instance, Recon Hengda
Technology (Beijing) Co., Ltd (“Recon-BJ”) is a WFOE wholly owned by Recon Investment Ltd. (“Recon-IN”), a Hong Kong limited company,
which in turn is wholly owned by us.
Under the Exclusive Technical Consultation and Service Agreements signed between Recon-BJ and the VIEs, Recon-BJ is entitled to 90%
of the expected profits of the VIEs in exchange for providing exclusive technical consulting services to the VIEs. Recon-BJ also bears all the
economic risk of losses. Current PRC regulations permit our indirect PRC subsidiaries to pay dividends to its shareholders only out of their
accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, according to the current
effective laws in Cayman Islands and Hong Kong, the resident companies could pay dividends to their shareholders. And there are no foreign
exchange restrictions on these two areas. Therefore, Recon-BJ can distribute the income obtained under the Contractual Arrangement to Recon-IN in
the form of dividends, with Recon-IN in turn distributing such revenue to us in the form of dividends, with we in turn would distribute such revenue
to U.S. investors in the form of dividends.
Each VIE has its own operating cash flow. Cashflow between our Company and the VIEs primarily consists of transfers from us to the
VIEs for supplemental working capital, which is mainly used in purchase of materials and payment of operating expenses and investments. In
addition, the VIEs occasionally make payments on our behalf when we experience a cash shortage. For the fiscal years ended June 30, 2024, 2023
and 2022, net cash transferred from the Company to the VIEs was RMB84,211,565, RMB69,562,912 and RMB55,569,342, respectively. Neither we
nor the VIEs have present plans to distribute earnings or settle amounts owed under the Contractual Agreements. We currently plan to retain the cash
in the VIEs for business growth and operation. No dividends or distributions have been declared to pay to us from our subsidiaries or the VIEs. No
dividends or distributions were made to any U.S. investors. For a description of our corporate structure and VIE contractual arrangements, see
“Corporate History and Structure.” See also “Risk Factors – Risks Related to Our Corporate Structure.”

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45
U.S. Dollar as the Functional Currency under FASB ASC 830-10-45-4
The functional currency of the Company, as a Cayman Islands holding entity, is the U.S. Dollar. Management has determined that the
intercompany receivable is denominated in U.S. Dollars for several reasons: first, our functional currency (as the Cayman Islands holding entity) is
the U.S. Dollar; and second, the inter-company receivable is ultimately paid in U.S. Dollars. Although transactions involving the Domestic
Companies may involve the RMB from time to time, the transactions are ultimately denominated in U.S. Dollars to reflect our functional currency.
For these reasons, because our functional currency is the U.S. Dollar, and because the inter-company receivables are ultimately paid in U.S. Dollars,
we believe there are no exchange rate fluctuations as the parent company.
Foreign Exchange Risk
The Domestic Companies, and Recon-BJ classify the RMB as their functional currencies. Because our functional currency, as the Cayman
Islands holding entity, is the U.S. Dollar, we are exposed to foreign exchange risks from fluctuations with the exchange rates among the U.S. Dollar
and the RMB. Notwithstanding that Domestic Companies conduct operations and transactions in RMB, we ultimately believe that there should not
be any U.S. Dollar/RMB exchange rate fluctuations because the inter-company receivable is denominated in U.S. Dollars. Thus, the transactions and
operations reported by the Domestic Companies are ultimately paid in U.S. Dollars as the inter-company receivables, which reflect our functional
currency in U.S. Dollars as the parent company. See “Risk Factors – Risks Related to Our Corporate Structure - There are possible economic risks
posed by foreign exchange rate fluctuations between the U.S. Dollar and RMB.”
Select Condensed Financial Statements on Consolidated VIEs
The following table below provides a condensed consolidating schedule depicting the financial position, cash flows, and results of
operations for the parent, the consolidated VIEs, and any eliminating adjustments separately as of the same dates and for the same periods for which
audited consolidated financial statements are required.

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46
SELECTED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Year Ended June 30, 2024
    
Recon
    
    
    
    
Technology,
Ltd.
(Cayman
“Non-VIE Subsidiaries
VIEs and VIE’s
Consolidated
Islands)
(Hong Kong and PRC)”
 subsidiaries (PRC)
Eliminations
Total
Revenue
  ¥
—   ¥
—   ¥
 68,854,280   ¥
—   ¥
 68,854,280
Cost of Revenue
 
—  
 135,705  
 47,841,131  
—  
 47,976,836
Gross Profit
 
—  
 (135,705)
 21,013,149
—
 20,877,444
Operating expenses
44,012,602
3,200,926
45,301,827
—
92,515,355
Loss from operations
 (44,012,602)
 (3,336,631)
 (24,288,678)
—
 (71,637,911)
Other income (expenses), net
16,452,789
(778,939)
4,528,251
—
20,202,101
Loss from subsidiaries
—
 (18,195,846)
—
 18,195,846
—
Loss from VIEs
 (22,311,446)
—
—
 22,311,446
—
Income tax expenses
—
 30
—
—　
 30
Net loss
 (49,871,259)
 (22,311,446)
 (19,760,427)
 40,507,292
 (51,435,840)
Non-controlling interest
—
—
 (1,564,581)
—
 (1,564,581)
Net Loss Attributable to Recon Technology, Ltd
¥  (49,871,259)
¥
 (22,311,446)
¥
 (18,195,846)
¥
40,507,292
¥  (49,871,259)
For the Year Ended June 30, 2023
    
Recon
    
    
    
    
Technology,
Ltd.
(Cayman
“Non-VIE Subsidiaries
VIEs and VIE’s
Consolidated
Islands)
(Hong Kong and PRC)”
 subsidiaries (PRC)
Eliminations
Total
Revenue
¥
—
¥
—
¥
 67,114,378
¥
—
¥
 67,114,378
Cost of Revenue
 
 —
 —
 48,247,395
 —
 48,247,395
Gross Profit
 
 —
 —
 18,866,983
 —
 18,866,983
Operating expenses
50,352,631
1,343,355
36,503,732
 —
88,199,718
Loss from operations
 (50,352,631)
 (1,343,355)
 (17,636,749)
 —
 (69,332,735)
Other income (expenses), net
16,224,783
343,437
(8,693,538)
 —
7,874,682
Loss from subsidiaries
 —
 (24,039,535)
 —
 24,039,535
 —
Loss from VIEs
 (25,039,453)
 —
 —
 25,039,453
 —
Income tax expenses
—
—
 18,339
—
 18,339
Net loss
 (59,167,301)
 (25,039,453)
 (26,348,626)
 49,078,988
 (61,476,392)
Non-controlling interest
 —
 —
 (2,309,091)
 —
 (2,309,091)
Net Loss Attributable to Recon Technology, Ltd
¥  (59,167,301)
¥
 (25,039,453)
¥
 (24,039,535)
¥  49,078,988
¥  (59,167,301)

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47
For the Year Ended June 30, 2022
    
Recon
    
    
    
    
Technology,
Ltd.
(Cayman
“Non-VIE Subsidiaries
VIEs and VIE’s
Consolidated
Islands)
(Hong Kong and PRC)”
 subsidiaries (PRC)
Eliminations
Total
Revenue
¥
 —
¥
 —
¥
 83,777,571
¥
 —
¥
 83,777,571
Cost of Revenue
 
 —
 —
 64,352,834
 —
 64,352,834
Gross Profit
 
 —
 —
 19,424,737
 —
¥
 19,424,737
Operating expenses
64,842,004
1,170,913
35,725,237
 —
101,738,154
Loss from operations
 (64,842,004)
 (1,170,913)
 (16,300,500)
 —
 (82,313,417)
Other income (expenses), net
178,590,691
(108,074)
(2,493,679)
 —
175,988,938
Loss from subsidiaries
 —
 (16,882,905)
 —
 16,882,905
 —
Loss from VIEs
 (18,161,892)
—
—
 18,161,892
 —
Income tax benefit
 —
 —
 (613,874)
 —
 (613,874)
Net loss
 95,586,795
 (18,161,892)
 (18,180,305)
 35,044,797
 94,289,395
Non-controlling interest
 —
 —
 (1,297,400)
 —
 (1,297,400)
Net income(loss) Attributable to Recon
Technology, Ltd
¥
 95,586,795
¥
 (18,161,892)
¥
 (16,882,905)
¥  35,044,797
¥
 95,586,795

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48
SELECTED CONDENSED CONSOLIDATING BALANCE SHEETS
    
As of June 30, 2024  
Recon
Technology,
Ltd.
(Cayman
 Non-VIE Subsidiaries
VIEs and VIE’s
Consolidated
Islands)
      (Hong Kong and PRC)      subsidiaries (PRC)     
Eliminations
    
Total
Cash and cash equivalents
  ¥
 16,473,018
¥
 58,161,122
¥
 35,357,534
¥
—
¥
 109,991,674
Restricted cash
 
—
—
 848,936
—
 848,936
Short-term investments
 
 88,091,794
—
—
—
 88,091,794
Other current assets
 
 170,158,947
 13,263,107
 125,157,390
—
 308,579,444
Intercompany receivables
 
 375,736,992
 157,821,815
—
 (533,558,807)
—
Total current assets
 
 650,460,751
 229,246,044
 161,363,860
 (533,558,807)
 507,511,848
Investments in subsidiaries and VIEs
 (145,408,577)
—
—
 145,408,577
 —
Benefits through VIEs and VIE’s subsidiaries
—
 (129,879,588)
—
 129,879,588
 —
Other non-current assets
—
 15,044,379
 29,833,287
—
 44,877,666
Total non-current assets
 (145,408,577)
 (114,835,209)
 29,833,287
 275,288,165
 44,877,666
Total Assets
 505,052,174
 114,410,835
 191,197,147
 (258,270,642)
 552,389,514
Intercompany payables
 —
 264,135,617
 269,423,190
 (533,558,807)
 —
Other liabilities and accrued liabilities
 2,497,637
 432,795
 58,525,185
 —
 61,455,617
Total Liabilities
 2,497,637
 264,568,412
 327,948,375
 (533,558,807)
 61,455,617
Class A common stock, $0.0001 U.S. dollar par
value,500,000,000 shares authorized; 2,306,295
shares and 7,987,959 shares issued and outstanding as
of June 30, 2023 and June 30, 2024, respectively*
 
 99,634
—
—
—
 99,634
Class B common stock, $0.0001 U.S. dollar par value,
80,000,000 shares authorized; 7,100,000 shares and
7,100,000 shares issued and outstanding as of June 30,
2023 and June 30, 2024, respectively*
 
 4,693
—
—
—
 4,693
Additional paid-in capital
 681,476,717
—
 4,749,000
 (4,749,000)
 681,476,717
Retained earnings
 (216,163,156)
 (125,967,252)
 (112,989,285)
 238,956,537
 (216,163,156)
Accumulated other comprehensive income
 37,136,649
 (24,190,325)
 (16,890,303)
 41,080,628
 37,136,649
Total Shareholders’ Equity
 502,554,537
 (150,157,577)
 (125,130,588)
 275,288,165
 502,554,537
Non-controlling interests
—
—
 (11,620,640)
—
 (11,620,640)
Total Liabilities and Equity
¥
 505,052,174
¥
 114,410,835
¥
 191,197,147
¥  (258,270,642)
¥
 552,389,514
* Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024 and change in capital structure on March 29, 2024.

Table of Contents
49
    
As of June 30, 2023
Recon
Technology,
Ltd.
(Cayman
Non-VIE Subsidiaries  
VIEs and VIE’s
Consolidated
Islands)
      (Hong Kong and PRC)      subsidiaries (PRC)     
Eliminations
    
Total
Cash and cash equivalents
  ¥
 54,864,089
¥
 11,600,593
¥
 37,661,118
¥
—
¥
 104,125,800
Restricted cash
 
 —
 —
 731,545
 —
 731,545
Short-term investments
 
 184,184,455
 —
 —
 —
 184,184,455
Other current assets
 
 77,134,062
 35,567
 138,201,744
 —
 215,371,373
Intercompany receivables
 
 291,525,426
 156,313,805
 —
 (447,839,231)
 —
Total current assets
 
 607,708,032
 167,949,965
 176,594,407
 (447,839,231)
 504,413,173
Investments in subsidiaries and VIEs
 
 (122,920,490)
 —
 —
 122,920,490
 —
Benefits through VIEs and VIE’s subsidiaries
 —
 (111,196,475)
 —
 111,196,475
 —
Other non-current assets
 —
 —
 27,411,404
 —
 27,411,404
Total non-current assets
 (122,920,490)
 (111,196,475)
 27,411,404
 234,116,965
 27,411,404
Total Assets
 484,787,542
 56,753,490
 204,005,811
 (213,722,266)
 531,824,577
Intercompany payables
 —
 183,903,309
 263,935,922
 (447,839,231)
 —
Other liabilities and accrued liabilities
 35,580,580
 519,671
 56,573,423
 92,673,674
—
Total Liabilities
 35,580,580
 184,422,980
 320,509,345
 (447,839,231)
 92,673,674
Class A common stock, $0.0001 U.S. dollar par value,
500,000,000 shares authorized; 1,704,766 shares and
2,306,295 shares issued and outstanding as of June 30,
2022 and June 30, 2023, respectively*
 
 26,932
 —
 —
 —
 26,932
Class B common stock, $0.0001 U.S. dollar par value,
80,000,000 shares authorized; 4,100,000 shares and
7,100,000 shares issued and outstanding as of June 30,
2022 and June 30, 2023, respectively*
 4,693
 —
 —
 —
 4,693
Additional paid-in capital
 580,340,061
 —
 4,749,000
 (4,749,000)
 580,340,061
Retained earnings
 (166,291,897)
 (103,655,803)
 (94,793,438)
 198,449,241
 (166,291,897)
Accumulated other comprehensive income
 35,127,173
 (24,013,687)
 (16,403,037)
 40,416,724
 35,127,173
Total Shareholders’ Equity
 449,206,962
 (127,669,490)
 (106,447,475)
 234,116,965
 449,206,962
Non-controlling interests
 —
 —
 (10,056,059)
 —
 (10,056,059)
Total Liabilities and Equity
¥
 484,787,542
¥
 56,753,490
¥
 204,005,811
¥  (213,722,266)
¥
 531,824,577
*Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024 and change in capital structure on March 29, 2024.

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50
    
As of June 30, 2022
Recon
Technology,
Ltd.
(Cayman
Non-VIE Subsidiaries  
VIEs and VIE’s
Consolidated
Islands)
      (Hong Kong and PRC)      subsidiaries (PRC)     
Eliminations
    
Total
Cash and cash equivalents
  ¥
 296,838,959
¥
 2,102,232
¥
 18,033,666
¥
 —
¥
 316,974,857
Restricted cash
 
 —
 —
 723,560
 —
 723,560
Other current assets
 
 20,364,424
 4,851
 107,549,349
 —
 127,918,624
Intercompany receivables
 
 205,224,961
 127,906,141
 —
 (333,131,102)
 —
Total current assets
 
 522,428,344
 130,013,224
 126,306,575
 (333,131,102)
 445,617,041
Investments in subsidiaries and VIEs
 
 (77,566,835)
 —
 —
 77,566,835
 —
Benefits through VIEs and VIE’s subsidiaries
 
 —
 (73,117,024)
 —
 73,117,024
 —
Other non-current assets
 —
 —
 44,625,043
 —
 44,625,043
Total non-current assets
 (77,566,835)
 (73,117,024)
 44,625,043
 150,683,859
 44,625,043
Total Assets
 444,861,509
 56,896,200
 170,931,618
 (182,447,243)
 490,242,084
Intercompany payables
 —
 138,758,092
 194,373,010
 (333,131,102)
 —
Other liabilities and accrued liabilities
 24,229,780
 453,943
 52,673,600
—
 77,357,323
Total Liabilities
 24,229,780
 139,212,035
 247,046,610
 (333,131,102)
 77,357,323
Class A common stock, $0.0001 U.S. dollar par value,
500,000,000 shares authorized; 1,547,415 shares and
1,704,766 shares issued and outstanding as of June 30,
2021 and June 30, 2022, respectively*
 19,461
 —
 —
 —
 19,461
Class B common stock, $0.0001 U.S. dollar par value,
80,000,000 shares authorized; nil and 4,100,000
shares issued and outstanding as of June 30, 2021 and
June 30, 2022, respectively*
 
 2,604
 —
 —
 —
 2,604
Additional paid-in capital
 516,426,799
 —
 4,749,000
 (4,749,000)
 516,426,799
Retained earnings  
 (107,124,596)
 (78,616,347)
 (70,753,901)
 149,370,248
 (107,124,596)
Accumulated other comprehensive income
 11,307,461
 (3,699,488)
 (2,363,123)
 6,062,611
 11,307,461
Total Shareholders’ Equity
 420,631,729
 (82,315,835)
 (68,368,024)
 150,683,859
 420,631,729
Non-controlling interests
 —
 —
 (7,746,968)
 —
 (7,746,968)
Total Liabilities and Equity
¥
 444,861,509
¥
 56,896,200
¥
 170,931,618
¥  (182,447,243)
¥
 490,242,084
*Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024 and change in capital structure on March 29, 2024.

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51
SELECTED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
    
For the Year Ended June 30, 2024
Recon
Technology,
Ltd.
Subsidiaries
(Cayman
(Hong Kong
Consolidated
    
Islands)
    
and PRC)
    
VIE (PRC)
    
Eliminations
    
Total
Net cash used in operating activities
¥
 (5,802,631)
¥
 (9,255,014)
¥
 (28,690,288)
—　
¥  (43,747,933)
Net cash provided by (used in) investing activities
 (261,267,638)
 (23,219,383)
 203,260,432
 84,211,565
 2,984,976
Net cash provided by financing activities
 45,094,034
 78,724,299
 5,417,289
 (84,211,565)
 45,024,057
Effect of exchange rate fluctuation on cash and cash
equivalents
 2,302,664
 310,627
 (891,126)
—
 1,722,165
Net change in cash
 (219,673,571)
 46,560,529
 179,096,307
 —
 5,983,265
Opening cash balance
 236,146,589
 11,600,593
 (142,889,837)
 —
 104,857,345
Restricted cash
—
—
 848,936
 —
 848,936
Ending cash balance
¥
 16,473,018
¥
 58,161,122
¥
 35,357,534
 —
¥  109,991,674
    
For the Year Ended June 30, 2023
Recon
Technology,
Ltd.
Subsidiaries
(Cayman
(Hong Kong
Consolidated
    
Islands)
    
and PRC)
    
VIE (PRC)
    
Eliminations
    
Total
Net cash used in operating activities
¥
 (22,888,678)
¥
 (964,905)
¥  (27,834,748)
 —
¥  (51,688,331)
Net cash used in investing activities
 (314,716,414)
 (16,808,723)
 86,300,464
 
(245,224,673)
Net cash provided by financing activities
 49,418,344
 16,737,550
 76,527,843
 (86,300,464)
 56,383,273
Effect of exchange rate fluctuation on cash and cash
equivalents
 46,211,878
 (6,274,284)
 (12,248,935)
 —
 27,688,659
Net change in cash
 (241,974,870)
 9,498,361
 19,635,437
 —
 
(212,841,072)
Opening cash balance
 296,838,959
 2,102,232
 18,757,226
 —
 317,698,417
Restricted cash
 —
 —
 731,545
 —
 731,545
Ending cash balance
¥
 54,864,089
¥  11,600,593
¥
 37,661,118
 —
¥  104,125,800
    
For the Year Ended June 30, 2022
Recon
Technology,
Subsidiaries
Ltd. (Cayman
(Hong Kong
Consolidated
Islands)
    
and PRC)
    
VIE (PRC)
    
Eliminations
    
Total
Net cash used in operating activities
¥
 (15,831,732)
¥
 (1,249,935)
¥
 (9,165,570)
 —
¥ (26,247,237)
Net cash used in investing activities
 
 (26,555,820)
 (12,000,000)
 (29,342,206)
 67,569,342
 (328,684)
Net cash provided by financing activities
 
 93,321
 1,306,892
 56,169,749
 (67,569,342)
 (9,999,380)
Effect of exchange rate fluctuation on cash and cash
equivalents
 
 14,016,375
 (1,494,983)
 (2,246,244)
 —
 10,275,148
Net change in cash
 
 (28,277,856)
 (13,438,026)
 15,415,729
 —
 (26,300,153)
Opening cash balance
 
 325,116,815
 14,588,376
 4,293,379
 —
 
343,998,570
Restricted cash
 —
 —
 723,560
 —
 723,560
Ending cash balance
  ¥  296,838,959
¥
 1,150,350
¥
 18,985,548
 —
¥
 
316,974,857
VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or
whose equity holders lack adequate decision-making ability. All VIEs and their subsidiaries with which the Company is involved must be evaluated
to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial
reporting purposes.

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52
The nature of any assets, operations and cash flows that exist or which occur outside of the VIEs are mainly about:
●
The daily operations of us, as the parent company, to maintain the basic functions as a holding entity such as the purchase of materials
and payment of operating expenses and investments, in order to realize the control of our subsidiaries and the VIEs to ensure that the
overall company’s business objectives are fulfilled. The main resource to finance these activities are cash from securities offerings.
●
There are some businesses or projects which are signed by us, as the parent company, and then subsequently outsourced from us to the
VIEs, as practical, particularly overseas projects. Generally, we would bid for projects based in China or from other countries. If we
win the bid, we sign the agreement and then assign and outsource the projects to the VIEs such as BHD and Nanjing to implement and
complete the project.
Our basic functions include but not limited to: 1) research and improve the Company’s development strategy based on the Company’s
industry and market trends; 2) financing, funding, budgeting and complete oversight of the Company and the VIEs’ safety and efficiencies in the use
of funds and assets; and 3) decision-making on major acquisitions.
Our current business objective is to grow both in scale and revenue. Over the longer term, our objective is to improve our business structure
and achieve net profits.
B. Business Overview
General
We believe that one of the most important advancements in China’s petroleum industry has been the automation of significant segments of
the exploration and extraction process. The Domestic Companies’ automation products and services allow petroleum mining and extraction
companies to reduce their labor requirements and improve the productivity of oilfields. The Domestic Companies’ solutions allow our customers to
locate productive oilfields more easily and accurately, improve control over the extraction process, increase oil yield efficiency in tertiary stage oil
recovery, and improve the transportation of crude oil.
For the most recent few years, the Domestic Companies’ capacity to provide integrated services has been a significant factor for long-term
development. We treat simulation measures around fracturing as the Domestic Companies’ entry point for our integrated service model. To date, we
have formed new business modules through R&D, investment in service-team building and developed an integrated services solution for stimulation.
Market Background
China is our major market. China is the world’s second-largest consumer of petroleum products, largest importer of petroleum and fourth-
largest producer of petroleum. In the last twenty years, China’s demand for oil has more than tripled, while its production of oil has only modestly
increased. China became a net importer of petroleum in 1983, and, since then, oil production in China has been focused on meeting the country’s
domestic oil consumption requirements. The oil industry in China is dominated by three state-owned holding companies: China National Petroleum
Corporation (“CNPC”), China Petroleum and Chemical Corporation (“Sinopec”) and China National Offshore Oil Corporation (“CNOOC”). Foreign
companies have also been deeply involved in China’s petroleum industry; however, according to Chinese law, China’s national oil companies still
take a majority (or minority) stake in any commercial discovery. As a result, the number of major foreign companies involved in the industry is
relatively limited in domestic China.
In the past, China’s petroleum companies mined for petroleum by leveraging the country’s abundance of inexpensive labor, rather than
focusing on developing new technologies. For example, a typical, traditional oilfield with an annual capacity of 1,000,000 tons would require
between 10,000 and 20,000 laborers. By contrast, when Baker CAC automated oil production products were employed in the mid-1990s to explore
and automate Cainan Oilfield, a desert oilfield in Xinjiang, annual capacity for the field reached 1,500,000 tons, with only 400 employees needed to
manage the oilfield. After the introduction of Baker CAC’s products into China’s petroleum industry, Chinese companies have also sought to provide
automation solutions.

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53
In the primary oil recovery stage, oil pressure in an oil reservoir may be high enough to force oil to the surface. Approximately 20% of oil
may be harvested at this stage. The secondary oil recovery stage accounts for another 5% to 15% of oil recovery and involves such efforts as pumps
to extract petroleum and the injection of water, natural gas, carbon dioxide or other gasses into the oil reservoir to force oil to the surface. Most
oilfields in China have now entered into the tertiary stage of oil recovery, at which oil extraction becomes increasingly difficult and inefficient.
Tertiary recovery generally focuses on decreasing oil viscosity to make extraction easier and accounts for between 5% and 15% of oil recovery. The
Domestic Companies’ efforts in tertiary recovery focus on reducing water content in crude oil in order to make extraction more efficient and to
improve the overall production of wells through advanced technologies and effective managing tools and approaches.
For recent years, the oil industry is experiencing digital transformation. We believe oil companies will continue to increase their usages of
intelligent solutions to improve the operation efficiency. Many oil companies have been raising the digitalization to a strategic level and take it as the
core portion of the corporate strategy to optimize business execution and operational efficiency. Besides, we have also seen the trend of digitalization
and intelligence in downstream of the oil and gas industry, especially in the management and operation of gas stations in China. The Domestic
Companies have been devoting resources and participating in testing projects with their clients to develop leading solutions. We will continue to
enhance the Domestic Companies’ competitive strength through up-gradation with big data and intelligent analysis.
Products and Services
The Domestic Companies have historically provided products and services mainly to oil and gas field companies, which focus on the
development and production of oil and natural gas. Our products and services described below correlate to the numbered stages of the oilfield
production system graphical expression shown below.
The following list shows Domestic Companies’ products and services. The first three items are covered by our (1) automation product and
software segment and (2) equipment and accessories segment. The last item is covered by our oilfield environmental protection segment.

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54
Equipment for Oil and Gas Production and Transportation
·
High-Efficiency Heating Furnaces (as shown above by process “3”). Crude petroleum contains certain impurities that must be removed before
the petroleum can be sold, including water and natural gas. To remove the impurities and to prevent solidification and blockage in transport
pipes, companies employ heating furnaces. BHD researched, developed and implemented a new oilfield furnace that is advanced, highly
automated, reliable, easily operable, safe and highly heat-efficient (90% efficiency).
·
Burner (as shown above by process “5”). The burner BHD provides has the following characteristics: high degree of automation; energy
conservation; high turn-down ratio; high security and environmental safety.
Automation System and Service
·
Pumping Unit Controller. Refers to process “1” above. Functions as a monitor to the pumping unit, and also collects data for load, pressure,
voltage, startup and shutdown control.
·
RTU Used to Monitor Natural Gas Wells. Collects gas well pressure data.
·
Wireless Dynamometer and Wireless Pressure Gauge. Refers to process “1” above. These products replace wired technology with cordless
displacement sensor technology. They are easy to install and significantly reduce the working load associated with cable laying.
·
Electric Multi-Way Valve for Oilfield Metering Station Flow Control. Refers to process “2” above. This multi-way valve is used before the test
separator to replace the existing three valve manifolds. It facilitates the electronic control of the connection of the oil lead pipeline with the
separator.
·
Natural Gas Flow Computer System. Flow computer system used in natural gas stations and gas distribution stations to measure flow.
·
Recon SCADA Oilfield Monitor and Data Acquisition System. Recon SCADA is a system which applies to the oil well, measurement station, and
the union station for supervision and data collection.
·
EPC Service of Pipeline SCADA System. A service technique for pipeline monitoring and data acquisition after crude oil transmission.
·
EPC Service of Oil and Gas Wells SCADA System. A service technique for monitoring and data acquisition of oil wells and natural gas wells.
·
EPC Service of Oilfield Video Surveillance and Control System. A video surveillance technique for controlling the oil and gas wellhead area
and the measurement station area.
·
Technique Service for “Digital Oilfield” Transformation. Includes engineering technique services such as oil and gas SCADA system, video
surveillance and control system and communication systems.
The Domestic Companies began providing automation services to other companies in the broader energy industry in China and also to
provide the following products and services beyond the oilfield production process in 2017:
Waste Water and Oil Treatment Products and Services
·
Oilfield sewage treatment. It is for oilfield waste water treatment solutions, related chemicals and onsite services customized to clients’
requirement. We have also developed our own designed equipment and aim to manufacture in the future.
·
Oily sludge disposal. This business line provides engineering services of oily sludge disposal in Gan Su province.
·
Residual oil recovery service. This business line assists oilfield companies recover residual oils, including aged oil and spilled oil through our
unique formula and equipment to enhance the profitability for oilfield companies.

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55
Platform Outsourcing Services: Intelligent marketing system and digitalization solution for gas stations
·
Gas Station operation and management solution. To provide new technical applications and data operations solutions and related service to gas
stations of oil companies. Tt can also help gas stations to export API ports to external parties for cooperation.
Chemical recycling Plan used for lower-value mixed plastics treatment (Under Construction)
·
A chemical recycling plant in Wei Fang City is in the preparation stage and scheduled to be operational in late 2024. The plant is meant to
process more than 40,000 tons of low-value plastic a year through pyrolysis techniques.
ISO9000 Certification
The Domestic Companies have received ISO9000 certifications for several of our processes. The International Organization for
Standardization consists of a worldwide federation of national standards bodies for approximately 130 countries, and the ISO9000 certification
represents an international consensus of these standards bodies, with the aim of creating global standards of product and service quality. We have
received ISO9000 certifications for the following:
·
Nanjing Recon has received certification for the development and service of RSCADA.
·
BHD has received certification for high efficiency heating furnaces, import burners, and manometer surrogate rendition and service.
Customers
We operate our business by cooperating with oil companies and their subsidiaries, the petroleum administration bureau and local service
companies. Historically, most actual control of our direct and indirect clients could be traced to Sinopec and CNPC, the two major Chinese state-
owned companies responsible for on-shore petroleum mining and extraction.
Sinopec
Currently, we undertake projects majorly at the following locations, among others:
●
North China Oil and Gas Branch
●
Southwest Branch
Since the fiscal year ended June 30, 2017, Sinopec accounted for less than 10% of our revenue. From fiscal year 2021, we developed new
products and service lines and regained revenue from Sinopec. Revenue from Sinopec accounted for 19%, 32% and 28% of our revenue in the fiscal
years ended June 30, 2024, 2023 and 2022, respectively.
CNPC
Currently, we undertake projects majorly at the following locations, among others:
●
Huabei Oilfield
●
Qinghai Oilfield
●
Jidong Oilfield
●
Zhejiang Oilfield
●
Petrochina sichuan petrochemical.CO., LTD.

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56
We provide products and services to CNPC under a series of agreements, each of which is terminable without advance notice. We first
began to provide services to CNPC in 2000. CNPC accounted for approximately 48%,43% and 50% of our revenue in the fiscal years ended June
30, 2024, 2023 and 2022, respectively, and any termination of our business relationships with CNPC would materially harm our operations.
China Energy Investment Group
We began to provide equipment to Shenhua Group, which was merged into China Energy with another group company, in 2017. We signed
a series of contracts with Shenhua Group and have established what we believe is a solid business relationship with Shenhua Group. Since calender
2023, affected by temporary changes in market participation requirements from Shenhua Group, our business from this basis was temporary
disrupted and there was no revenue from Shenhua Group in fiscal year 2024.
Our Strengths
·
Safety of products. The automation projects we have conducted have demonstrated that our products are reliable, safe and effective at
automating the petroleum extraction process.
·
Efficiency of technology. We believe our technology increases efficiency and profitability for petroleum companies by enabling them to monitor,
manage and control petroleum extraction; increase the amount of petroleum extracted and reduce impurities in extracted petroleum.
·
Ability to leverage our knowledge of Chinese business culture. Many of our competitors are based outside of China. As the Domestic
Companies are based in China, we are in a unique position to emphasize Chinese culture and business knowledge to obtain new customers and
new agreements with existing customers. We believe that many Chinese businesses, including state-owned companies like Shenhua Group and
CNPC, would prefer to hire a Chinese company to assist in their business operations if a Chinese company exists with the ability to fulfill their
needs on a timely and cost-efficient basis. In addition, our knowledge of Chinese culture allows us to anticipate and adapt to Chinese oilfield
management methods. We provide our software solutions in Mandarin for the benefit of our Chinese customers, and all of our customer support
is available from Mandarin-fluent personnel.
·
Experienced, successful executive management team. Our executive management team has significant experience and success in the petroleum
automation industry. They will be able to draw on their knowledge of the industry and their relationships in the industry.
·
Ability to leverage China’s cost structure. As a Chinese company, we believe we can operate our business more cost-effectively because all of
our employees, operations and assets are located in China, resulting in lower labor, development, manufacturing and rent costs than we believe
we would incur if we also maintained operations abroad. We expect these costs savings will be reflected in lower costs to our customers for
comparable products.
·
Ownership of our intellectual property. Because we own our intellectual property, we are able to avoid licensing fees or contravening licensing
agreements.

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57
Our Strategies
Our goal is to help our customers improve their efficiency and profitability by providing them with software and hardware solutions and
services to improve their ability to locate productive oil reservoirs, manage the oil extraction process, reduce extraction costs, and enhance recovery
from extraction activities. Key elements of our strategies include:
·
Increase our market share in China. We believe that as the Chinese economy and oil industry continue to develop, Chinese petroleum extraction
automation companies will compete with international businesses at an increasing rate. Consequently, we believe we will have opportunities to
take market share from foreign companies by developing positive business relationships in China’s petroleum mining and extraction industry.
We will also use strategic advertisements, predominantly in China’s northeast and northwest, where China’s major oilfields are located, to
increase our brand awareness and market penetration. We aim to continue developing new technologies designed to improve petroleum mining
and extraction efficiency and profitability for our customers.
·
Develop our own branded products and services and shift our focus away from trading business. Our management believes in the importance of
our own branded products and our services, in light of their higher profit margins and their long-term significance in establishing the status of
our Company in the oil and gas industry. Moreover, the trading business relies on the major clients’ procurement policies toward agencies, any
significant change of which could jeopardize our operating results. Our management therefore believes that in the long run we will need to
focus our growth strategy in developing professional services for the oil and gas industry in China.
·
Focus on higher-profit subsection of market. While we plan to continue to provide services to all of our clients, we believe that we may improve
our profit margins by focusing a higher portion of our advertising and promotions at those sub-divisions of our industry that have traditionally
held the highest profit margins.
·
Offer services to foreign oilfields contracted by Chinese petroleum companies. As Sinopec and CNPC continue to invest in oilfields in other
countries, we will focus on offering our services in these new locations based on our success in working with the companies in China.
·
Seek opportunities with foreign companies in China. Even where oilfields in China are partially operated by foreign companies, a significant
number of employees will be Chinese and will benefit from our Chinese-language services. We believe our hardware and software solutions
would be beneficial to any petroleum company—foreign or domestic—doing business in China and plan to continue marketing to foreign
companies entering the Chinese market.
·
Provide services that generate high customer satisfaction levels. Chinese companies in our market are strongly influenced by formal and
informal referrals. We believe that we have the opportunity to expand market share by providing high levels of customer satisfaction with our
current customers, thereby fostering strong customer referrals to support sales activities.
Competition
We mainly face competition from a variety of foreign and domestic companies involved in the petroleum extraction and production
industry. While we believe we effectively compete in our market, our competitors hold a substantial market share.
A few of our existing competitors, as well as a number of potential new competitors, have significantly greater financial, technical,
marketing and other resources than we do, which could provide them with a significant competitive advantage over us. We cannot guarantee that we
will be able to compete successfully against our current or future competitors in our industry or that competition will not have a material adverse
effect on our business, operating results and financial condition.
Research and Development
We focus our research and development efforts on improving our development efficiency and the quality of our products and services. As
of June 30, 2024, our research and development team consisted of over 60 experienced engineers, developers and programmers. In addition, some of
our support employees regularly participate in our research and development programs.

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58
In the fiscal years ended June 30, 2024, 2023 and 2022, we spent approximately RMB14.29 million (approximately $2.0 million), RMB8.8
million (approximately $1.2 million) and RMB9.0 million (approximately $1.3 million) respectively, on research and development activities.
Intellectual Property
Our success and competitive position is dependent in part upon our ability to develop and maintain the proprietary aspect of our technology.
The reverse engineering, unauthorized copying, or other misappropriation of our technology could enable third parties to benefit from our
technology without paying for it. We rely on a combination of trademark, trade secret, copyright law and contractual restrictions to protect the
proprietary aspects of the Domestic Companies’ and our technology. We seek to protect the source code to the Domestic Companies’ and our
software, documentation and other written materials under trade secret and copyright laws. While we actively take steps to protect the Domestic
Companies’ and our proprietary rights, such steps may not be adequate to prevent the infringement or misappropriation of the Domestic Companies’
and our intellectual property. This is particularly the case in China where the laws may not protect our proprietary rights as fully as in the United
States.
We license the Domestic Companies’ and our software products under signed license agreements that impose restrictions on the licensee’s
ability to utilize the software and do not permit the re-sale, sublicense or other transfer of the software. Finally, we seek to avoid disclosure of the
Domestic Companies’ and our intellectual property by requiring employees and independent consultants to execute confidentiality agreements.
Although we develop our software products in conjunction with the Domestic Companies, each software product is based upon middleware
developed by third parties. We integrate this technology, licensed by our customers from third parties in our software products. If our customers are
unable to continue to license any of this third-party software, or if the third-party licensors do not adequately maintain or update their products, we
would face delays in the releases of our software until equivalent technology can be identified, licensed or developed, and integrated into our
software products. These delays, if they occur, could harm our business, operating results and financial condition.
There has been a substantial amount of litigation in the software industry regarding intellectual property rights. It is possible that in the
future third parties may claim that our current or potential future software solutions infringe their intellectual property. We expect that software
product developers will increasingly be subject to infringement claims as the number of products and competitors in our industry segment grows and
the functionality of products in different industry segments overlap. In addition, we may find it necessary to initiate claims or litigation against third
parties for infringement of our proprietary rights or to protect our trade secrets. Although, along with the Domestic Companies, we may disclaim
certain intellectual property representations to our customers, these disclaimers may not be sufficient to fully protect us against such claims. Any
claims, with or without merit, could be time consuming, result in costly litigation, cause product shipment delays or require the Domestic Companies
and us to enter into royalty or license agreements. Royalty or licensing agreements, if required, may not be available on terms acceptable to us or at
all, which could have a material adverse effect on our business, operating results and financial condition.
Our standard software license agreements contain an infringement indemnity clause under which we agree to indemnify and hold harmless
our customers and business partners against liability and damages arising from claims of various copyright or other intellectual property
infringement by the Domestic Companies’ and our products. We have never lost an infringement claim, and our costs to defend such lawsuits have
been insignificant. Although it is possible that in the future third parties may claim that our current or potential future software solutions or we
infringe on their intellectual property, we do not currently expect a significant impact on our business, operating results, or financial condition.
We market our products under the following trademarks which are registered with the PRC Trademark Bureau under the State
Administration for Industry and Commerce. We currently own the following trademarks:
1.
Trademark of “BHD” valid from June 7, 2020 through June 6, 2030;
2.
Trademark of “Recon” of the 7th classification valid from October 20, 2021 through October 20, 2031;
3.
Trademark of “Recon” of the 9th classification valid from April 20, 2021 through April 20, 2031; and
4.
Trademark of “Recon” of the 42nd classification valid from September 6, 2021 through September 6, 2031.

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5.
Trademark of “DT” of the 9th, 35th, 37th, and 42nd classification valid from January 28, 2011 through January 27, 2028.
We currently own over 50 patents registered with the PRC State Intellectual Property Office which cover our automated products and
heating related equipment for the petroleum industry. Below is a list of our selected patents:
1.
Patent of Tubular type Heating furnace valid until March 6, 2030;
2.
Patent of Vacuum phase change furnace valid until March 6, 2030;
3.
Patent of Intelligent diagnosis method, device, storage medium and server of electric pump well valid until May 15, 2043;
4.
Patent of Negative pressure heating furnace valid until March 6, 2030;
5.
Patent of High-pressure natural gas furnace valid until March 6, 2030;
6.
Patent of oily sewage treatment equipment valid until July 8, 2025;
7.
Patent of an oil-water well smart wireless pressure transmitter valid until November 17, 2026;
8.
Patent of an intelligent terminal applied to data monitoring of gas wells valid until July 02, 2030;
9.
Patent of torch specialized for oilfield waste-gas burning valid until July 10, 2028;
10. Patent of Wireless temperature transmitter valid until March 27, 2029;
11. Suspended sludge filtration and purification device for oily sewage valid until July 24, 2028;
12. A biological activator for oilfield re-injection water treatment and its preparation method valid until February 17, 2037;
13. Pneumatic device valid until February 9, 2032;
14. Solar-powered shaftless permanent magnet flexible control system, in application valid until August 31 2031;
15. Patent of electricity collection device and oil pumping unit valid until March 28, 2038
We have registered over 40 software products with the PRC State Intellectual Property Office. Below is a list of our selected software
products:
1.
Recon automated monitoring system software version1.0 was published on February 6, 2012
2.
Recon SCADA oilfiled monitoring and data acquisition system software version 2.0 was published on September 25, 2003, and
version 3.0 was registered and published on June 26, 2008;
3.
Recon RCNAMT software version 1 was published on January 8, 2013;
4.
Recon Process Auto software version 1 was published on January 8, 2013;
5.
Recon Production Process Control system software V2.0 was published on November 18, 2013, and V1.0 was published on February
4, 2013;
6.
Recon Oil and Gas Processing SCADA System software V1.0 was published on June 14, 2016;
7.
Intelligent gas field management platform software V1.0 was published on July 14, 2020;

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8.
Gas well data acquisition and monitoring software V1.0 was published on July 14, 2020;
9.
Recon’s Video Intelligent Recognition Software version1.0 was published on April 13, 2021;
10. Solar permanent magnet semi-direct drive intelligent control software V1.0 was published on August 31, 2021;
11. An intelligent billing system that does not rely on physical cards to achieve self-service refueling for vehicle owners (Android) V2.0
was published on April 9, 2019;
12. An intelligent billing system that does not rely on physical cards to achieve self-service refueling for vehicle owners (ios) V2.0 was
published on April 9, 2019;
13. Gas Station Operation Vehicle Marketing System V1.0 was published on September 3, 2021;
14. Gas station user attraction system V1.0 was published on September 3, 2021;
15. Gas Station Electronic Coupon Vending System V1.0 was published on September 3, 2021;
16. Gas Station Revenue Clearing and Settlement System V1.0 was published on September 3, 2021;
17. An intelligent settlement system that does not rely on physical cards to achieve self-service refueling for vehicle owners (WeChat mini
program) V1.0 was published on September 3, 2021;
18. An intelligent settlement system that does not rely on physical cards to achieve self-service refueling for vehicle owners (Alipay mini
program) V1.0 was published on September 3, 2021;
19. Gas station abnormal transaction risk control system V1.0 was published on September 3, 2021;
20. A software copyright registration certificate of Recon’s Intelligent monitoring and management system software version1.0 for oil
production was published on September 3, 2021
Environmental Matters
We have not incurred material expenses in connection with compliance with Chinese environmental laws and regulations. We do not
anticipate expending any material amounts for such compliance purposes for the remainder of our current or succeeding fiscal year.
China’s Intellectual Property Rights Enforcement System
In 1998, China established the State Intellectual Property Office (“SIPO”) to coordinate China’s intellectual property enforcement efforts.
SIPO is responsible for granting and enforcing patents, as well as coordinating intellectual property rights related to copyrights and trademarks.
Protection of intellectual property in China follows a two-track system. The first track is administrative in nature, whereby a holder of intellectual
property rights files a complaint at a local administrative office. Determining which intellectual property agency can be confusing, as jurisdiction of
intellectual property matters is diffused throughout a number of government agencies and offices, with each typically responsible for the protection
afforded by one statute or one specific area of intellectual property-related law. The second track is a judicial track, whereby complaints are filed
through the Chinese court system. Since 1993, China has maintained various intellectual property tribunals. The total volume of intellectual property
related litigation, however, remains small.
Although there are differences in intellectual property rights between the United States and China, of most significance to the Company is
the inexperience of China in connection with the development and protection of intellectual property rights. Similar to the United States, China has
chosen to protect software under copyright law rather than trade secrets, patent or contract law. As such, we will attempt to protect our most
significant intellectual property pursuant to Chinese laws that have only recently been adopted. Unlike the United States, which has lengthy case law
related to the interpretation and applicability of intellectual property law, China has a less developed body of relevant intellectual property case law.

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REGULATIONS
We are subject to a variety of PRC and foreign laws, rules and regulations across a number of aspects of our business. This section
summarizes the principal PRC laws, rules and regulations relevant to our business and operations. Areas in which we are subject to laws, rules and
regulations outside of the PRC include intellectual property, competition, taxation, anti-money laundering and anti-corruption.
Regulation on Software Products
On March  1, 2009, the Ministry of Industry and Information Technology of China issued the Administrative Measures on Software
Products, or the Software Measures, which became effective as of April 10, 2009, to strengthen the regulation of software products and to encourage
the development of the Chinese software industry. Under the Software Measures, a software developer must have all software products imported into
or sold in China tested by a testing organization supervised by the Ministry of Industry and Information Technology. The software industry
authorities in provinces, autonomous regions, municipalities and cities with independent planning are in charge of the registration, report and
management of software products. Software products can be registered for five years, and the registration is renewable upon expiration. Although
some of Nanjing Recon’s current software products were registered in 2008, there can be no guarantee that the registration will be renewed timely or
that the Domestic Companies’ and our future products will be registered.
Regulation of Intellectual Property Rights
China has adopted legislation governing intellectual property rights, including trademarks and copyrights. China is a signatory to the main
international conventions on intellectual property rights and became a member of the Agreement on Trade Related Aspects of Intellectual Property
Rights upon its accession to the WTO in December 2001.
Copyright. China adopted its first copyright law in 1990 and revised in 2001, 2010 and 2020. The National People’s Congress amended the
Copyright Law in 2001 to widen the scope of works and rights that are eligible for copyright protection. The amended Copyright Law extends
copyright protection to software products, among others. In addition, there is a voluntary registration system administered by the China Copyright
Protection Center. Unlike patent and trademark registration, copyrighted works do not require registration for protection. Protection is granted to
individuals from countries belonging to the copyright international conventions or bilateral agreements of which China is a member. Nanjing Recon
has over ten copyrights for software programs.
Trademark. The Chinese Trademark Law, adopted in 1982 and revised in 1993, 2001, 2013 and 2019, protects registered trademarks. The
Trademark Office under the Chinese State Administration for Industry and Commerce handles trademark registrations and grants a term of ten years
to registered trademarks. Trademark license agreements must be filed with the Trademark Office for record. China has a “first-to-register” system
that requires no evidence of prior use or ownership. The Domestic Companies and we have registered a number of product names with the
Trademark Office.

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Regulations on Foreign Exchange
Foreign Currency Exchange. Under the PRC foreign exchange regulations, payments of current account items, such as profit distributions
and trade and service-related foreign exchange transactions, may be made in foreign currencies without prior approval from SAFE by complying
with certain procedural requirements. By contrast, approval from or registration with appropriate government authorities is required where RMB is
to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of foreign currency-denominated
loans or foreign currency is to be remitted into China under the capital account, such as a capital increase or foreign currency loans to our PRC
subsidiaries.
SAFE issued the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and
Settlement of Foreign Currency Capital of Foreign-Invested Enterprises (2008), or SAFE Circular 142, regulating the conversion by a foreign-
invested enterprise of foreign currency-registered capital into RMB by restricting how the converted RMB may be used. In addition, SAFE
promulgated Circular 45 on November 9, 2011 in order to clarify the application of SAFE Circular 142. Under SAFE Circular 142 and Circular 45,
the RMB capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used for purposes within the
business scope approved by the applicable government authority and may not be used for equity investments within the PRC. In addition, SAFE
strengthened its oversight of the flow and use of the RMB capital converted from foreign currency registered capital of foreign-invested enterprises.
The use of such RMB capital may not be changed without SAFE’s approval, and such RMB capital may not in any case be used to repay RMB loans
if the proceeds of such loans have not been used.
Since SAFE Circular 142 has been in place for more than five years, SAFE decided to further reform the foreign exchange administration
system in order to satisfy and facilitate the business and capital operations of foreign invested enterprises, and issued the Circular on the Relevant
Issues Concerning the Launch of Reforming Trial of the Administration Model of the Settlement of Foreign Currency Capital of Foreign-Invested
Enterprises in Certain Areas on August 4, 2014. This circular suspends the application of SAFE Circular 142 in certain areas and allows a foreign-
invested enterprise registered in such areas with a business scope including “investment” to use the RMB capital converted from foreign currency
registered capital for equity investments within the PRC.
SAFE promulgated Circular 59 in November 2010, which tightens the regulation over settlement of net proceeds from overseas offerings,
such as our initial public offering, and requires, among other things, the authenticity of settlement of net proceeds from offshore offerings to be
closely examined and the net proceeds to be settled in the manner described in the offering documents or otherwise approved by our board.
Violations of these SAFE regulations may result in severe monetary or other penalties, including confiscation of earnings derived from such
violation activities, a fine of up to 30% of the RMB funds converted from the foreign invested funds or in the case of a severe violation, a fine
ranging from 30% to 100% of the RMB funds converted from the foreign-invested funds.
In November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on
Foreign Direct Investment, which substantially amends and simplifies the current foreign exchange procedure. Pursuant to this circular, the opening
of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee
accounts, the reinvestment of RMB proceeds by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-
invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same
entity may be opened in different provinces, which was not possible previously. In addition, SAFE promulgated the Circular on Printing and
Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting
Documents in May 2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the
PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based
on the registration information provided by SAFE and its branches.
Regulation of Dividend Distribution. The principal regulations governing the distribution of dividends by foreign holding companies
include the Foreign Investment Enterprise Law (1986), as amended, and the Administrative Rules under the Foreign Investment Enterprise Law
(2001).
Under these regulations, foreign investment enterprises in China may pay dividends only out of their retained profits, if any, determined in
accordance with PRC accounting standards and regulations. In addition, foreign investment enterprises in China are required to allocate at least 10%
of their respective retained profits each year, if any, to fund certain reserve funds unless these reserves have reached 50% of the registered capital of
the enterprises. These reserves are not distributable as cash dividends.

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In July 2014, SAFE promulgated SAFE Circular 37, which replaced the former circular commonly known as “SAFE Circular 75”
promulgated by SAFE on October 21, 2005. SAFE Circular 37 requires PRC residents to register with local branches of SAFE in connection with
their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’
legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose
vehicle.” SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose
vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event.
In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries
of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-
border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC
subsidiary. Furthermore, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law
for evasion of foreign exchange controls.
Regulations on Foreign Investment in Automation Service Industry and Oil Exploration and Extraction Industry in PRC. In accordance
with the Catalogue of Industries for Guiding Foreign Investment (Revised 2007), the oil and gas automation service industries are in the catalogue of
permitted industries, and thus there are no restrictions on foreign investment in the oil and gas automation industry. In addition, the following
industries are encouraged for foreign investment in China:
●
Manufacturing of equipment for oil exploration, drilling, collection and transportation: floating drilling systems and floating production
systems with an operating water depth of more than 1,500 meters and the supporting subsea oil extraction, collection and transportation
equipment
●
Exploration and exploitation of oil and natural gas with venture capital (limited to equity joint ventures and cooperative joint ventures);
●
Development and application of new technologies that increase the recovery ratio of crude oil (limited to equity joint ventures and
cooperative joint ventures);
●
Development and application of new oil exploration and exploitation technologies such as geophysical exploration, drilling, well logging,
and downhole operation, etc. (limited to cooperative joint ventures); and
●
Exploration and development of unconventional oil resources such as oil shale, oil sands, heavy oil, and excess oil (limited to cooperative
joint ventures).

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C. Organizational Structure
Below is a chart representing our current corporate structure as of June 30, 2024:
Our registered office in the Cayman Islands is at the offices of Vistra (Cayman) Limited, P.O. Box 31119 Grand Pavilion, Hibiscus Way,
802 West Bay Road, Grand Cayman, KY1-1205, Cayman Islands.

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D. Property, Plants and Equipment
We currently operate in several facilities throughout China. Our headquarters are located in Beijing. Following is a list of our properties.
The first five properties are rentals. Gan Su BHD has received a land usage rights certificate regarding the last property and has constructed a plant
on that piece of land.
No.     
Tenant/Transferee
    
Address
    
Rental/Use Term
    
Space
    
Usage
    
Productive

Capacity
    
Extent of

utilization
1
Recon-BJ

BHD
601, 1 Shui’an South Street,
Chaoyang District, Beijing,
100012, PRC
May 1, 2024 to

April 30, 2027
813.35 square

meters
Headquarter and
office
N/A
100%
2
Nanjing Recon
Room 311, No. 2 Building, Chu
Qiao Cheng, Andemen Street,
Yu Hua District, Nanjing City,
PRC
April 1, 2024 to

March 31, 2026
334.2 square

meters
Office
N/A
80%
South side of 6th floor, 1
Shui’an South Street, Chaoyang
District, Beijing, 100012, PRC
May 1, 2024 to

April 30, 2027
577.65 square

meters
Office
N/A
100%
3
BHD
West building, Zhengfu Street,
Huo ying, Changping District,
PRC
January 1, 2024 to

December 31, 2025
420 square

meters
Warehouse
N/A
50%
4
HH BHD
No. 1767, Yin Bin South Street,
Huang Hua Economic
Development Zone, He Bei
Province, PRC
July 1, 2024 to

June 30, 2025
4,624 square

meters
Office and Plant
N/A
(Equipment
Installation)
100%
5
Gan Su BHD
North of Dongyun Road and
West of Petroleum Management
Bureau Wooden Furniture
Factory, Old District, Yumen
City, Gansu Province, PRC
August 1, 2017 to

July 31, 2067
26,235.59

square meters
Plant
60,000 tons
80%
6
FGS
Northeast side of 6th floor, 1
Shui’an South Street, Chaoyang
District, Beijing, 100012, PRC
May 1, 2024 to

April 30, 2027
677.65 square

meters
Office
N/A
50%
7
Recon-SD
West of Lingang Road, Weifang
Binhai Economic and
Technological Development
Zone, south of Shandong
Huachen Biochemistry Co., Ltd.
December 13, 2023

to December 12,

2073
32,363 square

meters
Plant
N/A
100%
ITEM 4A.
UNRESOLVED STAFF COMMENTS
None.
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion and analysis of our company’s financial condition and results of operations should be read in conjunction with
our consolidated financial statements and the related notes included elsewhere in this report. This discussion contains forward-looking statements
that involve risks and uncertainties. Actual results and the timing of selected events could differ materially from those anticipated in these forward-
looking statements as a result of various factors.

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Overview
We are a company with limited liability incorporated in 2007 under the laws of the Cayman Islands. Headquartered in Beijing, we have
been providing products and services to oil and gas companies and their affiliates through Nanjing Recon Technology Co. Ltd (“Nanjing Recon”)
and Beijing BHD Petroleum Technology Co, Ltd (“BHD”) and their affiliates, hereafter referred to as the domestic companies (the “Domestic
Companies”), which are established under the laws of the PRC. From 2017, we have been providing service to companies in other power energy
industries such as the electronic power industry and the renewable energy industry. As the Company contractually controls the Domestic Companies,
we serve as the center of strategic management, financial control and human resources allocation. To this end, our company and our subsidiaries,
Recon Investment Ltd. (“Recon-IN”) , Recon Hengda Technology (Beijing) Co., Ltd. (“Recon-BJ”), Shandong Recon Renewable Resources
Technology Co., Ltd. (“Recon-SD”) and Guangxi Recon Renewable Resources Technology Co., Ltd. (“Recon-GX”) are contractually engaged with
the following PRC VIE companies and their subsidiaries: Beijing BHD Petroleum Technology Co., Ltd. (“BHD”), Future Gas Station (Beijing)
Technology, Ltd. (“FGS”), Nanjing Recon Technology Co., Ltd. (“Nanjing Recon”), Gan Su BHD Environmental Technology Co. Ltd. (“Gan Su
BHD”), Huang Hua BHD Petroleum Equipment Manufacturing Co. Ltd. (“HH BHD”), and Qing Hai BHD New Energy Technology Co. Ltd.
(“Qing Hai BHD”) (collectively, the “Domestic Companies”), which provide services designed to automate and enhance the extraction of and
facilitate the sale of petroleum products. Due to this contractual control and our obligation to bear the losses of the Domestic Companies, we
consider them to be variable interest entities (“VIEs”) for accounting purposes and consolidate their results in our financial statements.
Through Nanjing Recon and BHD, our business is mainly focused on the upstream sectors of the oil and gas industry. From 2018, our
business has been expanding to the downstream of the energy industry– the civil and industrial heating furnaces market, electric and coal chemical
industry and the energy service management industry. As we acquired major equity interest of FGS in year 2021, we also extend our business to fuel
market. We derive our revenue from the sales and provision of (1) automation products and projects, (2) equipment and installment for heating
furnaces and overall energy saving resolution, (3) chemical products and overall resolution for wastewater and oily sludge treatment, (4) downhole
services, production enhancement, engineering and project services for aforementioned, and (5) platform development services for gas stations and
other entities that will provide services under the scenario of refuel.
●
Nanjing Recon: Nanjing Recon is a high-tech company that specializes in automation services for oilfield companies. It mainly focuses on
providing automation solutions to the oil exploration industry, including monitoring wells, automatic metering to the joint station
production, process monitor, and a variety of oilfield equipment and control systems. From 2018, Nanjing Recon also provides automation
products and services to other segments of the energy industry, such as the new energy industry, electric power and coal chemical
industries.
●
BHD: BHD is a high-tech company that specializes in transportation equipment and stimulation productions and services. Possessing
proprietary patents and substantial industry experience, BHD has also been expanding services to oilfield wastewater and oily sludge
treatment, and extended its heating products and resolutions to the civil market by leveraging its advantage on furnace products.
We entered into the wasted plastic chemical recycling business in year 2023 and established two new wholly-owned subsidiaries, Shandong
Recon Renewable Resources Technology Co., Ltd (“Recon-SD”) on October 10, 2023, and Guangxi Recon Renewable Resources Technology Co.,
Ltd. (“Recon-GX”) on February 22, 2024 through Recon-IN to serve customers located in different areas.
Recent Industry Developments and Business Outlook
For the fiscal year 2024, crude oil prices have experienced an upward and then a downward trajectory, but have overall remained above the
extraction costs of China’s domestic oilfield companies, which resulted in high extraction and production activities being maintained by all of
China’s oilfield companies. Oilfield companies have implemented a series of effective measures to strengthen the stable production of mature oil
fields and seek opportunities for profitable development in new areas. We expect this trend to continue for some time and our oilfield business is
gradually recovering.

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As the domestic refined oil market demand gradually recovers, the consumption growth of the natural gas market is also exhibiting a swift
upward trend. Under such circumstances, the natural gas production of oilfield companies is increasing at a swift rate, and its proportion in the total
oil and gas output is steadily rising. Furthermore, domestic oilfield companies have capitalized on the advantage of relatively lower extraction costs
associated with offshore oilfields, leading to increasingly frequent exploration activities in these areas. Faced with emerging opportunities in the
market, we are actively seeking and seizing chances, solidifying our existing oilfield customer business. We have established cooperative
relationships with both natural gas extraction clients and offshore oilfield clients, propelling the development of our business.
At the same time, we believe that the demand from oilfield customers for green, low-carbon, digitized and intelligent solutions to improve
recovery and production efficiency will continue to rise, in order to ensure a continuous and stable supply of high-quality oil and gas resources to
meet market demand.
With plastic waste ballooning into a global environmental crisis, and oil and chemical companies focus more on ESG management, we see
increasing opportunities on circular economy and a growing market demand for sustainable and recycled materials, in which products and materials
are reused, remanufactured and recycled. Chemical recycling plays an important role in achieving these goals by preserving the value of plastic
materials. Beginning in early calendar year 2023, we have been participating in the chemical recycling of low-value plastics. We have signed
purchase intentions with some multinational and local chemical companies, and based on these demands, we have started the construction of our
plants. Beginning in the second half of calendar year 2023, we purchased land and began applying for various access documents and construction
permits. We expect the plant to be ready for production and operation in early 2025.
Growth Strategy
As a small company focused on the Chinese market, our basic strategy focuses on developing our onshore oilfield business in the upstream
sector of the industry. We continuously focus on providing high quality products and services in oilfields in which we have a geographical
advantage. This helps us avoid conflicts of interest with larger private companies while protecting our position within this market segment. Our
mission is to increase the automation and safety levels of industrial petroleum production in China and to improve the underdeveloped working
process and management mode used by many companies by providing advanced technologies. At the same time, we are always looking to improve
our business and to increase our earning capability.
Currently, as more markets in China’s energy industry are open to non-state-owned companies, we are also seeking for opportunities in
other markets. We believe our experience and deep knowledge of the energy industry, especially in oil and gas, will always be the long-term
foundation for the company’s growth. By tapping into technological advances in recent years, such as solar energy and the Smart Industry and
Industrial Internet, which is bringing about a fundamental change in the way factories and workplaces function by making them safer, more efficient,
more flexible and more environmentally friendly. We expect to create more profitable business lines.
Also, to diversify our revenue stream and lower the risk of concentration, we will continue to seek new opportunities through enriching the
customer base and expanding the customer coverage area by leveraging our knowledge of intelligent equipment and the “internet of things” (IoT),
which is a crucial component of the Smart Industry and Industrial Internet.
We also see threatens from climate changes and opportunities from sustainable investments. We have also begun to engage in green, low-
carbon and recyclable resource businesses to secure our long-term growth.
Trend Information
Other than as disclosed elsewhere in this report we are not aware of any trends, uncertainties, demands, commitments, or events since the
beginning of our fiscal year 2024 which are reasonably likely to have a material effect on our net revenue, income from operations, profitability,
liquidity or capital resources, or would cause the disclosed financial information to be not necessarily indicative of future operating results or
financial condition.

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Factors Affecting Our Results of Operations
●
Our operating results in any period are subject to general conditions typically affecting the Chinese oilfield service industry which
include but are not limited to:
●
oil and gas prices;
●
the amount of spending by our customers, primarily those in the oil and gas industry;
●
growing demand from large corporations for improved management and software designed to achieve such corporate performance;
●
the procurement processes of our customers, especially those in the oil and gas industry;
●
competition and related pricing pressure from other oilfield service solution providers, especially those targeting the Chinese oil and
gas industry;
●
the ongoing development of the oilfield service market in China;
●
unpredictability of policies regarding the energy and internet sectors; and
●
inflation and other macroeconomic factors.
●
Unfavorable changes in any of these general conditions could negatively affect the number and size of the projects we undertake, the
number of products we sell, the amount of services we provide, the price of our products and services, and otherwise affect our results
of operations.
●
Our operating results in any period are more directly affected by company-specific factors including:
●
our revenue growth, in terms of the proportion of our business dedicated to large companies and our ability to successfully develop,
introduce and market new solutions and services;
●
our ability to increase our revenue from both old and new customers in the oil and gas industry in China;
●
our ability to effectively manage our operating costs and expenses; and
●
our ability to effectively implement any targeted acquisitions and/or strategic alliances so as to provide efficient access to markets and
industries in the oil and gas industry in China.
Major Critical Accounting Policies and Estimates
Consolidation of VIEs
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.
Assets recognized as a result of consolidating VIEs do not represent additional assets that could be used to satisfy claims against the
Company’s general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the
Company’s general assets; rather, they represent claims against the specific assets of the consolidated VIEs.

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Estimates and Assumptions
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in United States of
America (“US GAAP”), which 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 revenue 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 allowance for credit losses related to accounts receivable, other receivables and purchase
advances, allowance for inventory, the useful lives of property and equipment, valuation allowance for deferred tax assets, impairment assessment
for long-lived assets, goodwill and investment in unconsolidated entity, the discount rate for lease and investment, valuation of the convertible notes,
price purchase allocation for business combination and the fair value of share- based payments. The use of estimates is an integral component of the
financial reporting process; actual results could differ from those estimates.
The key assumptions underlying the Company’s accounting for material arrangements and the reasonably likely material effects of
resolving any uncertainties on the Company’s allowance for credit losses related to purchase advances. The production of the Company’s products
requires custom-made equipment from its suppliers. To ensure that it can secure the required customized equipment, the Company often needs to
make full prepayment for its intended purchases. As a standard practice in the petroleum extraction industry, the Company generally must submit a
bid in order to secure the sales contract. The bidding process generally takes between one month to one year and the timing depends on the size of
the overall project, which timing and size are generally controlled by its client. In order to secure timely purchase delivery and to meet its product
delivery schedule, the Company normally prepays for the purchase advances if the Company believes that it is more than likely to win the bid for the
sales contract which is accounted as pre-contract costs. After winning the bid and securing the sale contract, the Company normally needs to deliver
its products approximately within one week to six months. Based on the Company’s historical experience, the Company generally is able to realize
its purchase advances on the customized equipment that it orders. If it subsequently confirms that the Company is unable to secure the planned
contracts with a customer after making the advance payments for these planned contracts, the Company evaluates the probable recoverability of the
pre-contract cost and charges to expenses when the Company determines that the recovery of such pre-contract cost is improbable.
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 methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are
observable for the 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.
Accounting guidance also describes three main approaches to measure the fair value of assets and liabilities: (1) market approach; (2)
income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions
involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present
value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is
based on the amount that would currently be required to replace an asset.
The Company measures certain financial assets, including investments under the equity method on other-than-temporary basis, intangible
assets and fixed assets at fair value when an impairment charge is recognized.

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The carrying amounts reported in the consolidated balance sheets for short-term investments, accounts receivable, notes receivable, other
receivables, purchase advances, contract cost, accounts payable, other payable, accrued liabilities, contract liabilities, short-term bank loans and
short-term borrowings – related parties approximate fair value because of the immediate or short-term maturity of these financial instruments. The
carrying amounts of the long-term borrowings due to related party approximate its fair value because the stated interest rates approximate rates
currently offered by financial institutions for similar debt instruments of comparable credit risk and maturities.
Business Combinations
The Company accounts for its business combinations using the acquisition method of accounting in accordance with Accounting Standards
Codification (“ASC”) Topic 805 “Business Combinations”. The consideration transferred in an acquisition is measured as the aggregate of the fair
values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all
contractual contingencies as of the acquisition date. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable
assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any
noncontrolling interests. The excess of (i) the total costs of acquisition, fair value of the noncontrolling interests and acquisition date fair value of
any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the
cost of acquisition is less than the fair value of the net assets of the acquiree, the difference is recognized directly in the consolidated statements of
operation and comprehensive income (loss). During the measurement period, which can be up to one year from the acquisition date, the Company
may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the
measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments
are recorded to the consolidated statements of operation and comprehensive income (loss).
In a business combination considered as a step acquisition, the Company remeasures the previously held equity interest in the acquiree
immediately before obtaining control at its acquisition-date fair value and the re-measurement gain or loss, if any, is recognized in the consolidated
statements of operation and comprehensive income (loss).
Revenue Recognition
In accordance with ASC 606, “Revenue from Contracts with Customers”, revenue is recognized when all of the following five steps are
met: (i) identify the contract(s) with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv)
allocate the transaction price to the performance obligations; (v) recognize revenue when (or as) each performance obligation is satisfied. The core
principle underlying the new revenue recognition Accounting Standards Update (“ASU”) is that the Company recognizes revenue to represent the
transfer of goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange.
The Company identifies contractual performance obligations and determines whether revenue should be recognized at a point in time or over time,
based on when goods or services are provided to a customer.
Disaggregation of Revenue
Revenue are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the
consideration the Company expects to be entitled to in exchange for those goods or services.
The following items represent the Company’s revenue disaggregated by revenue source. In accordance with ASC 606-10-50-5, the
Company selects categories to present disaggregated revenue that depict how the nature, amount, timing, and uncertainty of revenue and cash flows
are affected by economic factors and delivery conditions of products and fulfillment of obligations.
The Company’s disaggregation of revenue for the years ended June 30, 2022, 2023 and 2024 is disclosed in Note 25 to accompanying
consolidated financial statements.
Automation Products and Software; Equipment, Accessories and Others
The Company generates revenue primarily through delivery of standard or customized products and equipment,  including automation
products, furnaces and related accessories. Revenue is recognized when products are delivered, and acceptance reports are signed off by customers.

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The sale of automation products or specialized equipment when combined with services represent a single performance obligation for the
development and construction of a single asset. The Company may also provide design or installation services to clients as there may be such
obligation in contracts. The promises to transfer the goods and provision of services are not separately identifiable, which is evidenced by the fact
that the Company provides significant services of integrating the goods and services into a single deliverable for which the customer has contracted.
For such sales arrangements, the Company recognizes revenue using input method, based on the relationship between actual costs incurred
compared to the total estimated costs for the contract. Such method is adopted because the Company believes it best depicts the transfer of goods
and services to the customer.
Oilfield Environmental Protection Service
The Company provides wastewater treatment products and related service to oilfield and chemical industry companies and generates
revenue from special equipment, self-developed chemical products and supporting service, transfer. Revenue is recognized when contract
obligations have been performed. For such sales arrangements, the Company recognizes revenue when products are delivered, on-site assistance
services rendered, and acceptance reports are signed off by customers. Such method is adopted because the Company believes it best depicts the
transfer of services to the customer.
The Company provides oily sludge disposal and treatment services to oilfield companies and generates revenue from treatment services of
oily sludge. Revenue is recognized when contract obligations have been performed. For such sales arrangements, the Company recognizes revenue
using output method, based on the percentage-of-completion method. Such method is adopted because the Company believes it best depicts the
transfer of services to the customer.
Platform Outsourcing Services
The Company provides online platform development, maintenance, and operation services to gas stations around different provinces in
China to complete online transactions; and API (application programming interface) port export service and related maintain services to business
cooperators of different industries that may have transactions in the refueling scenario during the service contract period. The Company considered
these performance obligations to be indistinguishable contractual performance obligations. As the Company has no right to get the compensation for
any performances completed while not accepted by its customers, the Company can only recognize revenue at a point in time, which is when the
online transaction is completed. The Company’s services enable terminal users of different mobile apps run by its clients or cooperators to complete
refueling in cash or online through different payment channels, when each transaction, including refueling and payment, is completed, the Company
is entitled to charge with pre-settled rates of each transaction amount as service fee and recognize the underlying amount as revenue. Related fees are
generally billed monthly, based on a per transaction basis.
Arrangements with Multiple Performance Obligations
Contracts with customers may include multiple performance obligations. For such arrangements, the Company will allocate revenue to each
performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to
customers or using expected cost-plus margin.
Contract Balances
The Company’s contract balances include contract costs, net and contract liabilities from contracts with customers, and the following table
provides information about contract balances:
    
June 30,
June 30,
    
June 30
2023
2024
2024
    
RMB
    
RMB
    
US Dollars
Contract costs, net
¥  49,572,685
¥  48,335,817
$  6,651,230
Contract liabilities
¥
 2,748,365
¥
 1,820,481
$
 250,507
Contract Costs, Net  - The Company recognizes an asset from the costs incurred to fulfill a contract when those costs meet all of the
following criteria: (i) the costs relate directly to a contract or to an anticipated contract that the Company can specifically identify; (ii) the costs
generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and
(iii) the costs are expected to be recovered.

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72
-
Pre-Contract Costs - Pre-contract costs are the amounts prepaid to suppliers for purchases of customized equipment in anticipation of
obtaining planned contracts for the Company’s hardware and software revenue. If it subsequently confirms that the Company is unable to
secure the planned contracts with a customer after making the advance payments for these planned contracts, the Company evaluates the
probable recoverability of the pre-contract cost and charges to expenses when the Company determines that the recovery of such pre-
contract cost is improbable.
-
Executed Contract Costs - Direct costs, such as material, labor, depreciation and amortization and subcontracting costs and indirect costs
allocable to contracts include the costs of contract supervision, tools and equipment, supplies, quality control and inspection, insurance,
repairs and maintenance for quality assurance purposes before clients’ initial acceptance. Once products are delivered, installed and
debugged for intended use and accepted by a client, which may last from weeks to months (this process is decided by the client’s individual
project construction arrangement), the Company records revenue based on the contract or the final clients’ acceptance. Minor costs for
repair during the maintenance period after initial acceptance are recorded as cost of goods sold as they are incurred. All other general and
administrative costs and selling costs are charged to expenses as incurred. The Company generally ships its products approximately one
week to six months after production begins and the timing depends on the size of the overall project.
Contract Liabilities - Contract liabilities are recognized for contracts where payment has been received in advance of performance under
the contract. The Company’s contract liabilities consist primarily of the Company’s unsatisfied performance obligations as of the balance sheet
dates. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition
criteria have been met.
Performance Obligations
Performance obligations include delivery of products and provision of services. The Company recognizes revenue when performance
obligations under the terms of a contract with its customer are satisfied. This occurs when the control of the goods and services have been transferred
to the customer. Accordingly, revenue for sale of goods is generally recognized upon shipment or delivery depending on the shipping terms of the
underlying contract, and revenue for provision of services is recognized upon the service rendered. Revenue is measured as the amount of
consideration the Company expects to receive in exchange for transferring goods and providing services.
Shipping and handling charges charged to customers for the fulfillment of the Company’s commitment to transfer the goods are included in
revenue, and the costs incurred by the Company as a result of the delivery of the goods are classified as cost of sales in the consolidated operating
and comprehensive income (loss) statements. Sales, value added, and other taxes the Company collects concurrent with revenue-producing activities
are excluded from revenue. The Company generally offers assurance-type warranties for its products. The specific terms and conditions of those
warranties vary depending upon the product. The Company estimates the costs that may be incurred under its warranties and records a liability in the
amount of such costs at the time product revenue is recognized. Factors that affect the warranty liability include historical product-failure experience
and estimated repair costs for identified matters. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the
amounts as necessary. The amount accrued for expected returns and warranty claims was immaterial as of June 30, 2024. The amount of revenue
recognized during the years ended June 30, 2022, 2023 and 2024 that was previously included within contract liability balances was ¥7,390,276,
¥1,901,277 and ¥1,489,311 ($204,936), respectively.
Practical Expedients Elected
Incremental Costs of Obtaining a Contract - The Company has elected the practical expedient permitted in ASC 340-40-25-4, which
permits an entity to recognize incremental costs to obtain a contract as an expense when incurred if the amortization period will be less than one year
and not significant.
Significant Financing Component - The Company has elected the practical expedient permitted in ASC 606-10-32-18, which allows an
entity to not adjust the promised amount of consideration for the effects of a significant financing component if a contract has a duration of one year
or less. As the Company’s contracts are majorly less than one year in length, consideration will not be adjusted. For the Company’s contracts include
a standard payment term of 90 days to 180 days; consequently, there is no significant financing component within contracts. There are also some
new contracts that will not be completed within one year from year 2023, the Company did calculation and the amount was not material as end of
this fiscal year.

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Accounts Receivable, Net, Other Receivables, Net and Loan to Third Parties
Accounts receivable are carried at original invoiced amount less a provision for any potential uncollectible amounts. In July 2020, the
Company adopted ASU 2016-13, Topics 326-Credit Loss, Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss
methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology, as its accounting
standard for its accounts receivable and other receivables. Other receivables and loan to third parties arise from transactions with non-trade
customers.
The adoption of the credit loss accounting standard has no material impact on the Company’s consolidated financial statements as of July 1,
2020. Accounts receivable, other receivables and loan to third parties are recognized and carried at carrying amount less an allowance for credit loss,
if any. The Company maintains an allowance for credit losses resulting from the inability of its trade and non-trade customers (“customers”) to make
required payments based on contractual terms. The Company reviews the collectability of its receivables on a regular and ongoing basis. The
Company has also included in calculation of allowance for credit losses, the potential impact of the COVID-19 pandemic on our customers
businesses and their ability to pay their accounts receivable, other receivables and loan to third parties. After all attempts to collect a receivable have
failed, the receivable is written off against the allowance. The Company also considers external factors to the specific customer, including current
conditions and forecasts of economic conditions, including the potential impact of the COVID-19 pandemic. In the event the Company recovers
amounts previously reserved for, the Company will reduce the specific allowance for credit losses. The net recovery of provision for credit loss for
the year ended June 30, 2024 decreased by approximately ¥6.6 million ($0.9 million) from the year ended June 30, 2023.
The Company evaluates the creditworthiness of all of its customers individually before accepting them and continuously monitors the
recoverability of accounts receivable, other receivables and loan to third parties. If there are any indicators that a customer may not make payment,
the Company may consider making provision for non-collectability for that particular customer. At the same time, the Company may cease further
sales or services to such customer. The following are some of the factors that the Company considers in determining whether to discontinue sales,
record as contra revenue or allowance for credit losses:
●
the oil price and fluctuation of the overall oil industry;
●
the customer fails to comply with its payment schedule;
●
the customer is in serious financial difficulty;
●
a significant dispute with the customer has occurred regarding job progress or other matters;
●
the customer breaches any of the contractual obligations;
●
the customer appears to be financially distressed due to economic or legal factors;
●
the business between the customer and the Company is not active; and
●
other objective evidence indicates non-collectability of the accounts receivable, other receivables and loan to third parties.
The Company considers the following factors when determining whether to permit a longer payment period or provide other concessions to
customers:
●
the customer’s past payment history;
●
the customer’s general risk profile, including factors such as the customer’s size, age, and public or private status;
●
macroeconomic conditions that may affect a customer’s ability to pay; and
●
the relative importance of the customer relationship to the Company’s business.

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Share-Based Compensation
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 valuation model estimated at the grant date based on the award’s fair value.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers
whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether
the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own
Class A Ordinary Shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s
control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time
of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a
component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity
classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.
Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations.
Results of Operations
The following consolidated results of operations include the results of operations of the Company and the Domestic Companies.
Our historical reporting results are not necessarily indicative of the results to be expected for any future period.
Year Ended June 30, 2024 Compared to Year Ended June 30, 2023
For the year ended June 30, 2024, our performance in the oilfield service sector improved, benefiting from the continued improvement in
oilfield customers’ production activities, the continued demand for clean energy in China, and the demand from oilfield customers for efficient, cost-
effective and environmentally friendly solutions. While we also faced challenges from customers’ cost control strategy and temporary update re-
equipment of operational qualification, our gross margin improvement was not significant, and revenue from some electronics sector and oilfield
environmental protection temporarily declined. As a result, we experienced certain fluctuations in our revenue structure and costs and expenses
during the current period.
Revenue
    
For the Years Ended
 
June 30,
    
    
    
Increase /
     Percentage  
    
2023
    
2024
    
(Decrease)
    
Change
Automation product and software
  ¥  26,628,216
¥  26,831,668
¥
 203,452
 0.8 %
Equipment and accessories
 
 16,248,197
 20,471,950
 4,223,753
 26.0 %
Oilfield environmental protection
 
 19,116,560
 17,576,573
 (1,539,987)
 (8.1)%
Platform outsourcing services
 5,121,405
 3,974,089
 (1,147,316)
 (22.4)%
Chemical recycling
—
—
—
—
Total revenue
  ¥  67,114,378
¥  68,854,280
¥
 1,739,902
 2.6 %
Our total revenue for the year ended June 30, 2024 were approximately ¥68.8 million ($9.5 million), an increase of approximately ¥1.7
million ($0.2 million) or 2.6% from ¥67.1 million for the same period in 2023.

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(1) Revenue from automation product and software increased by ¥0.2 million ($0.03 million) or 0.8%. For the year ended June 30, 2024,
affected by temporary changes in market participation requirements from electricity industry customers, our business in the electronic
automation segment disrupted and revenue from non-oilfield customers decreased by ¥5.8 million ($0.8 million). However, due to the
recovery of oilfield production, sales to oilfield customers increased by ¥6.0 million ($0.8 million). Thus, our revenue from automation
product and software business increased slightly overall. We anticipate that revenue from the electronic business will resume and revenue
will recover.
(2) Revenue from equipment and accessories increased by ¥4.2 million ($0.6million) or 26%. The increase in revenue was driven by the
continued growth of our oilfield business and the successful expansion of our offshore oilfield services.
(3) Revenue from oilfield environmental protection decreased by ¥1.5 million ($0.2 million) or 8.1%. mainly due to a reduction in the volume
of oily wastewater provided by customers as their production intensity decreased. In addition, Gansu BHD’ s hazardous waste operation
permit expired in July 26, 2023, and the renewal process took longer than expected due to changing government regulations. Production
activates were not allowed during this period. As a result, revenue from oily sludge treatment was reduced.
(4) Revenue from platform outsourcing services decreased by ¥1.1 million ($0.2 million) or 22.4%. The decrease was mainly due to reduced
demand from former gas station customers as they upgraded their own online systems and limited cooperation with third parties. During
the period, we shifted our target market from gasoline users to diesel users and established partnerships with several major online freight
platform customers. We expect the increase in revenue from this segment to gradually form a new business base for the Company.
(5) As of June 30, 2024, the factory for the chemical recycling is still under construction and has not started production and sales yet.
Cost of revenue
    
For the Years Ended
 
June 30,
    
    
    
Increase /
     Percentage  
    
2023
    
2024
    
(Decrease)
    
Change
Automation product and software
¥  23,610,281
¥  23,864,941
¥
 254,660
 1.1 %
Equipment and accessories
 8,945,796
 14,097,459
 5,151,663
 57.6 %
Oilfield environmental protection
 13,955,673
 9,240,828
 (4,714,845)
 (33.8)%
Platform outsourcing services
 1,735,645
 637,903
 (1,097,742)
 (63.2)%
Chemical recycling
—
 135,705
 135,705
 100.0 %
Total cost of revenue
¥  48,247,395
¥  47,976,836
¥
 (270,559)
 (0.6)%
Our total cost of revenue decreased from ¥48.2 million for the year ended June 30, 2023 to ¥48.0 million ($6.6 million) for the same period
in 2024.
For the years ended June 30, 2023 and 2024, cost of revenue from automation product and software was approximately ¥23.6 million and
¥23.9 million ($3.3 million), respectively, representing increase of approximately ¥0.3 million ($0.04 million) or 1.1%. The increase in cost of
revenue from automation product and software was primarily attributable to increased revenue of automation products and software.
For the years ended June 30, 2023 and 2024, cost of revenue from equipment and accessories was approximately ¥8.9 million and ¥14.1
million ($1.9 million), respectively, representing an increase of approximately ¥5.2 million ($0.7 million) or 57.6%. The increase in cost of revenue
from equipment and accessories was primarily attributable to increased revenue of equipment and accessories.
For the years ended June 30, 2023 and 2024, cost of revenue from oilfield environmental protection was approximately ¥14.0 million and
¥9.2 million ($1.3 million), respectively, representing a decrease of approximately ¥4.7 million ($0.6 million) or 33.8%. The decrease in the cost of
revenue, mainly drawn from wastewater and oily sludge treatments, was in line with decrease in revenue related to our oily sludge treatment.

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For the years ended June 30, 2023 and 2024, cost of revenue from platform outsourcing services was approximately ¥1.7 million and ¥0.6
million ($0.1 million), respectively, representing a decrease of approximately ¥1.1 million ($0.2 million) or 63.2%. The primary reasons for the
decrease in cost of revenue are the company’s efforts to reduce costs through staff layoffs and salary reductions, as well as the discontinuation of
server leasing due to the transition from operational to maintenance services.
For the years ended June 30, 2023 and 2024, cost of revenue from chemical recycling was nil and ¥0.1 million ($0.02 million), which was
business and sales related tax. As of June 30, 2024, the factory for the chemical recycling is still under construction and has not started production
and sales yet.
Gross Profit
For the Years Ended
 
June 30,
 
    
2023
    
2024
    
    
 
Gross 
    
Gross 
    
Increase /
Percentage  
Profit
Margin %
Profit
Margin %
(Decrease)
Change
 
Automation product and software
¥
 3,017,935
 11.3 %¥
 2,966,727
 11.1 %¥
 (51,208)
 (1.7)%
Equipment and accessories
 7,302,401
 44.9 %
 6,374,491
 31.1 %
 (927,910)
 (12.7)%
Oilfield environmental protection
 5,160,887
 27.0 %
 8,335,745
 47.4 %
 3,174,858
 61.5 %
Platform outsourcing services
 3,385,760
 66.1 %
 3,336,186
 83.9 %
 (49,574)
 (1.5)%
Chemical recycling
—
— %
 (135,705)
— %
 (135,705)
— %
Total gross profit and margin %
¥  18,866,983
 28.1 %¥  20,877,444
 30.3 %¥  2,010,461
 10.7 %
Our total gross profit increased to ¥20.9 million ($2.9 million) for the year ended June 30, 2024 from ¥18.9 million for the same period in
2023. Our gross profit as a percentage of revenue increased to 30.3% for the year ended June 30, 2024 from 28.1% for the same period in 2023.
For the years ended June 30, 2023 and 2024, our gross profit from automation product and software was approximately ¥3.0 million and
¥3.0 million ($0.4 million), respectively, representing a decrease in gross profit of approximately ¥0.1 million ($0.01 million) or 1.7%. The gross
margin for automation product and software has remained relatively stable in this period.
For the years ended June 30, 2023 and 2024, gross profit from equipment and accessories was approximately ¥7.3 million and ¥6.4 million
($0.9 million), respectively, representing a slight decrease of approximately ¥0.9 million ($0.1 million) or 12.7%. The reason for the decrease in
gross margin is that oilfield customers have adopted a low-cost operating model and tightly controlled budgets, which has narrowed the overall
margins of the market. Consequently, we had to resort to lower margins to secure business.
For the years ended June 30, 2023 and 2024, gross profit from oilfield environmental protection was approximately ¥5.2 million and ¥8.3
million ($1.1 million), respectively, representing an increase of ¥3.2 million ($0.4 million) or 61.5%. We have carried out the residual oil recovery
service, The business line assists oilfield companies recover residual oils, including aged oil and spilled oil through our unique formula and
equipment to enhance the profitability for oilfield companies.  This business contributes a relatively high gross margin.
For the years ended June 30, 2023 and 2024, gross profit from platform outsourcing services was approximately ¥3.4 million and ¥3.3
million ($0.5 million), respectively, representing a decrease of approximately ¥0.05 million ($0.01 million) or 1.5 %, The gross margin for platform
outsourcing services has remained relatively stable in this period.
For the years ended June 30, 2023 and 2024, gross profit losses from chemical recycling was nil and ¥0.1 million ($0.02 million),
respectively. As of June 30, 2024, the factory for the chemical recycling remains under construction and has not started production and sales yet.

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77
Operating Expenses
    
For the Years Ended
 
June 30,
    
    
    
Increase /
     Percentage  
    
2023
    
2024
    
(Decrease)
    
Change
 
Selling and distribution expenses
  ¥  10,638,978
¥  10,374,388
¥
 (264,590)
 (2.5)%
% of revenue
 
 15.9 %
 15.1 %
 (0.8)%
 —
General and administrative expenses
 
 76,784,396
 63,765,583
 (13,018,813)
 (17.0)%
% of revenue
 
 114.4 %
 92.6 %
 (21.8)%
 —
Allowance for (net recovery of) credit losses
 
 (9,038,985)
 4,086,505
 13,125,490
 (145.2)%
% of revenue
 
 (13.5)%
 5.9 %
 19.4 %
 —
Research and development expenses
 
 8,806,205
 14,288,879
 5,482,674
 62.3 %
% of revenue
 
 13.1 %
 20.8 %
 7.7 %
 —
Impairment loss of property and equipment and other long-lived assets
 1,009,124
 —
 (1,009,124)
 (100.0)%
% of revenue
 1.5 %
 — %
 (1.5)%
 —
Operating expenses
  ¥  88,199,718
¥  92,515,355
¥
 4,315,637
 4.9 %
Selling and Distribution Expenses. Selling and distribution expenses consist primarily of salaries and related expenditures of the Company’s
sales and marketing departments, sales commissions, costs of marketing programs including traveling expenses, advertising and trade shows, and
rental expense, as well as shipping charges. Selling expenses decreased by 2.5%, or ¥0.3 million ($0.04 million), from ¥10.6 million in the year
ended June 30, 2023 to ¥10.4 million ($1.4 million) in the same period of 2024. The decrease was mainly attributable to the decreased Marketing
promotion, bidding expense. Sales activities are relatively stable for the years ended June 30, 2024. Selling expenses were 15.1% of total revenue for
year ended June 30, 2024 and 15.9% of total revenue for the same period of 2023
General and Administrative Expenses. General and administrative expenses consist primarily of costs in human resources, facilities costs,
depreciation expenses, professional advisor fees, audit fees, stock-based compensation expense and other miscellaneous expenses incurred in
connection with general operations. General and administrative expenses decreased by 17%, or ¥13.0 million ($1.8 million), from ¥76.8 million in
the year ended June 30, 2023 to ¥63.8 million ($8.8 million) in the same period of 2024. The decrease was primarily due to the decrease of
consulting fee, share-based compensation to our management and employees and restricted shares issued for services and Rent fee during the year
ended June 30, 2024. General and administrative expenses accounted for 92.6% of total revenue for the year ended June 30, 2024 and 114.4% of
total revenue for the same period of 2023.
Allowance for (net recovery of) credit losses. Allowance for credit losses is the estimated amount of bad debt that will arise as a result of
lower collectability from account receivables, other receivables, purchase advances and contract assets. We recorded net recovery of credit losses of
¥9.0 million for the year ended June 30, 2023 as compared to net provision for credit losses of ¥4.1 million ($0.6 million) for the same period in
2024. The net recovery of credit losses was mainly due to 1) we made specific reserve for some outstanding accounts receivable which we did not
collect as we expected due to the downturn in the economy from the previous disease pandemic. However, due to the recovery of economy in China
and the management’s great efforts in collection of receivables from our customers, some of accounts receivable we have provided credit losses for
in the prior period were collected during the year ended June 30, 2023, causing a reversal of provision for credit losses of accounts receivables; and
2). as of June 30, 2024, there was an increase in the bad debt accrual corresponding to the aging of the accounts. Management plans to continue to
monitor and maintain the provision at a lower risk level.
Research and development (“R&D”) expenses. R&D expenses consist primarily of salaries and related expenditures for research and
development projects. R&D expenses remained relatively stable with an increase by 62.3%, or ¥5.5 million ($0.8 million) from ¥8.8 million for the
year ended June 30, 2023 to ¥14.3 million ($2.0 million) for the same period of 2024. R&D expenses accounted for 20.8% of total revenue in the
year ended June 30, 2024 and 13.1% of total revenue for the same period of 2023. The company has increased investment related to research and
development.

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78
Impairment loss of property and equipment and other long-lived assets. Impairment loss of property and equipment and other long-lived
assets decreased by100.0%, or ¥1.0 million ($0.1 million), from ¥1.0 million in the year ended June 30, 2023 to nil in the same period of 2024. As of
June 30, 2023, property and equipment and other long-lived assets of FGS had fully accrued for impairment. The impairment was mainly due to the
decision of the major customers to develop their own autonomous unified system and to significantly reduce the procurement of third-party services.
This change has had a significant and negative impact on FGS’s business model and enterprise value. We are currently working to find new ways
and channels of cooperation to enhance the FGS business.
Net Loss
    
For the Years Ended
 
June 30,
    
    
    
Increase /
     Percentage  
    
2023
    
2024
    
(Decrease)
    
Change
 
Loss from operations
  ¥  (69,332,735)
¥  (71,637,911)
¥  (2,305,176)
 3.3 %
Change in fair value of warrant liability
 6,116,000
 (933,995)
 (7,049,995)
 (115.3)%
Interest income, net
 11,088,637
 21,827,314
 10,738,677
 96.8 %
Impairment loss on goodwill and intangible asset
 (9,980,002)
—
 9,980,002
 (100.0)%
Other income (expenses), net
 
 650,047
 (691,218)
 (1,341,265)
 (206.3)%
Loss before income taxes
 
 (61,458,053)
 (51,435,810)
 10,022,243
 (16.3)%
Income tax expenses
 
 18,339
 30
 (18,309)
 (99.8)%
Net loss
 
 (61,476,392)
 (51,435,840)
 10,040,552
 (16.3)%
Less: Net loss attributable to non-controlling interest
 
 (2,309,091)
 (1,564,581)
 744,510
 (32.2)%
Net loss attributable to Recon Technology, Ltd
  ¥  (59,167,301)
¥  (49,871,259)
¥
 9,296,042
 (15.7)%
Loss from operations. Loss from operations was ¥71.6 million ($9.9 million) for the year ended June 30, 2024, compared to a loss of ¥69.3
million for the same period of 2023. This ¥2.3 million ($0.3 million) increase in loss from operations was primarily due to the increase in operating
expense as discussed above.
Change in fair value changes of warrant liability. The Company classified the warrants issued in connection with common share offering as
liabilities at their fair value and adjusted the warrant instrument to fair value at each reporting period. This liability is subject to re-measurement at
each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. Gain in change in fair value of
warrant liability was ¥6.1 million and ¥0.8 million ($0.1million) for the years ended June 30, 2023 and 2024, respectively. On December 14, 2023,
we redeemed an aggregate of 17,953,269 (997,404 warrants post 2024 Reverse Split) warrants from the Sellers, and the difference between the
repurchase price and fair value of the warrants, a difference of ¥1.7 million ($0.2 million), was recognized as loss in fair value changes of warrant
liability. The aforementioned gain of ¥0.8 million ($0.1 million) from fair value changes of warrant liability and the loss of ¥1.7 million ($0.2
million) from fair value changes of warrant liability combine to result in a net loss of ¥0.9 million ($0.1 million) in fair value changes of warrant
liability.
Impairment loss on goodwill and intangible assets. The Company recognized the excess of purchase price over the fair value of assets
acquired and liabilities assumed of the business acquired was recorded as goodwill and fair value of identified intangible assets, which is customer
relationship as a result of the step acquisition of FGS. In conjunction with the preparation of our consolidated financial statement for years ended
June 30, 2023 and 2024, the management performed evaluation on the impairment of goodwill and intangible assets and recorded an impairment
loss on goodwill and intangible assets of ¥10.0 million and nil for the years ended June 30, 2023 and 2024, respectively. As of June 30, 2023,
goodwill and intangible assets of FGS had fully accrued for impairment. The impairment was mainly due to the decision of the major customers to
develop their own autonomous unified system and to significantly reduce the procurement of third-party services. This change has had a significant
and negative impact on FGS’s business model and enterprise value. We are currently working to find new ways and channels of cooperation to
enhance the FGS business.
Interest income, net. Net interest income was ¥21.8 million ($3.0 million) for the year ended June 30, 2024, compared to net interest
income of ¥11.1 million for the same period of 2023. The ¥10.7 million ($1.5 million) increase in net interest income was primarily due to the
increased interest-bearing loans to third parties and increased short-term investments we invested during the year ended June 30, 2024.

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79
Other income (expenses), net. Other net expenses was ¥0.7 million ($0.1 million) for the year ended June 30, 2024, compared to other net
income of ¥0.7 million for the same period of 2023. The ¥1.3 million ($0.2 million) decrease other net income was primarily due to a decrease in
subsidy income of ¥0.2 million. The decrease in other net income was also attributable to an increase in foreign exchange transaction loss of ¥1.1
million ($0.2) due to the fluctuation of exchange rate of RMB against US dollars during the year ended June 30, 2024 compared to the same period
of 2023.
Net loss. As a result of the factors described above, net loss was ¥51.4 million ($7.1 million) for the year ended June 30, 2024, a decrease of
¥10.0 million ($1.4 million) from net loss of ¥61.4 million for the same period of 2023.
Liquidity and Capital Resources
As of June 30, 2024, we had cash in the amount of approximately ¥110.0 million ($15.1 million) and short-term investment in bank fixed
income product of approximately ¥88.1 million ($12.1 million). As of June 30, 2023, we had cash in the amount of approximately ¥104.1 million
and short-term investment in bank fixed income product of approximately ¥184.2 million ($25.3 million).
Indebtedness. As of June 30, 2024, we had ¥6,969.0 ($959.0) of warrant liability, ¥12.4 million ($1.7 million) of short-term bank loans,
¥10.0 million ($1.4 million) of short-term borrowings from related parties, ¥1.9 million ($0.3 million) of short-term lease payable due to third
parties, ¥1.8 million ($0.2 million) of short-term lease payable due to a related party, ¥24.0 million ($3.3 million) of contractual purchase
commitments, and a liability of severance payments of ¥8.8 million ($1.2 million) which is very unlikely to be incurred in the foreseeable future.
Other than indebtedness listed above, we did not have any other finance leases, guarantees or other material contingent liabilities.
Holding Company Structure. We are a holding company with no operations of our own. All of our operations are conducted through the
Domestic Companies. As a result, our ability to pay dividends and to finance any debt that we may incur is dependent upon the receipt of dividends
and other distributions from the Domestic Companies. In addition, Chinese legal restrictions permit payment of dividends to us by the Domestic
Companies only out of their respective accumulated net profits, if any, determined in accordance with Chinese accounting standards and regulations.
Under Chinese law, the Domestic Companies are required to set aside a portion (at least 10%) of their after-tax net income (after discharging all
cumulated loss), if any, each year for compulsory statutory reserve until the amount of the reserve reaches 50% of the Domestic Companies’
registered capital. These funds may be distributed to shareholders at the time of each Domestic Company’s wind-up.
Off-Balance Sheet Arrangements. We have not entered into any financial guarantees or other commitments to guarantee the payment
obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as
shareholders’ equity, or that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets
transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable
interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research
and development services with us.
Capital Resources. To date we have financed our operations primarily through cash flows from operations, short-term bank loans, short-
term borrowings due to related parties and warrant liabilities. As of June 30, 2024, we had total assets of ¥552.4 million ($76.0 million), which
includes cash of ¥110.0 million ($15.1 million), short-term investments of ¥88.1 million ($12.1 million), net accounts receivable of ¥38.6 million
($5.3 million), loans to third parties of ¥208.9 million ($28.8 million) and net contract costs of ¥48.3 million ($6.7 million) and working capital of
¥460.0 million ($63.3 million). Shareholders’ equity amounted to ¥502.6 million ($69.2 million).
Cash from Operating Activities. Net cash used in operating activities was ¥43.7 million ($6.0 million) for the year ended June 30, 2024.
This was a decrease of approximately ¥7.9 million ($1.1 million) compared to net cash used in operating activities of approximately ¥51.7 million
for the same period in 2023. The net cash used in operating activities for the year ended June 30, 2023 was primarily attributable to the net loss
attributable to the Company in the amount of ¥51.4 million ($7.1 million) due to the reasons discussed above, reconciled by a decrease in accounts
receivable of ¥12.2 million ($1.7 million), and a decrease in contract costs of ¥4.4 million ($0.6 million).

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80
Cash from Investing Activities. Net cash provided by investing activities was approximately ¥3.0 million ($0.4 million) for the year ended
June 30, 2024. This was an increase of approximately ¥248.2 million ($34.2 million) compared to net cash used in investing activities of
approximately ¥245.2 million for the same period in 2023, which was due to the increased repayments of loans from third parties and Redemption of
short-term investments, which partially offset by the increased payments for short-term investments, payments made for loan to third parties and
purchase of land use right.
Cash from Financing Activities. Net cash provided by financing activities amounted to ¥45.0 million ($6.2 million) for the year ended June
30, 2024, as compared to net cash provided by financing activities of ¥56.4 million for the same period in 2023. The decrease in net cash provided
by financing activities was mainly due to the redemption of warrants during the year ended June 30, 2024. Meanwhile, we received ¥77.7 million
($10.7 million) proceeds from sale of common stock, net of issuance costs.
Working Capital. Total working capital as of June 30, 2024 amounted to ¥460.0 million ($63.3 million), compared to ¥443.4 million as of
June 30, 2023. Total current assets as of June 30, 2024 amounted to ¥507.5 million ($69.8 million), an increase of ¥3.1 million ($0.4 million)
compared to approximately ¥504.4 million at June 30, 2023. The increase in total current assets at June 30, 2024 compared to June 30, 2023 was
mainly due to an increase in cash, accounts receivable and loan to third parties, partially offset by a decrease in short-term investments. For the year
ended June 30, 2024, the Company had approximately ¥43.7 million ($6.0 million) cash out flow from the operating activities, and as of June 30,
2024, our total future minimum purchase commitment under the non-cancellable purchase contracts were amounted to ¥24.0 million ($3.3 million).
As of June 30, 2024, the Company had cash in the amount of approximately ¥110.0 million ($15.1 million) for the next operating cycle ending June
30, 2025. Based on the historical trends and the capital requirements of the new plant we are building, management believes that the Company will
have sufficient working capital for its operations at least 12 months from the issuance date of this report.
Current liabilities. Current liabilities amounted to ¥47.5 million ($6.5 million) at June 30, 2024, in comparison to ¥61.0 million at June 30,
2023.
Capital Needs. With the uncertainty of the current market, our management believes it is necessary to enhance collection of outstanding
accounts receivable and other receivables, and to be cautious on operational decisions and project selection. Our management believes that our
current operations can satisfy our daily working capital needs. We may also raise capital through public offerings or private placements of our
securities to finance our development of our business and to consummate any merger and acquisition, if necessary.
Tabular Disclosure of Contractual Obligations
Below is a table setting forth all our contractual obligations as of June 30, 2024, which consists of our short-term loan agreements,
operating lease obligations, loans from third parties, warrant liabilities and due to related party:
    
Payment Due by Period
Less
More
than
1 – 3
3 – 5
than
Contractual Obligations
    
Total
    
1 year
    
years
    
years
    
5 years
Debt obligations
 
¥  32,428,834
¥  22,428,834
¥  10,000,000
¥
 —
¥
 —
Operating lease obligations
 
 8,161,143
 
 4,017,831
 
 4,143,312
 
 —
 
 —
Due to related parties
 
 2,299,069
 
 2,299,069
 
 —
 
 —
 
 —
Purchase obligation
 
 23,956,141
 
 23,956,141
 
 —
 
 —
 
 —
Warrant liabilities
 
 6,969
 
—
 
 6,969
 
—
 
 —
Total
 
¥  66,852,156
¥  52,701,875
¥  14,150,281
¥
 —
¥
—

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81
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6.A. Directors and Senior Management
Executive Officers and Directors
The following table sets forth our executive officers and directors, their ages and the positions held by them:
Name
    
Age
    
Position Held
Mr. Yin Shenping
54
Chief Executive Officer and Director
Ms. Liu Jia
41
Chief Financial Officer and Director
Mr. Chen Guangqiang
61
Chief Technology Officer, Chairman and Director
Mr. Hu Zhongchen
71
Independent Director
Mr. Nelson N.S. Wong
62
Independent Director (Audit Committee Chair)
Mr. Hu Jijun
59
Independent Director
Dr. Duan Yonggang
60
Independent Director
Yin Shenping.  Mr. Yin has been our Chief Executive Officer and a director since the Company’s inception. In 2003, Mr. Yin founded
Nanjing Recon, a Chinese company that provides services to automate and enhance the extraction of petroleum in China, and has been the Chief
Executive Officer since that time. Prior to founding Nanjing Recon, Mr. Yin served as a sales manager for Fujian Haitian Network Company from
1992 through 1994. Mr. Yin has founded and operated a number of companies engaged in the IT industry including: Xiamen Hengda Haitian
Computer Network Co., Ltd. (1994), Baotou Hengda Haitian Computer Network Co., Ltd. (1997), Beijing Jingke Haitian Electronic Technology
Development Co., Ltd. (1999), and Jingsu Huasheng Information Technology Co., Ltd. (2000). Mr. Yin currently serves as Chairman of the Board of
Directors of HiTek Global Inc. (NASDAQ: HKIT) since 2017. In 2000, Mr. Yin merged the former Nanjing Kingsley Software Engineering Co.,
Ltd. into Nanjing Recon. Mr. Yin received his bachelor’s degree in 1991 from Nanjing Agricultural University in information systems. Mr. Yin was
chosen as a director of the Company because as one of the founders of the Company, we believe his knowledge of the Company and years of
experience in our industry give him the ability to guide the Company as a director.
Liu Jia. Ms. Liu has served as our Chief Financial Officer since 2008 and as our director since 2022. Ms. Liu received her bachelor’s degree
in 2006 from Beijing University of Chemical Technology, School of Economics and Management and her master’s degree in industrial economics in
2009 from Beijing Wuzi University. Ms. Liu is a certified U.S. CPA.
Chen Guangqiang. Mr. Chen has served as our Chief Technology Officer and director since our inception. Mr. Chen was a geological
engineer for the Fourth Oil Extraction Plant of Huabei Oilfield from 1985 through 1993. From 1993 through 1999, Mr. Chen was a chief engineer
for Xinda Company, CNPC Development Bureau. From 1999 through 2003, Mr. Chen served as the general manager of Beijing Adar. Mr. Chen
received his bachelor’s degree in 1985 from Southwest Petroleum Institute. Mr. Chen was appointed to the position of director because he is one of
the founders of the Company and we believe we can benefit from his many years of engineering experience and management experience in the oil
extraction industry.
Nelson N.S. Wong. Mr. Wong joined our board of directors in 2008. Prior to joining our Board, in 1990 Mr. Wong joined the Vigers Group,
a real estate company that provides services in valuation, corporate property services, investment advisory services, general practice surveying,
building surveying, commercial, in both retail and industrial agency, and property and facilities management. Mr. Wong became the Vice Chairman
and CEO of the Vigers Group in 1993. In 1995 Mr.  Wong established the ACN Group, a business consulting firm, where he has worked
continuously and continues to serve as the Chairman and Managing Partner. Mr. Wong received a bachelor’s degree in arts from the PLA Institute of
International Relations in Nanjing in 1983. Mr.  Wong was appointed to the position of director because we believe we can benefit from his
leadership skills and management experience.
Hu Jijun. Mr. Hu joined our board of directors in 2008. Prior to joining our Board, from 1988 to 2003, Mr. Hu served in a variety of
positions at No.  2 test-drill plant, including technician of installation, assets equipment work, electrical installation, control room production
dispatcher, Deputy Chief Engineer of the Technology Battalion, and Deputy Director of Production. From 2003 to 2005 he served as Head of the
Integrated Battalion and he is currently the Head of the Transport Battalion, Senior Electric Engineer. Mr.  Hu graduated as an automated
professional from the China University of Petroleum in 1988. Mr. Hu was appointed to the position of a director because we believe his years of
experience and knowledge gained while working at our No. 2 test-drill plant will prove beneficial to the guidance of the Company.

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82
Zhao Shudong (from 2013 to October 2024). Mr. Zhao joined our board of directors in 2013. Mr. Zhao spent over 30 years working in the
oilfield industry prior to retiring from full-time work in 2006. From 1970 to 1976, Mr. Zhao worked as a technician in the Daqing oilfield. From
1976 to 1982, Mr. Zhao served as the vice director of the Hubei Oilfield Generalized Geologic Technical Research Institute. Mr. Zhao then spent 11
years as a director and section chief at the Scientific and Technological Development Department of the Huabei Petroleum Administrative Bureau.
He was subsequently appointed Chief Geologist of the bureau, a position he held from 1993 to 1999. From 1999 to 2006, Mr. Zhao served as the
General Manager of the Huabei Oilfield Company of CNPC. Mr. Zhao studied at the Northeast Petroleum Institute from 1965 to 1970. Mr. Zhao was
elected as a director because of his extensive experience in the oilfield industry.
Duan Yonggang. Dr. Duan has served as our director since March 2020. Dr. Duan has been teaching and researching in the oil-gas field
development engineering area for a long time. From November 2004, Dr. Duan has been a professor at Southwest Petroleum University in Sichuan,
China. He is the director of the oil well technology center of petroleum engineering school of Southwest Petroleum University. In addition, Dr. Duan
is also a researcher and Ph.D. supervisor. He has published over 60 articles on top academic journals and participated in writing six books. He was
named an expert with outstanding contributions and an oil-gas safety expert in Sichuan Province, China. Dr. Duan received his bachelor’s degree in
oil production in 1984, and his master degree in oil-gas field development engineering in 1988, both from Southwest Colleague. Dr. Duan received
his Ph.D. degree in oil-gas field development engineering in 2009 from Southwest Petroleum University. Dr. Duan was chosen as a director because
he is an expert in the oilfield area.
Hu Zhongchen. Mr. Hu joined our board of directors in October 2024. Mr. Hu retired from Baotou Steel (Group) Co., Ltd. after having been
employed from 1979 to 2014. Mr. Hu received his bachelor’s degree in business management in 1979 from Inner Mongolia University of
Technology. He possesses a China’s Senior Economist certificate. Mr. Hu was chosen to serve as a director because of his expertise and experience
in economic management and deep understanding of China’s energy industry.
Employment Agreements
We have employment agreements with each of our Chief Executive Officer, Chief Technology Officer and Chief Financial Officer. With the
exception of the employment agreement with our Chief Financial Officer, each of these employment agreements provides for an indefinite term.
Such employment agreements may be terminated (1) if the employee gives written notice of his or her intention to resign, (2) the employee is absent
from three consecutive meetings of the board of directors, without special leave of absence from the other members of the board of directors, and the
board of directors passes a resolution that such employee has vacated his office, or (3) the death, bankruptcy or mental incapacity of the employee.
The employment agreement for our Chief Financial Officer provides for a one-year term, with automatic renewal upon expiration, and the parties
have continued to operate under the terms of this agreement since its expiration. Such employment agreement may be terminated if Ms. Liu gives
thirty days’ written notice of her intention to resign, or if the board of directors determines she can no longer perform her duties as Chief Financial
Officer and provides her with thirty days’ written notice of termination.
Under Chinese law, we may only terminate employment agreements without cause and without penalty by providing notice of non-renewal
one month prior to the date on which the employment agreement is scheduled to expire. If we fail to provide this notice or if we wish to terminate an
employment agreement in the absence of cause, then we are obligated to pay the employee one month’s salary for each year we have employed the
employee. We are, however, permitted to terminate an employee for cause without penalty to our company, where the employee has committed a
crime or the employee’s actions or inactions have resulted in a material adverse effect to us.
6.B. Compensation
The following table shows the annual compensation paid by us to Yin Shenping, our Chief Executive Officer, Liu Jia, our Chief Financial
Officer, and Chen Guangqiang, our Chief Technology Officer, for the years ended June 30, 2024, 2023 and 2022. No other employee or officer
received more than $100,000 in total compensation in 2024, 2023 and 2022.

Table of Contents
83
Summary Executive Compensation Table
    
    
    
    
Option
     Restricted Stock     
Name and principal position
Year
Salary
Bonus
Awards
Awards
Total
Yin Shenping,
Principal Executive Officer
 
2024
$  600,000
$
 180,000
$
—
$
 1,186,674
$  1,966,674
 
2023
$  620,000
$
 150,000
$
—
$
 1,515,000
$  2,285,000
 
2022
$  360,000
$
 100,000
$
—
$
2,934,500
$  3,394,500
Liu Jia
Principal Financial Officer
 
2024
$  180,000
$
 60,000
$
 —
$
 263,078
$
 503,078
 
2023
$  162,000
$
 60,000
$
 —
$
 372,600
$
 594,600
 
2022
$  112,000
$
 50,000
$
—
$
156,000
$
 318,000
Chen Guangqiang,
Chief Technology Officer
 
2024
$  600,000
$
 180,000
$
 —
$
 1,186,674
$  1,966,674
 
2023
$  620,000
$
 150,000
$
 —
$
 1,515,000
$  2,285,000
 
2022
$  395,833
$
 100,000
$
—
$
2,934,000
$  3,430,333
Director Compensation
All directors hold office until the expiration of their respective terms and until their successors have been duly elected and qualified. There
are no family relationships among our directors or executive officers. Officers are elected by and serve at the discretion of the board of directors.
Employee directors and non-voting observers do not receive any compensation for their services. We pay $8,000 to each independent director
annually for their service as directors. In addition, non-employee directors are entitled to receive compensation for their actual travel expenses for
each board of directors meeting attended.
Summary Director Compensation Table
    
Fees earned
    
    
    
or
Option
Restricted Stock
Name*
paid in cash
Awards
Awards
Total
Nelson N.S. Wong
$
 8,000
$
—  
—
$
 8,000
Hu Jijun
$
 8,000
$
—  
—
$
 8,000
Zhao Shudong**
$
 8,000
$
—  
—
$
 8,000
Duan Yonggang
$
 8,000
$
—  
—
$
 8,000
Hu Zhongchen
$
 —
$
 —
 —
$
 —
*
Compensation for our directors Yin Shenping, Chen Guangqiang and Liu Jia, who also serve as executive officers, is fully disclosed in the
executive compensation table.
**
Zhao Shudong resigned on October 9, 2024.

Table of Contents
84
The following table summarizes, as of June 30, 2024, the outstanding options, unvested restricted share units and shares that we granted to
our current directors and executive officers, reflecting the previous one-for-five Reverse Stock Split in 2019 and the recent one-for-eighteen 2024
Reverse Split.
    
Class A Ordinary Shares
    
    
    
underlying options
awarded/Restricted
Exercise price
Name
Share Units/Shares*
(US$/share)*
Date of grant
Date of expiration
Yin Shenping
 
 125,000
 
—
 
02/26/2024
 
02/25/2025
Liu Jia
 
 356
 
 148.50
 
1/31/2015
 
1/31/2025
 
 2,778
 
—
 
02/28/2022
 
02/27/2025
 
 57,527
 
—
 
02/26/2024
 
02/25/2025
Chen Guangqiang
 
 125,000
 
 —
 
02/26/2024
 
02/25/2025
Nelson N.S. Wong
 
 278
 
 148.50
 
1/31/2015
 
1/31/2025
 1,666
 —
02/28/2022
02/27/2025
 
 10,000
 
—
 
02/26/2024
 
02/27/2025
Hu Jijun
 
 278
 
 148.50
 
1/31/2015
 
1/31/2025
 1,666
 —
02/28/2022
02/27/2025
 
 10,000
 
—
 
02/26/2024
 
02/25/2025
Zhao Shudong**
 
 200
 
 148.50
 
1/31/2015
 
1/31/2025
 1,666
 —
02/28/2022
02/27/2025
 
 10,000
 
—
 
02/26/2024
 
02/25/2025
Duan Yonggang
 
 1,666
 
 —
 
02/28/2022
 
02/27/2025
 10,000
 —
02/26/2024
02/25/2025
Total
 
 358,081
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.
**
Zhao Shudong resigned on October 9, 2024.
6.C. Board Practices
Board of directors and Board Committees
Our board of directors currently consists of seven members. There are no family relationships between any of our executive officers and
directors.
The directors are divided into three classes, as nearly equal in number as the then total number of directors permits. Class I directors faced
re-election at our annual general meeting of shareholders in 2023 and every three years thereafter. Class II directors faced re-election at our annual
general meeting of shareholders in 2024 and every three years thereafter. Class III directors faced re-election at our annual general meeting of
shareholders in 2021 and every three years thereafter.
If the number of directors changes, any increase or decrease will be apportioned among the classes so as to maintain the number of directors
in each class as nearly as possible. Any additional directors of a class elected to fill a vacancy resulting from an increase in such class will hold
office for a term that coincides with the remaining term of that class. Decreases in the number of directors will not shorten the term of any incumbent
director. These board provisions could make it more difficult for third parties to gain control of the Company by making it difficult to replace
members of our board of directors.
A director may vote in respect of any contract or transaction in which he is interested, provided, however, that the nature of the interest of
any director in any such contract or transaction shall be disclosed by him at or prior to the board of directors consideration and any vote on that
matter. A general notice or disclosure to the directors, or otherwise contained in the minutes of a meeting or a written resolution of the directors or
any committee thereof that a director is a shareholder of any specified firm or company and is to be regarded as interested in any transaction with
such firm or company shall be sufficient disclosure and after such general notice it shall not be necessary to give special notice relating to any
particular transaction.
There are no membership qualifications for directors. Further, there are no share ownership qualifications for directors unless so fixed by us
in a general meeting.

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85
The board of directors maintains a majority of independent directors who are deemed to be independent under the definition of
independence provided by NASDAQ Stock Market Rule 4200(a)(15). Mr. Zhao, Mr. Wong, Mr. Hu and Dr. Duan are our independent directors.
We do not have a lead independent director because of the foregoing reason because we believe our independent directors are encouraged to
freely voice their opinions on a relatively small company board.
Our board of directors plays a significant role in our risk oversight. The board of directors makes all relevant Company decisions. As such,
it is important for us to have our Chief Executive Officer serve on the Board as he plays a key role in the risk oversight of the Company. As a smaller
reporting company with a small board of directors, we believe it is appropriate to have the involvement and input of all of our directors in risk
oversight matters.
Currently, three committees have been established under the board: the audit committee, the compensation committee and the nominating
committee. All of these committees consist solely of independent directors.
The audit committee is responsible for overseeing the accounting and financial reporting processes of the Company and audits of the
financial statements of the Company, including the appointment, compensation and oversight of the work of our independent auditors. Mr. Wong
qualifies as the audit committee financial expert and serves as the chair of the audit committee.
The compensation committee of the board of directors reviews and makes recommendations to the board regarding our compensation
policies for our officers and all forms of compensation, and also administers our incentive compensation plans and equity-based plans (but our board
retains the authority to interpret those plans). Mr. Hu serves as the chair of the compensation committee.
The nominating committee of the board of directors is responsible for the assessment of the performance of the board, considering and
making recommendations to the board with respect to the nominations or elections of directors and other governance issues. The nominating
committee considers diversity of opinion and experience when nominating directors. Mr. Zhao serves as the chair of the nominating committee.
There are no other arrangements or understandings pursuant to which our directors are selected or nominated.
Duties of Directors
Under Cayman Islands law, our directors have a fiduciary duty to the Company to act in good faith in their dealings with or on behalf of the
Company and exercise their powers and fulfill the duties of their office honestly. This duty has four essential elements:
●
a duty to act in good faith in the best interests of the Company;
●
a duty not to personally profit from opportunities that arise from the office of director;
●
a duty to avoid conflicts of interest; and
●
a duty to exercise powers for the purpose for which such powers were intended.

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In general, Cayman Islands law imposes various duties on directors of a company with respect to certain matters of management and
administration of the Company. In addition to the remedies available under general law, the Companies Law imposes fines on directors who fail to
satisfy some of these requirements. However, in many circumstances, an individual is only liable if he is knowingly guilty of the default or
knowingly and willfully authorizes or permits the default. In comparison, under Delaware law, the business and affairs of a corporation are managed
by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the
interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its shareholders. In addition, under Delaware law, a party
challenging the propriety of a decision of the directors bears the burden of rebutting the applicability of the presumptions afforded to directors by the
“business judgment rule.” If the presumption is not rebutted, the business judgment rule protects the directors and their decisions, and their business
judgments will not be second guessed. If the presumption is rebutted, the directors bear the burden of demonstrating the entire fairness of the
relevant transaction. Notwithstanding the foregoing, Delaware courts subject directors’ conduct to enhanced scrutiny in respect of defensive actions
taken in response to a threat to corporate control and approval of a transaction resulting in a sale of control of the corporation.
Limitation of Director and Officer Liability
Pursuant to our Memorandum and Articles of Association, every director or officer and the personal representatives of the same shall be
indemnified and held harmless out of our assets and funds against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities
incurred or sustained by him or her in or about the conduct of our business or affairs or in the execution or discharge of his or her duties, powers,
authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by him in
defending (whether successfully or otherwise) any civil proceedings concerning us or our affairs in any court whether in the Cayman Islands or
elsewhere. No such director or officer will be liable for: (a) the acts, receipts, neglects, defaults or omissions of any other such Director or officer or
agent; or (b) any loss on account of defect of title to any of our properties; or (c) account of the insufficiency of any security in or upon which any of
our money shall be invested; or (d) any loss incurred through any bank, broker or other similar person; or (e) any loss occasioned by any negligence,
default, breach of duty, breach of trust, error of judgment or oversight on his or her part; or (f) any loss, damage or misfortune whatsoever which
may happen in or arise from the execution or discharge of the duties, powers authorities, or discretions of his or her office or in relation thereto,
unless the same shall happen through his or her own dishonesty, gross negligence or willful default.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers has been convicted in a criminal proceeding, excluding traffic
violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past ten years that resulted in a
judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities or commodities laws, any laws respecting financial institutions or insurance companies, any law
or regulation prohibiting mail or wire fraud in connection with any business entity or been subject to any disciplinary sanctions or orders imposed by
a stock, commodities or derivatives exchange or other self-regulatory organization, except for matters that were dismissed without sanction or
settlement.
6.D. Employees
As of June 30, 2024, we employed a total of 184 full-time in the following functions:
    
Number of Employees
June 30,
    
June 30,
    
June 30,
Department
2024
2023
2022
Senior Management
 
 11
 20
 27
Human Resource & Administration
 
 10
 26
 25
Finance
 
 17
 11
 13
Research & Development & Technology
 
 68
 64
 53
Procurement and production
 
 35
 27
 26
Sales & Marketing
 
 43
 40
 44
Total
 
 184
 188
 188
Our employees are not represented by a labor organization or covered by a collective bargaining agreement. We have not experienced any
work stoppages.

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87
We are required under PRC law to make contributions to employee benefit plans at specified percentages of our after-tax profit. In addition,
we are required by PRC law to cover employees in China with various types of social insurance. In fiscal year 2024, we contributed approximately
$418,587 to the employee benefit plans and social insurance. In fiscal year 2023, we contributed approximately $382,791 to the employee benefit
plans and social insurance. In fiscal year 2022, we contributed approximately $427,614 to the employee benefit plans and social insurance. The
effect on our liquidity by the payments for these contributions is immaterial. We believe that we are in material compliance with the relevant PRC
employment laws.
6.E. Share Ownership
For information regarding the share ownership of our directors and senior management, see “Item 7. Major Shareholders and Related Party
Transactions — A. Major Shareholders.”
Share and Share Options
Share Option Pool
In connection with our initial public offering, we established a pool for share options as our 2009 Stock Incentive Plan (“2009 Incentive
Plan”) for the Domestic Companies’ and our employees. This pool initially contained options to purchase up to 158,073 (8,782 shares post 2024
Reverse Split) of our Class A Ordinary Shares. The options will vest at a rate of 20% per year for five years and have an exercise price of the market
price of our shares on the date the options are granted. To date, we issued 112,800 (6,267 options post 2024 Reverse Split) options and 45,273 (2,515
shares post 2024 Reverse Split) shares out of this employee share option pool. We initially granted 58,600 (3,256 options post 2024 Reverse Split)
options in 2009. We held a shareholder meeting in December 2010 and announced the resignation of three directors, and as a result, 20,000 (1,111
options post 2024 Reverse Split) options were forfeited and went back in the pool. In 2012, we granted an additional 83,000 (4,611 options post
2024 Reverse Split) options and 8,800 (489 options post 2024 Reverse Split) options were forfeited and went back to the pool. In the three months
ended June 30, 2014, 29,680 (1,649 options post 2024 Reverse Split) vested options from 2012 grants were exercised. During the year ended June
30, 2024, we have 0 options outstanding under the 2009 Incentive Plan.
On January 29, 2015, the Company held its 2014 annual general meeting of shareholders, during which the Company’s shareholders
approved the Company’s 2015 Stock Incentive Plan (“2015 Incentive Plan”). Pursuant to the 2015 Incentive Plan, we were initially authorized to
issue up to an aggregate of 140,000 (7,778 shares post 2024 Reverse Split) Class A Ordinary Shares. Additionally, commencing on the first business
day in fiscal year ending June 30, 2016 and on the first business day of each fiscal year thereafter while the 2015 Incentive Plan is in effect, the
maximum number of Class A Ordinary Shares available for issuance under this 2015 Incentive Plan during that fiscal year shall be increased such
that, as of such first business day, the maximum aggregate number of Class A Ordinary Shares available for issuance under this 2015 Incentive Plan
during that fiscal year shall be equal to Fifteen Percent (15%) of the number of total issued and outstanding Class A Ordinary Shares of the
Company as recorded by the Company’s transfer agent on the last business day of the prior fiscal year. The Company granted options to purchase
80,000 (4,456 shares post 2024 Reverse Split) Class A Ordinary Shares to its employees and non-employee director on January 31, 2015 under the
2015 Incentive Plan. As of June 30, 2024, we have an aggregate of 80,000 (4,456 options post 2024 Reverse Split) options outstanding under the
2015 Incentive Plan.
On April 5, 2021, the Company held its 2020 annual general meeting of shareholders, during which the Company’s shareholders approved
the Company’s 2021 Equity Incentive Plan (“2021 Incentive Plan”). As of June 30, 2024, we have 0 options outstanding under the 2021 Incentive
Plan.
Executive Class A Ordinary Stock Grants
On February 28, 2022, the Company’s board granted 1,642,331 (91,241 shares post 2024 Reverse Split) Class A Ordinary Shares pursuant
to its 2015 Equity Incentive Plan to the employees of the Company, at a fair value of $1,708,024, with a vesting period of three years from the date
of the grant.
On March 15, 2023, the Company’s board granted 1,000,000 (55,556 shares post 2024 Reverse Split) Class A Ordinary Shares to the
employees of the Company, at a fair value of $372,600, with a vesting period of six months from the date of the grant.

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88
On February 26, 2024, the Company’s board granted 6,255,483 (347,527 shares post 2024 Reverse Split) Class A Ordinary Shares pursuant
to its 2015 Equity Incentive Plan to the employees of the Company, at a fair value of $2,130,000, with a vesting period of one year from the date of
the grant.
As of June 30, 2024, we have 6,802,926 (377,939 shares post 2024 Reverse Split) non-vested restricted stocks outstanding under such
grant.
Executive Class B Ordinary Stock Grants
On February 28, 2022, the Company’s board approved a grant of 1,600,000 Class B Ordinary Shares to its management as compensation
cost for awards. The fair value of the restricted shares was $1,694,000 based on the fair value of share price $1.06 at February 28, 2022. These
restricted shares vested immediately on the grant date. All granted shares under this plan are issued and outstanding on February 28, 2022.
On March 9, 2023, the Company’s board approved a grant of 3,000,000 restricted shares to its management as compensation cost for
awards. The fair value of the restricted shares was $3,025,000 based on the fair value of share price $1.01 at March 9, 2023. These restricted shares
vested immediately on the grant date. All granted shares under this plan are issued and outstanding on March 9, 2023.
On February 26, 2024, the Company’s board approved a grant of 12,900,000 restricted shares to its management as compensation cost for
awards. The fair value of the restricted shares was $2,130,000 based on the fair value of share price $0.17 at February 26, 2023. These restricted
shares vested immediately on the grant date. As of June 30, 2024, all granted shares under this plan are not issued and outstanding.
6.F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
None.

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89
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7.A. Major Shareholders
The following table sets forth information with respect to beneficial ownership of our Class A and Class B Ordinary Shares as of the date of
this report, for each person known by us to beneficially own 5% or more of our Class A Ordinary Shares, and all of our executive officers and
directors individually and as a group. It reflects the one-for-eighteen Reverse Stock Split we effected on May 1, 2024 and the two classes of shares
approved by our shareholders on April 5, 2021: Class A Ordinary Shares, with one vote per share, and Class B Ordinary Shares, with fifteen votes
per share. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the
securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and
investment power with respect to all Class A and Class B Ordinary Shares shown as beneficially owned by them. Percentage of beneficial ownership
is based on shares, which consists of 7,987,959 Class A Ordinary Shares and 20,000,000 Class B Ordinary Shares outstanding as of August 31, 2024
and 80,000 (4,456 shares post 2024 Reverse Split) shares subject to options that are exercisable within 60 days after October 23, 2023. Percentage of
beneficial ownership is based on shares, which consists of 7,987,959 Class A Ordinary Shares and 7,100,000 Class B Ordinary Shares outstanding as
of June 30, 2024 and 80,000 (4,456 shares post 2024 Reverse Split) shares subject to options.
    
Shares Beneficially Owned (1)
    
Class A Ordinary Shares
Class B Ordinary Shares
% of Total Voting
Name of Beneficial Owner
Number
    
%(2)
    
Number
    
%(2)
    
Power(3)
    
Directors and Executive Officers:
Yin Shenping(4)
 
 164,041
 2.05 %  10,000,000
 50 %
 48.76 %  
Chen Guangqiang(5)
 
 160,297
 2.01 %  10,000,000
 50 %
 48.75 %  
Hu Jijun(6)
 
 16,166
*
*
Wong Nelson(7)
 
 15,278
*
*
Zhao Shudong(8)
 
 16,421
*
*
Hu Zhongchen
 —
 —
 —
Liu Jia(9)
 
 126,485
 1.58 %
*
Duan Yonggang(10)
 
 15,000
*
*
Directors and Executive Officers as a Group (eight members)
 
 513,688
 6.43 %  20,000,000
 100 %
 97.75 %  
5% or Greater Shareholders
*
Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the
Ordinary Shares. All shares represent Class A and Class B Ordinary Shares.
(2) The percentage of shares beneficially owned is based on 7,987,959 Class A Ordinary Shares and 20,000,000 Class B Ordinary Shares
outstanding as of October 30, 2024.
(3) Class A Ordinary Shares have one vote per share. Class B Ordinary Shares have fifteen votes per share.
(4) Mr. Yin holds 164,041 Class A Ordinary Shares and 10,000,000 Class B Ordinary Shares. Due to his ownership of 50% of the outstanding Class
B Ordinary Shares (which have 15 votes per share rather than one vote like Class A Ordinary Shares), Mr. Yin has substantial control over
Recon. The address is: Recon Technology Ltd, Room 601, No. 1 Shui’an South Street, Chaoyang District, Beijing 100012, People’s Republic of
China.
(5) Mr. Chen holds 160,297 Class A Ordinary Shares and 10,000,000 Class B Ordinary Shares. Due to his ownership of 50% of the outstanding
Class B Ordinary Shares (which have 15 votes per share rather than one vote like Class A Ordinary Shares), Mr. Chen has substantial control
over Recon. The address is Recon Technology Ltd, Room 601, No. 1 Shui’an South Street, Chaoyang District, Beijing 100012, People’s
Republic of China.
(6) The address is Recon Technology Ltd, Room 601, No. 1 Shui’an South Street, Chaoyang District, Beijing 100012, People’s Republic of China.

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90
(7) The address is Recon Technology Ltd, Room 601, No. 1 Shui’an South Street, Chaoyang District, Beijing 100012, People’s Republic of China.
(8) Zhao Shudong resigned on October 9, 2024.
(9) The address is Recon Technology Ltd, Room 601, No. 1 Shui’an South Street, Chaoyang District, Beijing 100012, People’s Republic of China.
(10)The address is Recon Technology Ltd, Room 601, No. 1 Shui’an South Street, Chaoyang District, Beijing 100012, People’s Republic of China.
7.B. Related party transactions
Transactions with Related Persons
Other payables consisted of the following:
    
June 30,
    
June 30,
    
June 30,
    
2023
    
2024
    
2024
Related Parties
    
RMB
    
RMB
    
US Dollars
Expenses paid by the major shareholders
 
¥
 1,796,309  
¥
 1,453,910
$
 200,064
Due to family members of the owners of BHD and FGS
 
 545,159  
 
 845,159
 
 116,298
Due to management staff for costs incurred on behalf of the Company
 
 250,927  
 
—
 
  —
Total
 
¥
 2,592,395  
¥
 2,299,069
$
 316,362
The Company also had short-term borrowings from related parties. Below is a summary of the Company’s short-term borrowings due to
related parties as of June 30, 2023 and 2024, respectively.
The Company also had long-term borrowings from a related party. Below is a summary of the Company’s long-term borrowings due to a
related party as of June 30, 2023 and 2024, respectively.
    
June 30,
    
June 30,
    
June 30,
2023
2024
2024
Short-term borrowings due to related parties:
RMB
RMB
US Dollars
Short-term borrowing from a Founder, 3.65% annual interest, due on December 26, 2023
¥
 10,004,055
¥
—
$
—
Short-term borrowing from a Founder, 3.40% annual interest, due on June 4, 2024*
 
 4,993,950
 
—
 
—
Short-term borrowing from a Founder, 3.40% annual interest, due on June 16, 2024*
 
 5,020,217
 
—
 
—
Short-term borrowing from a Founder, 3.45% annual interest, due on December 28, 2024
 
—
 
 10,002,875
 
 1,376,441
Total short-term borrowings due to related parties
¥
 20,018,222
¥
 10,002,875
$
 1,376,441
    
June 30,
    
June 30,
    
June 30,
2023
2024
2024
Long-term borrowings due to related party:
RMB
RMB
US Dollars
Long-term borrowing from a Founder, monthly payments of ¥31,250 inclusive of interest
at 3.75%, three years loan, due in April 29, 2027.
¥
—
¥
 10,000,000
$
1,376,046
Less: current portion
 
—
—
—
Total long-term borrowings due to related party
¥
—
¥
 10,000,000
$
 1,376,046

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91
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 ¥96,875 ($13,330) with annual
rental expense at ¥1.2 million ($0.16 million). The details of leases from related parties are as below:
    
    
     Monthly Rent      Monthly Rent
Lessee
Lessor
Rent Period
RMB
US Dollars
Nanjing Recon
Yin Shenping
April 1, 2024 - March 31, 2026
¥
 40,000
$
 5,504
BHD
  Chen Guangqiang   Jan 1, 2024- Dec 31, 2025
 
 33,250
 
 4,575
BHD
  Chen Guangqiang   Jan 1, 2024- Dec 31, 2025
 
 23,625
 
 3,251
Expenses paid by the owner on behalf of Recon – Shareholders and founders of the VIEs paid certain operating expenses for the Company.
As of June 30, 2023 and 2024, ¥2,592,395 and ¥2,299,069 ($316,362) was due to them, respectively.
Guarantee/collateral related parties – The Company’s founders provide guarantee and collateral for the Company’s short-term bank loans.
(see Note 13)
Other than as described herein, no transactions required to be disclosed under Item  404 of Regulation S-K have occurred since the
beginning of the Company’s last fiscal year.
Director Independence
The board of directors maintains a majority of independent directors who are deemed to be independent under the definition of
independence provided by NASDAQ Stock Market Rule 4200(a)(15). Mr. Wong, Mr. Hu, Mr. Zhao and Dr. Duan are our independent directors.
7.C. Interests of experts and counsel
Not applicable for annual reports on Form 20-F.
ITEM 8.
FINANCIAL INFORMATION
8.A. Consolidated Statements and Other Financial Information
Please refer to Item 18.
Legal and Administrative Proceedings
We are currently not a party to any material legal or administrative proceedings and are not aware of any pending or threatened material
legal or administrative proceedings against us. We may from time to time become a party to various legal or administrative proceedings arising in
the ordinary course of our business.
Dividend Policy
We have never declared or paid any cash dividends on our Class A Ordinary Shares. We anticipate that we will retain any earnings to
support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable
future. Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number
of factors, including future earnings, capital requirements, financial conditions and future prospects and other factors the board of directors may
deem relevant.

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Because we are a holding company with no operations of our own and all of our operations are conducted through our Chinese subsidiary,
our ability to pay dividends and to finance any debt that we may incur is dependent upon dividends and other distributions paid. In addition, Chinese
legal restrictions permit payment of dividends to us by our Chinese subsidiary only out of its accumulated net profit, if any, determined in
accordance with Chinese accounting standards and regulations. Under Chinese law, our subsidiary is required to set aside a portion (at least 10%) of
its after-tax net income (after discharging all cumulated loss), if any, each year for compulsory statutory reserve until the amount of the reserve
reaches 50% of our subsidiaries’ registered capital. These funds may be distributed to shareholders at the time of its wind-up. See “Holding
Company Structure.”
Payments of dividends by our subsidiary in China to the Company are also subject to restrictions including primarily the restriction that
foreign invested enterprises may only buy, sell and/or remit foreign currencies at those banks authorized to conduct foreign exchange business after
providing valid commercial documents. There are no such similar foreign exchange restrictions in the Cayman Islands.
8.B. Significant Changes
We have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual
report.
ITEM 9.
THE OFFER AND LISTING
9.A. Offer and listing details
We completed our initial public offering on July 29, 2009. Our Class A Ordinary Shares trade under the trading symbol “RCON” on the
NASDAQ Capital Market.
As of October 30, 2024, there were approximately 40 holders of record of our Class A Ordinary Shares. This excludes our Class A
Ordinary Shares owned by shareholders holding Class A Ordinary Shares under nominee security position listings. On October 30, 2024, the last
sales price of our Class A Ordinary Shares as reported on the NASDAQ Capital Market was $[●] per Class A Ordinary Share.
9.B. Plan of distribution
Not applicable for annual reports on Form 20-F.
9.C. Markets
Our Class A Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “RCON.”
9.D. Selling shareholders
Not applicable for annual reports on Form 20-F.
9.E. Dilution
Not applicable for annual reports on Form 20-F.
9.F. Expenses of the issue
Not applicable for annual reports on Form 20-F.
ITEM 10.
ADDITIONAL INFORMATION
10.A. Share capital
Not applicable for annual reports on Form 20-F.

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93
10.B. Memorandum and articles of association
We are an exempted company incorporated in Cayman Islands and our affairs are governed by our fourth amended and restated
memorandum and articles of association and the Cayman Islands Companies Act (2023 Revision) (as amended) (the “Cayman Companies Act”). A
Cayman Islands exempted company:
●
is a company that conducts its business mainly outside the Cayman Islands;
●
is prohibited from trading in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the
exempted company carried on outside the Cayman Islands (and for this purpose can effect and conclude contracts in the Cayman
Islands and exercise in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands);
●
does not have to hold an annual general meeting;
●
does not have to make its register of members open to inspection by shareholders of that company;
●
may obtain an undertaking against the imposition of any future taxation;
●
may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
●
may register as a limited duration company; and
●
may register as a segregated portfolio company.
The following description of our memorandum and articles of association, as amended and restated from time to time, are summaries and
do not purport to be complete. Reference is made to our fourth amended and restated memorandum and articles of association, effective on March
29, 2024 (respectively, the “Memorandum” and the “Articles”).
All of our issued and outstanding Ordinary Shares are fully paid and non-assessable. Our Ordinary Shares are issued in registered form, and
are issued when registered in our register of members. Unless and until the directors resolve to issue share certificates, no share certificate shall be
issued, and the records of the shareholdings of each shareholder shall be in uncertified book entry form. Our shareholders who are non-residents of
the Cayman Islands may freely hold and vote their Ordinary Shares. We may not issue shares or warrants to bearer.
On December 10, 2019, the Company’s board of directors approved to effect a one-for-five reverse stock split of its ordinary shares (the
“2019 Reverse Stock Split”) with the market effective date of December 27, 2019, such that the number of the Company’s ordinary shares is
decreased from 100,000,000 to 20,000,000 and the par value of each ordinary share is increased from US$0.0185 to US$0.0925. As a result of the
Reverse Stock Split, each five pre-split ordinary shares outstanding were automatically combined and converted to one issued and outstanding
ordinary share without any action on the part of the shareholder.
On April 5, 2021, at the 2021 annual meeting, to implement a dual class structure, our shareholders approved (i) a special resolution that the
authorized share capital of the Company be amended from US$1,850,000, divided into 20,000,000 ordinary shares of a nominal or par value of
US$0.0925 each, to US$15,725,000, divided into 150,000,000 Class A Ordinary Shares of a nominal or par value of US$0.0925 each and
20,000,000 Class B Ordinary Shares of a nominal or par value of US$0.0925 each, and (ii) a special resolution that the Third Amended and Restated
Memorandum and Articles of Association of the Company to substitute the Second Amended and Restated Memorandum and Articles of
Association. On April 7, 2021, we filed the Third Amended and Restated Memorandum and Articles of Association with the Companies Register of
the Cayman Islands. Our Class A Ordinary Shares began to trade on the NASDAQ Capital Market on April 12, 2021 under the same symbol,
“RCON.”

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On March 29, 2024, the Company held its annual meeting, at which the Company’s shareholders approved (i) a capital increase to the
authorized share capital by the creation of 350,000,000 additional Class A Ordinary Shares with a nominal or par value of US$0.0925 each and
60,000,000 Class B Ordinary Shares with a nominal or par value of US$0.0925 each; (ii) a share consolidation or reverse stock split of only the
Class A Ordinary Shares, at a ratio of one-for-eighteen (the “2024 Reverse Stock Split”), such that there were then 27,694,610.80 Class A Ordinary
Shares with a nominal or par value of US$1.67 (together with 60,000,000 Class B Ordinary Shares with a nominal or par value of US$0.0925 each);
(iii) a subsequent share subdivision of all shares at a ratio of 1:17,349.9459 into 480,500,000,000 Class A Ordinary Shares with a nominal or par
value of US$0.0001 each and 56,000,000,000 Class B Ordinary Shares with a nominal or par value of US$0.0001 each; and (iv) a final capital
reduction by the cancellation of 480,000,000,000 unissued Class A Ordinary Shares and the cancellation of 55,920,000,000 unissued Class B
Ordinary Shares, such that the final authorized share capital of the Company, following each of the above stages was amended from: US$15,725,000
divided into 150,000,000 Class A ordinary shares of a nominal or par value of US$0.0925 each, and 20,000,000 Class B ordinary shares of a
nominal or par value of US$0.0925 each, to: US$58,000 divided into 500,000,000 Class A Ordinary Shares of a nominal or par value of US$0.0001
each and 80,000,000 Class B Ordinary Shares of a nominal or par value of US$0.0001 each (collectively, the “Capital Amendment”). No fractional
ordinary shares were issued to any shareholders in connection with the Capital Amendment. Each shareholder will be entitled to receive one
ordinary share in lieu of the fractional share that would have resulted from the Capital Amendment.
As of the date of this amendment to the annual report, the authorized share capital of the Company is US$58,000 divided into 500,000,000
Class A Ordinary Shares of a nominal or par value of US$0.0001 each and 80,000,000 Class B Ordinary Shares of a nominal or par value of
US$0.0001 each. Subject to the provisions of the Cayman Companies Act and the provisions, if any, of the Articles, and any directions given by any
ordinary resolution and the rights attaching to any class of existing shares, the directors may issue, allot, grant options over or otherwise dispose of
shares (including any fractions of Shares) and other securities of our company at such times, to such persons, for such consideration and on such
terms as the directors may determine.
Class A Ordinary Shares
Ordinary Shares
Holders of ordinary shares are entitled to cast one vote for each share on all matters submitted to a vote of shareholders, including the
election of directors and auditor. The holders of ordinary shares are entitled to receive ratably such dividends, if any, as may be declared by the
Board of Directors out of funds legally available therefor and subject to any preference of any then authorized and issued preferred shares. Such
holders do not have any preemptive rights to subscribe for additional shares. All holders of ordinary shares are entitled to share ratably in any assets
for distribution to shareholders upon the liquidation, dissolution or winding up of the Company, subject to any preference of any then authorized and
issued preferred shares. All outstanding ordinary shares are fully paid and non-assessable.
Preferred Shares
Pursuant to our Articles and Cayman Islands law, our Company may by Special Resolution establish one or more series of preferred shares
having such number of shares, designations, relative voting rights, dividend rates, liquidation and other rights, preferences, powers and limitations as
may be fixed by the Special Resolution. Any preferred shares issued will include restrictions on voting and transfer intended to avoid having us
constitute a “controlled foreign corporation” for United States federal income tax purposes. Such rights, preferences, powers and limitations as may
be established could have the effect of discouraging an attempt to obtain control of us. The issuance of preferred shares could also adversely affect
the voting power of the holders of the ordinary shares deny shareholders the receipt of a premium on their ordinary shares in the event of a tender or
other offer for the ordinary shares and have a depressive effect on the market price of the ordinary shares.
Under the Fourth Amended and Restated Memorandum and Articles of Association of the Company, each Class B Ordinary Share is
convertible into one-eighteenth (1/18) of one Class A Ordinary Share at any time by the holder. The number of Class B Ordinary Shares held by a
holder will be automatically and immediately converted into corresponding number of Class A Ordinary Shares in the ratio of 1/18 upon any direct
or indirect sale, transfer, assignment or disposition of such number of Class B Ordinary Shares by the holder. Furthermore, Class A Ordinary Shares
are not convertible into Class B Ordinary Shares under any circumstances. Finally, except for voting rights and conversion rights as set forth in the
Fourth Amended and Restated Memorandum and Articles of Association of the Company, the Class A Ordinary Shares and the Class B Ordinary
Shares shall have the same rights, preferences, privileges and restrictions.

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Register of Members
Under Cayman Islands law, we must keep a register of members and there should be entered therein:
●
the names and addresses of the members, a statement of the shares held by each member, and of the amount paid or agreed to be
considered as paid, on the shares of each member;
●
the date on which the name of any person was entered on the register as a member; and
●
the date on which any person ceased to be a member.
Under Cayman Islands law, the register of members of our Company is prima facie evidence of the matters set out therein (i.e. the register
of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members is
deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members. Once our register of
members has been updated, the shareholders recorded in the register of members are deemed to have legal title to the shares set against their name.
If the name of any person is incorrectly entered in, or omitted from, our register of members, or if there is any default or unnecessary delay
in entering on the register the fact of any person having ceased to be a member of our Company, the person or member aggrieved (or any member of
our Company or our Company itself) may apply to the Cayman Islands Grand Court for an order that the register be rectified, and the Court may
either refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification of the register.
10.C. Material contracts
We have not entered into any material contracts other than in the ordinary course of business and otherwise described elsewhere in this
annual report.
10.D. Exchange controls
Foreign Currency Exchange
The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations. Under the
PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange
transactions, may be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. By contrast,
approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted
out of China to pay capital expenses such as the repayment of foreign currency-denominated loans or foreign currency is to be remitted into China
under the capital account, such as a capital increase or foreign currency loans to our PRC subsidiaries.
In August 2008, SAFE issued the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the
Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 142, regulating the conversion by a foreign-
invested enterprise of foreign currency-registered capital into RMB by restricting how the converted RMB may be used. In addition, SAFE
promulgated Circular 45 on November 9, 2011 in order to clarify the application of SAFE Circular 142. Under SAFE Circular 142 and Circular 45,
the RMB capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used for purposes within the
business scope approved by the applicable government authority and may not be used for equity investments within the PRC. In addition, SAFE
strengthened its oversight of the flow and use of the RMB capital converted from foreign currency registered capital of foreign-invested enterprises.
The use of such RMB capital may not be changed without SAFE’s approval, and such RMB capital may not in any case be used to repay RMB loans
if the proceeds of such loans have not been used.

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In November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on
Foreign Direct Investment, which substantially amends and simplifies the current foreign exchange procedure. Pursuant to this circular, the opening
of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee
accounts, the reinvestment of RMB proceeds by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-
invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same
entity may be opened in different provinces, which was not possible previously. In addition, SAFE promulgated the Circular on Printing and
Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting
Documents in May 2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the
PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based
on the registration information provided by SAFE and its branches.
We typically do not need to use our offshore foreign currency to fund our PRC operations. In the event we need to do so, we will apply to
obtain the relevant approvals of SAFE and other PRC government authorities as necessary.
SAFE Circular 75
Under the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Financing and Roundtrip Investment
Through Offshore Special Purpose Vehicles, or SAFE Circular 75, issued by SAFE on October 21, 2005 and its implementation rules, a PRC
resident (whether a natural or legal person) is required to complete an initial registration with its local SAFE branch before incorporating or
acquiring control of an offshore special purpose vehicle, or SPV, with assets or equity interests in a PRC company, for the purpose of offshore equity
financing. The PRC resident is also required to amend the registration or make a filing upon (1) the injection of any assets or equity interests in an
onshore company or undertaking of offshore financing, or (2) the occurrence of a material change that may affect the capital structure of a SPV.
SAFE also subsequently issued various guidance and rules regarding the implementation of SAFE Circular 75, which imposed obligations on PRC
subsidiaries of offshore companies to coordinate with and supervise any PRC-resident beneficial owners of offshore entities in relation to the SAFE
registration process.
Regulation of Dividend Distribution
The principal laws, rules and regulations governing dividend distribution by foreign-invested enterprises in the PRC are the Company Law
of the PRC, as amended, the Wholly Foreign-owned Enterprise Law and its implementation regulations and the Equity Joint Venture Law and its
implementation regulations. Under these laws, rules and regulations, foreign-invested enterprises may pay dividends only out of their accumulated
profit, if any, as determined in accordance with PRC accounting standards and regulations. Both PRC domestic companies and wholly-foreign
owned PRC enterprises are required to set aside as general reserves at least 10% of their after-tax profit, until the cumulative amount of such
reserves reaches 50% of their registered capital. A PRC company is not permitted to distribute any profits until any losses from prior fiscal years
have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year.
10.E. Taxation
The following sets forth the material Cayman Islands, Chinese and U.S. federal income tax consequences related to an investment in our
Class A Ordinary Shares. It is directed to U.S. Holders (as defined below) of our Class A Ordinary Shares and is based upon laws and relevant
interpretations thereof in effect as of the date of this annual report, all of which are subject to change. This description does not deal with all possible
tax consequences relating to an investment in our Class A Ordinary Shares, such as the tax consequences under state, local and other tax laws.
The following brief description applies only to U.S. Holders (defined below) that hold Class A Ordinary Shares as capital assets and that
have the U.S. dollar as their functional currency. This brief description is based on the tax laws of the United States in effect as of the date of this
annual report and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of this annual report, as well as judicial and
administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which change could
apply retroactively and could affect the tax consequences described below.

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The brief description below of the U.S. federal income tax consequences to “U.S. Holders” will apply to you if you are a beneficial owner
of shares and you are, for U.S. federal income tax purposes,
●
an individual who is a citizen or resident of the United States;
●
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United States,
any state thereof or the District of Columbia;
●
an estate whose income is subject to U.S. federal income taxation regardless of its source; or
●
a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all
substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
WE URGE POTENTIAL PURCHASERS OF OUR SHARES TO CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX
CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF OUR SHARES.
People’s Republic of China Enterprise Taxation
The following brief description of Chinese enterprise laws is designed to highlight the enterprise-level taxation on our earnings, which will
affect the amount of dividends, if any, we are ultimately able to pay to our shareholders. See “Dividend Policy.”
We are a holding company incorporated in the Cayman Islands and we gain substantial income by way of dividends paid to us from our
PRC subsidiaries. The EIT Law and its implementation rules provide that China-sourced income of foreign enterprises, such as dividends paid by a
PRC subsidiary to its equity holders that are non-resident enterprises, will normally be subject to PRC withholding tax at a rate of 10%, unless any
such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a preferential tax rate or a tax exemption.
Under the EIT Law, an enterprise established outside of China with a “de facto management body” within China is considered a “resident
enterprise,” which means that it is treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. Although the
implementation rules of the EIT Law define “de facto management body” as a managing body that actually, comprehensively manage and control
the production and operation, staff, accounting, property and other aspects of an enterprise, the only official guidance for this definition currently
available is set forth in SAT Notice 82, which provides guidance on the determination of the tax residence status of a Chinese-controlled offshore
incorporated enterprise, defined as an enterprise that is incorporated under the laws of a foreign country or territory and that has a PRC enterprise or
enterprise group as its primary controlling shareholder. Although Recon does not have a PRC enterprise or enterprise group as our primary
controlling shareholder and is therefore not a Chinese-controlled offshore incorporated enterprise within the meaning of SAT Notice 82, in the
absence of guidance specifically applicable to us, we have applied the guidance set forth in SAT Notice 82 to evaluate the tax residence status of
Recon and its subsidiaries organized outside the PRC.
According to SAT Notice 82, a Chinese-controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of
having a “de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the
following criteria are met: (i) the places where senior management and senior management departments that are responsible for daily production,
operation and management of the enterprise perform their duties are mainly located within the territory of China; (ii) financial decisions (such as
money borrowing, lending, financing and financial risk management) and personnel decisions (such as appointment, dismissal and salary and wages)
are decided or need to be decided by organizations or persons located within the territory of China; (iii) main property, accounting books, corporate
seal, the board of directors and files of the minutes of shareholders’ meetings of the enterprise are located or preserved within the territory of China;
and (iv) one half (or more) of the directors or senior management staff having the right to vote habitually reside within the territory of China.

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We believe that we do not meet some of the conditions outlined in the immediately preceding paragraph. For example, as a holding
company, the key assets and records of the Company, including the resolutions and meeting minutes of our board of directors and the resolutions and
meeting minutes of our shareholders, are located and maintained outside the PRC. In addition, we are not aware of any offshore holding companies
with a corporate structure similar to ours that has been deemed a PRC “resident enterprise” by the PRC tax authorities. Accordingly, we believe that
Recon and its offshore subsidiaries should not be treated as a “resident enterprise” for PRC tax purposes if the criteria for “de facto management
body” as set forth in SAT Notice 82 were deemed applicable to us. However, as the tax residency status of an enterprise is subject to determination
by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body” as applicable to our
offshore entities, we will continue to monitor our tax status.
The implementation rules of the EIT Law provide that, (i) if the enterprise that distributes dividends is domiciled in the PRC or (ii) if gains
are realized from transferring equity interests of enterprises domiciled in the PRC, then such dividends or gains are treated as China-sourced income.
It is not clear how “domicile” may be interpreted under the EIT Law, and it may be interpreted as the jurisdiction where the enterprise is a tax
resident. Therefore, if we are considered as a PRC tax resident enterprise for PRC tax purposes, any dividends we pay to our overseas shareholders
which are non-resident enterprises as well as gains realized by such shareholders from the transfer of our shares may be regarded as China-sourced
income and as a result become subject to PRC withholding tax at a rate of up to 10%.
See “Risk Factors — Risks Related to Doing Business in China — Under the Enterprise Income Tax Law, we may be classified as a
‘Resident Enterprise’ of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders.”
Any gain or loss recognized by you generally will be treated as United States source gain or loss. However, if we are treated as a PRC
resident enterprise for PRC tax purposes and PRC tax were imposed on any gain, and if you are eligible for the benefits of the tax treaty between the
United States and PRC, you may elect to treat such gain as PRC source gain under such treaty and, accordingly, you may be able to credit the PRC
tax against your United States federal income tax liability.
Cayman Islands Taxation
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is
no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to our company levied by the Government of
the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction
of the Cayman Islands. The Cayman Islands is not a party to any double tax treaties. There are no exchange control regulations or currency
restrictions in the Cayman Islands.
United States Federal Income Taxation
The following does not address the tax consequences to any particular investor or to persons in special tax situations such as:
●
banks;
●
financial institutions;
●
insurance companies;
●
regulated investment companies;
●
real estate investment trusts;
●
broker-dealers;
●
traders that elect to mark-to-market;
●
U.S. expatriates;

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tax-exempt entities;
●
persons liable for alternative minimum tax;
●
persons holding our Class A Ordinary Shares as part of a straddle, hedging, conversion or integrated transaction;
●
persons that actually or constructively own 10% or more of our voting shares;
●
persons who acquired our Class A Ordinary Shares pursuant to the exercise of any employee share option or otherwise as consideration; or
●
persons holding our Class A Ordinary Shares through partnerships or other pass-through entities.
Prospective purchasers are urged to consult their own tax advisors about the application of the U.S. Federal tax rules to their particular
circumstances as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our Class A
Ordinary Shares.
Taxation of Dividends and Other Distributions on our Class A Ordinary Shares
Subject to the passive foreign investment company rules discussed below, the gross amount of distributions made by us to you with respect
to the Class A Ordinary Shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as
dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and
profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not be eligible for the
dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.
With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate
applicable to qualified dividend income, provided that (1) the Class A Ordinary Shares are readily tradable on an established securities market in the
United States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of
information program, (2) we are not a passive foreign investment company (as discussed below) for either our taxable year in which the dividend is
paid or the preceding taxable year, and (3) certain holding period requirements are met. Under U.S. Internal Revenue Service authority, Class A
Ordinary Shares are considered for purpose of clause (1) above to be readily tradable on an established securities market in the United States if they
are listed on the Nasdaq Capital Market. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid
with respect to our Class A Ordinary Shares, including the effects of any change in law after the date of this annual report.
Dividends will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend
income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will be
limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable to dividends. The
limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends
distributed by us with respect to our Class A Ordinary Shares will constitute “passive category income” but could, in the case of certain U.S.
Holders, constitute “general category income.”
To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal
income tax principles), it will be treated first as a tax-free return of your tax basis in your Class A Ordinary Shares, and to the extent the amount of
the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S.
federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would
otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.

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Taxation of Dispositions of Class A Ordinary Shares
Subject to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or
other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S.
dollars) in the Class A Ordinary Shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual
U.S. Holder, who has held the Class A Ordinary Shares for more than one year, you will generally be eligible for reduced tax rates.     The
deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as United States source
income or loss for foreign tax credit limitation purposes.
Passive Foreign Investment Company
A non-U.S. corporation is considered a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable
year if either:
●
at least 75% of its gross income is passive income; or
●
at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to
assets that produce or are held for the production of passive income (the “asset test”).
We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other
corporation in which we own, directly or indirectly, at least 25% (by value) of the stock.
Based on the market price of our Class A Ordinary Shares, the value of our assets and the composition of our assets and income, we believe
that we were not a PFIC for our taxable year ended December 31, 2019, 2018 or 2017. However, given the factual nature of the analyses and the lack
of guidance, no assurance can be given. We do not expect to be a PFIC for our taxable year ending December 31, 2018. However, because PFIC
status is a factual determination for each taxable year which cannot be made until the close of the taxable year, our actual PFIC status will not be
determinable until the close of the taxable year and, accordingly, there is no guarantee that we will not be a PFIC for the current taxable year or any
future taxable year.
We must make a separate determination each year as to whether we are a PFIC. As a result, our PFIC status may change from year to year.
In particular, because the value of our assets for purposes of the asset test will generally be determined based on the market price of our Class A
Ordinary Shares, our PFIC status will depend in large part on the market price of our Class A Ordinary Shares. Accordingly, fluctuations in the
market price of the Class A Ordinary Shares may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty
in several respects including the composition of our income and assets in a given year. If we are a PFIC for any year during which you hold Class A
Ordinary Shares, we will continue to be treated as a PFIC for all succeeding years during which you hold Class A Ordinary Shares. However, if we
cease to be a PFIC, you may avoid some of the adverse effects of the PFIC regime by making a “deemed sale” election with respect to the Class A
Ordinary Shares.
If we are a PFIC for any taxable year during which you hold Class A Ordinary Shares, you will be subject to special tax rules with respect
to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of the Class A Ordinary
Shares, unless you make a “mark-to-market” election as discussed below. Distributions you receive in a taxable year that are greater than 125% of
the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the Class A Ordinary
Shares will be treated as an excess distribution. Under these special tax rules:
●
the excess distribution or gain will be allocated ratably over your holding period for the Class A Ordinary Shares;
●
the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be
treated as ordinary income, and
●
the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally
applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

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The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating
losses for such years, and gains (but not losses) realized on the sale of the Class A Ordinary Shares cannot be treated as capital, even if you hold the
Class A Ordinary Shares as capital assets.
A U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock to elect out of the
tax treatment discussed above. If you make a mark-to-market election for the Class A Ordinary Shares, you will include in income each year an
amount equal to the excess, if any, of the fair market value of the Class A Ordinary Shares as of the close of your taxable year over your adjusted
basis in such Class A Ordinary Shares. You are allowed a deduction for the excess, if any, of the adjusted basis of the Class A Ordinary Shares over
their fair market value as of the close of the taxable year. However, deductions are allowable only to the extent of any net mark-to-market gains on
the Class A Ordinary Shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as
well as gain on the actual sale or other disposition of the Class A Ordinary Shares, are treated as ordinary income. Ordinary loss treatment also
applies to the deductible portion of any mark-to-market loss on the Class A Ordinary Shares, as well as to any loss realized on the actual sale or
disposition of the Class A Ordinary Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously
included for such Class A Ordinary Shares. Your basis in the Class A Ordinary Shares will be adjusted to reflect any such income or loss amounts. If
you make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions
by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under “— Taxation of Dividends and Other
Distributions on our Class A Ordinary Shares” generally would not apply.
The mark-to-market election is available only for “marketable stock”, which is stock that is traded in other than de minimis quantities on at
least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other market (as defined in applicable U.S. Treasury
regulations), including the Nasdaq Capital Market. If the Class A Ordinary Shares are regularly traded on the Nasdaq Capital Market and if you are a
holder of Class A Ordinary Shares, the mark-to-market election would be available to you were we to be or become a PFIC.
Alternatively, a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election with respect to such PFIC to elect out of the
tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in
gross income for a taxable year such holder’s pro rata share of the corporation’s earnings and profits for the taxable year. However, the qualified
electing fund election is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required
under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a
qualified electing fund election. If you hold Class A Ordinary Shares in any year in which we are a PFIC, you will be required to file U.S. Internal
Revenue Service Form 8621 regarding distributions received on the Class A Ordinary Shares and any gain realized on the disposition of the Class A
Ordinary Shares.
You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our Class A Ordinary Shares
and the elections discussed above.
Information Reporting and Backup Withholding
Dividend payments with respect to our Class A Ordinary Shares and proceeds from the sale, exchange or redemption of our Class A
Ordinary Shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding at a current rate
of 28%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other
required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are
required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are
urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

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Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income
tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for
refund with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold taxes for individual
shareholders.
Under the Hiring Incentives to Restore Employment Act of 2010, certain United States Holders are required to report information relating
to ordinary shares, subject to certain exceptions (including an exception for ordinary shares held in accounts maintained by certain financial
institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for
each year in which they hold ordinary shares. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information
reporting and backup withholding rules.
10.F. Dividends and paying agents
Not applicable for annual reports on Form 20-F.
10.G. Statement by experts
Not applicable for annual reports on Form 20-F.
10.H. Documents on display
We are subject to the information requirements of the Exchange Act. In accordance with these requirements, the Company files reports and
other information with the SEC. You may read and copy any materials filed with the SEC at the Public Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC also maintains a web site at http://www.sec.gov that contains reports and other information regarding registrants that file electronically with the
SEC.
10.I. Subsidiary Information
Not applicable.
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Our exposure to interest rate risk primarily relates to excess cash invested in short-term instruments with original maturities of less than a
year and long-term held-to-maturity securities with maturities of greater than a year. Investments in both fixed rate and floating rate interest earning
instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest
rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment
income may fall short of expectations due to changes in interest rates, or we may suffer losses in principal if we have to sell securities that have
declined in market value due to changes in interest rates. We have not been, and do not expect to be, exposed to material interest rate risks, and
therefore have not used any derivative financial instruments to manage our interest risk exposure.
In fiscal years 2024, 2023 and 2022, we had RMB12.40 million (approximately $1.71 million), RMB12.45 million (approximately $1.71
million), and RMB17.53 million (approximately $2.54 million) of weighted outstanding bank loans, with weighted average effective interest rate of
3.07%, 4.33%, and 4.75% respectively.
As of June 30, 2024, if interest rates increased/decreased by 1%, with all other variables having remained constant, and assuming the
amount of bank borrowings outstanding at the end of the year was outstanding for the entire year, profit attributable to equity owners of our
company would have been RMB123,997 (approximately $17,063) lower/higher, respectively, mainly as a result of higher/lower interest expense
from our short-term borrowings.

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Foreign Exchange Risk
Our functional currency is the RMB, and our financial statements are presented in the RMB. Therefore, the change in the value of RMB
relative to the U.S. dollar will not affect our financial results reported in the RMB.
However, any significant revaluation of RMB against U.S. dollar may materially the value of, and any dividends payable on, our Class A
Ordinary Shares in U.S. dollars in the future. See “Risk Factors — Risks Related to Doing Business in China — Fluctuations in exchange rates
could adversely affect the value of our securities.”
Commodity Risk
As a provider of hardware, software, and on-site services, our Company is exposed to the risk of an increase in the price of raw materials.
We historically have been able to pass on price increases to customers by virtue of pricing terms that vary with changes in steel prices, but we have
not entered into any contract to hedge any specific commodity risk. Moreover, our Company does not purchase or trade on commodity instruments
or positions; instead, it purchases commodities for use.
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
With the exception of Items 12.D.3 and 12.D.4, this Item 12 is not applicable for annual reports on Form 20-F. As to Items 12.D.3 and
12.D.4, this Item 12 is not applicable, as the Company does not have any American Depositary Shares.
PART II
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
We do not have any material defaults in the payment of principal, interest, or any installments under a sinking or purchase fund.
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITIES HOLDERS AND USE OF PROCEEDS
Material Modifications to the Rights of Security Holders
Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” from our annual
report on Form 10-K filed on September 28, 2016 is incorporated herein by reference.
Use of Proceeds
Not applicable.
ITEM 15.
CONTROLS AND PROCEDURES
(a)
Disclosure Controls and Procedures.
As of June 30, 2024, our company carried out an evaluation, under the supervision of and with the participation of management, including
our Company’s chief executive officer and chief financial officer, of the effectiveness of the design and operation of our Company’s disclosure
controls and procedures. Included in this Annual Report on Form 20-F, the chief executive officer and chief financial officer concluded that our
Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were
ineffective in timely alerting them to information required to be included in the Company’s U.S. Securities and Exchange Commission (the
“Commission”) filings.

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(b)
Management’s annual report on internal control over financial reporting.
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in
Rule 13a-15(f) under the Securities and Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and
procedures that:
(1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
Company’s assets;
(2)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with U.S. GAAP, and that the Company’s receipts and expenditures are being made only in accordance with the authorization of its
management and directors; and
(3)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
Company’s assets that could have a material effect on the financial statements.
The Company’s management assessed the effectiveness of its internal control over financial reporting as of June 30, 2024. In making this
assessment, management used the 2013 framework set forth in the report entitled Internal Control—Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s
internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and
(v) monitoring. Our management has implemented and tested our internal control over financial reporting based on these criteria. Based on the
assessment and material weakness identified, the Company’s management concluded that, as of June 30, 2024, its internal control over financing
reporting was not effective.
The specific material weaknesses identified by the Company’s management as of June 30, 2024 are described as follows:
We did not have sufficient skilled accounting personnel who are either qualified as Certified Public Accountants in the U.S. or who have
received education from U.S. institutions or other educational programs that would provide enough relevant education relating to U.S. GAAP. While
our CFO is a U.S. Certified Public Accountant, our controller is not, and they have limited experience with U.S. GAAP. Further, our operating
subsidiaries are based in China, and in accordance with PRC laws and regulations, are required to comply with PRC GAAP, rather than U.S. GAAP.
Thus, the accounting skills and understanding necessary to fulfill the requirements of U.S. GAAP-based reporting, including the preparation of
consolidated financial statements, are inadequate, and determined to be a material weakness.
In addition, we have also identified several material weaknesses in information technology general control (“ITGC”) in the areas of: (1) IT
related risk analysis and vulnerability assessment, cybersecurity training; (2) third-party vendor management; (3) system change management and
system development management; (4) backup management, disaster recovery and off-site back management; (5) system security & assess (SSA)
related risk; (6) segregation of duties and audit logging; and (7) system firewalls set up.
While we have developed the scope of our internal audit function, it has not yet been fully implemented as we have not been able to hire
sufficient qualified resources to do so. And due to limited availability of qualified resources, we may not be able to make sufficient hiring within a
short period of time.
We have reassessed all of our financial reporting cycles and we are unable to declare effectiveness of our controls as of June 30, 2024 due
to sufficient monitoring of our internal controls (lack of self-testing of internal controls) and lack of enough training and adjustment of our internal
procedures to provide enough supporting documents as required. Therefore, we determined that the lack of time to evaluate our design and operating
effectiveness are material weaknesses. It should be noted, however, that (a) many actions had been undertaken to enhance the control environment
during the year; and (b) there are other remedial activities that are scheduled to take place in fiscal year 2025. We have significantly reduced
deficiencies of our internal control during this fiscal year, and management will continue to resolve internal control weaknesses and ensure effective
internal controls are in place.

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As a result, the Company has developed remedial actions and enhanced schedules to strengthen its accounting and financial reporting
functions as well as the internal audit function. Such plan will require the hiring of additional resources and the deployment of other corporate
resources for the accounting department in relation to the financial reporting process and internal audit department. Such additional resources will
include the establishment of a work force dedicated to the task of correcting past financial irregularities and maintaining correct financial reporting
on an on-going basis. To strengthen the Company’s internal control over financial reporting, the Company needs to engage outside consultants that
are skilled in SEC reporting and Section 404 compliance to assist in the implementation of the following remedial actions as of the date of this
report:
●
Continuous assessment of our internal procedure of operation as we develop new business and new subsidiaries;
●
Development and formalization of key accounting and financial reporting policies and procedures;
●
Identification and documentation of key controls by business process;
●
Enhancement of existing disclosures policies and procedures;
●
Formalization of periodic communication between management and the audit committee; and
●
Implementation of policies and procedures intended to enhance management monitoring and oversight by the Audit Committee.
In addition to the foregoing efforts, the Company expects to implement the following remedial actions during fiscal year 2025:
●
Formalization of a periodic staff training program to enhance their awareness of the key internal control activities.
●
Develop a comprehensive training and development plan, for our finance, accounting and internal audit personnel, including our Chief
Financial Officer, Controller, and others, in the principles and rules of U.S. GAAP, SEC reporting requirements and the application
thereof.
●
Continue to improve the Company’s self-developed system.
●
Hire a full-time employee who possesses the requisite U.S. GAAP experience and education.
●
Monitoring of internal controls by performing self-testing of various key controls.
●
To hire third party/professional firm to establish the basic of the Company’s IT strategy and IT control system.
Despite the material weaknesses reported above, our management believes that our consolidated financial statements included in this report
fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented and that this report does
not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the
Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
(c)
Attestation report of the registered public accounting firm.
Not applicable.
(d)
Changes in internal control over financial reporting.

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Management continues to focus on internal control over financial reporting. As of June 30, 2024, the Company has completed certain
documentation of our internal controls and will be implementing the following remedial initiatives:
●
To engage a professional organization to assist the company revamp our internal controls and implementation of our internal control
over financial report in the coming year;
●
Design and implement an ongoing company-wide training program regarding our internal controls, with particular emphasis on our
finance and accounting staff to better cooperating with other operation department to improve the accuracy and reporting efficiency of
financial statements under the trend of operation and finance integration;
●
Implement a control process over business acquisition and use or disposition of our assets that could have a material effect on the
financial statements;
●
Developing enhanced risk assessment procedures and controls related to changes in IT systems; and developing a training program for
internal control staff to address ITGC principals and requirements, with a focus on issues related to user access and change-
management over IT systems impacting financial reporting; and
●
Developing a training program for management and related staff to address ITGC principals and requirements, with a focus on issues
related to user access and change-management over IT systems impacting financial reporting.
ITEM 15T.
CONTROLS AND PROCEDURES
Not applicable.

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107
ITEM 16.
[RESERVED]
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
The Company’s board of directors has determined that Mr. Nelson Wong qualifies as an “audit committee financial expert” in accordance
with applicable Nasdaq Capital Market standards. The Company’s board of directors has also determined that Mr. Wong and the other members of
the Audit Committee are all “independent” in accordance with the applicable Nasdaq Capital Market standards.
ITEM 16B.
CODE OF ETHICS
The Company has adopted a Code of Business Conduct and Ethics that applies to the Company’s directors, officers, employees and
advisors. The Code of Ethics is attached it as an exhibit to this annual report. We have also posted a copy of our code of business conduct and ethics
on our website at www.recon.cn.
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Friedman LLP was appointed by the Company to serve as its independent registered public accounting firm for fiscal year 2022. Effective
September 1, 2022, Friedman combined with Marcum LLP and continued to operate as an independent registered public accounting firm. Friedman
continued to serve as the Company’s independent registered public accounting firm through February 1, 2023.
On February 1, 2023, the Audit Committee of the Company approved the engagement of Marcum Asia to serve as the independent
registered public accounting firm for fiscal year 2023. On August 22, 2023, Marcum Asia has been dismissed by the Audit Committee of the
Company before completing the audit of fiscal year 2023.
On August 22, 2023, the Audit Committee of the Company approved the engagement of Enrome LLP to serve as the independent registered
public accounting firm of the Company.
Fees Paid To Independent Registered Public Accounting Firm
Audit Fees
During fiscal year ended June 30, 2023, Friedman LLP’s audit fees were $25,000, and Marcum Asia CPAs LLP’s audit fees were $339,150.
Friedman LLP’s audit fees consisted of service to perform and issuance of consent. Marcum Asia CPAs LLP’s audit fees consisted of completed
planning work and three weeks of field work, services to perform midterm review and consents and assistance with and review of documents filed
with the SEC and related fees. Our decision to dismiss the Marcum Asia CPAs LLP was primarily due to concerns about cost controls. The fees paid
by the Company to Marcum Asia CPAs LLP were based on the contractually agreed fees for the audit progress until the Company’s dismissal.
Enrome LLP’s audit fees were $171,000.
During fiscal year ended June 30, 2024, Enrome LLP’s audit fees were $191,500.
Audit-Related Fees
The Company has not incurred any audit-related fees from Friedman LLP, Marcum Asia CPAs LLP and Enrome LLP for audit-related
services in fiscal years 2024 and 2023.
Tax Fees
The Company has not incurred any tax fees from Friedman LLP, Marcum Asia CPAs LLP and Enrome LLP for tax services in fiscal years
2024 and 2023.
All Other Fees
The Company has not incurred any other fees from Friedman LLP, Marcum Asia CPAs LLP and Enrome LLP other fees in fiscal years
2024 and 2023.

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108
Audit Committee Pre-Approval Policies
Before Enrome LLP was engaged by the Company to render audit or non-audit services, the engagement was approved by the Company’s
audit committee. All services rendered by Enrome LLP have been so approved.
Percentage of Hours
The percentage of hours expended on the principal accountants’ engagement to audit our consolidated financial statements for fiscal year
2024 that were attributed to work performed by persons other than Enrome LLP’s full-time permanent employees was less than 5%.
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Neither the Company nor any affiliated purchaser has purchased any shares or other units of any class of the Company’s equity securities
registered by the Company pursuant to Section 12 of the Securities Exchange Act during the fiscal year ended June 30, 2024.
ITEM 16F.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
On August 22, 2023, we appointed Enrome LLP (“Enrome”) as its independent registered public accounting firm, effective on the same
day. Enrome replaced Marcum Asia, our former independent registered public accounting firm, which we dismissed on August 22, 2023. The
appointment of Enrome was made after careful consideration and evaluation process by the Company and has been approved by the audit committee
of our board of directors. Our decision to make this change was not the result of any disagreement between the Company and Marcum Asia on any
matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
During the two most recent fiscal years ended June 30, 2021 and 2022 and any subsequent interim period prior to engaging Enrome, neither
the Company nor anyone on its behalf consulted Enrome regarding either (i) the application of accounting principles to any proposed or completed
transaction, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice
was provided to the Company that Enrome concluded was an important factor considered by the Company in reaching a decision as to any
accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in Item 16F(a)(1)(iv) of
Form 20-F and the related instructions to Item 16F of Form 20-F) or any reportable events as described in Item 16F(a)(1)(v) of Form 20-F.
Previously, on February 7, 2023, the Company’s board of directors determined and ratified the audit committee’s approval of the proposed
appointment of Marcum Asia as the Company’s independent registered public accounting firm. The services previously provided by Friedman were
then provided by Marcum Asia up until its dismissal on August 22, 2023.
The Company was notified by Friedman, the Company’s then independent registered public accounting firm, that effective September 1,
2022, Friedman combined with Marcum LLP and continued to operate as an independent registered public accounting firm. Friedman continued to
serve as the Company’s independent registered public accounting firm through February 1, 2023. On February 1, 2023, the audit committee
approved the engagement of Marcum Asia to serve as the independent registered public accounting firm of the Company.

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Friedman’s reports on the consolidated financial statements of the Company for the fiscal years ended June 30, 2022 and 2021 did not
contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, scope of accounting principles. During the
Company’s two most recent fiscal years and through February 1, 2023, there were no disagreements with Friedman on any matters of accounting
principles or practices, financial statement disclosure or auditing scope and procedures which, if not resolved to the satisfaction of Friedman, would
have caused Friedman to make reference to such matters in their reports. There were no reportable events (as that term is described in Item 304(a)(1)
(v) of Regulation S-K) during the two fiscal years ended June 30, 2022 and 2021, or in the subsequent period through February 1, 2023.
We provided Marcum Asia and Friedman with a copy of the above statements and requested that Marcum Asia furnish us with a letter
addressed to the SEC stating whether or not it agrees with the above statements. A copy of Marcum Asia’s letter dated August 25, 2023, to the SEC,
regarding the disclosures herein under the heading “Change in Registrant’s Certifying Accountant” is filed as Exhibit 16.1 to this annual report. A
copy of Friedman’s letter, dated February 8, 2023, is filed as Exhibit 16.1 to the Form 6-K filed on February 8, 2023.
ITEM 16G.
CORPORATE GOVERNANCE
We are incorporated in the Cayman Islands and our corporate governance practices are governed by applicable Cayman Islands law. In
addition, because our Class A Ordinary Shares are listed on The Nasdaq Capital Market, we are subject to Nasdaq’s corporate governance
requirements.
As noted above in the risk factor titled “We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such
we are exempt from certain provisions applicable to United States domestic public companies.”, The Nasdaq Capital Market allows foreign private
issuers like our Company to opt to follow rules that apply in the issuer’s home country instead of a given Nasdaq rule. NASDAQ Listing Rule
5615(a)(3) permits a foreign private issuer like us to follow home country practices in lieu of certain requirements of Listing Rule 5600, provided
that such foreign private issuer discloses in its annual report filed with the SEC each requirement of Rule 5600 that it does not follow and describes
the home country practice followed in lieu of such requirement.
NASDAQ Rule 5635 requires shareholder approval for the issuance of securities: (i) in connection with the acquisition of stock or assets of
another Company; (ii) when it would result in a change of control; (iii) when a stock option or purchase plan is to be established or materially
amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors,
employees, or consultants; or (iv) in connection with a transaction other than a public offering involving the sale, issuance or potential issuance of
common stock at a price less than market value. Our Cayman Islands counsel, Campbells, has provided a letter to NASDAQ certifying that under
Cayman Islands law and our Memorandum and Articles of Association, we are not prohibited from issuing shares without first obtaining shareholder
approval where such issuance of securities otherwise requires shareholder approval under NASDAQ Rule 5635. Accordingly, we intend to comply
with the requirements of Cayman Islands law in determining whether shareholder approval is required.
ITEM 16H.
MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
Our company is incorporated in the Cayman Islands. The VIEs and other operating entities being consolidated in our financial statements,
or the consolidated foreign operating entities, are incorporated or otherwise organized in the PRC, Hong Kong, or the Cayman Islands.
To the best of our knowledge, no governmental entity in any of the PRC, Hong Kong, or the Cayman Islands owns any shares of our
company or any of the consolidated foreign operating entities.
To the best of our knowledge, no governmental entity in the PRC has a controlling financial interest with respect to our company or any of
the consolidated foreign operating entities.

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110
No member of the board of directors of our company or any of the consolidated foreign operating entities is any official of the Chinese
Communist Party.
Neither the memorandum and articles of association of our company nor the articles of incorporation (or equivalent organizing document)
of any of the consolidated foreign operating entities contains any charter of the Chinese Communist Party.
ITEM 16J.
INSIDER TRADING POLICIES
(a) We have adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of our securities by
directors, senior management, and employees that are reasonably designed to promote compliance with applicable insider trading laws, rules and
regulations, and listing standards applicable to us.
(b) Please see our Insider Trading Policy of the Company, which has been filed as Exhibit 11.2 to this annual report.
ITEM 16K.
CYBERSECURITY
Risk management and strategy
As of the date of this annual report, we have not experienced any cybersecurity incidents that have materially affected or are reasonably likely to
materially affect us, our business strategy, results of operations, or financial condition; such risks are referred to below as “material risks from
cybersecurity threats”.
We identify, assess and manage any material risks from cybersecurity threats through the following countermeasures:
●
Cybersecurity threat defense system that addresses both internal and external threats;
●
Network, host and application security; and
●
Sensitive information protection methods, including:
o
Technical safeguards;
o
Procedural requirements;
o
Monitoring program on our corporate network;
o
Continuous testing of our security posture both internally and with outside vendors;
o
Incident response program;
o
Security system effectiveness reviews with reference to applicable security standards; and
o
Regular cybersecurity awareness training for employees.
Our abovementioned countermeasures for identifying, assessing and managing any material risks from cybersecurity threats, have been
integrated into our overall risk management system.
We do not engage any assessors, consultants, auditors, or other third parties in connection with any of our Cybersecurity Risk Management
Processes.
Governance
The audit committee of our board of directors is ultimately responsible for the oversight of risks from cybersecurity threats.

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Our board of directors and its audit committee have delegated an important leadership role in assessing and managing any material risks
from cybersecurity threats to Mr. Rui Liu, who heads and oversees FGS. Mr. Liu is responsible for ensuring that the cybersecurity team has
processes in place designed to identify and evaluate cybersecurity risks to which the company is exposed, implement processes and programs to
manage cybersecurity risks and mitigate cybersecurity incidents. Our cybersecurity team is responsible for identifying, considering and assessing
material cybersecurity risks on an ongoing basis, establishing processes to ensure that such potential cybersecurity risk exposures are monitored,
putting in place appropriate mitigation measures and maintaining cybersecurity programs. Our cybersecurity programs are under the direction of Mr.
Liu who receives reports from our cybersecurity team and monitors the prevention, detection, mitigation, and remediation of cybersecurity incidents.
Our cybersecurity team has relevant academic backgrounds and possesses extensive knowledge in cybersecurity risk management. Our
cybersecurity team, regularly update and engages in discussions with Mr. Liu on the company’s cybersecurity programs, material cybersecurity risks,
and mitigation strategies.
PART III
ITEM 17.
FINANCIAL STATEMENTS
See Item 18.
ITEM 18.
FINANCIAL STATEMENTS
Our consolidated financial statements are included at the end of this annual report, beginning with page F-1.

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112
ITEM 19.
EXHIBITS
Exhibit No.
    
Description of Exhibit
    
Included
     Form     
Filing Date
1.1.1
Second Amended and Restated Articles of Association of the Registrant
By
Reference
S-3
2016-09-19
1.1.2
Second Amended and Restated Memorandum of Association of the Registrant
By
Reference
S-3
2016-09-19
1.1.3
Third Amended and Restated Articles of Association of the Registrant
By
Reference
6-K
2021-04-06
1.1.4
Third Amended and Restated Memorandum of Association of the Registrant
By
Reference
6-K
2021-04-06
1.1.5
Fourth Amended and Restated Articles of Association of the Registrant
Herewith
1.1.6
Fourth Amended and Restated Memorandum of Association of the Registrant
Herewith
2.1
Specimen Share Certificate
By
Reference
6-K
2020-01-17
2.2
Description of Securities Registered under Section 12 of the Securities Exchange Act of
1934
2.3
Form of Convertible Note
By
reference
6-K
2020-11-27
2.4
Form of Pre-Funded Warrant
By
Reference
6-K
2021-06-16
2.5
Form of Warrant
By
reference
6-K
2021-06-16
2.6
Specimen Share Certificate
By
Reference
6-K
2021-04-12
4.1
2009 Equity Incentive Plan
By
Reference
S-1/A
2009-06-10
4.2
2015 Equity Incentive Plan
By
Reference
10-K
2016-09-28
4.3
Translation of Exclusive Technical Consulting Service Agreement between Recon
Technology (Jining) Co., Ltd. and Beijing BHD Petroleum Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.4
Translation of Power of Attorney for rights of Chen Guangqiang in Beijing BHD
Petroleum Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.5
Translation of Power of Attorney for rights of Yin Shenping in Beijing BHD Petroleum
Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12

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113
4.6
Translation of Power of Attorney for rights of Li Hongqi in Beijing BHD Petroleum
Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.7
Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology
(Jining) Co. Ltd., Chen Guangqiang and Beijing BHD Petroleum Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.8
Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology
(Jining) Co. Ltd., Yin Shenping and Beijing BHD Petroleum Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.9
Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology
(Jining) Co. Ltd., Li Hongqi and Beijing BHD Petroleum Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.10
Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co.,
Ltd., Chen Guangqiang and Beijing BHD Petroleum Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.11
Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co.,
Ltd., Yin Shenping and Beijing BHD Petroleum Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.12
Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co.,
Ltd., Li Hongqi and Beijing BHD Petroleum Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.13
Translation of Exclusive Technical Consulting Service Agreement between Recon
Technology (Jining) Co., Ltd. and Nanjing Recon Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.14
Translation of Power of Attorney for rights of Chen Guangqiang in Nanjing Recon
Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.15
Translation of Power of Attorney for rights of Yin Shenping in Nanjing Recon Technology
Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.16
Translation of Power of Attorney for rights of Li Hongqi in Nanjing Recon Technology
Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.17
Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology
(Jining) Co. Ltd., Chen Guangqiang and Nanjing Recon Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.18
Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology
(Jining) Co. Ltd., Yin Shenping and Nanjing Recon Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.19
Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology
(Jining) Co. Ltd., Li Hongqi and Nanjing Recon Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.20
Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co.,
Ltd., Chen Guangqiang and Nanjing Recon Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12

Table of Contents
114
4.21
Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co.,
Ltd., Yin Shenping and Nanjing Recon Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.22
Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co.,
Ltd., Li Hongqi and Nanjing Recon Technology Co., Ltd.
By
Reference
S-1/A
2008-08-12
4.23
Translation of the Investment Agreement between Recon Technology, Ltd., Future Gas
Station (Beijing) Technology, Ltd. and six individuals
By
Reference
6-KA
2018-08-28
4.24
Translation of the Supplemental Agreement between Recon Technology, Ltd., Future Gas
Station (Beijing) Technology, Ltd. and six individuals
By
Reference
6-KA
2018-08-28
4.25
Translation of Exclusive Technical Consulting Service Agreement dated April 1, 2019
between Recon Hengda Technology (Beijing) Co., Ltd. and Beijing BHD Petroleum
Technology Co., Ltd.
By
Reference
6-K
2019-04-24
4.26
Translation of Amended and Restated Exclusive Equity Interest Purchase Agreement dated
April 1, 2019 among Recon Hengda Technology (Beijing) Co., Ltd., Beijing BHD
Petroleum Technology Co., Ltd. and Fan Zhang, Shenping Yin, Donglin Li, Zhiqiang Feng
and Guangqiang Chen
By
Reference
6-K
2019-04-24
4.27
Translation of Amended and Restated Equity Interest Pledge Agreement dated April 1,
2019 between Recon Hengda Technology (Beijing) Co., Ltd. and Fan Zhang, Shenping
Yin, Donglin Li, Zhiqiang Feng and Guangqiang Chen about Beijing BHD Petroleum
Technology Co., Ltd.
By
Reference
6-K
2019-04-24
4.28
Translation of Exclusive Technical Consulting Service Agreement dated April 1, 2019
between Recon Hengda Technology (Beijing) Co., Ltd. and Nanjing Recon Technology
Co., Ltd.
By
Reference
6-K
2019-04-24
4.29
Translation of Amended and Restated Exclusive Equity Interest Purchase Agreement dated
April 1, 2019 among Recon Hengda Technology (Beijing) Co., Ltd., Nanjing Recon
Technology Co., Ltd. and Shenping Yin, Guangqiang Chen and Degui Zhai
By
Reference
6-K
2019-04-24
4.30
Translation of Amended and Restated Equity Interest Pledge Agreement dated April 1,
2019 between Recon Hengda Technology (Beijing) Co., Ltd. and Shenping Yin,
Guangqiang Chen and Degui Zhai about Nanjing Recon Technology Co., Ltd.
By
Reference
6-K
2019-04-24
4.31
Translation of Financial Support Commitment Letter from Two Major Shareholders dated
August 31, 2019
By
Reference
20-F
2019-10-01
4.32
Translation of Supplemental Agreement to the Investment Agreement with respect to
Future Gas Station (Beijing) Technology Co., Ltd. dated September 24, 2019
By
Reference
20-F
2019-10-01

Table of Contents
115
4.33
Translation of Supplemental Agreement to the Investment Agreement with respect to
Future Gas Station (Beijing) Technology Co., Ltd. dated March 17, 2020
By
Reference
6-K
2020-03-18
4.34
Translation of Supplemental Agreement to the Investment Agreement with respect to
Future Gas Station (Beijing) Technology Co., Ltd. dated February 4, 2021
By
reference
6-K
2021-02-08
4.35
Share Acquisition Agreement, dated June 3, 2021
By
reference
6-K
2021-06-04
4.36
Placement Agency Agreement, dated June 14, 2021, between the Company and Maxim
Group LLC
By
reference
6-K
2021-06-16
4.37
Form of Securities Purchase Agreement dated June 14, 2021, between the Company and
the Purchasers
By
reference
6-K
2021-06-16
4.38
Form of Securities Purchase Agreement dated March 15, 2023, between the Company and
the Purchasers
By
reference
6-K
2023-03-20
4.39
Form of Securities Purchase Agreement dated January 31, 2024, between the Company
and the Purchasers
By
reference
6-K
2024-02-05
4.40
Form of Warrant Purchase Agreement dated December 14, 2023, between the company
and certain investors
By
reference
6-K
2023-12-15
4.41
2021 Equity Incentive Plan
By
Reference
6-K
2021-04-06
4.42
2024 Equity Incentive Plan
By
Reference
6-K
2024-04-02
8.1
List of subsidiaries of the Company
Herewith
11.1
Code of Ethics of the Company
By
Reference
10-K
2009-09-28
11.2
Insider Trading Policy of the Company
Herewith
12.1
Certification of Chief Executive Officer Required by Rule 13a-14(a)
Herewith
12.2
Certification of Chief Financial Officer Required by Rule 13a-14(a)
Herewith
13.1
Certification of Chief Executive Officer Required by Rule 13a-14(b) and Section 1350 of
Chapter 63 of Title 18 of the United States Code
Herewith
13.2
Certification of Chief Financial Officer Required by Rule 13a-14(b) and Section 1350 of
Chapter 63 of Title 18 of the United States Code
Herewith
15.1
Consent of Friedman LLP
Herewith
15.2
Consent of Enrome LLP
Herewith
16.1
Letter of Marcum Asia CPAs LLP to the U.S. Securities and Exchange Commission dated
August 25, 2023
By
reference
6-K
2023-08-25

Table of Contents
116
16.2
Letter of Friedman LLP to the U.S. Securities and Exchange Commission dated February
8, 2023
By
reference
6-K
2023-02-08
97.1
Clawback Policy
Herewith
99.1
Recon Technology, Ltd Reports Financial Year Results for Fiscal Year 2024
Herewith
101.INS
Inline XBRL Instance Document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (Embedded within the Inline XBRL document and
included in Exhibit)

Table of Contents
117
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.
 
 
Recon Technology, Ltd.
 
 
 
 
By:   /s/ Yin Shenping
 
 
Name: Yin Shenping
 
 
Title:   Chief Executive Officer
Date:
October 30, 2024

Table of Contents
RECON TECHNOLOGY, LTD
 
PAGE
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
 
Report of Independent Registered Public Accounting Firm (PCAOB ID: 6907)
F-1
Report of Independent Registered Public Accounting Firm (PCAOB ID: 711)
F-2
 
 
Consolidated Balance Sheets as of June 30, 2023 and 2024
F-4
 
 
Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended June 30, 2022, 2023 and 2024
F-5
 
 
Consolidated Statements of Changes in Shareholders’ Equity for the years ended June 30, 2022, 2023 and 2024
F-6
 
 
Consolidated Statements of Cash Flows for the years ended June 30, 2022, 2023 and 2024
F-7
 
 
Notes to the Consolidated Financial Statements
F-8

Table of Contents
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors
Recon Technology, Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Recon Technology, Ltd. and its subsidiaries (collectively, the “Company”) as of
June 30, 2024 and 2023, the related consolidated statements of operations and comprehensive income (loss), changes in shareholder’s equity, and
cash flows for the years ended June 30, 2024 and 2023, the related notes (collectively referred to as the 20 – F “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024
and 2023, and the results of its operations and its cash flows for the years ended June 30, 2024 and 2023, in conformity with accounting principles
generally accepted in the United States of America (“U.S GAAP”).
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we
are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit
provides a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required
to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements
and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Enrome LLP
We have served as the Company’s auditor since 2023.
Singapore
October 30, 2024

Table of Contents
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Director and
Stockholders of Recon Technology, Ltd
Opinion on the Financial Statements
We have audited, before the effects of retrospective adjustments to the reverse stock split and change in capital structure as disclosed in Note 16, the
accompanying consolidated balance sheet of Recon Technology, Ltd and Subsidiaries (collectively, the “Company”) as of June 30, 2022, and the
related consolidated statements of operations and comprehensive (loss) income, changes in shareholders’ equity, and cash flows for the year ended
June 30, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements, except for the
effects of retrospective adjustments to the reverse stock split and change in capital structure as disclosed in Note 16,  present fairly, in all material
respects, the financial position of the Company as of June 30, 2022, and the results of its operations and its cash flows for the year ended June 30,
2022, in conformity with accounting principles generally accepted in the United States of America.
We were not engaged to audit, review, or apply any procedures to the retrospective adjustments to the reverse stock split and change in capital
structure as disclosed in Note 16, accordingly, we do not express an opinion or any other form of assurance about whether such retrospective
adjustments are appropriate and have been properly applied. Those adjustments were audited by other auditor.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to
obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our
opinion.

Table of Contents
F-3
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and
(2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions
on the critical audit matters or on the accounts or disclosures to which they relate.
Assessment of impairment for goodwill
Description of Critical Audit Matter
As described in Note 2, the goodwill impairment test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the
carrying amount of a reporting unit exceeds its fair value, goodwill of the reporting unit would be considered impaired. Management performed
evaluation with the assistance of an independent valuation firm on the impairment of goodwill and recorded an impairment loss on goodwill of
¥2,266,893 ($338,457) for the year ended June 30, 2022.
We identified the assessment of impairment for goodwill as a critical audit matter because there is a high degree of subjective auditor judgement in
assessing the assumptions used to determine the free cash flow projection used to develop the fair value of the underlying assets.
How We Addressed the Matter in Our Audit
The primary procedures we performed to address this critical audit matter included the following. We read the accounting memo prepared by the
Company. We evaluated management’s application of the relevant accounting standards. We also engaged a specialist to assist us in the evaluation of
the Company’s valuation methodology and tested the significant assumptions used by the Company to develop forecasted results and discounted
cash flows.
Friedman LLP
We served as the Company’s auditor from 2011 to 2023
New York, New York
October 28, 2022

Table of Contents
F-4
RECON TECHNOLOGY, LTD
CONSOLIDATED BALANCE SHEETS
As of June, 30
As of June, 30
As of June, 30
    
2023
    
2024
    
2024
RMB
RMB
US Dollars
ASSETS
  
  
  
Current assets
  
  
  
Cash
¥
104,125,800
¥
109,991,674
$
15,135,358
Restricted cash
731,545
848,936
116,817
Short-term investments
184,184,455
88,091,794
12,121,834
Notes receivable
3,742,390
1,341,820
 
184,641
Accounts receivable, net
27,453,415
38,631,762
 
5,315,907
Inventories, net
6,330,701
1,128,912
 
155,343
Other receivables, net
2,185,733
3,352,052
 
461,258
Other receivables - related parties
—
275,976
37,976
Loans to third parties
123,055,874
208,928,370
28,749,500
Purchase advances, net
2,680,456
5,156,550
 
709,565
Contract costs, net
49,572,685
48,335,817
6,651,230
Prepaid expenses
350,119
401,586
 
55,260
Total Current Assets
504,413,173
506,485,249
 
69,694,689
Property and equipment, net
24,752,864
22,137,940
 
3,046,282
Construction in progress
—
219,132
30,154
Long-term other receivables, net
3,640
—
—
Operating lease right-of-use assets, net (including ¥335,976 and ¥1,769,840 ($243,538) from a related party as of June 30,
2023 and June 30, 2024, respectively)
2,654,900
23,547,193
3,240,202
Total Assets
¥
531,824,577
¥
552,389,514
$
76,011,327
LIABILITIES AND EQUITY
 
Current liabilities
 
Short-term bank loans
¥
12,451,481
¥
12,425,959
$
1,709,869
Accounts payable
10,791,721
10,187,518
1,401,849
Other payables
5,819,010
2,769,685
 
381,121
Other payable- related parties
2,592,395
2,299,069
 
316,362
Contract liabilities
2,748,365
1,820,481
250,507
Accrued payroll and employees’ welfare
2,382,516
3,237,164
 
445,449
Taxes payable
1,163,006
993,365
 
136,692
Short-term borrowings - related parties
20,018,222
10,002,875
 
1,376,441
Operating lease liabilities - current (including ¥335,976 and ¥1,775,114 ($244,264) from a related party as of June 30, 2023
and June 30, 2024, respectively)
3,066,146
3,741,247
514,812
Total Current Liabilities
61,032,862
47,477,363
 
6,533,102
Operating lease liabilities - non-current (including ¥nil and ¥335,976 ($46,232) from a related party as of June 30, 2023 and
June 30, 2024, respectively)
25,144
3,971,285
546,467
Long-term borrowings - related party
—
10,000,000
1,376,046
Warrant liability - non-current
31,615,668
6,969
959
Total Liabilities
92,673,674
61,455,617
 
8,456,574
Commitments and Contingencies
  
  
 
  
Shareholders’ Equity
  
  
 
  
Class A ordinary shares, $0.0001 U.S. dollar par value, 500,000,000 shares authorized; 2,306,295 shares and 7,987,959
shares issued and outstanding as of June 30, 2023 and June 30, 2024, respectively*
26,932
99,634
13,710
Class B ordinary shares, $0.0001 U.S. dollar par value, 80,000,000 shares authorized; 7,100,000 shares and 7,100,000
shares issued and outstanding as of June 30, 2023 and June 30, 2024, respectively*
4,693
4,693
646
Additional paid-in capital*
580,340,061
681,476,717
93,774,317
Statutory reserve
4,148,929
4,148,929
 
570,912
Accumulated deficit
(170,440,826)
(220,312,085)
 
(30,315,952)
Accumulated other comprehensive income
35,127,173
37,136,649
 
5,110,173
Total Recon Technology, Ltd’ equity
449,206,962
502,554,537
 
69,153,806
Non-controlling interests
(10,056,059)
(11,620,640)
 
(1,599,053)
Total shareholders’ equity
439,150,903
490,933,897
 
67,554,753
Total Liabilities and Shareholders’ Equity
¥
531,824,577
¥
552,389,514
$
76,011,327
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024 and change in capital structure on March 29, 2024.
The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents
F-5
RECON TECHNOLOGY, LTD
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
    
For the years ended
June 30, 
    
2022
    
2023
    
2024
    
2024
 
RMB
 
RMB
 
RMB
 
US Dollars
Revenue
Revenue - third parties
¥
83,777,571
¥
67,114,378
¥
68,854,280
$
9,474,664
Revenue
 
83,777,571  
67,114,378
68,854,280  
9,474,664
Cost of revenue
Cost of revenue - third parties
64,352,834
48,247,395
47,976,836
6,601,832
Cost of revenue
64,352,834
48,247,395
47,976,836
6,601,832
Gross profit
 
19,424,737  
18,866,983  
20,877,444  
2,872,832
Selling and distribution expenses
 
10,150,802  
10,638,978  
10,374,388  
1,427,563
General and administrative expenses
 
83,281,958  
76,784,396  
63,765,583  
8,774,436
Allowance for (net recovery of) credit losses
 
(658,823) 
(9,038,985) 
4,086,505  
562,322
Impairment loss of property and equipment and other long-lived assets
—
1,009,124
—
—
Research and development expenses
 
8,964,217  
8,806,205  
14,288,879  
1,966,215
Operating expenses
 
101,738,154  
88,199,718  
92,515,355  
12,730,536
Loss from operations
 
(82,313,417) 
(69,332,735) 
(71,637,911) 
(9,857,704)
Other income (expenses)
 
 
 
 
Subsidy income
 
11,993  
325,425  
131,428  
18,085
Interest income
 
5,367,979  
13,603,487  
22,897,763  
3,150,837
Interest expense
 
(1,522,526) 
(2,514,850) 
(1,070,449) 
(147,299)
Income from investment in unconsolidated entity
 
15,411  
—  
—  
—
Gain (loss) in fair value changes of warrants liability
174,485,575
6,116,000
(933,995)
(128,522)
Foreign exchange transaction gain (loss)
 
(118,456) 
241,652  
(881,695) 
(121,325)
Impairment loss on goodwill and intangible assets
(2,266,893)
(9,980,002)
—
—
Other income
 
15,855  
82,970  
59,049  
8,126
Other income, net
 
175,988,938  
7,874,682  
20,202,101  
2,779,902
Income (loss) before income tax
 
93,675,521  
(61,458,053) 
(51,435,810) 
(7,077,802)
Income tax expenses (benefit)
 
(613,874) 
18,339  
30  
4
Net income (loss)
 
94,289,395  
(61,476,392) 
(51,435,840) 
(7,077,806)
Less: Net loss attributable to non-controlling interests
 
(1,297,400) 
(2,309,091) 
(1,564,581) 
(215,294)
Net income (loss) attributable to Recon Technology, Ltd
 
¥
95,586,795  
¥
(59,167,301) 
¥
(49,871,259)
$
(6,862,512)
Comprehensive income (loss)
 
 
 
 
Net income (loss)
 
94,289,395  
(61,476,392) 
(51,435,840)
(7,077,806)
Foreign currency translation adjustment
 
9,332,625  
23,819,712  
2,009,476
 
276,513
Comprehensive income (loss)
 
103,622,020  
(37,656,680) 
(49,426,364)
 
(6,801,293)
Less: Comprehensive loss attributable to non- controlling interests
 
(1,297,400) 
(2,309,091) 
(1,564,581)
 
(215,294)
Comprehensive income (loss) attributable to Recon Technology, Ltd
 
¥
104,919,420  
¥
(35,347,589) 
¥
(47,861,783)
$
(6,585,999)
Earnings (loss) per share - basic and diluted*
¥
55.52
¥
(27.43)
¥
(9.88)
$
(1.36)
Weighted - average shares -basic and diluted*
1,721,529
2,157,158
5,048,952
5,048,952
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.
The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents
F-6
RECON TECHNOLOGY, LTD
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Accumulated
Additional
Other
Paid-in
Statutory
Accumulated
Comprehensive
Shareholders’
Non-controlling
Total
Total
    
Common Stock
    
Capital*
    
Reserve
    
deficit
    
income 
    
Equity
    
Interest
    
Equity
    
Equity
Number of
Number of
Class A
Amount
Class B
Amount
Shares*
(RMB)*
Shares
(RMB)*
(RMB)
(RMB)
(RMB)
(RMB)
(RMB)
(RMB)
(RMB)
(US Dollars
    
    
    
Balance, as of June 30, 2021
 
1,547,415  
¥17,665  
—  
¥
—  
¥495,813,924
¥4,148,929
¥(206,860,320) 
¥
1,974,836
¥295,095,034
¥
(7,579,568)
¥287,515,466
$39,563,441
Capital contribution in non-controlling
interests
 
—
—
—
—
—
—
—
—
—
1,130,000
1,130,000
155,493
Restricted shares issued for services
86,111
986
—
—
8,934,933
—
—
—
8,935,919
—
8,935,919
1,229,623
Stock issuance for Pre-Funded warrants
81,667
929
—
—
92,392
—
—
—
93,321
—
93,321
12,841
Cancellation of ordinary shares issued to
Starry Lab
(17,575)
(202)
—
—
(27,675,248)
—
—
—
(27,675,450)
—
(27,675,450)
(3,808,269
Restricted shares issued for management
7,148
83
4,100,000
2,604
39,260,798
—
—
—
39,263,485
—
39,263,485
5,402,835
Net income (loss) for the year
—
—
—
—
—
—
95,586,795
—
95,586,795
(1,297,400)
94,289,395
12,974,653
Foreign currency translation adjustment
—
—
—
—
—
—
—
9,332,625
9,332,625
—
9,332,625
1,284,212
Balance, as of June 30, 2022
 
1,704,766  
19,461  
4,100,000  
2,604  
516,426,799
4,148,929
(111,273,525) 
11,307,461
420,631,729
(7,746,968)
412,884,761
56,814,829
Stock issuance
490,417
6,091
—
—
28,168,902
—
—
—
28,174,993
—
28,174,993
3,877,008
Restricted shares issued for services
55,556
690
—
—
5,805,150
—
—
—
5,805,840
—
5,805,840
798,910
Proceeds from Pre-Funded warrants
—
—
—
—
3,750,282
—
—
—
3,750,282
—
3,750,282
516,056
Restricted shares issued for management
55,556
690
3,000,000
2,089
26,188,928
—
—
—
26,191,707
—
26,191,707
3,604,099
Net loss for the year
—
—
—
—
—
—
(59,167,301)
—
(59,167,301)
(2,309,091)
(61,476,392)
(8,459,433
Foreign currency translation adjustment
—
—
—
—
—
—
—
23,819,712
23,819,712
—
23,819,712
3,277,701
Balance, as of June 30, 2023
 
2,306,295
¥26,932
7,100,000
¥ 4,693
¥580,340,061
¥4,148,929
¥(170,440,826)
¥
35,127,173
¥449,206,962
¥
(10,056,059)
¥439,150,903
$60,429,170
Stock issuance
5,555,559
71,799
—
—
77,639,734
—
—
—
77,711,533
—
77,711,533
10,693,464
Restricted shares issued for services
—
—
—
—
1,070,143
—
—
—
1,070,143
—
1,070,143
147,258
Proceeds from Pre-Funded warrants
65,278
859
—
—
(859)
—
—
—
—
—
—
—
Restricted shares issued for management
60,827
44
—
—
22,427,638
—
—
—
22,427,682
—
22,427,682
3,086,154
Net loss for the year
—
—
—
—
—
—
(49,871,259)
—
(49,871,259)
(1,564,581)
(51,435,840)
(7,077,806
Foreign currency translation adjustment
—
—
—
—
—
—
—
2,009,476
2,009,476
—
2,009,476
276,513
Balance, as of June 30, 2024
7,987,959
¥99,634
7,100,000
¥ 4,693
¥681,476,717
¥4,148,929
¥(220,312,085)
¥
37,136,649
¥502,554,537
¥
(11,620,640)
¥490,933,897
$67,554,753
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024 and change in capital structure on March 29, 2024.
The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents
F-7
RECON TECHNOLOGY, LTD
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended June 30,
2022
2023
2024
2024
    
RMB
    
RMB
    
RMB
    
US Dollars
Cash flows from operating activities:
 
   
   
   
  
Net income (loss)
¥
94,289,395  
¥
(61,476,392) 
¥
(51,435,840)
$
(7,077,806)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
 
 
 
 
 
 
Depreciation and amortization
 
3,339,868  
 
3,683,586  
 
2,844,025
 
391,351
Loss (gain) from disposal of property and equipment
 
48,628  
 
(12,782) 
 
35,325
 
4,861
(Gain) loss in fair value changes of warrants liability
(174,485,575)
(6,116,000)
933,995
128,522
Amortization of offering cost of warrants
—
1,483,306
—
—
Allowance for (net recovery of) credit losses
 
(658,823) 
 
(9,038,985) 
 
4,086,505
 
562,322
Allowance for slow moving inventories
 
266,285  
 
484,644  
 
886,991
 
122,054
Impairment loss of property and equipment and other long-lived assets
—
1,009,124
—
—
Impairment loss on goodwill and intangible assets
2,266,893
9,980,002
—
—
Amortization of right of use assets
 
3,138,518  
 
3,252,066  
 
1,636,215
 
225,151
Restricted shares issued for management and employees
 
39,263,485  
 
26,191,707  
 
22,427,682
 
3,086,152
Restricted shares issued for services
8,935,919
5,805,840
1,070,143
147,257
Income from investment in unconsolidated entity
 
(15,411) 
 
—  
 
—
 
—
Deferred tax benefit
(624,087)
—
—
—
Accrued interest income from loans to third parties
(270,563)
(7,997,961)
(6,998,866)
(963,076)
Accrued interest income from short-term investment
 
—  
 
(2,901,955) 
 
(885,394)
 
(121,834)
Changes in operating assets and liabilities:
 
   
 
   
 
  
 
  
Notes receivable
 
(4,522,674) 
 
7,085,917  
 
2,400,570
 
330,329
Accounts receivable
 
3,811,866  
 
(495,784) 
 
(12,151,359)
 
(1,672,083)
Inventories
 
(689,291) 
 
(2,373,013) 
 
5,590,058
 
769,218
Other receivables
 
285,786  
 
(1,307,694) 
 
31,908
 
4,391
Other receivables-related parties
—
(64,122)
(275,976)
(37,976)
Purchase advances
 
865,430  
 
(2,575,198) 
 
(2,422,123)
 
(333,295)
Contract costs
 
15,422,513  
 
(14,236,539) 
 
(4,400,442)
 
(605,521)
Prepaid expense
 
(274,215) 
 
70,164  
 
(51,467)
 
(7,082)
Prepaid expense - related parties
 
158,000  
 
275,000  
 
—
 
—
Operating lease liabilities
 
(1,594,702) 
 
(3,061,303) 
 
(2,907,014)
 
(400,018)
Accounts payable
 
(5,523,938) 
 
(1,710,898) 
 
(604,203)
 
(83,141)
Other payables
 
(6,329,042) 
 
2,270,104  
 
(3,020,216)
 
(415,597)
Other payables-related parties
 
969,468  
 
352,260  
 
(293,326)
 
(40,363)
Contract liabilities
 
(5,578,999) 
 
641,087  
 
(927,884)
 
(127,681)
Accrued payroll and employees’ welfare
 
296,065  
 
131,971  
 
854,644
 
117,603
Taxes payable
961,964  
(1,036,483) 
(171,884)
(23,652)
Net cash used in operating activities
 
(26,247,237)
 
(51,688,331)
 
(43,747,933)
 
(6,019,914)
Cash flows from investing activities:
 
 
 
 
 
 
Purchases of property and equipment
 
(692,206) 
 
(940,673) 
 
(282,184)
 
(38,830)
Proceeds from disposal of property and equipment
 
—  
 
31,950  
 
20,000
 
2,752
Purchase of land use right
 
—  
 
—  
 
(15,000,251)
 
(2,064,103)
Repayments of loans to third parties
171,435,032
40,113,311
117,522,129
16,171,583
Payments made for loans to third parties
(171,071,510)
(103,146,761)
(196,437,504)
(27,030,700)
Payments and prepayments for construction in progress
—
—
(219,132)
(30,154)
Payments for short-term investments
 
—  
 
(290,051,964) 
 
(203,481,600)
 
(28,000,000)
Redemption of short-term investments
—
108,769,464
300,863,518
41,400,198
Net cash (used in) provided by investing activities
 
(328,684) 
 
(245,224,673) 
 
2,984,976
 
410,746
 
 
 
 
 
 
Cash flows from financing activities:
Proceeds from short-term bank loans
 
10,000,000  
 
13,491,481  
 
11,581,000
 
1,593,599
Repayments of short-term bank loans
 
(15,000,000) 
 
(11,040,000) 
 
(11,632,755)
 
(1,600,720)
Repayments of short-term borrowings
 
(530,000) 
 
—  
 
—
 
—
Proceeds from short-term borrowings-related parties
 
11,100,000  
 
15,013,115  
 
10,000,000
 
1,376,046
Repayments of short-term borrowings-related parties
(14,770,000)
(9,000,000)
(10,018,222)
(1,378,553)
Repayments of long-term borrowings-related party
 
(892,701) 
 
(1,499,667) 
 
—
 
—
Proceeds from warrants issued with common stock
—
17,493,069
—
—
Proceeds from sale of ordinary shares, net of issuance costs
 
—  
 
28,174,993  
 
77,711,533
 
10,693,463
Proceeds from sale of prefunded warrants, net of issuance costs
93,321
3,750,282
—
—
Redemption of warrants
 
—  
 
—  
 
(32,617,499)
 
(4,488,317)
Net cash (used in) provided by financing activities
 
(9,999,380) 
 
56,383,273  
 
45,024,057
 
6,195,518
Effect of exchange rate fluctuation on cash and restricted cash
 
10,275,148  
 
27,688,659  
 
1,722,165
 
236,978
Net increase (decrease) in cash and restricted cash
 
(26,300,153) 
 
(212,841,072) 
 
5,983,265
 
823,328
Cash and restricted cash at beginning of year
 
343,998,570  
 
317,698,417  
 
104,857,345
 
14,428,851
Cash and restricted cash at end of year
¥
317,698,417  
¥
104,857,345  
¥
110,840,610
$
15,252,179
 
 
 
 
 
 
Supplemental cash flow information
Cash paid during the year for interest
¥
1,427,174  
¥
1,200,699  
¥
659,472
$
90,945
Cash paid during the year for taxes
¥
10,214  
¥
18,339  
¥
2,137,166
$
294,729
Reconciliation of cash and restricted cash, beginning of year
 
   
 
   
 
  
 
  
Cash
¥
343,998,570
¥
316,974,857
¥
104,125,800
$
14,328,187
Restricted cash
—
723,560
731,545
100,664
Cash and restricted cash, beginning of year
¥
343,998,570
¥
317,698,417
¥
104,857,345
$
14,428,851
Reconciliation of cash and restricted cash, end of year
Cash
¥
316,974,857
¥
104,125,800
¥
109,991,674
$
15,135,362
Restricted cash
723,560
731,545
848,936
116,817
Cash and restricted cash, end of year
¥
317,698,417
¥
104,857,345
¥
110,840,610
$
15,252,179
Non-cash investing and financing activities
Cancellation of shares issued to Starry Lab
¥
(27,675,450)
¥
—
¥
—
$
—
Right-of-use assets obtained in exchange for operating lease obligations
¥
937,672
¥
75,182
¥
8,303,099
$
1,145,050
Reduction of right-of-use assets and operating lease obligations due to early termination of lease agreement
¥
—
¥
62,357
¥
61,301
$
8,454
Inventories transferred to and used as fixed assets
¥
—
¥
(65,456) 
¥
—
$
—
Receivable for disposal of property and equipment
¥
3,000
¥
—  
¥
—
$
—
Other payable due to non-controlling interest converted into capital contribution
¥
1,130,000
¥
—
¥
$
The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents
F-8
NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS
Organization – Recon Technology, Ltd (the “Company”, “We” or “Our”) was incorporated under the laws of the Cayman Islands on August 21,
2007 as a limited liability company. By far, the Company provides specialized equipment, automation systems, tools, chemicals, outsourcing
platform services and field services to energy industry companies mainly in the People’s Republic of China (the “PRC”).
VIEs:
The Company, along with its wholly-owned subsidiaries Recon Investment Ltd. (“Recon-IN”) and Recon Hengda Technology (Beijing) Co., Ltd.
(“Recon-BJ”), conducts its business through the following PRC legal entities (“Domestic Companies”) that operate in the Chinese energy industry:
1.
Beijing BHD Petroleum Technology Co., Ltd. (“BHD”),
2.
Nanjing Recon Technology Co., Ltd. (“Nanjing Recon”).
The Company has signed Exclusive Technical Consulting Service Agreements with each of the Domestic Companies, and Equity Interest Pledge
Agreements and Exclusive Equity Interest Purchase Agreements with their shareholders (collectively the “VIE Agreements”). Pursuant to these VIE
Agreements, the Company has the ability to substantially influence each of the Domestic Companies’ daily operations and financial affairs, appoint
their senior executives and approve all matters requiring shareholder approval. The VIE agreements are designed to render the Company as the
primary beneficiary of and entitle the Company of rights to consolidate each Domestic Company for accounting purposes. We believe that the
Domestic Companies should be treated as Variable Interest Entities (“VIEs”) under the Statement of Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 810 Consolidation and we are regarded as the primary beneficiary of the VIEs.
On February 21, 2019, the Company’s board of directors approved transferring the VIEs and VIE-controlled companies from Jining Recon
Technology Ltd. (“Recon-JN”) to Recon-BJ. At the time, both Recon-JN and Recon-BJ were the Company’s wholly owned subsidiaries in China.
On April 1, 2019, the Company completed the VIE transfer process and then completed the dissolution of Recon-JN on April 10, 2019, and
subsequently completed the dissolution of Recon Technology Co., Limited (“Recon-HK”) on May 15, 2020. The Company does not expect any
negative impact of this process on its operations.
On December 17, 2015, Huang Hua BHD Petroleum Equipment Manufacturing Co., Ltd (“HH BHD”), a fully owned subsidiary established by
BHD was organized under the laws of the PRC, focusing on the design, assemble and manufacture of hearing equipment.
Gan Su BHD Environmental Technology Co., Ltd (“Gan Su BHD”) was established on May 23, 2017, with registered capital of ¥50.0 million. The
paid in capital was ¥27,495,000 ($3,783,438) as of June 30,2024. BHD owned an equity interest of 49% of Gan Su BHD, and the remaining 51%
equity interests was owned by an individual shareholder upon incorporation of Gan Su BHD. On September 25, 2017, the individual shareholder
became the minority shareholder by transferring 2.0% equity shares to BHD. On April 26, 2021, the minority shareholder of Gan Su BHD
transferred 15.4% of her equity interest to BHD. On May 19, 2021, the minority shareholder transferred 3.6% of her equity interest and BHD
transferred 15.4% of its equity interest of Gan Su BHD to Nanjing Recon. There was no consideration paid for the transfers, and after the transfers,
BHD owns equity an interest of 51% and Nanjing Recon owns an equity interest of 19% of Gan Su BHD, which is focusing on oilfield sewage
treatment and oily sludge disposal projects.
Qing Hai BHD New Energy Technology Co., Ltd. (“Qinghai BHD”) was established on October 16, 2017, with registered capital of ¥50.0 million.
The paid in capital was ¥4,200,000 ($577,939) as of June 30, 2024. BHD owned an equity interest of 55% of Qinghai BHD previously; however,
based on an agreement signed by the shareholders of Qinghai BHD dated October 23, 2018, each of the other two individual shareholders agreed to
reduce 10% of their equity interests. As a result, Qinghai BHD returned ¥200,000 paid in capital back to one of the individual shareholders. After the
new arrangement, BHD owns a total interest of 75% of Qinghai BHD. The remaining paid in capital should be contributed by BHD and the other
individual shareholder is ¥33,300,000 ($4,582,232) and ¥12,500,000 ($1,720,057) respectively. Based on the requirements of the Company Law of
China, the remaining capital will be injected before June 30, 2032.

Table of Contents
F-9
As the energy consumption market opened to private and foreign companies, and online payment technology developed, the Domestic Companies
began to invest in the downstream of the oil industry. On December 15, 2017, BHD and Nanjing Recon entered into a subscription agreement with
Future Gas Station (Beijing) Technology, Ltd (“FGS”), pursuant to which the Domestic Companies acquired an 8% equity interest in FGS.
Established in January 2016, FGS is a service company focusing on providing new technical applications and data operations to gas stations and
provides solutions to gas stations to improve their operations and their customers’ experience. On August 21, 2018, the Domestic Companies entered
into an investment agreement and a supplemental agreement (collectively, the “Investment Agreement”) with FGS and the other shareholders of
FGS. Pursuant to the Investment Agreement, our VIEs’ ownership interest in FGS shall increase from 8% to 43%, in exchange for their investment
in FGS for a total amount of ¥10.0 million in cash and the issuance of 487,057 (27,059 shares post 2024 Reverse Split) restricted Class A Ordinary
Shares to the other shareholders of FGS with certain conditions. As of June 30, 2019, the Domestic Companies invested an aggregate amount of
¥35,116,707 in FGS and issued 487,057 (27,059 shares post 2024 Reverse Split) restricted shares in total to other shareholders of FGS, and the
Domestic Companies’ ownership interest in FGS has increased to 43%. On February 4, 2021, Nanjing Recon and BHD, entered into the fourth
supplemental agreement to the investment agreement with FGS and FGS’ founding shareholders to acquire 8% equity ownership of FGS. The
transaction has been closed. As a result, the Domestic Companies collectively own 51% interest of FGS and began to consolidate the financial
results of FGS since January 2021. Through the fourth supplemental agreement, the Domestic Companies waived the requirement on FGS’
performance goal about the number of gas stations. Accordingly, the Domestic Companies agreed to pay for the balance of the investment and
cancelled the related lock-up terms on the restricted shares, in exchange of the additional 8% equity ownership of FGS.
The VIE contractual arrangements
The Company’s main operating entities, the Domestic Companies, are controlled through contractual arrangements by the Company.
A VIE is an entity which has a total equity investment that is insufficient to finance its activities without additional subordinated financial support, or
whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual
returns of the entity or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial
interest in a VIE is deemed to be the primary beneficiary of, and must consolidate, the VIE, because it met the condition under accounting principles
generally accepted in the United States of America (“U.S. GAAP”) to consolidate the VIE.
The Company is deemed to have a controlling financial interest in and be the primary beneficiary of the Domestic Companies because it has both of
the following characteristics:
●
The power to direct activities of the Domestic Companies that most significantly impact such entities’ economic performance, and
●
The obligation to absorb losses of, and the right to receive benefits from, the Domestic Companies that could potentially be significant to
such entities.
Pursuant to these contractual arrangements, the Domestic Companies shall pay service fees equal to all of their net profit after tax payments to the
Company. Accordingly, the Company has the right to absorb 90% of net interest or 100% of net loss of those Domestic Companies for accounting
purposes. Such contractual arrangements are designed so that the operations of the Domestic Companies are solely for the benefit of the Company,
and therefore the Company must consolidate the Domestic Companies under U.S. GAAP.
Risks associated with the VIE structure
The Company believes that the contractual arrangements with the VIEs and the shareholders of the VIEs are in compliance with PRC laws and
regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual
arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government
could:
●
revoke the business and operating licenses of the Company’s PRC subsidiary and the VIEs;
●
discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and the VIEs;

Table of Contents
F-10
●
limit the Company’s business expansion in China by way of entering into contractual arrangements;
●
impose fines or other requirements with which the Company’s PRC subsidiary and the VIEs may not be able to comply;
●
require the Company or the Company’s PRC subsidiary and the VIEs to restructure the relevant ownership structure or operations; or
●
restrict or prohibit the Company’s use of the proceeds from public offering to finance the Company’s business and operations in China.
The Company’s ability to conduct its businesses may be negatively affected if the PRC government were to carry out of any of the aforementioned
actions. As a result, the Company may not be able to consolidate the VIEs in its consolidated financial statements as it may lose the ability to
exercise its rights as the primary beneficiary over the VIEs and it may lose the ability to receive economic benefits from the VIEs. The Company,
however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiary and the VIEs. There are no
terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to
provide financial support to the VIEs and the VIEs’ subsidiaries. However, when the VIEs and the VIEs’ subsidiaries ever need financial support,
the Company or its subsidiaries has, at its option and subject to statutory limits and restrictions, provided financial support to the VIEs and the VIEs’
subsidiaries through loans to the VIEs and the VIEs’ subsidiaries.
Non-VIE:
The Company, along with its wholly-owned subsidiaries, Recon Investment Ltd. (“Recon-IN”) and the following PRC legal entities that operate in
the Chinese chemical recycling industry:
1.
Shandong Recon Renewable Resources Technology Co., Ltd. (“Recon-SD”)
2.
Guangxi Recon Renewable Resources Technology Co., Ltd. (“Recon-GX”)
On October 10, 2023, Shandong Recon Renewable Resources Technology Co., Ltd (“Recon-SD”), a fully owned subsidiary established by Recon-
IN, with registered capital of $30.0 million. The paid in capital was $10.0 million as of this report date. Shandong Recon focuses on the Plastic
chemical cycles business. On February 22, 2024, Guangxi Recon Renewable Resources Technology Co., Ltd. (“Recon-GX”), a fully owned
subsidiary established by Recon-IN, with registered capital of $30.0 million., focusing on the Plastic chemical cycles business. The paid in capital
was $1.0 million as of this report date.
Nature of Operations – The Company engages in (1) providing equipment, tools and other components and parts related to oilfield production and
other energy industries companies, including simple installations in connection with some projects; (2) providing services to improve production and
efficiency of exploited oil wells, (3) developing and selling its own specialized industrial automation control and information solutions, (4)
designing, testing and implementing solution of sewage and oily sludge treatment, production and sales of related integrated equipment and project
services, and (5) developing, upgrading and maintaining the online operation and cooperation platform of gas stations, marketing and promotion
services, (6) Plastic chemical cycles business, etc.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP and are expressed
in United States dollars (“US dollars”).
Principles of Consolidation - The consolidated financial statements include the accounts of the Company, all the subsidiaries, VIEs and subsidiaries
of VIEs of the Company. All transactions and balances between the Company and its subsidiaries and VIEs have been eliminated upon
consolidation.

Table of Contents
F-11
We consolidate all subsidiaries in which we have a controlling financial interest and variable interest entities (“VIEs”) for which we or one of our
consolidated subsidiaries is the primary beneficiary. Control generally equates to ownership percentage, whereby (i) affiliates that are more than
50% owned are consolidated; (ii) investments in affiliates of 50% or less but greater than 20% are generally accounted for using the equity method
where we have determined that we have significant influence over the entities; and (iii) investments in affiliates of 20% or less are generally
accounted for using the cost method.
We consolidate a VIE when we have both the power to direct the activities that most significantly impact the results of the VIE and the right to
receive benefits or the obligation to absorb losses of the entity that could be potentially significant to the VIE. Along with the VIEs that are
consolidated in accordance with the above guidelines, we also hold variable interests in other VIEs that are not consolidated because we are not the
primary beneficiary. We continually monitor both consolidated and unconsolidated VIEs to determine if any events have occurred that could cause
the primary beneficiary to change. A change in determination could have a material impact on our 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. 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.
Assets recognized as a result of consolidating VIEs do not represent additional assets that could be used to satisfy claims against the Company’s
general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general
assets; rather, they represent claims against the specific assets of the consolidated VIEs.
Currency Translation - The Company’s functional currency is US dollars and the consolidated financial statements have been expressed in Chinese
Yuan (“RMB”) as RMB is the Company’s reporting currency. The consolidated financial statements as of and for the year ended June 30, 2024 have
been translated into US dollars solely for the convenience of the readers. The translation has been made at the rate of ¥7.2672 = US$1.00, the
approximate exchange rate prevailing on June 30, 2024. These translated US dollar amounts should not be construed as representing Chinese Yuan
amounts or that the Chinese Yuan amounts have been or could be converted into US dollars.
Estimates and Assumptions  -  The preparation of the consolidated financial statements in conformity with US GAAP, which 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 revenue 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 allowance for credit losses related to accounts receivable, other receivables and purchase advances, allowance for inventory, the useful lives
of property and equipment, valuation allowance for deferred tax assets, impairment assessment for long-lived assets, goodwill and investment in
unconsolidated entity, the discount rate for lease and investment, valuation of the convertible notes, price purchase allocation for business
combination and the fair value of share-based payments. The use of estimates is an integral component of the financial reporting process; actual
results could differ from those estimates.
The key assumptions underlying the Company’s accounting for material arrangements and the reasonably likely material effects of resolving any
uncertainties on the Company’s allowance for credit losses related to purchase advances. The production of the Company’s products requires
custom-made equipment from its suppliers. To ensure that it can secure the required customized equipment, the Company often needs to make full
prepayment for its intended purchases. As a standard practice in the petroleum extraction industry, the Company generally must submit a bid in order
to secure the sales contract. The bidding process generally takes between one month to one year and the timing depends on the size of the overall
project, which timing and size are generally controlled by its client. In order to secure timely purchase delivery and to meet its product delivery
schedule, the Company normally prepays for the purchase advances if the Company believes that it is more than likely to win the bid for the sales
contract which is accounted as pre-contract costs. After winning the bid and securing the sale contract, the Company normally needs to deliver its
products approximately within one week to six months. Based on the Company’s historical experience, the Company generally is able to realize its
purchase advances on the customized equipment that it orders. If it subsequently confirms that the Company is unable to secure the planned
contracts with a customer after making the advance payments for these planned contracts, the Company evaluates the probable recoverability of the
pre-contract cost and charges to expenses when the Company determines that the recovery of such pre-contract cost is improbable.

Table of Contents
F-12
Fair Values of Financial Instruments - The U.S. GAAP accounting standards regarding fair value of financial instruments and related fair value
measurements define fair value, establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value.
The three levels of inputs are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable
for the 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.
Accounting guidance also describes three main approaches to measure the fair value of assets and liabilities: (1) market approach; (2) income
approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving
identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value
amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on
the amount that would currently be required to replace an asset.
The carrying amounts reported in the consolidated balance sheets for short-term investments, accounts receivable, notes receivable, other
receivables, purchase advances, contract cost, accounts payable, other payable, accrued liabilities, contract liabilities, short-term bank loans and
short-term borrowings – related parties approximate fair value because of the immediate or short-term maturity of these financial instruments. The
carrying amounts of the long-term borrowings due to related party approximate its fair value because the stated interest rates approximate rates
currently offered by financial institutions for similar debt instruments of comparable credit risk and maturities.
Cash - Cash includes cash on hand consisting of coins, currency, undeposited checks, money orders and drafts, demand deposits in banks, certain
short-term highly liquid investments and cash in transit.
Short-term investments - Short-term investments include wealth management products, which are certain deposits with fixed interest rates and the
principal are guaranteed by the financial institutions. The carrying values of the Company’s short-term investments approximate fair value because
of their short-term maturities within one year. The interest earned is recognized in the consolidated statements of operations and comprehensive
income (loss) as interest income. As of June 30, 2023 and June 30, 2024, the Company had short-term investments balance of ¥184.2 million and
¥88.1 million ($12.1 million), including accrued interests of ¥2.9 million and ¥0.9 million ($121,834), respectively.
Accounts Receivables, Net, Other Receivables, Net and Loan to Third Parties - Accounts receivables are carried at original invoiced amount less a
provision for any potential uncollectible amounts. In July 2020, the Company adopted ASU 2016-13, Topics 326-Credit Loss, Measurement of
Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the
current expected credit loss (“CECL”) methodology, as its accounting standard for its accounts receivable and other receivables. Other receivables
and loan to third parties arise from transactions with non-trade customers.
The adoption of the credit loss accounting standard has no material impact on the Company’s consolidated financial statements as of July 1, 2020.
Accounts receivable, other receivables and loan to third parties are recognized and carried at carrying amount less an allowance for credit loss, if
any. The Company maintains an allowance for credit losses resulting from the inability of its trade and non-trade customers (“customers”) to make
required payments based on contractual terms. The Company reviews the collectability of its receivables on a regular and ongoing basis. The
Company has also included in calculation of allowance for credit losses. After all attempts to collect a receivable have failed, the receivable is
written off against the allowance. The Company also considers external factors to the specific customer, including current conditions and forecasts of
economic conditions. In the event the Company recovers amounts previously reserved for, the Company will reduce the specific allowance for credit
losses. The net recovery of provision for credit loss for the year ended June 30, 2024 decreased by approximately ¥7.2 million ($1.0 million) from
the year ended June 30, 2023.

Table of Contents
F-13
The Company evaluates the creditworthiness of all of its customers individually before accepting them and continuously monitors the recoverability
of accounts receivable, other receivables and loan to third parties. If there are any indicators that a customer may not make payment, the Company
may consider making provision for non-collectability for that particular customer. At the same time, the Company may cease further sales or
services to such customer. The following are some of the factors that the Company considers in determining whether to discontinue sales, record as
contra revenue or allowance for credit losses:
●
the oil price and fluctuation of the overall oil industry;
●
the customer fails to comply with its payment schedule;
●
the customer is in serious financial difficulty;
●
a significant dispute with the customer has occurred regarding job progress or other matters;
●
the customer breaches any of the contractual obligations;
●
the customer appears to be financially distressed due to economic or legal factors;
●
the business between the customer and the Company is not active; and
●
other objective evidence indicates non-collectability of the accounts receivable, other receivables and loan to third parties.
The Company considers the following factors when determining whether to permit a longer payment period or provide other concessions to
customers:
●
the customer’s past payment history;
●
the customer’s general risk profile, including factors such as the customer’s size, age, and public or private status;
●
macroeconomic conditions that may affect a customer’s ability to pay; and
●
the relative importance of the customer relationship to the Company’s business.
Notes Receivable - Notes receivable represent short-term notes receivable the Company receives from its customers as payment for amounts owed to
the Company in normal course of business operation. The notes receivables are issued by reputable financial institutions that entitle the Company to
receive the full-face amount from the financial institutions at maturity, which generally ranges from three to six months from the date of issuance.
Purchase Advances, Net - Purchase advances are the amounts prepaid to suppliers for business activities, such as standard raw materials, supplies
and services. These types of prepayments will be expensed when those products or services have been rendered or consumed.
Inventories, Net -  Inventories are stated at the lower of cost or net realizable value, on a first-in-first-out basis. The methods of determining
inventory costs are used consistently from year to year. Market value of the inventories is determined based on its estimated net realizable value,
which is generally the selling price less normally predictable costs of disposal and transportation. The Company records write-downs of inventory
that is obsolete or in excess of anticipated demand or market value based on consideration of product lifecycle stage, technology trends, product
development plans and assumptions about future demand and market conditions. Actual demand may differ from forecasted demand, and such
differences may have a material effect on recorded inventory values. Inventory write-downs are charged to cost of revenue and establish a new cost
basis for the inventory.

Table of Contents
F-14
Property and Equipment, Net - 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 five years. Production equipment includes Equipment
and Utilities and Facilities, both of which are depreciated using the straight-line method based on the estimated useful life of the assets. The useful
life of Equipment is 10 years, while the useful life of Utilities and Facilities is 20 years. Leasehold improvements are amortized over the shorter of
the lease term or the estimated useful life of the assets.
Items
    
Useful life
Motor vehicles
  3-5 years
Office equipment and fixtures
2-5 years
Production equipment, including:
Equipment
10 years
Utilities and Facilities
  20 years
Leasehold improvement
  Lesser of useful life and lease term
Construction in progress includes property and equipment in the course of construction for production or for its own use purposes. Construction in
progress is carried at cost less any recognized impairment loss. Construction in progress is classified to the appropriate category of property and
equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when
the assets are ready for their intended use.
Goodwill - Goodwill represents the excess of the purchase price over the fair value of assets acquired. The goodwill impairment test compares the
fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, goodwill
of the reporting unit would be considered impaired. To measure the amount of the impairment loss, the implied fair value of a reporting unit’s
goodwill is compared to the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of
goodwill recognized in a business combination. If the carrying amount of a reporting unit’s goodwill exceeds the implied fair value of that goodwill,
an impairment loss is recognized in an amount equal to that excess. For each of these tests, the fair value of each of the Company’s reporting units is
determined using a combination of valuation techniques, including a discounted cash flow methodology. To corroborate the discounted cash flow
analysis performed at each reporting unit, a market approach is utilized using observable market data such as comparable companies in similar lines
of business that are publicly traded or which are part of a public or private transaction (to the extent available). The Company evaluates qualitative
factors and overall financial performance to determine whether it is necessary to perform the first step of the two-step goodwill test. This step is
referred to as “Step 0.” Step 0 involves qualitative assessment, among other qualitative factors, weighing the relative impact of factors that are
specific to the reporting unit as well as industry and macroeconomic factors. After assessing those various factors, if it is determined that it is more
likely than not that the fair value of a reporting unit is less than its carrying amount, then the entity will need to proceed to the first step of the
goodwill impairment test. Step 1 of the goodwill impairment test, used to identify potential impairment, compares the fair value of the reporting unit
with its carrying amount, including goodwill. If the fair value, which is based on future cash flows, exceeds the carrying amount, goodwill is not
considered impaired. If the carrying amount exceeds the fair value, the Step 2 must be performed to measure the amount of the impairment loss, if
any. The Company has adopted Accounting Standards Updates (“ASU”) 2017-04, simplifying the Test for Goodwill Impairment, which permits the
Company to impair the difference between carrying amounts in excess of the fair value of the reporting unit as the reduction in goodwill. ASU 2017-
04 eliminates the requirement in previous GAAP to perform Step 2 of the goodwill impairment test. The Company considers various factors in
performing the qualitative test, including macroeconomic conditions, industry and market considerations, the overall financial performance of the
Company’s reporting units, the Company’s share price and the excess amount or “cushion” between the Company reporting unit’s fair value and
carrying value as indicated on the Company’s most recent quantitative assessment. Impairment loss on goodwill was ¥2,266,893, ¥4,730,002 and
¥nil for the years ended June 30, 2022, 2023 and 2024, respectively.
Intangible Assets, Net - Intangible assets is composed of customer relationship, which is measured at fair value on initial recognition. Identifiable
intangible assets resulting from the acquisitions of subsidiaries accounted for using the purchase method of accounting are estimated by management
based on the fair value of assets received. The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and
reviews these assets for impairment. The Company typically amortizes its intangible assets with definite useful lives on a straight-line basis over the
shorter of the contractual terms or the estimated useful lives.

Table of Contents
F-15
Impairment of Long-Lived Assets - Long-lived assets are 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. The Company considers the events or changes in circumstances that may indicate the impairment of the Company’s long-lived assets, such as
a significant decrease occurs in the market price of a long-lived asset (or asset group); a significant adverse change in the extent or manner in which
a long-lived asset (or asset group) is being used or in its physical condition; a significant adverse change in legal factors or in the business climate
that could affect the value of a long-lived asset (or asset group), including an adverse action or assessment by a regulator; an accumulation of costs
significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (or asset group); a current-period
operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses
associated with the use of a long-lived asset (or asset group); and a current expectation that, more likely than not, a long-lived asset (or asset group)
will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. Impairment for the long-lived assets was
¥nil, ¥6,259,124 and ¥nil for the years ended June 30, 2022, 2023 and 2024, respectively.
Long-term Investments  - ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities amends certain aspects of
recognition, measurement, presentation and disclosure of financial instruments. The main provisions require equity investments (except those
accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value through
earnings, unless they qualify for a measurement alternative. The new guidance requires modified retrospective application to all outstanding
instruments for fiscal years beginning after December 15, 2017, with a cumulative effect adjustment recorded to opening accumulated deficit as of
the beginning of the first period in which the guidance becomes effective. However, changes to the accounting for equity securities without a readily
determinable fair value would be applied prospectively. The Company adopted the new financial instruments accounting standard from July 1, 2018.
-      Equity Investments with Readily Determinable Fair Values - Equity investments with readily determinable fair values are measured and
recorded at fair value using the market approach based on the quoted prices in active markets at the reporting date. The Company classifies the
valuation techniques that use these inputs as Level 1 of fair value measurements.
-      Equity Investments without Readily Determinable Fair Values - After the adoption of this new accounting standard, the Company elected to
record equity investments without readily determinable fair values and not accounted for under the equity method at cost, less impairment,
adjusted for subsequent observable price changes on a nonrecurring basis, and report changes in the carrying value of the equity investments in
current earnings. Changes in the carrying value of the equity investments are required to be made whenever there are observable price changes
in orderly transactions for the identical or similar investment of the same issuer. The implementation guidance notes that an entity should make
a “reasonable effort” to identify price changes that are known or that can reasonably be known.
-      Equity Investments Accounted for Using the Equity Method - The Company accounts for its equity investment over which it has significant
influence but does not own a majority equity interest or otherwise control using the equity method. The Company adjusts the carrying amount of
the investment and recognizes investment income or loss for share of the earnings or loss of the investee after the date of investment. The
Company assesses its equity investment for other-than-temporary impairment by considering factors including, but not limited to, current
economic and market conditions, operating performance of the entities, including current earnings trends and undiscounted cash flows, and
other entity-specific information. The fair value determination, particularly for investment in privately held entities, requires judgment to
determine appropriate estimates and assumptions. Changes in these estimates and assumptions could affect the calculation of the fair value of
the investment and determination of whether any identified impairment is other-than-temporary.
An impairment charge is recorded if the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-
temporary. The Company recorded no impairment loss on its equity method investment during the years ended June 30, 2022, 2023 and 2024. The
Company recorded a ¥15,411, ¥nil and ¥nil investment income on its equity method investment in unconsolidated entities during the years ended
June 30, 2022, 2023 and 2024, respectively.

Table of Contents
F-16
Business Combinations - The Company accounts for its business combinations using the acquisition method of accounting in accordance with
Accounting Standards Codification (“ASC”) Topic 805 “Business Combinations”. The consideration transferred in an acquisition is measured as the
aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent
considerations and all contractual contingencies as of the acquisition date. Transaction costs directly attributable to the acquisition are expensed as
incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of
the extent of any noncontrolling interests. The excess of (i) the total costs of acquisition, fair value of the noncontrolling interests and acquisition
date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as
goodwill. If the cost of acquisition is less than the fair value of the net assets of the acquiree, the difference is recognized directly in the consolidated
statements of operation and comprehensive income (loss). During the measurement period, which can be up to one year from the acquisition date,
the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion
of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent
adjustments are recorded to the consolidated statements of operation and comprehensive income (loss).
In a business combination considered as a step acquisition, the Company remeasures the previously held equity interest in the acquiree immediately
before obtaining control at its acquisition-date fair value and the re-measurement gain or loss, if any, is recognized in the consolidated statements of
operation and comprehensive income (loss).
Non-controlling Interests - For the Company’s majority-owned subsidiaries, VIEs and subsidiaries of VIEs, a non-controlling interest is recognized
to reflect the portion of their equity which is not attributable, directly or indirectly, to the Company. Non-controlling interests are classified as a
separate line item in the equity section of the Company’s consolidated balance sheets and have been separately disclosed in the Company’s
consolidated statements of operation and comprehensive income (loss) to distinguish the interests from that of the Company.
Revenue Recognition - In accordance with ASC 606, “Revenue from Contracts with Customers”, revenue is recognized when all of the following
five steps are met: (i) identify the contract(s) with the customer; (ii) identify the performance obligations in the contract; (iii) determine the
transaction price; (iv) allocate the transaction price to the performance obligations; (v) recognize revenue when (or as) each performance obligation
is satisfied. The core principle underlying the new revenue recognition Accounting Standards Update (“ASU”) is that the Company recognizes
revenue to represent the transfer of goods or services to customers in an amount that reflects the consideration to which the Company expects to be
entitled in such exchange. The Company identifies contractual performance obligations and determines whether revenue should be recognized at a
point in time or over time, based on when goods or services are provided to a customer.
Disaggregation of Revenue
Revenue are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration
the Company expects to be entitled to in exchange for those goods or services.
The following items represent the Company’s revenue disaggregated by revenue source. In accordance with ASC 606-10-50-5, the Company selects
categories to present disaggregated revenue that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by
economic factors and delivery conditions of products and fulfillment of obligations.
The Company’s disaggregation of revenue for the years ended June 30, 2022, 2023 and 2024 is disclosed in Note 25.
Automation Products and Software; Equipment, Accessories and Others
The Company generates revenue primarily through delivery of standard or customized products and equipment, including automation products,
furnaces and related accessories. Revenue is recognized when products are delivered, and acceptance reports are signed off by customers.

Table of Contents
F-17
The sale of automation products or specialized equipment when combined with services represent a single performance obligation for the
development and construction of a single asset. The Company may also provide design or installation services to clients as there may be such
obligation in contracts. The promises to transfer the goods and provision of services are not separately identifiable, which is evidenced by the fact
that the Company provides significant services of integrating the goods and services into a single deliverable for which the customer has contracted.
For such sales arrangements, the Company recognizes revenue using input method, based on the relationship between actual costs incurred
compared to the total estimated costs for the contract. Such method is adopted because the Company believes it best depicts the transfer of goods
and services to the customer.
Oilfield Environmental Protection Service
The Company provides wastewater treatment products and related service to oilfield and chemical industry companies and generates revenue from
special equipment, self-developed chemical products and supporting service, transfer. Revenue is recognized when contract obligations have been
performed. For such sales arrangements, the Company recognizes revenue when products are delivered, on-site assistance services rendered, and
acceptance reports are signed off by customers. Such method is adopted because the Company believes it best depicts the transfer of services to the
customer.
The Company provides oily sludge disposal and treatment services to oilfield companies and generates revenue from treatment services of oily
sludge. Revenue is recognized when contract obligations have been performed. For such sales arrangements, the Company recognizes revenue using
output method, based on the percentage-of-completion method. Such method is adopted because the Company believes it best depicts the transfer of
services to the customer.
Platform Outsourcing Services
The Company provides online platform development, maintenance, and operation services to gas stations around different provinces in China to
complete online transactions; and API (application programming interface) port export service and related maintain services to business cooperators
of different industries that may have transactions in the refueling scenario during the service contract period. The Company considered these
performance obligations to be indistinguishable contractual performance obligations. As the Company does not create or enhance assets controlled
by its customers during the provision of its services, and its customers do not simultaneously receive and consume benefits, the Company recognizes
revenue at a single point in time, when the online transaction is completed. The Company’s services enable terminal users of different mobile apps
run by its clients or cooperators to complete refueling in cash or online through different payment channels, when each transaction, including
refueling and payment, is completed, the Company is entitled to charge with pre-settled rates of each transaction amount as service fee and recognize
the underlying amount as revenue. Related fees are generally billed monthly, based on a per transaction basis.
Arrangements with Multiple Performance Obligations
Contracts with customers may include multiple performance obligations. For such arrangements, the Company will allocate revenue to each
performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to
customers or using expected cost-plus margin.
Contract Balances
The Company’s contract balances include contract costs, net and contract liabilities from contracts with customers, and the following table provides
information about contract balances:
    
June 30,
    
June 30,
    
June 30,
2023
2024
2024
RMB
RMB
US Dollars
Contract costs, net
 
¥
49,572,685  
¥
48,335,817
$
6,651,230
Contract liabilities
 
¥
2,748,365  
¥
1,820,481
$
250,507

Table of Contents
F-18
Contract Costs, Net - The Company recognizes an asset from the costs incurred to fulfill a contract when those costs meet all of the following
criteria: (i) the costs relate directly to a contract or to an anticipated contract that the Company can specifically identify; (ii) the costs generate or
enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and (iii) the
costs are expected to be recovered.
-      Pre-Contract Costs - Pre-contract costs are the amounts prepaid to suppliers for purchases of customized equipment in anticipation of obtaining
planned contracts for the Company’s hardware and software revenue. If it subsequently confirms that the Company is unable to secure the
planned contracts with a customer after making the advance payments for these planned contracts, the Company evaluates the probable
recoverability of the pre-contract cost and charges to expenses when the Company determines that the recovery of such pre-contract cost is
improbable.
-      Executed Contract Costs - Direct costs, such as material, labor, depreciation and amortization and subcontracting costs and indirect costs
allocable to contracts include the costs of contract supervision, tools and equipment, supplies, quality control and inspection, insurance, repairs
and maintenance for quality assurance purposes before clients’ initial acceptance. Once products are delivered, installed and debugged for
intended use and accepted by a client, which may last from weeks to months (this process is decided by the client’s individual project
construction arrangement), the Company records revenue based on the contract or the final clients’ acceptance. Minor costs for repair during the
maintenance period after initial acceptance are recorded as cost of goods sold as they are incurred. All other general and administrative costs
and selling costs are charged to expenses as incurred. The Company generally ships its products approximately one week to six months after
production begins and the timing depends on the size of the overall project.
Contract Liabilities - Contract liabilities are recognized for contracts where payment has been received in advance of performance under the
contract. The Company’s contract liabilities consist primarily of the Company’s unsatisfied performance obligations as of the balance sheet dates.
Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition
criteria have been met.
Performance Obligations - Performance obligations include delivery of products and provision of services. The Company recognizes revenue when
performance obligations under the terms of a contract with its customer are satisfied. This occurs when the control of the goods and services have
been transferred to the customer. Accordingly, revenue for sale of goods is generally recognized upon shipment or delivery depending on the
shipping terms of the underlying contract, and revenue for provision of services is recognized upon the service rendered. Revenue is measured as the
amount of consideration the Company expects to receive in exchange for transferring goods and providing services.
Amounts billed to customers for shipping and handling activities to fulfill the Company’s promise to transfer the goods are included in revenue, and
costs incurred by the Company for the delivery of goods are classified as cost of sales in the consolidated statements of operations and
comprehensive income (loss). Sales, value added, and other taxes the Company collects concurrent with revenue-producing activities are excluded
from revenue. The Company generally offers assurance-type warranties for its products. The specific terms and conditions of those warranties vary
depending upon the product. The Company estimates the costs that may be incurred under its warranties and records a liability in the amount of such
costs at the time product revenue is recognized. Factors that affect the warranty liability include historical product-failure experience and estimated
repair costs for identified matters. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as
necessary. The amount accrued for expected returns and warranty claims was immaterial as of June 30, 2024. The amount of revenue recognized
during the years ended June 30, 2022, 2023 and 2024 that was previously included within contract liability balances was ¥7,390,276, ¥1,901,277 and
¥1,489,311 ($204,936), respectively.
Practical Expedients Elected
Incremental Costs of Obtaining a Contract - The Company has elected the practical expedient permitted in ASC 340-40-25-4, which permits an
entity to recognize incremental costs to obtain a contract as an expense when incurred if the amortization period will be less than one year and not
significant.

Table of Contents
F-19
Significant Financing Component - The Company has elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to not
adjust the promised amount of consideration for the effects of a significant financing component if a contract has a duration of one year or less. As
the Company’s contracts are majorly less than one year in length, consideration will not be adjusted. For the Company’s contracts include a standard
payment term of 90 days to 180 days; consequently, there is no significant financing component within contracts. There are also some new contracts
that will not be completed within one year from year 2023, the Company did calculation and the amount was not material as end of this fiscal year.
Share-Based Compensation - 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 valuation model estimated at the grant date based on the award’s fair value.
Research and Development Expenses - Research and development expenses relating to improving development efficiency and the quality of the
Company’s products and services, including the design of downhole automation platform systems and chemical products used for waste water
treatment, are expensed as incurred.
Shipping and Handling Costs - Shipping and handling cost incurred to ship products to customers are included in selling and distribution expenses.
Shipping and handling expenses were ¥537,371, ¥789,932 and ¥1,030,811 ($141,844) for the  years ended June  30, 2022, 2023 and 2024,
respectively.
Leases - The Company follows FASB ASC No.  842, Leases (“Topic 842”). The Company leases office spaces and land use rights, which are
classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the
exception of short-term leases, usually with initial term of 12 months or less) on the commencement date: (i) lease liability, which is a lessee’s
obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use (“ROU”) asset, which is an asset that
represents the lessee’s right to use, or control the use of, a specified asset for the lease term.
At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the
underlying lease. The ROU asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial
direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All ROU assets are reviewed for impairment
annually. Impairment for ROU lease assets were ¥nil, ¥834,975 and ¥nil for the years ended June 30, 2022, 2023 and 2024, respectively.
Income Taxes - Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes. Deferred taxes are
provided on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements, and tax carry forwards.
Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities
are adjusted through the provision for income taxes. The Company has not been subject to any income taxes in the United States or the Cayman
Islands.
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.
The Company has no uncertain tax position as of June 30, 2023 and 2024.
As of June 30, 2024, the tax years ended December 31, 2019 through December 31, 2023 for the Company’s People’s Republic of China (“PRC”)
subsidiaries remain open for statutory examination by PRC tax authorities.
Comprehensive Income (Loss) - Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income
(loss). The foreign currency translation gain or loss resulting from the translation of the financial statements expressed in US$ to RMB is reported in
other comprehensive income (loss) in the consolidated statements of operations and comprehensive income (loss).
Earnings (Loss) per Share - Earnings (loss) per share (“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 outstanding. Potentially dilutive Ordinary Shares consist of Ordinary Shares issuable upon the
conversion of ordinary share options, restricted shares and warrants (using the treasury share method).

Table of Contents
F-20
Given the fact that the “2024 Reverse Split” only affected the outstanding number of the Company’s Class A Ordinary Shares, the weighted average
number of Class A Ordinary Shares outstanding had been retroactively restated for the 1-for-18 reverse stock split. While the Class B Ordinary
Shares’ number and voting power were not subjected to the 2024 Reverse Split, according to the Company’s Fourth Amended and Restated M&A
and Articles of Association, “each Class B Ordinary Share entitles its holder the right to convert it into one eighteenth (1/18) of a Class A Ordinary
Share at any time. Correspondingly, each one eighteenth (1/18) of a share of Class B Ordinary Share has dividend rights equivalent to the one share
of Class A Ordinary Share”. In addition, (a) since becoming public, the Company has never declared a dividend, and (b) if a dividend were declared,
the Board of Directors would intend to make sure the dividends were properly allocated among the Class A Ordinary Shares and Class B Ordinary
Shares to give effect to the 1/18 ratio. The Company believes that all of these treatments are designed to ensure that the dividend rights and the
dividend rate are the same with that for Class A and Class B Ordinary Shares. To calculate EPS equally for all ordinary shares, the Company use the
sum of the weighted average number of Class A Ordinary Shares outstanding and one-eighteenth of the weighted average number of Class B
Ordinary Shares outstanding as the denominator.
The following table sets forth the computation of basic and diluted earnings per share for the years ended June 30, 2022, 2023 and 2024:
For the years ended June 30,
2022
2023
2024
    
2024
    
RMB
    
RMB
    
RMB
    
US Dollars
Numerator:
 
  
 
  
 
   
  
Net income (loss) attributable to Recon Technology, Ltd
¥ 95,586,795
¥
(59,167,301)
¥
(49,871,259)
$
(6,862,512)
Denominator:
 
 
  
 
  
 
  
Weighted-average number of ordinary shares outstanding – basic*
 
1,721,529
2,157,158
5,048,952
5,048,952
Class A Ordinary Shares*
1,612,427
1,880,065
4,654,508
4,654,508
Class B Ordinary Shares**
109,102
277,093
394,444
394,444
Outstanding options/warrants*
 
585,357
1,115,088
52,407
52,407
Potentially dilutive shares from outstanding options/warrants
 
—
—
—
—
Weighted-average number of ordinary shares outstanding – diluted*
 
1,721,529
2,157,158
5,048,952
5,048,952
Earnings (loss) per share – basic and diluted*
¥
55.52
¥
(27.43)
¥
(9.88)
$
(1.36)
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.
**
The Class B Ordinary Shares were not subjected to reverse stock split, and each Class B Ordinary Share is convertible into one-eighteenth
(1/18) of one Class A Ordinary Share at any time by the holder thereof, so the weighted average number of Class B Ordinary Shares is
calculated on a one-for-eighteen basis of issued and outstanding Class B Ordinary Shares.
Warrants - The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers
whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether
the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own
Class A Ordinary Shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s
control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time
of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of
additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the
warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated
fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations.

Table of Contents
F-21
Recently Issued Accounting Pronouncements
In March 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718) Scope Application of Profits Interest and Similar
Awards. The FASB is issuing this ASU to improve generally accepted accounting principles by adding an illustrative example to demonstrate how
an entity should apply the scope guidance to determine whether profits interest and similar awards (“profit interest awards”) should be accounted for
in accordance with Topic 718, Compensation - Stock Compensation. The illustrative example is intended to reduce 1) complexity in determining
whether a profits interest award is subject to the guidance in Topic 718 and 2) existing diversity in practice. For public business entities, the
amendments are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is
permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The amendments in this
Update should be applied either (1) retrospectively to all prior periods presented in the financial statements or (2) prospectively to profits interest and
similar awards granted or modified on or after the date at which the entity first applies the amendments. The Company evaluated and does not intend
to early adopt this standard.
In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures.” This
ASU expands required public entities’ segment disclosures, including disclosure of significant segment expenses that are regularly provided to the
chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition
for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. This ASU is effective for fiscal years beginning
after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is
currently evaluating the impact that the adoption of ASU  2023-07 will have on its condensed consolidated financial statement presentation or
disclosures.
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. This ASU requires
additional quantitative and qualitative income tax disclosures to enable financial statements users better assess how an entity’s operations and related
tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. This ASU is effective for fiscal years
beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-09
will have on its condensed consolidated financial statement presentation or disclosures.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on
the consolidated financial position, statements of operations and cash flows.
NOTE 3. ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following:
    
June 30, 
    
June 30, 
    
June 30, 
2023
2024
2024
Third Parties
RMB
RMB
US Dollars
Trade accounts receivable
 
¥
27,606,257  
¥
39,825,619
$
5,480,187
Allowance for credit losses
 
(152,842) 
(1,193,857)
 
(164,280)
Total third-parties, net
 
¥
27,453,415  
¥
38,631,762
$
5,315,907
    
 June 30,
    
June 30,
    
June 30,
2023
2024
2024
Third Parties- long-term
RMB
RMB
US Dollars
Trade accounts receivable
¥
842,607
¥
774,604
$
106,589
Allowance for credit losses
 
(842,607)
 
(774,604)
 
(106,589)
Total third-parties, net
¥
—
¥
—
$
—
Provision for credit losses of accounts receivable due from third parties was ¥153,329 for the years ended June 30, 2022. Net recovery of provision
for credit losses of accounts receivable due from third parties was ¥8,767,356 for the year ended June 30, 2023. Provision for credit losses of
accounts receivable due from third parties was ¥973,012 for the year ended June 30, 2024.
As the date of this report, approximately 35.2%, or ¥13.6 million ($1.9 million) of net outstanding balance as of June 30, 2024 has been collected.

Table of Contents
F-22
Movement of allowance for doubtful accounts is as follows:
    
June 30, 
    
June 30, 
    
June 30, 
2023
2024
2024
RMB
RMB
US Dollars
Beginning balance
 
¥
9,612,470  
¥
995,449
$
136,978
Charge to (reversal of) credit losses
 
(8,767,356) 
973,012
 
133,891
Foreign currency translation adjustments
150,335
—
—
Ending balance
 
¥
995,449  
¥
1,968,461
$
270,869
NOTE 4. NOTES RECEIVABLE
Notes receivable represented the non-interest-bearing commercial bills the Company received from the customers for the purpose of collection of
sales amounts, which ranged from three to six months from the date of issuance. As of June 30, 2023 and June 30, 2024, notes receivable was
¥3,742,390 and ¥1,341,820 ($184,641), respectively. As of June 30, 2023 and June 30, 2024, no notes were guaranteed or collateralized. As the date
of this report, 25.4%, or ¥340,820 ($46,898) have been subsequently collected, and the remaining balance is expected to be collected by December
2024.
NOTE 5. OTHER RECEIVABLES, NET
Other receivables, net consisted of the following:
    
June 30, 
    
June 30, 
    
June 30, 
2023
2024
2024
Third Party
RMB
RMB
US Dollars
Business advances to officers and staffs (A)
 
¥
854,162  
¥
1,373,300  
$
188,972
Deposits for projects
 
1,247,992  
1,056,316  
145,354
VAT recoverable
 
690,053  
583,413  
80,280
Others
 
1,392,126  
1,139,397  
156,787
Allowance for credit losses
(1,994,960)
(800,374)
(110,135)
Subtotal
2,189,373
3,352,052
461,258
Less: Long term portion (B)
 
(3,640) 
—  
—
Other receivable - current portion
 
¥
2,185,733
¥
3,352,052
$
461,258
(A) Business advances to officers and staffs represent advances for business travel and sundry expenses related to oilfield or on-site installation and
inspection of products through customer approval and acceptance.
(B) Long-term portion are mainly tender deposits for large-scale projects or rental contracts. These funds may not be collected back until projects
are finished or contracts are completed.
Net recovery of provision for credit losses of other receivables was ¥294,644 for the years ended June 30, 2022. Provision for credit losses of other
receivables was ¥1,375,516 for the year ended June 30, 2023. Net recovery of provision for credit losses of other receivables was ¥1,194,586
($164,381) for the year ended June 30, 2024.
Movement of allowance for credit losses is as follows:
    
June 30, 
    
June 30, 
    
June 30, 
2023
2024
2024
RMB
RMB
US Dollars
Beginning balance
 
¥
619,444  
¥
1,994,960
$
274,516
Charge to (reversal of) allowance
1,375,516
(1,194,586)
(164,381)
Ending balance
 
¥
1,994,960  
¥
800,374
$
110,135

Table of Contents
F-23
NOTE 6. LOANS TO THIRD PARTIES
Loans to third parties consisted of the following:
June 30, 
June 30, 
June 30, 
2023
2024
2024
    
RMB
    
RMB
    
US Dollars
Working fund to third party companies
¥
123,055,874
¥
208,928,370
$
28,749,500
Loans to third parties
¥
123,055,874
¥
208,928,370
$
28,749,500
Loans to third parties are mainly used for short-term funding to support the Company’s external business partners and at the same time the Company
can earn interest income from these loans. Most of these loans bear interest of 6% to 15.6% per annum and have terms of no more than one year,
except one of the loans to third party has term of three years. The Company periodically reviewed the loans to third parties as to whether their
carrying values remain realizable. The Company believes that the risk associated with the above loans are relatively low based on the evaluation of
the creditworthiness of these third-party debtors and the relationships with them. As the date of this report, approximately 1.0%, or ¥2.0 million
($0.3 million) was collected by the Company and the remaining part was expected to be paid in full by end of June 2025.
NOTE 7. CONTRACT COSTS, NET
Contract costs, net consisted of the following:
    
June 30, 
    
June 30, 
    
June 30, 
2023
2024
2024
Third Party
RMB
RMB
US Dollars
Contract costs
 
¥
52,158,840
¥
56,730,105
$
7,806,322
Allowance for credit losses
 
 
(2,586,155) 
 
(8,394,288)
 
(1,155,092)
Total contract costs, net
 
¥
49,572,685
¥
48,335,817
$
6,651,230
As of June 30, 2024, total contracts costs, net amounted to ¥48,335,817 ($6,651,230), of which 28.4%, or ¥13.7 million ($1.9 million) have been
subsequently realized as the date of this report, and the remaining balance is expected to be utilized by June 2025.
Net recovery of provision for credit losses of contract cost was ¥552,008 and ¥1,720,095 ($237,212) for the years ended June 30, 2022 and 2023,
respectively. Provision for credit losses of contract was ¥4,532,872 ($623,743) for the year ended June 30, 2024.
Movement of allowance for credit losses of contract costs is as follows:
    
June 30,
    
June 30,
    
June 30,
2023
2024
2024
RMB
RMB
US Dollars
Beginning balance
 
¥
4,063,482  
¥
2,586,155
$
355,867
Charge to (reversal of) allowance
(1,720,095)
4,532,872
623,743
Charge to cost of sales
 
 
242,768  
 
1,275,261
 
175,482
Ending balance
 
¥
2,586,155  
¥
8,394,288
$
1,155,092

Table of Contents
F-24
NOTE 8. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following:
    
June 30, 
    
June 30, 
    
June 30, 
2023
2024
2024
RMB
RMB
US Dollars
Motor vehicles
 
¥
5,176,175  
¥
3,699,101
$
509,013
Office equipment and fixtures
 
1,440,819  
1,405,076
 
193,345
Production equipment
 
31,115,843  
31,231,574
 
4,297,608
Leasehold improvement
2,260,000
2,260,000
310,986
Total cost
 
39,992,837  
38,595,751
 
5,310,952
Less: accumulated depreciation
 
(14,297,511) 
(15,515,349)
 
(2,134,983)
Less: accumulated impairment
 
(942,462) 
(942,462)
(129,687)
Property and equipment, net
¥
24,752,864
¥
22,137,940
$
3,046,282
Construction in progress
 
¥
—  
¥
219,132
$
30,154
Construction in progress pertains to the factory construction for the plastic recycling business. The company is currently engaged in the overall
design of the plant, safety assessment, environmental impact assessment and the acquisition of construction permits. It is also in the process of filing
and applying for the relevant permits with the local regulatory authorities. The company anticipates that construction of the plant will commence in
December 2024 and that it will be completed in the first half of 2025 for trial production, with full production status reached by the end of 2025.
Depreciation expenses were ¥2,611,854, ¥2,983,586 and ¥2,844,025 ($391,351) for the years ended June 30, 2022, 2023 and 2024, respectively.
Loss from property and equipment disposal was ¥48,628 for the years ended June 30, 2022. Income from property and equipment disposal was
¥12,782 for the year ended June 30, 2023. Loss from property and equipment disposal was ¥35,325 ($4,861) for the year ended June 30, 2024.
NOTE 9. BUSINESS ACQUISITION AND INVESTMENT IN UNCONSOLIDATED ENTITY
(U) Step Acquisition of Future Gas Station (Beijing) Technology, Ltd (“FGS”)
On August 21, 2018, the Company entered into a definitive investment agreement and a supplemental agreement (collectively, the “Agreement”)
with FGS and the other shareholders of FGS. Following full performance under the Agreement, Recon will own 43% of FGS. As consideration for
increasing its affiliates’ interest in FGS from 8% to 43%, the Company will (1) pay a total of RMB10 million in cash to FGS and (2) issue 487,057
(27,059 shares post 2024 Reverse Split) restricted Class A Ordinary Shares of the Company (the “Restricted Shares”) to the other shareholders of
FGS within 30 days after FGS finalizes recording the Company’s corresponding interest at the local governmental agency. If FGS does not reach
certain performance goals, the Company has the right to cancel all of the Restricted Shares and without further payment. The Restricted Shares are
also subject to lock-up period requirements that vary for each of FGS shareholders, from one year to three years following issuance of the Restricted
Shares. FGS has finalized recording Recon’s corresponding interest at the local governmental agency, and Recon has issued 487,057 (27,059 shares
post 2024 Reverse Split) Restricted Shares in total to the other shareholders of FGS in August 2018.
On September 24, 2019, the Company signed an extension agreement with FGS and the other shareholders of FGS to postpone the Agreement to
provide extra period for FGS to further fulfill the goals mentioned on the supplemental agreement. During the original contract period, FGS adjusted
its operation model with an advanced improvement of its mobile applications and business model. Objected user and average Gross Merchandise
Volume (“GMV”) of FGS’ mobile applications have been exceeded. FGS will need an extension to deploy its business in more provinces to
complete a goal of 200 more gas stations.
On March 17, 2020, the Company signed a new supplemental agreement with FGS and the other shareholders of FGS to extend another 12 months
to February 2021 for FGS and its shareholders to fulfill the goals mentioned on the supplemental agreement.

Table of Contents
F-25
As of December 31, 2020, the Company owned 43% of the equity interests of FGS. The investments are accounted for using the equity method
because the Company has significant influence, but no control of FGS.
On February 8, 2021, and pursuant to FGS’ shareholder meeting resolution dated January 13, 2021 (“Acquisition Date”), two of the Company’s
subsidiaries entered into the fourth supplemental agreement to the investment agreement with FGS and FGS’ founding shareholders to acquire 8%
equity ownership of FGS, as an exchange for waiver of the requirement on FGS’ performance goal about the number of gas stations and cancellation
of the related lock-up terms on the 487,057 (27,059 shares post 2024 Reverse Split) Restricted Shares of the Company (reflecting the effect of one-
for-five reverse share split) issued per the agreement signed on August  21, 2018. FGS failed to complete one of the three goals set up in the
investment agreement. As a consequence, the Company shall cancel one third of the 487,057 (27,059 shares post 2024 Reverse Split) Restricted
Shares, which shall be 162,352 (9,020 shares post 2024 Reverse Split) Restricted Shares. According to this new arrangement, the Company waived
the goals and cancellation of the shares as a deemed consideration of the 8% equity. Based on the share price $1.61 ($28.98 post 2024 Reverse Split)
on January 13, 2021, the fair value of the waived performance goal equals to ¥1,689,807 ($261,667). As a result, the Company owns 51% interest of
FGS and this transaction was considered as a step acquisition under ASC 805 “Business Combinations”. A step acquisition gain of ¥979,254 arising
from revaluation of previously held equity interest was recognized during the year ended June 30, 2021.
The Company retained independent appraisers to advise management in the determination of the fair value of customers relationship and goodwill.
The values assigned in these financial statements represent management’s best estimate of fair values as of the Acquisition Date. The carrying value
of other assets and liabilities other than customer relationship and goodwill, are approximate at their fair value as of the Acquisition Date.
The fair values of the identifiable assets and liabilities as at the date of the acquisitions are summarized in the following table:
    
RMB
    
US Dollars
Cash
 
¥
471,843
$
64,928
Accounts receivable, net
 
831,049
 
114,356
Other receivables, net
 
144,285
 
19,854
Contract costs, net
 
75,250
 
10,355
Prepaid expenses
 
91,132
 
12,540
Property and equipment, net
 
118,130
 
16,255
Intercompany receivables*
 
6,850,000
 
942,591
Intangible assets- customer relationship
 
7,000,000
 
963,232
Goodwill
 
6,996,895
 
962,805
Accounts payable
 
(1,032,078)
 
(142,019)
Other payables
 
(1,273,182)
 
(175,196)
Other payable- related parties
 
(479,959)
 
(66,045)
Deferred revenue
 
(39,786)
 
(5,475)
Accrued payroll and employees’ welfare
 
(1,629,519)
 
(224,229)
Taxes payable
 
(64,253)
 
(8,842)
Deferred tax liability
 
(1,050,000)
 
(144,485)
Total
¥
17,009,807
$
2,340,627
Cash considerations
 
—
—
Deemed equity consideration to acquire 8% equity interest in FGS
1,689,807
232,525
Fair value of previously held equity interest
 
30,530,000
 
4,201,068
Non-controlling interest
 
34,790,000
 
4,787,263
Capital contribution receivable due from non-controlling Interest
 
(50,000,000)
 
(6,880,229)
Total
 
¥
17,009,807
$
2,340,627
*
Intercompany receivables from Nanjing Recon and BHD are eliminated upon consolidation.
The noncontrolling interest has been recognized at fair value net with subscription receivable on the acquisition date.

Table of Contents
F-26
Goodwill and intangible assets
The excess of purchase price over the fair value of assets acquired and liabilities assumed of the business acquired was recorded as goodwill. The
goodwill is not expected to be deductible for tax purposes. In conjunction with the preparation of our consolidated financial statement for years
ended June 30, 2022, 2023 and 2024, the management performed evaluation on the impairment of goodwill and recorded an impairment loss on
goodwill of ¥2,266,893, ¥4,730,002 and ¥nil for the years ended June 30, 2022, 2023 and 2024, respectively.
The identifiable goodwill acquired and the carrying value consisted of the following:
    
June 30,
    
June 30,
    
June 30,
2023
2024
2024
    
RMB
RMB
    
US Dollars
Goodwill
¥
6,996,895
¥
6,996,895
$
962,805
Less: impairment for goodwill
(6,996,895)
(6,996,895)
 
(962,805)
Goodwill, net
¥
—
¥
—
$
—
The fair value of identified intangible assets, which is customer relationship, and its estimated useful lives as of June 30, 2024 is as follows:
    
    
Average
Useful Life
Fair Value
(in Years)
    
RMB
(Unaudited)
    
US Dollars
(Unaudited)
    
Intangible assets - customer relationship
 
¥
7,000,000
$
963,232  
10
Less: accumulated amortization
(1,750,000)
(240,808)
Less: impairment
(5,250,000)
(722,424)
Intangible assets - customer relationship, net
¥
—
$
—
The amortization expense of customer relationship was ¥700,000, ¥700,000 and ¥nil for the years ended June 30, 2022, 2023 and 2024, respectively.
Impairment loss for intangible assets - customer relationship was ¥nil, ¥5,250,000 and ¥nil for the years ended June 30, 2022, 2023 and 2024,
respectively. As intangible assets - customer relationship was not able to generate enough future cashflow. Therefore, the Company decided to record
full impairment of the intangible assets - customer relationship during the year ended June 30, 2023.
NOTE 10. LEASES
The Company leases office spaces and land use rights under non-cancelable operating leases, with terms ranging from one to fifty years. The
Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial
measurement of right of use assets and lease liabilities. Lease expense for lease payment is recognized on a straight-line basis over the lease term.
Leases with initial term of 12 months or less are not recorded on the balance sheet.
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Table of Contents
F-27
The table below presents the operating lease related assets and liabilities recorded on the balance sheets:
    
June 30,
    
June 30,
    
June 30,
2023
2024
2024
RMB
RMB
US Dollars
Rights of use lease assets
     ¥
3,489,875      ¥
23,547,193      $
3,240,202
Less: impairment
(834,975)
—
—
Rights of use lease assets, net
¥
2,654,900
¥
23,547,193
$
3,240,202
Operating lease liabilities – current
 
¥
3,066,146  
¥
3,741,247
$
514,812
Operating lease liabilities – non-current
 
 
25,144  
 
3,971,285
 
546,467
Total operating lease liabilities
 
¥
3,091,290  
¥
7,712,532
$
1,061,279
The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2024:
    
June 30,
    
June 30,
 
2023
2024
Remaining lease term and discount rate:
 
  
  
Weighted average remaining lease term (years)
 
23.90
34.08
Weighted average discount rate
 
5.0 %
5.0 %
Operating lease costs and short-term lease costs for the year ended June 30, 2022 were ¥3,443,813 and ¥967,247, respectively. Operating lease costs
and short-term lease costs for the year ended June 30, 2023 were ¥3,354,147 and ¥2,683,860, respectively. Operating lease costs and short-term lease
costs for the year ended June 30, 2024 were ¥3,175,289 ($436,934) and ¥327,812 ($45,108), respectively.
Impairment loss for the ROU was ¥nil, ¥834,975 and ¥nil for the years ended June 30, 2022, 2023 and 2024, respectively.
The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2024:
Twelve months ending June 30,
    
RMB
    
US Dollars
2025
 
¥
4,017,831
$
552,871
2026
 
2,514,546
346,013
2027
 
 
1,628,766
 
224,126
Total lease payments
 
 
8,161,143
 
1,123,010
Less: imputed interest
 
 
(448,611)
 
(61,731)
Present value of lease liabilities
 
 
7,712,532
 
1,061,279
Less: operating lease liabilities – current
 
 
3,741,247
 
514,812
Operating lease liabilities – non-current
 
¥
3,971,285
$
546,467

Table of Contents
F-28
NOTE 11. OTHER PAYABLES
Other payables consisted of the following:
    
June 30, 
    
June 30, 
    
June 30, 
2023
2024
2024
Third Parties
RMB
RMB
US Dollars
Professional service fees
 
¥
2,246,101  
¥
1,610,455
$
221,606
Distributors and employees
 
3,073,289  
586,929
 
80,764
Accrued expenses
 
200,218  
229,385
 
31,564
Others
 
299,402  
342,916
 
47,187
Total
 
¥
5,819,010  
¥
2,769,685
$
381,121
    
June 30, 
    
June 30, 
    
June 30, 
2023
2024
2024
Related Parties
RMB
RMB
US Dollars
Expenses paid by the major shareholders
 
¥
1,796,309  
¥
1,453,910
$
200,064
Due to family members of the owners of BHD and FGS
 
545,159  
845,159
 
116,298
Due to management staff for costs incurred on behalf of the Company
 
250,927  
—
 
—
Total
 
¥
2,592,395  
¥
2,299,069
$
316,362
NOTE 12. TAXES PAYABLE
Taxes payable consisted of the following:
    
June 30, 
    
June 30, 
    
June 30, 
2023
2024
2024
RMB
RMB
US Dollars
VAT payable
 
¥
699,601  
¥
439,771
$
60,515
Income tax payable
 
440,030  
440,060
 
60,554
Other taxes payable
 
23,375  
113,534
 
15,623
Total taxes payable
 
¥
1,163,006  
¥
993,365
$
136,692

Table of Contents
F-29
NOTE 13. BANK LOANS
Short-term bank loans consisted of the following:
June 30, 
June 30, 
June 30, 
2023
2024
2024
    
RMB
    
RMB
    
US Dollars
Bank of Kunlun (1)
¥
950,000
¥
843,487
$
116,068
Industry and Commercial Bank of China (“ICBC”) (2)
10,000,000
—
—
China Construction Bank (3)
1,501,481
—
—
Industry and Commercial Bank of China (“ICBC”) (4)
—
10,000,000
1,376,046
China Construction Bank (5)
—
1,106,091
152,203
Industry and Commercial Bank of China (“ICBC”) (6)
—
476,381
65,552
Total short-term bank loans
¥
12,451,481
¥
12,425,959
$
1,709,869
(1) On August 31, 2022, the Company entered into a loan agreement with Bank of Kunlun to borrow up to ¥2,900,000 ($408,456) as working
capital for eighteen months, with a maturity date of February 29, 2024. The loan has a fixed interest rate of 6.0% per annum. The Company
made a withdrawal in an amount of ¥1,000,000 ($140,847) on August 31, 2022. During the year ended June 30, 2023, the Company repaid
¥50,000 ($6,880). During the year ended June 30, 2024, the Company repaid ¥131,274 ($18,064). The loan is guaranteed by the non-controlling
shareholder of Gan Su BHD. The Company also pledged the accounts receivable from the contracts the Company entered into with CNPC as
collateral for this loan, and the total value of the contracts are approximately ¥6.5 million (approximately $1.0 million). From June 30, 2024, to
the date of this report, the Company has made no repayments. According to the final judgment, the loan that Gansu BHD cannot repay will be
deducted from the restricted cash of ¥848,936 from Beijing BHD in the future.
(2) On June 6, 2023, the Company entered into a revolving loan facility with ICBC to borrow up to ¥10,000,000 ($1,376,046) as working capital
for one year, with a maturity date of June 7, 2024. The loan has a fixed interest rate of 2.5% per annum. The Company made the first
withdrawal in an amount of ¥5,000,000 ($688,023) on June 9, 2023, with a maturity date of June 7, 2024. Company made the second
withdrawal in an amount of ¥5,000,000 ($688,023) on June 13, 2023, with a maturity date of June 7, 2024. These loans are pledged by the self-
owned housing property of one of the founders of the Company with carrying value of approximately ¥17.0 million (approximately $2.3
million) as collateral for these loans. The loan was full repaid upon maturity.
(3) On June 6, 2023, the Company entered into a revolving loan facility with China Construction Bank to borrow up to ¥1,500,000 ($206,407) as
working capital for twelve months, with a maturity date of June 9, 2024. The loan has a fixed interest rate of 3.95% per annum. The loan is
guaranteed by the non-controlling shareholder of FGS. The loan was full repaid upon maturity.
(4) On June 25, 2024, the Company entered into a revolving loan facility with ICBC to borrow up to ¥10,000,000 ($1,376,046) as working capital
for one year, with a maturity date of June 24, 2025. The loan has a fixed interest rate of 2.8% per annum. The Company made a withdrawal in
an amount of ¥10,000,000 ($1,376,046) on June 25, 2024. These loans are pledged by the self-owned housing property of one of the founders
of the Company with carrying value of approximately ¥17.0 million (approximately $2.3 million) as collateral for these loans.
(5) On June 11, 2024, the Company entered into a revolving loan facility with China Construction Bank to borrow up to ¥1,105,000 ($152,053) as
working capital for twelve months, with a maturity date of June 11, 2025. The loan has a fixed interest rate of 3.95% per annum. The non-
controlling shareholders of FGS are co-borrowers.
(6) On June 18, 2024, the Company entered into a revolving loan facility with ICBC to borrow up to ¥476,000 ($65,500) as working capital for
twelve months, with a maturity date of June 18, 2025. The loan has a fixed interest rate of 3.2% per annum.
Interest expense for the short-term bank loan was ¥486,757, ¥416,481 and ¥332,881 ($45,806) for the years ended June 30, 2022, 2023 and 2024,
respectively.

Table of Contents
F-30
NOTE 14. SHORT-TERM BORROWINGS DUE TO RELATED PARTIES
Short-term borrowings due to related parties consisted of the following:
    
June 30, 
    
June 30, 
    
June 30, 
2023
2024
2024
Short-term borrowings due to related parties:
RMB
RMB
US Dollars
Short-term borrowing from a Founder, 3.65% annual interest, due on December 26,
2023
¥
10,004,055
¥
—
$
—
Short-term borrowing from a Founder, 3.40% annual interest, due on June 4, 2024*
4,993,950
—
—
Short-term borrowing from a Founder, 3.40% annual interest, due on June 16, 2024*
5,020,217
—
—
Short-term borrowing from a Founder, 3.45% annual interest, due on December 28,
2024
—
10,002,875
1,376,441
Total short-term borrowings due to related parties
 
¥
20,018,222  
¥
10,002,875
$
1,376,441
*
On May 29, 2024, the Company entered into a three-year supplemental agreement with the founder, changing loan maturity date from June 4,
2024, and June 16, 2024, to April 29, 2027 and the annual interest rate to 3.75%. This loan is classified as “NOTE 15. Long-term borrowings
due to related parties.”
No short-term borrowings due to related parties were guaranteed or collateralized as of June 30, 2023 and 2024.
Interest expense for short-term borrowings due to related parties were ¥397,468, ¥326,893 and ¥648,581 ($89,248) for the years ended June 30,
2022, 2023 and 2024, respectively.
NOTE 15. LONG-TERM BORROWINGS DUE TO RELATED PARTIES
Long-term borrowings due to related parties consisted of the following:
    
June 30, 
    
June 30, 
    
June 30, 
2023
2024
2024
Long-term borrowings due to related parties:
RMB
RMB
US Dollars
Long-term borrowing from a Founder, 3.75% annual interest, three years loan, due in
April 29, 2027
 
¥
—  
¥
10,000,000  
$
1,376,046
Total long-term borrowings due to related parties
 
¥
—  
¥
10,000,000
$
1,376,046
No long-term borrowings due to related parties were guaranteed or collateralized as of June 30, 2023 and 2024.
Interest expense for long-term borrowings due to related parties were ¥617,611, ¥472,593 and ¥34,375 ($4,730) for the years ended June 30, 2022,
2023 and 2024, respectively.
NOTE 16. CLASS A ORDINARY SHARES
Share offering
On March 15, 2023, the Company and certain institutional investors (the “Purchasers”) entered into that certain securities purchase agreement (the
“Purchase Agreement”), pursuant to which the Company agreed to sell to such Purchasers an aggregate of 8,827,500 (490,417 shares post 2024
Reverse Split) Class A Ordinary Shares, par value $0.0925 (US$1.67 post 2024 Reverse Split) per share and 1,175,000 (65,278 pre-funded warrants
post 2024 Reverse Split) pre-funded warrants (the “Pre-Funded Warrants”) to purchase Class A Ordinary Shares in a registered direct offering, and
warrants to purchase up to 10,002,500 (555,694 shares post 2024 Reverse Split) Class A Ordinary Shares in a concurrent private placement, for
gross proceeds of approximately $8.0 million before deducting the placement agent’s fees and other estimated offering expenses.

Table of Contents
F-31
On October 16, 2023, 1,175,000 (65,278 pre-funded warrants post 2024 Reverse Split) pre-funded warrants issued on March 15, 2023 were
exercised by investor and 1,175,000 (65,278 shares post 2024 Reverse Split) Class A Ordinary shares were issued and being outstanding.
On March 29, 2024, the Company’s shareholders approved the reverse shares split of the Company’s Class A Ordinary Shares at the ratio of one-for-
eighteen with the market effective date of May 1, 2024 (the “2024 Reverse Split”). In connection with the reverse stock split, on March 29, 2024 the
Company’s shareholder approved and authorized the Company’s registered office service agent to filed the Fourth Amended and Restated
Memorandum and Articles of Association with local registry, and change its authorized share capital from: US$15,725,000 divided into 150,000,000
Class A Ordinary Shares of a nominal or par value of US$0.0925 each, and 20,000,000 Class B Ordinary Shares of a nominal or par value of
US$0.0925 each, to: US$58,000 divided into 500,000,000 Class A Ordinary Shares of a nominal or par value of US$0.0001 each and 80,000,000
Class B Ordinary Shares of a nominal or par value of US$0.0001 each (the “2024 change in capital structure”). As a result of the 2024 Reverse Split,
each eighteen pre-split Class A Ordinary Shares outstanding were automatically combined and converted to one issued and outstanding Class A
Ordinary Share. No fractional Class A Ordinary Shares were issued to any shareholders in connection with the 2024 Reverse Split. Each shareholder
was entitled to receive one Class A Ordinary Shares in lieu of the fractional share that would have resulted from the reverse stock split. The
Depository Trust Company (the “DTC”) requested the Company’s transfer agent to issue 54,727 round-up Class A Ordinary Shares. As of May 1,
2024 (immediately prior to the effective date), there were 141,703,218 Class A Ordinary Shares outstanding, and the number of Class A Ordinary
Shares outstanding after the 2024 Reverse Split is 7,927,132, taking into account of the effect of rounding fractional shares into whole shares. In
addition, all Class A Ordinary Shares, options and any other Class A securities of the Company outstanding immediately prior to the 2024 Reverse
Split was retroactively applied by dividing the number of ordinary shares into which the options and other securities are exercisable by 18 and
multiplying the exercise price thereof by 18, as a result of the 2024 Reverse Split. All share and earnings per-share information have been
retroactively adjusted to reflect the 2024 Reverse-Split. The Company had 500,000,000 authorized Class A Ordinary Shares, par value of $0.0001,
of which 2,306,295 and 7,987,959 Class A Ordinary Shares were issued and outstanding as of June 30, 2023 and 2024, respectively. The Company
had 80,000,000 authorized Class B Ordinary Shares, par value of $0.0001, of which 7,100,000 and 7,100,000 Class B Ordinary Shares were issued
and outstanding as of June 30, 2023 and 2024, respectively.
The following table summarizes the Company’s Pre-Funded Warrants activities and status of Pre-Funded Warrants as of June 30, 2024:
Weighted
 
Average
Average
 
Remaining
Pre-Funded
Exercise Price  
Period
Pre-Funded Warrants
    
Warrants*     
Per Share*
    
(Years)
Outstanding as of June 30, 2022
 
—
$
—
—
Issued
 
65,278
0.18
5.50
Forfeited
 
—
—
—
Exercised
 
—
—
—
Expired
 
—
—
—
Outstanding as of June 30, 2023
 
65,278
$
0.18
5.22
Issued
 
—
—
—
Forfeited
 
—
—
—
Exercised
 
(65,278)
0.18
—
Expired
 
—
—
—
Outstanding as of June 30, 2024
 
—
$
—
—
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.
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 of the companies. As of June 30, 2023 and June 30, 2024, the balance of total
statutory reserves was ¥4,148,929 and ¥4,148,929 ($570,912), respectively.

Table of Contents
F-32
NOTE 17. ORDINARY SHARES PURCHASE WARRANTS ISSUED TO INVESTORS
In June 2021, the Company issued to some institutional investors warrants to purchase an aggregate of up to 8,814,102 (489,673 shares post 2024
Reverse Split) Class A Ordinary Shares. (the “Warrant 2021”) The warrants are subject to deemed-liquidation redemption features and are therefore
classified as a liability in accordance with FASB ASC 480. Warrant liability is classified as non-current liabilities as their liquidation is not
reasonably expected to require the use of current assets or require the creation of current liabilities. The warrant liability is re-valued at each
reporting period with the change in fair value recorded through earnings. The Company established the initial fair value of the warrants at
$34,860,000. During the year ended June 30, 2023, the exercise price of warrants to purchase an aggregate of up to 7,950,769 (441,710 shares post
2024 Reverse Split) Class A Ordinary Shares was adjusted to $0.80 ($14.40 post 2024 Reverse Split), and the exercise price of the remaining
warrants to purchase an aggregate of up to 863,333 (47,963 shares post 2024 Reverse Split) Class A Ordinary Shares remained at $6.24 ($112.32
post 2024 Reverse Split).
On December 14, 2023, the Company entered into a Warrant Purchase Agreement with certain accredited investors pursuant to which the Company
agreed to buy back an aggregate of 7,950,769 (441,710 warrants post 2024 Reverse Split) warrants from the investors, and the investors agreed to
sell the Warrants back to the Company. The purchase price for each Warrant was $0.25 ($4.50 post 2024 Reverse Split). As of December 31,2023,
The Company still holds the investor 863,333 (47,963 warrants post 2024 Reverse Split) warrants. As of June 30, 2023 and June 30, 2024, the fair
value of the warrant liability of the Warrant 2021 was $1,930,000 and $959 (¥6,969). During the years ended June 30, 2023 and 2024, there was
change in fair value of the Warrant 2021 liability in an aggregate amount of $560,000 and $109,041, respectively.
The key inputs into the Black-Scholes model were as follows at their measurement dates:
June 30,
June 30,
 
Input
    
2024
    
2023
 
Number of warrants*
 
47,963
47,963
441,710
Share price*
$
0.02
$
0.34
0.34
Risk-free interest rate
 
4.62 %   
4.41 %  
4.41 %
Volatility
 
105 %   
127 %  
127 %
Exercise price*
$
112.32
$
112.32
14.40
Warrant life
  2.46 years
  3.47 years
3.47 years
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.
On March 15, 2023, the Company issued to some institutional investors warrants to purchase an aggregate of up to 10,002,500 (555,694 shares post
2024 Reverse Split) Class A Ordinary Shares. (the “Warrant 2023”) The warrants are subject to deemed-liquidation redemption features and are
therefore classified as a liability in accordance with FASB ASC 480. Warrant liability is classified as non-current liabilities as their liquidation is not
reasonably expected to require the use of current assets or require the creation of current liabilities. The warrant liability is re-valued at each
reporting period with the change in fair value recorded through earnings. The Company established the initial fair value of the warrants at
$2,750,000.
On December 14, 2023, the Company entered into a Warrant Purchase Agreement with certain accredited investors pursuant to which the Company
agreed to buy back an aggregate of 10,002,500 (555,694 warrants post 2024 Reverse Split) warrants from the investors, and the investors agreed to
sell the Warrants back to the Company. The purchase price for each Warrant is $0.25 ($4.50 post 2024 Reverse Split). On December, 14, 2023,
Company bought back all warrants 2023 from the investors. As of June 30, 2023 and June 30, 2024, the fair value of the warrant liability of the
Warrant 2023 was $2,430,000 and $nil. During the years ended June 30, 2023 and 2024, there was change in fair value of the Warrant 2023 liability
in an aggregate amount of $320,000 and $nil, respectively.
During the year ended June 30, 2024, the change in fair value of warrant liability attributable to the redeemed of Warrant 2021 and Warrant 2023 in
an aggregate amount of $238,317.

Table of Contents
F-33
The key inputs into the Black-Scholes model were as follows at their measurement dates:
June 30,
June 30,
 
Input
    
2024
    
2023
 
Number of warrants*
—
555,694
Share price*
$
—
$
0.34
Risk-free interest rate
— %   
3.59 %
Volatility
— %   
110 %
Exercise price*
$
—
$
14.40
Warrant life
—
 
5.22 years
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.
The following table presents information about the Company’s warrants that were measured at fair value on a recurring basis as of June 30, 2023 and
June 30, 2024, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
    
     Quoted Prices In      Significant Other     
Significant Other
June 30,
Active Markets
Observable Inputs
Unobservable Inputs
Description
2023
(Level 1)
(Level 2)
(Level 3)
Liabilities:
 
   
   
   
  
Warrant liability - non-current
$ 4,360,000
$
—
$
—
$
4,360,000
      
     Quoted Prices In     
Significant Other
    
Significant Other
 
June 30,  
Active Markets
 
Observable Inputs  
Unobservable Inputs
Description
    
2024
    
(Level 1)
    
(Level 2)
    
(Level 3)
Liabilities:
 
   
   
   
  
Warrant liability - non-current
$
959
$
—
$
—
$
959
The following table summarizes the Company’s Warrants activities and status of Warrants as of June 30, 2024:
    
    
Weighted
    
Average
Average
Remaining
Exercise Price
Period
Warrants
    
Warrants*
    
Per Share*
    
(Years)
Outstanding as of June 30, 2022
 
489,673
$
112.32  
4.46
Issued
 
555,694
14.40  
5.50
Forfeited
 
—
—  
—
Exercised
 
—
—  
—
Expired
 
—
—  
—
Outstanding as of June 30, 2023
 
1,045,367
$
18.90  
4.40
Issued
 
—
—  
—
Redeemed
 
(997,404)
14.40  
—
Forfeited
 
—
—  
—
Exercised
 
—
—  
—
Expired
—
—
—
Outstanding as of June 30, 2024
 
47,963
$
112.32  
2.96
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.

Table of Contents
F-34
NOTE 18. SHARE-BASED COMPENSATION
Share-Based Awards Plan
The following is a summary of the share options activity:
    
    
 Weighted
Average
Exercise Price
Share Options
Shares*
Per Share*
Outstanding as of June 30, 2022
 
4,456
$
148.50
Granted
 
—
—
Forfeited
 
—
—
Exercised
 
—
—
Expired
—
—
Outstanding as of June 30, 2023
 
4,456
$
148.50
Granted
 
—
—
Forfeited
 
—
—
Exercised
 
—
—
Expired
—
—
Outstanding as of June 30, 2024
 
4,456
$
148.50
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.
The following is a summary of the status of options outstanding and exercisable as of June 30, 2024:
Outstanding Options
Exercisable Options
    
    
Average
    
    
    
Average
Remaining
Remaining
Average Exercise
 
Contractual
Average Exercise
 
Contractual
Price*
Number*
 
life (Years)
Price*
Number*
 
life (Years)
$
148.50  
4,456  
1.08
$
148.50  
4,456  
1.08
 
4,456  
  
 
   
4,456  
  
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.
The Share-based compensation expense recorded for stock options granted were all ¥Nil for the years ended June 30, 2022, 2023 and 2024,
respectively. No unrecognized share-based compensation for stock options as of June 30, 2024.
Restricted Shares to Senior Management
As of June 30, 2024, the Company has granted restricted Class A Ordinary Shares to senior management and employees as follows:
On February 28, 2022, the Company granted 1,642,331 (91,241 shares post 2024 Reverse Split) Class A Ordinary Shares to its employees as
compensation cost for awards. The fair value of the restricted shares was $1,708,024 based on the closing share price $1.04 ($18.72 post 2024
Reverse Split) at February 28, 2022.These restricted shares will vest over three years with one-third of the shares vesting every year from the grant
date. As of June 30, 2024, 1,094,888 (60,827 shares post 2024 Reverse Split) shares were vested and the remaining 547,443 (30,412 shares post
2024 Reverse Split) shares will not be vested until February 28, 2025.
On March 15, 2023, the Company issued 1,000,000 (55,556 shares post 2024 Reverse Split) restricted Class A Ordinary Shares with a value of
$372,600 based on the closing share price of $0.3726 ($6.71 post 2024 Reverse Split) on March 15, 2023 to its employee as compensation for
service to the Company on new business exploration. The service period was six months from the date of grant. All of the restricted shares were
issued on March 15, 2023 and the granted shares under this plan will not be vested until September 15, 2023.

Table of Contents
F-35
On February 26, 2024, the Company granted 6,255,483 (347,527 shares post 2024 Reverse Split) restricted Class A Ordinary Shares to its
management and staff. The fair value of the Class A restricted shares was $988,366 based on the fair value of share price $0.158 ($2.844 post 2024
Reverse Split) at February 26, 2024. All of the restricted shares were not issued and the granted shares under this plan will not be vested until
February 26, 2025.
128,672 (7,148 shares post 2024 Reverse Split), 1,000,000 (55,556 shares post 2024 Reverse Split) and 60,827 restricted Class A restricted shares
were issued and outstanding for the years ended June 30, 2022, 2023 and 2024, respectively, for all the plans mentioned above.
As of June 30, 2024, the Company has granted restricted Class B Ordinary Shares to senior management as follows:
On February 28, 2022, the Company granted 1,600,000 restricted shares to its management as compensation cost for awards. The fair value of the
restricted shares was $1,694,000 based on the fair value of share price $1.06 at February 28, 2022. These restricted shares vested immediately on the
grant date. All granted shares under this plan are issued and outstanding on February 28, 2022.
On March 9, 2023, the Company granted 3,000,000 restricted shares to its management as compensation cost for awards. The fair value of the
restricted shares was $3,025,000 based on the fair value of share price $1.01 at March 9, 2023. These restricted shares vested immediately on the
grant date. All granted shares under this plan are issued and outstanding on March 9, 2023.
On February 26, 2024, the Company granted 12,900,000 restricted Class B Ordinary Shares to its management as compensation cost for awards. The
fair value of the Class B restricted shares was $2,130,000 based on the fair value of share price $0.17 at February 26, 2024. These restricted shares
vested immediately on the grant date. As of June 30, 2024, all granted shares under this plan are not issued and outstanding.
4,100,000, 3,000,000 and nil restricted Class B restricted shares were issued and outstanding during the years ended June 30, 2022, 2023 and 2024,
respectively, for all the plans mentioned above.
The share-based compensation expense recorded for restricted shares issued for management was ¥39,263,485, ¥26,191,707 and ¥22,427,682
($3,086,154) for the years ended June 30, 2022, 2023 and 2024, respectively. The total unrecognized share-based compensation expense of restricted
shares issued for management and employees as of June 30, 2024 was approximately ¥7.1 million ($1.0 million), which is expected to be recognized
over a weighted average period of approximately 0.68 years.
Restricted Shares for services
As of June 30, 2024, the Company has granted restricted Class A Ordinary Shares to consultant as follows:
On November 10, 2021, the Company signed a service agreement with Starry. As the service consideration, the Company issued 500,000 (27,778
shares post 2024 Reverse Split) restricted Class A Ordinary Shares which vested in equal monthly amounts through the end of December 31, 2021.
Half of the restricted Class A Ordinary Shares was valued based on the closing share price of $1.60 ($28.80 post 2024 Reverse Split) on December
10, 2021 and the other half was valued based on the closing share price of $1.31 ($23.58 post 2024 Reverse Split) on December 31, 2021. 250,000
(13,889 shares post 2024 Reverse Split) restricted Class A Ordinary Shares were issued on December 10, 2021 and the remaining 250,000 (13,889
shares post 2024 Reverse Split) restricted Class A Ordinary Shares were issued in January 2022.
On January 5, 2022, the Company signed a consulting agreement with Lintec Information Ltd (the “Consultant”). As the service consideration, the
Company issued 1,050,000 (58,333 shares post 2024 Reverse Split) restricted Class A Ordinary Shares with a value of $1,354,500 based on the
closing share price of $1.29 ($23.22 post 2024 Reverse Split) on January 5, 2022 to the Consultant as payment for being the Company’s investment
and financial advisor for a period of one year. The vesting period of these shares was one year from the date of contract. All of the restricted shares
were issued under this plan on January 5, 2022 and all of the granted shares under this plan was vested as of June 30, 2024.

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F-36
On March 15, 2023, the Company signed a consulting agreement with some business consultants (the “Consultants”). As the service consideration,
the Company issued 1,000,000 (55,556 shares post 2024 Reverse Split) restricted Class A Ordinary Shares with a value of $372,600 based on the
closing share price of $0.3726 ($6.71 post 2024 Reverse Split) on March 15, 2023 to the Consultants as compensation for acting as advisors to the
Company on new business exploration. The vesting period of these shares was six months from the date of contract. All of the restricted shares were
issued under this plan on March 15, 2023 and the granted shares under this plan have been vested until September15, 2023.
1,550,000 (86,111 shares post 2024 Reverse Split), 1,000,000 (55,556 shares post 2024 Reverse Split) and nil restricted Class A restricted shares
were issued and outstanding during the years ended June 30, 2022, 2023 and 2024, respectively, for all the plans mentioned above.
The share-based compensation expense recorded for restricted shares issued for service was ¥8,935,920, ¥5,805,840 and ¥nil for the years ended
June 30, 2022, 2023 and 2024, respectively. The total unrecognized share-based compensation expense of restricted shares issued for service as of
June 30, 2024 was ¥nil.
Following is a summary of the restricted shares granted:
Restricted share grants
    
Shares*
Non-vested as of June 30, 2022
 
120,407
Granted
 
277,778
Vested
 
(226,247)
Non-vested as of June 30, 2023
 
171,938
Granted
 
347,527
Vested
 
(141,526)
Non-vested as of June 30, 2024
 
377,939
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.
The following is a summary of the status of restricted share at June 30, 2024:
Outstanding Restricted Shares
    
    
Average
Remaining
Fair Value per
 
Amortization 
Share*
Number*
 
Period (Years)
$
18.72  
30,412
0.67
2.844  
347,527  
0.66
 
377,939  
  
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.
NOTE 19. INCOME TAX
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%.
Nanjing Recon was approved as a government-certified high-technology company and is subject to a reduced income tax rate of 15% through
November 30, 2019. Nanjing Recon reapplied for a high-technology company certificate, and the new certificate was approved as November 22,
2019 and expired on November 22, 2022. Nanjing Recon reapplied for a high-technology company certificate, and the new certificate was approved
as October 12, 2022 and will expire on October 12, 2025.

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F-37
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 25, 2018. BHD reapplied for a high-technology company certificate, and
the new certificate was approved as October 31, 2018 and expired on October 31, 2021. BHD reapplied for a high-technology company certificate,
and the new certificate was approved as December 17, 2021 and will expire on December 17, 2024.
Income (loss) before provision for income taxes consisted of:
    
For the years ended June 30, 
2022
2023
2024
2024
    
RMB
    
RMB
    
RMB
    
US Dollars
Outside China areas
  ¥
113,741,972   ¥
(34,038,460)  ¥
(27,573,933)
$
(3,794,299)
China
 
(20,066,451) 
(27,419,593) 
(23,861,877)
 
(3,283,503)
Total
  ¥
93,675,521   ¥
(61,458,053)  ¥
(51,435,810)
$
(7,077,802)
Deferred tax assets, net is composed of the following:
    
June 30, 
    
June 30, 
    
June 30, 
2023
2024
2024
RMB
RMB
US Dollars
Deferred tax assets:
Allowance for credit losses
 
¥
1,019,592
¥
1,652,102
$
227,337
Impairment for inventory
90,322
221,290
30,451
Net operating loss carryforwards
 
23,290,731
25,843,951
3,556,246
Subtotal
24,400,645
27,717,343
3,814,033
Less: Valuation allowance
(24,107,246)
(27,437,564)
(3,775,534)
Total deferred tax assets, net
¥
293,399
¥
279,779
$
38,499
Deferred tax liabilities:
Accelerated amortization of intangible assets
(146,511)
(132,891)
(18,287)
Gain on the previously held equity method investment
(146,888)
(146,888)
(20,212)
Total deferred tax liabilities
 
(293,399)
(279,779)
(38,499)
Deferred tax assets, net
 
¥
—
¥
—
$
—
The Company’s subsidiaries, VIEs and VIEs’ subsidiaries incurred a cumulative net operating loss (“NOL”) which may reduce future corporate
taxable income. As of June 30, 2023, the cumulative NOL was approximately ¥133.6 million. During the year ended June 30, 2024, the Company’s
subsidiaries, VIEs and VIEs’ subsidiaries incurred an additional NOL carryforwards of approximately ¥11.7 million ($1.6 million). As of June 30,
2024, there are $13.2 million ($1.8 million) of the cumulative NOL that have expired, resulting in a cumulative NOL carryforwards of
approximately ¥125.8 million ($17.3 million) as of June 30, 2024.

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F-38
The NOL will expire over the next five years as follows:
Twelve months ending June 30,
         
RMB
    
US Dollars
2025
¥
19,617,124
$
2,699,406
2026
 
32,533,742
 
4,476,792
2027
 
27,137,905
 
3,734,300
2028
 
34,868,363
 
4,798,046
2029
 
11,670,406
 
1,605,901
Total
¥
125,827,540
$
17,314,445
Following is a reconciliation of income tax expense (benefit) at the effective rate to income tax at the calculated statutory rates:
For the years ended June 30, 
    
2022
    
2023
    
2024
    
2024
RMB
RMB
RMB
US Dollars
Income tax (benefits) expenses calculated at PRC statutory rates
 
¥
23,418,880
¥
(15,364,513)
¥
(12,858,953)
$
(1,769,451)
Nondeductible expenses and others
 
263,655
539,247
427,969
58,890
Effect of tax rate differential
 
(24,061,020)
7,949,048
9,080,982
1,249,585
Benefit of revenue exempted from enterprise income tax
 
(1,799)
(18,814)
19,714
2,713
Change in valuation allowances
 
(233,590)
6,913,371
3,330,318
458,267
Income tax expenses (benefit)
 
¥
(613,874)
¥
18,339
¥
30
$
4
The Company’s income tax expense (benefit) is comprised of the following:
For the years ended June 30, 
    
2022
    
2023
    
2024
    
2024
 
RMB
 
RMB
 
RMB
 
US Dollars
Current income tax provision
 
¥
10,214  
¥
18,339  
¥
30
$
4
Deferred income tax benefit
 
(624,088) 
—  
—
 
—
Expense (benefit) for income tax
 
¥
(613,874) 
¥
18,339  
¥
30
$
4

Table of Contents
F-39
NOTE 20. NON-CONTROLLING INTEREST
Non-controlling interest consisted of the following:
As of June 30, 2023
    
    
Nanjing
    
Gan Su
    
Qinghai
    
    
    
BHD
Recon
BHD
BHD
FGS
Total
Total
RMB
RMB
RMB
RMB
RMB
RMB
US Dollars
Paid-in capital
  ¥ 1,651,000   ¥
200,000   ¥
4,805,000
¥
—
¥
—
¥
6,656,000
$
917,904
Capital contribution
receivable due from non-
controlling Interest
—  
—  
—
—
(48,870,000)
(48,870,000)
 
(6,739,481)
Unappropriated retained
earnings (deficit)
 
3,477,494  
3,616,001  
(6,336,893)
(1,561,196)
(1,796,762)
(2,601,356)
 
(358,742)
Accumulated other
comprehensive loss
 
(18,850)
(11,853)
—
—
—
(30,703)
(4,234)
Valuation increase shared by
minority shareholders
—
—
—
—
34,790,000
34,790,000
4,797,760
Total non-controlling
interests
  ¥ 5,109,644   ¥ 3,804,148   ¥
(1,531,893)
¥
(1,561,196)
(15,876,762)
¥
(10,056,059)
$
(1,386,793)
As of June 30, 2024
    
    
Nanjing
    
Gan Su
    
Qinghai
    
    
    
BHD
Recon
BHD
BHD
FGS
 
Total
Total
RMB
RMB
RMB
RMB
RMB
 
RMB
US Dollars
Paid-in capital
  ¥ 1,651,000   ¥
200,000   ¥
4,805,000
¥
—
¥
—
¥
6,656,000
$
915,896
Capital contribution
receivable due from non-
controlling Interest
 
—
—
—
—
(48,870,000)
(48,870,000)
(6,724,736)
Unappropriated retained
earnings (deficit)
 
3,477,494  
3,616,001  
(7,547,154)
(1,581,474)
(2,130,804)
 
(4,165,937)
 
(573,251)
Accumulated other
comprehensive loss
(18,850) 
(11,853) 
—
—
—
 
(30,703)
 
(4,225)
Valuation increase shared by
minority shareholders
—
—
—
—
34,790,000
34,790,000
4,787,263
Total non-controlling
interests
  ¥ 5,109,644   ¥ 3,804,148   ¥
(2,742,154)
¥
(1,581,474)
¥
(16,210,804)
¥
(11,620,640)
$
(1,599,053)

Table of Contents
F-40
NOTE 21. CONCENTRATIONS
Credit risk
As of June 30, 2023 and June 30, 2024, approximately ¥45.5 million and ¥90.3 million ($12.4 million) of the Company’s cash was on deposit at
financial institutions in the PRC, respectively. Per PRC regulations, the maximum insured bank deposit amount is RMB500,000 for each financial
institution. The Company’s total unprotected cash held in banks amounted to approximately ¥40.0 million and ¥84.4 million ($11.6 million) as of
June 30, 2023 and June 30, 2024, respectively. As of June 30, 2023 and June 30, 2024, approximately ¥240.3 million and ¥108.7 million ($15.0
million) of the Company’s cash was on deposit at financial institutions in the Hong Kong, respectively. Per Hong Kong regulations, the maximum
insured bank deposit amount is HKD 500,000 for each financial institution. The Company’s total unprotected cash held in banks amounted to
approximately ¥238.8 million and ¥105.5 million ($14.5 million) as of June 30, 2023 and June 30, 2024, respectively.
Customer concentration risk
For the year ended June 30, 2022, CNPC represented 50%, SINOPEC represented 28%, and another customer represented 10% of the Company’s
total revenue, respectively. At June 30, 2022, CNPC accounted for 49%, SINOPEC represented 22% and another customer accounted for 14% of the
Company’s accounts receivable, net, respectively.
For the year ended June 30, 2023, CNPC represented 43% and SINOPEC represented 32% of the Company’s total revenue, respectively. At June 30,
2023, CNPC accounted for 31%, SINOPEC represented 27% and another two customers accounted for 11% and 10% of the Company’s accounts
receivable, net, respectively.
For the year ended June 30, 2024, CNPC represented 48% and SINOPEC represented 19% of the Company’s total revenue, respectively. At June 30,
2024, CNPC accounted for 38%, SINOPEC represented 27% and another customer accounted for 6% of the Company’s accounts receivable, net,
respectively.
NOTE 22. COMMITMENTS AND CONTINGENCY
(a)   Contingency
Severance payments
The Labor Contract Law of the PRC requires employers to assure the liability of severance payments if employment contracts are terminated. The
employers will be liable for one month of severance pay for each year of the service provided by the employees. As of June 30, 2024, the Company
estimated its severance payments of approximately ¥8.8 million ($1.2 million) which has not been reflected in its consolidated financial statements,
because management cannot predict what the actual payment, if any, will be in the future.
Legal contingencies
On April 24, 2024, Bank of Kunlun Co., Ltd. Tuha Branch (the “Plaintiff”) submitted a civil complaint to the People’s Court of Yizhou District,
Hami City, Xinjiang Uygur Autonomous Region (the “Court”). The complaint requested: (1) Gan Su BHD to repay the principal and interest of the
loan to the Plaintiff, (2) Gan Su BHD to pay the overdue interest to the Plaintiff; (3) Gan Su BHD to pay the attorney’s fees to the Plaintiff; (4) Wang
Ping, Beijing BHD, and Nanjing Recon to bear joint and several liabilities for the first four claims of the Plaintiff, (5) all costs of the case, including
the acceptance fee, mailing fee, preservation fee, and preservation insurance fee, to be borne by the defendants. The Plaintiff also applied for pre-
litigation property preservation. On April 24, 2024, the Court issued a ruling to seize and freeze the bank deposits of the respondents Gan Su BHD,
Wang Ping, Beijing BHD, and Nanjing Recon, amounting to ¥848,935.63. On May 24, 2024, the Court made a first-instance judgment, ordering (1)
Gan Su BHD to repay the Plaintiff the principal of the loan amounting to ¥818,730.95, (2) Gan Su BHD to pay the loan interest of ¥199.51 and the
interest from April 1, 2024, until the actual repayment date (calculated based on the actual amount owed at an annual interest rate of 9%), (3) Gan Su
BHD to bear the attorney’s fees of ¥30,000, (4) Gan Su BHD to bear the preservation agency fee of ¥4,765, (5) Wang Ping, Beijing BHD and
Nanjing Recon to bear joint and several liability guarantees for the above four judgment contents and the case acceptance fee.

Table of Contents
F-41
(b)   Purchase commitment
The total future minimum purchase commitment under the non-cancellable purchase contracts as of June 30, 2024 are payable as follows:
Twelve months ending June 30,
    
RMB
US Dollars
2025
¥
23,956,141
$
3,296,475
Total minimum payments required
 
¥
23,956,141
$
3,296,475
(c)   Leases Commitment
The Company has entered into several operating leases for office premises with the property owner and service agreements with a property service
company, respectively. According to the agreements, the Company is required to pay rent and property management fees for future periods, of
which, future rent payments have been included in lease liabilities as disclosed in Note 10, and the future property management fees payable as of
June 30, 2024 are disclosed as follows:
Twelve months ending June 30,
    
RMB
    
US Dollars
2025
 
¥
553,709
$
76,193
2026
604,046
83,119
2027
453,034
62,340
Total
 
¥
1,610,789
$
221,652
NOTE 23. RELATED PARTY TRANSACTIONS AND BALANCES
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 ¥96,875 ($13,330) with annual rental
expense at ¥1.2 million ($0.16 million).
The details of leases from related parties are as below:
    
    
Monthly Rent
    
Monthly Rent
Lessee
    
Lessor
    
Rent Period
    
RMB
    
US Dollars
Nanjing Recon
 
One of the founders
 
April 1, 2024 - March 31, 2026
 
¥
40,000
$
5,504
BHD
 
One of the founders
 
January 1, 2024- Dec 31, 2025
 
33,250
 
4,575
BHD
 
One of the founders
 
January 1, 2024 - Dec 31, 2025
 
23,625
 
3,251
As of June 30, 2023, the operating lease ROU assets and corresponding operating lease liabilities of leases from related parties was ¥335,976 and
¥335,976, respectively.
As of June 30, 2024, the operating lease ROU assets and corresponding operating lease liabilities of leases from related parties was ¥1,769,840
($243,538) and ¥2,111,090 ($290,496), respectively.
Guarantee/collateral related parties - The Company’s founders provide guarantee and collateral for the Company’s short-term bank loans (see Note
13).
NOTE 24. VARIABLE INTEREST ENTITIES
VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose
equity holders lack adequate decision-making ability. All VIEs and their subsidiaries with which the Company is involved must be evaluated to
determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial
reporting purposes.

Table of Contents
F-42
Summary information regarding consolidated VIEs and their subsidiaries is as follows:
June 30, 2023
June 30, 2024
June 30, 2024
    
RMB
    
RMB
    
US Dollars
ASSETS
 
 
   
  
Current Assets
 
 
   
  
Cash
  ¥
37,661,118   ¥
35,357,534
$
4,865,359
Restricted cash
731,545
848,936
116,817
Notes receivable
 
3,742,390  
1,341,820
 
184,641
Accounts receivable, net
 
27,453,415  
38,631,762
 
5,315,907
Inventories, net
6,330,701
1,128,912
155,343
Other receivables, net
11,618,275
3,514,776
483,649
Loans to third parties
37,770,188
31,008,330
4,266,888
Purchase advances, net
1,592,761
30,691
4,223
Contract costs, net
49,572,685
48,335,817
6,651,230
Prepaid expenses
121,329
138,683
19,083
Operating lease right-of-use assets, net - current
 
—  
1,026,599
 
141,265
Total current assets
 
176,594,407  
161,363,860
22,204,405
Property and equipment, net
24,752,864
22,137,940
3,046,282
Long-term other receivables, net
3,640
—
—
Operating lease right-of-use assets, net - non-current
 
2,654,900  
7,695,347
 
1,058,915
Total Assets
  ¥
204,005,811   ¥
191,197,147
$
26,309,602
LIABILITIES
 
 
 
Short-term bank loans
  ¥
12,451,481   ¥
12,425,959
$
1,709,869
Accounts payable
10,791,721
10,187,518
1,401,849
Other payables
3,904,135
1,160,065
159,630
Other payable- related parties
1,356,915
2,252,236
309,918
Contract liabilities
2,748,361
1,820,481
250,507
Accrued payroll and employees’ welfare
1,048,061
2,030,300
279,379
Intercompany payables*
263,935,922
269,423,190
37,073,865
Taxes payable
1,163,237
933,219
128,415
Short-term borrowings - related parties
20,018,222
10,002,875
1,376,441
Operating lease liabilities - current
 
3,066,146  
3,741,247
 
514,812
Total current liabilities
 
320,484,201  
313,977,090
 
43,204,685
Operating lease liabilities - non-current
25,144
3,971,285
546,467
Long-term borrowings - related party
 
—  
10,000,000
 
1,376,046
Total Liabilities
  ¥
320,509,345   ¥
327,948,375
$
45,127,198
*
Intercompany payables are eliminated upon consolidation.
The financial performance of VIEs and their subsidiaries reported in the consolidated statement of operations and comprehensive income for the
year ended June 30, 2022 includes revenue of ¥83,777,571, operating expenses of ¥35,725,237, and net loss of ¥18,180,305. The financial
performance of VIEs and their subsidiaries reported in the consolidated statement of operations and comprehensive income (loss) for the year ended
June 30, 2023 includes revenue of ¥67,114,378, operating expenses of ¥35,547,439, and net loss of ¥26,349,629. The financial performance of VIEs
and their subsidiaries reported in the consolidated statement of operations and comprehensive income (loss) for the year ended June 30, 2024
includes revenue of ¥68,854,280 ($9,474,664), operating expenses of ¥45,301,827 ($6,233,739), and net loss of ¥19,760,427 ($2,719,125).

Table of Contents
F-43
NOTE 25. SEGMENT REPORTING
ASC 280, “Segment Reporting,” establishes standards for reporting information about operating segments on a basis consistent with the Company’s
internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for
details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The
management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating
decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating
decision maker, reviews operation results by the revenue of different products. Based on management’s assessment, the Company has determined
that it has four operating segments: automation product and software, equipment and accessories, oilfield environmental protection and platform
outsourcing services.
The following tables present summary information by segment for the years ended June 30, 2022, 2023 and 2024, respectively:
For the years ended June 30, 
2022
2023
2024
2024
    
RMB
    
RMB
    
RMB
    
US Dollars
Automation product and software
 
¥
31,944,055  
¥
26,628,216  
¥
26,831,668
$
3,692,160
Equipment and accessories
 
17,159,381  
16,248,197  
20,471,950
 
2,817,034
Oilfield environmental protection
 
25,335,363  
19,116,560  
17,576,573
 
2,418,617
Platform outsourcing services
9,338,772
5,121,405
3,974,089
546,853
Total revenue
 
¥
83,777,571  
¥
67,114,378  
¥
68,854,280
$
9,474,664
For the year ended June 30, 2024
    
Automation 
    
Equipment,
    
Oilfield 
    
Platform
    
    
 
product and 
accessories
environmental 
outsourcing
Chemical
 
software
and others
protection
services
recycle
Total
RMB
RMB
RMB
RMB
RMB
RMB
Revenue
  ¥ 26,831,668   ¥
20,471,950   ¥
17,576,573   ¥ 3,974,089
¥
—
¥ 68,854,280
Cost of revenue and related tax
 
23,864,941  
14,097,459  
9,240,828  
637,903
135,705
47,976,836
Gross profit
  ¥
2,966,727   ¥
6,374,491   ¥
8,335,745   ¥ 3,336,186
¥
(135,705)
¥ 20,877,444
Depreciation and amortization
  ¥
493,633   ¥
289,234   ¥
2,059,292   ¥
1,865
¥
175,003
¥
3,019,027
Total capital expenditures
  ¥
146,367   ¥
150,081   ¥
—   ¥
2,989
¥
15,000,251
¥ 15,299,688
Timing of revenue recognition
Goods transferred at a point in time
¥ 20,032,784   ¥
20,471,950   ¥
17,576,573   ¥
199,918
¥
—
¥ 58,281,225
Services rendered over time
6,798,884
—
—
3,774,171
—
10,573,055
Total revenue
  ¥ 26,831,668   ¥
20,471,950   ¥
17,576,573   ¥ 3,974,089
¥
—
¥ 68,854,280
For the year ended June 30, 2023
    
Automation 
    
Equipment 
    
Oilfield 
    
Platform
    
product and 
and 
environmental 
outsourcing
software
accessories
protection
services
Total
RMB
RMB
RMB
RMB
RMB
Revenue
 
¥
26,628,216  
¥
16,248,197  
¥
19,116,560  
¥
5,121,405  
¥
67,114,378
Cost of revenue and related tax
 
23,610,281  
8,945,796  
13,955,673  
1,735,645  
48,247,395
Gross profit
 
¥
3,017,935  
¥
7,302,401  
¥
5,160,887  
¥
3,385,760  
¥
18,866,983
Depreciation and amortization
 
¥
857,332  
¥
689,552  
¥
2,077,165  
¥
59,537  
¥
3,683,586
Total capital expenditures
 
¥
803,311  
¥
46,681  
¥
75,728  
¥
14,953  
¥
940,673
Timing of revenue recognition
Goods transferred/service rendered at a point in
time
¥
18,640,699
¥
16,248,197
¥
19,116,560
¥
4,470,462
¥
58,475,918
Services rendered over time
7,987,517
—
—
650,943
8,638,460
Total revenue
 
¥
26,628,216  
¥
16,248,197  
¥
19,116,560  
¥
5,121,405  
¥
67,114,378

Table of Contents
F-44
For the year ended June 30, 2022
    
Automation 
    
Equipment 
    
Oilfield 
    
Platform
    
product and 
and 
environmental 
outsourcing
software
accessories
protection
services
Total
RMB
RMB
RMB
RMB
RMB
Revenue
 
¥
31,944,055  
¥
17,159,381  
¥
25,335,363  
¥
9,338,772  
¥
83,777,571
Cost of revenue and related tax
 
29,824,014  
10,479,615  
20,222,446  
3,826,759  
64,352,834
Gross profit
 
¥
2,120,041  
¥
6,679,766  
¥
5,112,917  
¥
5,512,013  
¥
19,424,737
Depreciation and amortization
 
¥
421,619  
¥
814,960  
¥
2,045,601  
¥
57,688  
¥
3,339,868
Total capital expenditures
 
¥
14,823  
¥
21,456  
¥
768,795  
¥
194,578  
¥
999,652
Timing of revenue recognition
Goods transferred/service rendered at a point in
time
¥
31,944,055
¥
17,159,381
¥
15,779,825
¥
9,338,772
¥
74,222,033
Services rendered over time
—
—
9,555,538
—
9,555,538
Total revenue
 
¥
31,944,055  
¥
17,159,381  
¥
25,335,363  
¥
9,338,772  
¥
83,777,571
    
June 30, 
    
June 30, 
    
June 30, 
2023
2024
2024
RMB
RMB
US Dollars
Total assets:
 
   
   
  
Automation product and software
 
¥
167,009,315  
¥
132,194,082
$
18,190,511
Equipment, accessories and others
 
170,809,759  
145,316,223
 
19,996,178
Oilfield environmental protection
 
107,393,609  
78,023,782
 
10,736,430
Platform outsourcing services
86,611,894
61,931,606
8,522,072
Chemical recycling
—
134,923,821
18,566,136
Total assets
 
¥
531,824,577  
¥
552,389,514
$
76,011,327
NOTE 26. SUBSEQUENT EVENTS
These consolidated financial statements were approved by management and available for issuance on October 30, 2024, and the Company has
evaluated subsequent events through this date.
On February 26, 2024, the Company granted 12,900,000 restricted Class B Ordinary Shares to its management as compensation cost for awards. The
fair value of the Class B restricted shares was $2,130,000 based on the fair value of share price $0.17 at February 26, 2024. These restricted shares
vested immediately on the grant date. On August 1, 2024, all granted shares under this plan were issued and outstanding.
On August 28, 2024, the Company proactively redeemed a term deposit of $12.0 million at Standard Chartered Bank ahead of schedule. The original
term of the deposit was from April 22, 2024, to October 22, 2024, yielded an interest income of $178,167.
On September 27, 2024, Recon-SD signed a supplemental agreement of ¥10.0 million ($1.4 million) for the purchase of equipment for the
construction of capacity for the plastics recycling business.

Table of Contents
F-45
NOTE 27. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY
Pursuant to the requirements of Rules 12-04(a), 5-04(c), and 4-08(e)(3) of Regulation S-X, the condensed financial information of the parent
company shall be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the
most recently completed fiscal year. The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance with such
requirements and concluded that it was applicable to the Company as the restricted net assets of the Company’s PRC subsidiary and VIEs exceeded
25% of the consolidated net assets of the Company. Therefore, the condensed financial statements for the parent company are included herein.
For purposes of the above test, restricted net assets of consolidated subsidiaries and VIEs shall mean that amount of the Company’s proportionate
share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be
transferred to the parent company by subsidiaries and VIEs in the form of loans, advances, or cash dividends without the consent of a third party.
The condensed financial information of the parent company has been prepared using the same accounting policies as set out in the Company’s
consolidated financial statements except that the parent company used the equity method to account for investment in its subsidiaries and VIEs. Such
investment is presented on the condensed balance sheets as “Investment in subsidiaries and VIEs” and the respective profit or loss as “Equity in
earnings of subsidiaries and VIEs” on the condensed statements of income.
The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read
in conjunction with the notes to the consolidated financial statements of the Company. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.
The Company did not pay any dividend for the periods presented. As of June 30, 2023 and June 30, 2024, there were no material contingencies,
significant provisions for long-term obligations, or guarantees of the Company, except for those which have been separately disclosed in the
consolidated financial statements, if any.

Table of Contents
F-46
RECON TECHNOLOGY, LTD
PARENT COMPANY BALANCE SHEETS (UNAUDITED)
    
June 30,
    
June 30,
    
June 30,
2023
2024
2024
RMB
RMB
US Dollars
ASSETS
 
  
 
   
  
Cash
¥
236,146,589
¥
16,473,018
$
2,266,763
Short-term investments
—
88,091,794
12,121,834
Due from intercompany*
291,525,426
375,736,992
51,703,131
Other current assets
80,036,017
170,158,947
23,414,650
Total Current Assets
607,708,032
650,460,751
89,506,378
Investment in subsidiaries and VIEs
 
(122,920,490)
(145,408,577)
(20,008,886)
Total Assets
  ¥
484,787,542
¥
505,052,174
$
69,497,492
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
  
 
  
 
  
Other current liabilities
3,964,912
2,490,668
342,727
Total Current Liabilities
3,964,912
2,490,668
342,727
Warrant liability - non-current
31,615,668
6,969
959
Total Liabilities
  ¥
35,580,580
¥
2,497,637
$
343,686
COMMITMENTS AND CONTINGENCIES
 
  
 
  
 
  
SHAREHOLDERS’ EQUITY
 
  
 
  
 
  
Class A ordinary shares, $0.0001 U.S. dollar par value, 500,000,000 shares authorized;
2,306,295 shares and 7,987,959 shares issued and outstanding as of June 30, 2023 and
June 30, 2024, respectively**
 
26,932
99,634
13,710
Class B ordinary shares, $0.0001 U.S. dollar par value, 80,000,000 shares authorized;
7,100,000 shares and 7,100,000 shares issued and outstanding as of June 30, 2023 and
June 30, 2024, respectively**
 
4,693
4,693
646
Additional paid-in capital**
 
580,340,061
681,476,717
93,774,317
Accumulated deficit
 
(166,291,897)
 
(216,163,156)
 
(29,745,040)
Accumulated other comprehensive income
 
35,127,173
 
37,136,649
 
5,110,173
Total Shareholders’ Equity
 
449,206,962
 
502,554,537
 
69,153,806
Total Liabilities and Shareholders’ Equity
  ¥
484,787,542
¥
505,052,174
$
69,497,492
*
Due from intercompany are eliminated upon consolidation.
**
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024 and change in capital structure on March 29, 2024.

Table of Contents
F-47
RECON TECHNOLOGY, LTD
PARENT COMPANY STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
    
For the years ended June 30,
    
2022
    
2023
    
2024
    
2024
RMB
RMB
RMB
US Dollars
Revenue
¥
—
¥
—
¥
—
$
—
Cost of revenue
—
—
—
—
Gross profit
—
—
—
—
General and administrative expenses
62,918,622
54,494,219
44,012,602
6,056,336
Provision for credit losses
1,923,382
(4,141,588)
—
—
Loss from operations
(64,842,004)
(50,352,631)
(44,012,602)
(6,056,336)
Fair value changes of warrants liability
174,485,575
6,116,000
(933,995)
(128,522)
Other income
4,105,116
10,108,783
17,386,784
2,392,501
Equity in loss of subsidiaries, VIEs and VIEs’ subsidiaries
(18,161,892)
(25,039,453)
(22,312,339)
(3,070,280)
 
　 
Net income (loss)
¥
95,586,795
¥
(59,167,301)
¥
(49,872,152)
$
(6,862,637)
 
 
 
 
Foreign currency translation adjustment
 
9,332,625  
23,819,712  
2,009,476
 
276,513
Comprehensive income (loss) attributable to the Company
¥
104,919,420   ¥
(35,347,589)  ¥
(47,862,676)
$
(6,586,124)

Table of Contents
F-48
RECON TECHNOLOGY, LTD
PARENT COMPANY STATEMENTS OF CASH FLOWS (UNAUDITED)
For the years ended June 30,
    
2022
    
2023
    
2024
    
2024
RMB
RMB
RMB
US Dollars
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
¥
95,586,795
¥
(59,167,301) 
¥
(49,872,152)
$
(6,862,637)
Adjustments to reconcile net cash flows from operating activities:
 
  
 
　 
 
Changes in warrants liabilities
(174,485,575)
(6,116,000)
933,995
128,522
Amortization of offering cost of warrants
—
1,483,306
—
—
Provision for doubtful accounts
1,923,382
(4,141,588)
—
—
Restricted shares issued for management and employees
39,263,485
26,191,707
22,427,682
3,086,152
Income (loss) from investment in unconsolidated entity
(15,411)
—
—
—
Accrued interest income from loans to third parties
—
—
(4,058,536)
(558,473)
Accrued interest income from short-term investment
—
—
(885,394)
(121,834)
Restricted shares issued for services
8,935,919
5,805,840
1,070,143
147,257
Equity in earnings of subsidiaries and VIEs
 
18,161,892
 
25,039,453  
22,312,339
 
3,070,280
Other current assets
(111,521)
(8,396,555)
3,743,536
515,128
Other current liabilities
(5,090,698)
(3,587,540)
(1,474,244)
(202,864)
Net cash used in operating activities
 
(15,831,732)
 
(22,888,678) 
(5,802,631)
 
(798,469)
Cash flows from investing activities:
Repayments from loans to third parties
166,405,032
32,413,311
75,987,831
10,456,274
Payments made for loans to third parties
(137,391,510)
(79,546,761)
(165,837,504)
(22,820,000)
Payments for short-term investments
—
—
(87,206,400)
(12,000,000)
Due from intercompany, VIEs and VIEs’ subsidiaries
(55,569,342)
(86,300,464)
(84,211,565)
(11,587,897)
　
　
Net cash used in investing activities
(26,555,820)
(133,433,914)
(261,267,638)
(35,951,623)
Cash flows from financing activities:
Proceeds from warrants issued with common share
—
17,493,069
—
—
Proceeds from sale of common share, net of issuance costs
—
28,174,993
77,711,533
10,693,463
Proceeds from sale of prefunded warrants, net of issuance costs
93,321
3,750,282
—
—
Redemption of warrants
—
—
(32,617,499)
(4,488,317)
Net cash provided by financing activities
93,321
49,418,344
45,094,034
6,205,146
　
Effect of exchange rate fluctuation on cash
14,016,375
46,211,878
2,302,664
316,857
　
　
Net increase (decrease) in cash
 
(28,277,856)
 
(60,692,370) 
(219,673,571)
 
(30,228,089)
　
　
Cash, beginning of year
 
325,116,815
 
296,838,959  
236,146,589
 
32,494,852
　
Cash, end of year
¥
296,838,959
¥
236,146,589  
¥
16,473,018
$
2,266,763
Non-cash investing and financing activities
Cancellation of ordinary shares issued to Starry
¥
(27,675,450)
¥
—
¥
—
$
—

1
Exhibit 1.1.5
THE COMPANIES ACT (AS REVISED)
OF THE CAYMAN ISLANDS COMPANY
LIMITED BY SHARES
FOURTH AMENDED AND RESTATED ARTICLES OF ASSOCIATION OF
RECON TECHNOLOGY, LTD
Adopted by Special Resolution on March 29, 2024
1.
In these Articles Table A in the Schedule to the Statute does not apply and, unless there is something in the subject or context inconsistent
therewith,
“Affiliate”
(i) in the case of a natural person, such person’s parents, parents-in-law, spouse, children or
grandchildren, a trust for the benefit of any of the foregoing, a company, partnership or any natural
person or entity wholly or jointly owned by such person or any of the foregoing,
(ii) in the case of an entity, a partnership, a corporation or any natural person or entity which
directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under
common control with, such entity. The term “control” shall mean the ownership, directly or
indirectly, of shares possessing more than fifty percent (50%) of the voting power of the
corporation, or the partnership or other entity (other than, in the case of corporation, share having
such power only by reason of the happening of a contingency), or having the power to control the
management or elect a majority of members to the board of directors or equivalent decision-making
body of such corporation, partnership or other entity.
“Articles”
means these Articles as originally framed or as from time to time altered by Special Resolution.
“Auditors”
means the persons for the time being performing the duties of auditors of the Company.
“Chairman”
means the Chairman of the Board of Directors appointed in accordance with Article 91.
“Class”
means a class of Director established pursuant to Article 68.
“Class A Ordinary Shares”
means the Class A ordinary shares in the capital of the Company of US$0.0001 par value each,
having the rights provided for in these Articles.
“Class B Ordinary Shares”
means the Class B ordinary shares in the capital of the

2
Company of US$0.0001 par value each, having the rights provided for in these Articles.
“Company”
means Recon Technology, Ltd
“debenture”
means debenture stock, mortgages, bonds and any other such securities of the Company whether
constituting a charge on the assets of the Company or not.
“Designated Exchange”
means The Nasdaq Stock Market, the New York Stock Exchange, the NYSE Market or any other
internationally recognized stock exchange where the Company’s securities are traded;
“Directors”
means the directors for the time being of the Company.
“dividend”
includes bonuses.
“Exchange Rules”
means the relevant code, rules and regulations, as amended, from time to time, applicable as a result
of the original and continued listing of any shares on the Designated Exchange;
“Member”
shall bear the meaning as ascribed to it in the Statute.
“month”
means calendar month.
“Original Articles”
means the First Amended and Restated Articles of Association of the Company adopted by Special
Resolutions dated 23rd day of June, 2009
“paid-up”
means paid-up and/or credited as paid-up.
“registered office”
means the registered office for the time being of the Company.
“Seal”
means the common seal of the Company and includes every duplicate seal.
“Secretary”
includes an Assistant Secretary and any person appointed to perform the duties of Secretary of the
Company.
“Share Premium Account”
means the account of the Company which the Company is required by the Statute to maintain, to
which all premiums over nominal or par value received by the Company in respect of issues of
shares from time to time are credited.
“shares”
means any share in the capital of the Company, including Class A Ordinary Shares, Class B
Ordinary Shares and shares of other classes.

3
“Special Resolution”
has the same meaning as in the Statute and includes a resolution approved in writing as described
therein.
“Statute”
means the Companies Act of the Cayman Islands as amended and every statutory modification or
re-enactment thereof for the time being in force.
“written” and “in writing”
include all modes of representing or reproducing words in visible form.
Words importing the singular number include the plural number and vice-versa. Words
importing the masculine gender include the feminine gender.
Words importing persons include corporations.
2.
The business of the Company may be commenced as soon after incorporation as the Directors shall see fit, notwithstanding that only part of the
shares may have been allotted.
3.
The Directors may pay, out of the capital or any other monies of the Company, all expenses incurred in or about the formation and
establishment of the Company including the expenses of registration.
CERTIFICATES FOR SHARES
4.
Certificates representing shares of the Company shall be in such form as shall be determined or agreed to by the Directors. Such certificates
may be under Seal. All certificates for shares shall be consecutively numbered or otherwise identified and shall specify the shares to which they
relate. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall
be entered in the register of Members of the Company. All certificates surrendered to the Company or any agent appointed by the Company for
the purpose of maintaining the Company’s register of Members and registering transfer of the Company’s shares (the “Share Registrar”) for
transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been
surrendered and cancelled. The Directors may authorize certificates to be issued with the seal and authorized signature(s) affixed by some
method or system of mechanical process.
5.
Notwithstanding Article 4 of these Articles, if a share certificate be defaced, lost or destroyed, it may be renewed on payment of a fee of one
dollar (US$l.00) or such other sum determined by the Directors or the Share Registrar and on such terms (if any) as to evidence and indemnity
and the payment of the expenses incurred by the Company in investigating evidence, as the Directors or Share Registrar may prescribe.
ISSUE OF SHARES
6.
Subject to the relevant provisions, if any, in the Memorandum of Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the holders of existing shares, the Directors may, in their absolute
discretion and without approval of the holders of shares, allot, issue, grant options over or otherwise dispose of shares of the Company
(including fractions of a share) with or without preferred, deferred or other special rights or restrictions, whether with regard to dividend, voting,
return of capital or otherwise and to such persons, at such times and on such other terms as they think proper. The Company shall not issue
shares in bearer form.

4
REGISTER OF MEMBERS AND SHARE CERTIFICATES
7.
The Company shall maintain a register of its Members and every person whose name is entered as a Member in the register of Members shall be
entitled without payment to receive within two months after allotment or lodgement of transfer (or within such other period as the conditions of
issue shall provide) one certificate for all his shares or several certificates each for one or more of his shares upon payment of fifty cents
(US$0.50) for every certificate after the first or such sum as the Directors of the Share Registrar shall from time to time determine provided that
in respect of a share or shares held jointly by several persons the Company shall not be bound to issue more than one certificate and delivery of
a certificate for a share to one of the several joint holders shall be sufficient delivery to all such holders. The Directors may appoint a Share
Registrar to maintain the Company’s register of Members.
TRANSFER OF SHARES
8.
The instrument of transfer of any share shall be in writing and shall be executed by or on behalf of the transferor and the transferor shall be
deemed to remain the holder of a share until the name of the transferee is entered in the register in respect thereof. The Directors may in their
absolute discretion decline to register any transfer of shares without assigning any reason therefor. If the Directors refuse to register a transfer
they shall notify the transferee within two months of such refusal.
9.
The registration of transfers may be suspended at such time and for such periods as the Directors may from time to time determine.
REDEEMABLE SHARES
10. (a) Subject to the provisions of the Statute and the Memorandum of Association, shares may be issued on the terms that they are, or at the
option of the Company or the holder are, to be redeemed on such terms and in such manner as the Company, before the issue of the shares, may
by Special Resolution determine.
(b) Subject to the provisions of the Statute and the Memorandum of Association, the Company may purchase its own shares (including
fractions of a share), including any redeemable shares, provided that the manner of purchase has first been authorized by the Company in
general meeting and may make payment therefor in any manner authorized by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
11. If at any time the share capital of the Company is divided into different classes of shares, the rights attached to any class (unless otherwise
provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound-up and except where these Articles
or the Statute impose any stricter quorum, voting or procedural requirements in regard to the variation of rights attached to a specific class, be
varied with the consent in writing of the holders of at least 50% of the issued shares of that class, or with the sanction of a Special Resolution
passed at a general meeting of the holders of the shares of that class.
The provisions of these Articles relating to general meetings shall apply to every such general meeting of the holders of one class of shares
except that the necessary quorum shall be one or more persons holding or representing by proxy at least one-third of the issued shares of the
class and that any holder of shares of the class present in person or by proxy may demand a poll.
12. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly
provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu

5
therewith.
COMMISSION ON SALE OF SHARES
13. The Company may insofar as the Statute from time to time permits pay a commission to any person in consideration of his subscribing or
agreeing to subscribe whether absolutely or conditionally for any shares of the Company. Such commissions may be satisfied by the payment of
cash or the lodgement of fully or partly paid-up shares or partly in one way and partly in the other. The Company may also on any issue of
shares pay such brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
14. No person shall be recognized by the Company as holding any share upon any trust and the Company shall not be bound by or be compelled in
any way to recognize (even when having notice thereof) any equitable, contingent, future, or partial interest in any share, or any interest in any
fractional part of a share, or (except only as is otherwise provided by these Articles or the Statute) any other rights in respect of any share except
an absolute right to the entirety thereof in the registered holder.
LIEN ON SHARES
15. The Company shall have a first and paramount lien and charge on all shares (whether fully paid-up or not) registered in the name of a Member
(whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not) by
such Member or his estate, either alone or jointly with any other person, whether a Member or not, but the Directors may at any time declare
any share to be wholly or in part exempt from the provisions of this Article. The registration of a transfer of any such share shall operate as a
waiver of the Company’s lien (if any) thereon. The Company’s lien (if any) on a share shall extend to all dividends or other monies payable in
respect thereof.
16. The Company may sell, in such manner as the Directors think fit, any shares on which the Company has a lien, but no sale shall be made unless
a sum in respect of which the lien exists is presently payable, nor until the expiration of fourteen days after a notice in writing stating and
demanding payment of such part of the amount in respect of which the lien exists as is presently payable, has been given to the registered holder
or holders for the time being of the share, or the person, of which the Company has notice, entitled thereto by reason of his death or bankruptcy.
17. To give effect to any such sale, the Directors may authorize some person to transfer the shares sold to the purchaser thereof. The purchaser shall
be registered as the holder of the shares comprised in any such transfer, and he shall not be bound to see to the application of the purchase
money, nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.
18. The proceeds of such sale shall be received by the Company and applied in payment of such part of the amount in respect of which the lien
exists as is presently payable and the residue, if any, shall (subject to a like lien for sums not presently payable as existed upon the shares before
the sale) be paid to the person entitled to the shares at the date of the sale.
CALL ON SHARES
19. (a) The Directors may from time to time make calls upon the Members in respect of any monies unpaid on their shares (whether on account of
the nominal value of the shares or by way of premium or otherwise) and not by the conditions of allotment thereof made payable at fixed terms,
provided that no call shall be payable at less than one month from the date fixed for the payment of the last preceding call, and each Member
shall (subject to receiving at least fourteen (14) days’ notice specifying the time or times of payment) pay to the Company at the

6
time or times so specified the amount called on the shares. A call may be revoked or postponed as the Directors may determine. A call may be
made payable by installments.
(b) A call shall be deemed to have been made at the time when the resolution of the Directors authorizing such call was passed.
(c) The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof.
20. If a sum called in respect of a share is not paid before or on a day appointed for payment thereof, the persons from whom the sum is due shall
pay interest on the sum from the day appointed for payment thereof to the time of actual payment at such rate not exceeding ten per cent per
annum as the Directors may determine, but the Directors shall be at liberty to waive payment of such interest either wholly or in part.
21. Any sum which by the terms of issue of a share becomes payable on allotment or at any fixed date, whether on account of the nominal value of
the share or by way of premium or otherwise, shall for the purposes of these Articles be deemed to be a call duly made, notified and payable on
the date on which by the terms of issue the same becomes payable, and in the case of non-payment all the relevant provisions of these Articles
as to payment of interest forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.
22. The Directors may, on the issue of shares, differentiate between the holders as to the amount of calls or interest to be paid and the times of
payment.
23. (a) The Directors may, if they think fit, receive from any Member willing to advance the same, all or any part of the monies uncalled and
unpaid upon any shares held by him, and upon all or any of the monies so advanced may (until the same would but for such advances, become
payable) pay interest at such rate not exceeding (unless the Company in general meeting shall otherwise direct) seven per cent per annum, as
may be agreed upon between the Directors and the Member paying such sum in advance. No such sum paid in advance of calls shall entitle the
Member paying such sum to any portion of a dividend declared in respect of any period prior to the date upon which such sum would, but for
such payment, become presently payable.
FORFEITURE OF SHARES
24. (a) If a Member fails to pay any call or installment of a call or to make any payment required by the terms of issue on the day appointed for
payment thereof, the Directors may, at any time thereafter during such time as any part of the call, installment or payment remains unpaid, give
notice requiring payment of any part of the call, installment or payment that is unpaid, together with any interest which may have accrued and
all expenses that have been incurred by the Company by reason of such non-payment. Such notice shall name a day (not earlier than the
expiration of fourteen (14) days’ from the date of giving of the notice) on or before which the payment required by the notice is to be made, and
shall state that, in the event of non-payment at or before the time appointed the shares in respect of which such notice was given will be liable to
be forfeited.
(b) If the requirements of any such notice as aforesaid are not complied with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the Directors to that effect. Such
forfeiture shall include all dividends declared in respect of the forfeited share and not actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the Directors think fit, and at any time before a
sale or disposition, the forfeiture may be cancelled on such terms as the Directors see fit.

7
25. A person whose shares have been forfeited shall cease to be a Member in respect of the forfeited shares, but shall, notwithstanding, remain
liable to pay to the Company all monies which, at the date of forfeiture, were payable by him to the Company in respect of the shares together
with interest thereon, but his liability shall cease if and when the Company shall have received payment in full of all monies whenever payable
in respect of the shares.
26. A certificate in writing under the hand of one Director or the Secretary of the Company that a share in the Company has been duly forfeited on a
date stated in the declaration shall be conclusive evidence of the fact therein stated as against all persons claiming to be entitled to the share.
The Company may receive the consideration given for the share on any sale or disposition thereof and may execute a transfer of the share in
favor of the person to whom the share is sold or disposed of and he shall thereupon be registered as the holder of the share and shall not be
bound to see to the application of the purchase money, if any, nor shall his title to the share be affected by any irregularity or invalidity in the
proceedings in reference to the forfeiture, sale or disposal of the share.
27. The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which, by the terms of issue of a share,
becomes payable at a fixed time, whether on account of the nominal value of the share or by way of premium as if the same had been payable
by virtue of a call duly made and notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
28. The Company shall be entitled to charge a fee not exceeding one dollar (US$1.00) on the registration of every probate, letter of administration,
certificate of death or marriage, power of attorney, notice in lieu of distringas, or other instrument.
TRANSMISSION OF SHARES
29. In case of the death of a Member, the survivor or survivors where the deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognized by the Company as having any title to his interest in the shares, but
nothing herein contained shall release the estate of any such deceased holder from any liability in respect of any shares which had been held by
him solely or jointly with other persons.
30. (a) Any person becoming entitled to a share in consequence of the death or bankruptcy or liquidation or dissolution of a Member (or in any
other way than by transfer) may, upon such evidence being produced as may from time to time be required by the Directors and subject as
hereinafter provided, elect either to be registered himself as holder of the share or to make such transfer of the share to such other person
nominated by him as the deceased or bankrupt person could have made and to have such person registered as the transferee thereof, but the
Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share
by that Member before his death or bankruptcy as the case may be.
(b) If the person so becoming entitled shall elect to be registered himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
31. A person becoming entitled to a share by reason of the death or bankruptcy or liquidation or dissolution of the holder (or in any other case than
by transfer) shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the
share, except that he shall not, before being registered as a Member in respect of the share, be entitled in respect of it to exercise any right
conferred by membership in relation to meetings of the Company; PROVIDED, HOWEVER, that the Directors may at any time give notice
requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within ninety (90)
days, the Directors may thereafter

8
withhold payment of all dividends, bonuses or other monies payable in respect of the share until the requirements of the notice have been
complied with.
RIGHTS CONFERRED BY CLASS A ORDINARY SHARES AND
CLASS B ORDINARY SHARES
32. Each Class A Ordinary Share and Class B Ordinary Share confers on its holder:
(a) the right to vote as provided in Article 33 hereof;
(b) the right to an equal share in any dividend paid by the Company; and
(c) the right to an equal share in the distribution of the surplus of the Company.
33. Holders of Class A Ordinary Shares and Class B Ordinary Shares shall at all times vote together as one class on all resolutions submitted to a
vote by the Members. Each Class A Ordinary Share shall be entitled to one (1) vote on all matters subject to vote at general meetings of the
Company, and each Class B Ordinary Share shall be entitled to fifteen (15) votes on all matters subject to vote at general meetings of the
Company.
34. Each Class B Ordinary Share is convertible into one-eighteenth (1/18) of one Class A Ordinary Share at any time by the holder thereof. The
right to convert shall be exercisable by the holder of the Class B Ordinary Share delivering a written notice to the Company that such holder
elects to convert a specified number of Class B Ordinary Shares into Class A Ordinary Shares.
35. The number of Class B Ordinary Shares held by a holder thereof will be automatically and immediately converted into the corresponding
number of Class A Ordinary Shares in the ratio set forth in Article 34 hereof upon any direct or indirect sale, transfer, assignment or disposition
of such number of Class B Ordinary Shares by the holder thereof or an Affiliate or such holder or the direct or indirect transfer or assignment of
the voting power attached to such number of Class B Ordinary Shares through voting proxy or otherwise to any person or entity that is not an
Affiliate of such holder. For the avoidance of doubt, the creation of any pledge, charge, encumbrance or other third party right of whatever
description on any of Class B Ordinary Shares to secure contractual or legal obligations shall not be deemed as a sale, transfer, assignment or
disposition unless and until any such pledge, charge, encumbrance or other third-party right is enforced and results in the third party holding
directly or indirectly beneficial ownership or voting power through voting proxy or otherwise to the related Class B Ordinary Shares, in which
case all the related Class B Ordinary Shares shall be automatically converted into the same number of Class A Ordinary Shares.
36. Any conversion of Class B Ordinary Shares into Class A Ordinary Shares pursuant to these Articles shall be effected by means of the
conversion into stock of each relevant Class B Ordinary Share and their reconversion into a Class A Ordinary Share.
37. Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstances.
38. Save and except for voting rights and conversion rights as set out in Articles 33 to 37 (inclusive), the Class A Ordinary Shares and the Class B
Ordinary Shares shall rank pari passu and shall have the same rights, preferences, privileges and restrictions.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, ALTERATION
OF CAPITAL & CHANGE OF LOCATION OF REGISTERED OFFICE
39. (a) Subject to and in so far as permitted by the provisions of the Statute, the Company may from time to time by Special Resolution alter or
amend its Memorandum of Association with respect to its name and objects, powers or other matters specified therein provided that

9
the Company may by ordinary resolution, without restricting the generality of the foregoing:
(i)
increase the share capital by such sum to be divided into shares of such amount or without nominal or par value as the resolution
shall prescribe and with such rights, priorities and privileges annexed thereto, as the Company in general meeting may determine;
(ii)
consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;
(iii)
by subdivision of its existing shares or any of them divide the whole or any part of its share capital into shares of smaller amount
than is fixed by the Memorandum of Association or into shares without nominal or par value;
(iv)
cancel any shares that at the date of the passing of the resolution have not been taken or agreed to be taken by any person.
(b) All new shares created hereunder shall be subject to the same provisions with reference to the payment of calls, liens, transfer, transmission,
forfeiture and otherwise as the shares in the original share capital.
(c) Without prejudice to Article 11 hereof and subject to the provisions of the Statute, the Company may by Special Resolution reduce its share
capital and any capital redemption reserve fund.
(d) Subject to the provisions of the Statute, the Company may by resolution of the Directors change the location of its registered office.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
40. For the purpose of determining Members entitled to notice of or to vote at any meeting of Members or any adjournment thereof, or Members
entitled to receive payment of any dividend, or in order to make a determination of Members for any other proper purpose, the Directors of the
Company may provide that the register of Members shall be closed for transfers for a stated period but not to exceed in any case forty (40) days.
If the register of Members shall be so closed for the purpose of determining Members entitled to notice of or to vote at a meeting of Members,
such register shall be so closed for at least ten (10) days immediately preceding such meeting and the record date for such determination shall be
the date of the closure of the register of Members.
41. In lieu of or apart from closing the register of Members, the Directors may fix in advance a date as the record date for any such determination of
Members entitled to notice of or to vote at a meeting of the Members and for the purpose of determining the Members entitled to receive
payment of any dividend the Directors may, at or within ninety (90) days prior to the date of declaration of such dividend, fix a subsequent date
as the record date for such determination.
42. If the register of Members is not so closed and no record date is fixed for the determination of Members entitled to notice of or to vote at a
meeting of Members or Members entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on
which the resolution of the Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of
Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this section, such
determination shall apply to any adjournment thereof.
GENERAL MEETING

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43. All general meetings of the Company other than annual general meetings shall be called extraordinary general meetings.
44. (a) The Directors may whenever they think fit, and they shall on the requisition of Members of the Company holding at the date of the deposit
of the requisition not less than one tenth (1/10) of such of the paid-up capital of the Company as at the date of the deposit carries the right of
voting at general meetings of the Company, proceed to convene a general meeting of the Company.
(b) The requisition must state the object of the meeting and must be signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or more requisitionists.
(c) If the Directors do not within twenty one (21) days from the date of the deposit of the requisition duly proceed to convene a general
meeting, the requisitionists, or any of them representing more than one half (1/2) of the total voting rights of all of them, may themselves
convene a general meeting, but any meeting so convened shall not be held after the expiration of three (3) months after the expiration of the said
twenty-one (21) days.
(d) A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which
general meetings are to be convened by Directors.
NOTICE OF GENERAL MEETINGS
45. At least ten (10) days’ notice shall be given for an annual general meeting or any other general meeting. Every notice shall be exclusive of the
day on which it is given or deemed to be given and of the day for which it is given and shall specify the place, the day and the hour of the
meeting and the general nature of the business and shall be given in the manner hereinafter mentioned or in such other manner if any as may be
prescribed by the Company; PROVIDED, that a general meeting of the Company shall be deemed to have been duly convened if it is called as
an annual general meeting if it is so agreed by all the Members entitled to attend and vote thereat or their proxies.
46. In cases where instruments of proxy are sent out with notices, the accidental omission to send such instrument of proxy to, or the non-receipt of
any such instrument of proxy by, any person entitled to receive notice shall not invalidate any resolution passed or any proceeding at any such
meeting.
47. No business may be transacted at any annual general meeting, other than business that is either (A) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board (or any duly authorized committee thereof), (B) otherwise properly brought before
an annual general meeting by or at the direction of the Board (or any duly authorized committee thereof) or (C) otherwise properly brought
before an annual general meeting by any Member of the Company who (i) is a Member of record on both (x) the date of the giving of the notice
by such Member provided for in this Article and (y) the record date for the determination of Members entitled to vote at such annual general
meeting and (ii) complies with the notice procedures set forth in this Article.
(a) In addition to any other applicable requirements, for business to be brought properly before an annual general meeting by a Member, such
Member must have given timely notice thereof in proper written form to the Secretary of the Company.
(b) For matters other than for the nomination for election of a Director to be made by a Member of the Company, to be timely, such Member’s
notice shall be delivered to the Secretary at the principal executive offices of the Company not less than sixty (60) days nor more than ninety
(90) days prior to the first anniversary of the preceding year’s annual

11
general meeting; provided, however, that in the event that the date of the annual general meeting is advanced by more than thirty (30) days or
delayed by more than sixty (60) days from such anniversary date, notice by a Member to be timely must be delivered not earlier than the
ninetieth (90th) day prior to such annual general meeting and not later than the close of business on the later of the sixtieth (60th) day prior to
such annual general meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made.
(c) To be in proper written form, a Member’s notice to the Secretary must set forth as to such matter such Member proposes to bring before the
annual general meeting (1) a brief description of the business desired to be brought before the annual general meeting and the reasons for
conducting such business at the annual general meeting, (2) the name and address, as they appear on the Company’s books, of the Member
proposing such business and any Member Associated Person (as defined below), (3) the class or series and number of shares of the Company
that are held of record or are beneficially owned by such Member or any Member Associated Person and any derivative positions held or
beneficially held by the Member or any Member Associated Person, (4) whether and the extent to which any hedging or other transaction or
series of transactions has been entered into by or on behalf of such Member or any Member Associated Person with respect to any securities of
the Company, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending
of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit from share price changes for, or to increase or
decrease the voting power of, such Member or any Member Associated Person with respect to any securities of the corporation, (5) any material
interest of the Member or a Member Associated Person in such business, and (6) a statement whether either such Member or any Member
Associated Person will deliver a proxy statement and form of proxy to holders of at least the percentage of the Company’s voting shares
required under applicable law. For purposes of this Article 43(c), a “Member Associated Person” of any Member shall mean (i) any person
controlling, directly or indirectly, or acting in concert with, such Member, (ii) any beneficial owner of shares of the Company owned of record
or beneficially by such Member and on whose behalf the proposal or nomination, as the case may be, is being made, or (iii) any person
controlling, controlled by or under common control with such person referred to in the preceding clauses (i) and (ii).
(d) No business shall be conducted at the annual general meeting except business brought before the annual general meeting in accordance with
the procedures set forth in this Article, provided, however, that once business has been properly brought before the annual general meeting in
accordance with such procedures, nothing in this Article shall be deemed to preclude discussion by any Member of any such business. If the
Chairman of an annual general meeting determines that business was not properly brought before the annual general meeting in accordance with
the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such
business shall not be transacted.
(e) In addition to any other applicable requirements, for a nomination for election of a Director to be made by a Member of the Company, such
Member must (A) be a Member of record on both (x) the date of the giving of the notice by such Member provided for in this Article and (y) the
record date for the determination of Members entitled to vote at such annual general meeting; (B) have held at least 100,000 Class A Ordinary
Shares or Class B Ordinary Shares for at least twelve (12) months; and (C) have given timely notice thereof in proper written form to the
Secretary of the Company. If a Member is entitled to vote only for a specific class or category of directors at a meeting of the Members, such
Member’s right to nominate one or more persons for election as a director at the meeting shall be limited to such class or category of directors.
(f)
To be timely for purposes of Article 41(e) in connection with the annual general meeting, a Member’s notice shall be delivered to the
Secretary at the principal executive offices of the Company. In the event the Company calls an extraordinary general meeting for

12
the purpose of electing one or more directors to the Board, any Member entitled to vote for the election of such director(s) at such meeting and
satisfying the requirements specified above may nominate a person or persons (as the case may be) for election to such position(s) as are
specified in the Company’s notice of such meeting, but only if the Member notice required hereof shall be delivered to the Secretary at the
principal executive office of the Company. The period for lodgment of the notices by a Member referred to in this Article shall commence no
earlier than the day after the dispatch of the notice of the meeting appointed for such election and end no later than (7) days prior to the date of
such meeting and shall be for a minimum period of seven (7) days .
(g) To be in proper written form for purposes of Article 43(e), a Member’s notice to the Secretary must be set forth (A) as to each person whom
the Member proposes to nominate for election as a director (1) the name, age, business address and residence address of the person, (2) the
principal occupation or employment of the person, (3) the class or series and number of shares of the Company, if any, which are owned
beneficially or of record by the person and (4) any other information relating to the person that would be required to be disclosed pursuant to
any Exchange Rules; and (B) as to the Member giving notice (1) the name and record address of such Member, (2) the class or series and
number of Shares of the Company which are owned beneficially or of record by such Member, (3) a description of all arrangements or
understandings between such Member and each proposed nominee and any other person or persons (including their names) pursuant to which
the nomination(s) are to be made by such Member, (4) a representation that such Member intends to appear in person or by proxy at the annual
meeting to nominate the person(s) named in its notice and (5) any other information relating to such Member that would be required to be
disclosed pursuant to any Exchange Rules. Such notice must be accompanied by a written consent of each proposed nominee to being named as
a nominee and to serve as a director if elected.
(h) No person shall be eligible for election as a director of the Company unless nominated in accordance with the procedures set forth in these
Articles under this heading of “NOTICE OF GENERAL MEETINGS”. If the Chairman of an annual general meeting determines that a
nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was
defective and such defective nomination shall be disregarded.
48. The accidental omission to give notice of a general meeting to, or the non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
49. No business shall be transacted at any general meeting unless a quorum of Members is present at the time when the meeting proceeds to
business. Members present in person or by proxy holding not less than one thirds (1/3) of the issued and outstanding shares of the Company
shall be a quorum.
50. Members may participate in a general meeting at which no special resolutions are proposed by means of conference telephone or other
electronic means by which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this provision
shall constitute presence in person at such meeting.
51. A resolution (including a Special Resolution) in writing (in one or more counterparts) signed by all Members for the time being entitled to
receive notice of and to attend and vote at general meetings (or being corporations by their duly authorized representatives) shall be as valid and
effective as if the same had been passed at a general meeting of the Company duly convened and held.
52. If within half an hour from the time appointed for the meeting a quorum is not present, the

13
meeting, shall be dissolved and in any other case it shall stand adjourned to the same day in the next week at the same time and place or to such
other time or such other place as the Directors may determine and if at the adjourned meeting a quorum is not present within half an hour from
the time appointed for the meeting, the Members present shall be a quorum, subject to compliance with applicable laws, regulations and listing
requirements.
53. The Chairman, if any, of the Board of Directors shall preside as Chairman at every general meeting of the Company. If there is a Chairman of
the Board of Directors and he shall not be present within fifteen minutes after the time appointed for the holding of the meeting or is unwilling
to act, the Directors present shall elect one of their number to be Chairman of the meeting.
54. If at any general meeting no Director is willing to act as Chairman or if no Director is present within fifteen minutes after the time appointed for
holding the meeting, the Members present shall choose one of their own number to be Chairman of the meeting.
55. The Chairman may, with the consent of any general meeting duly constituted hereunder, and shall if so directed by the meeting, adjourn the
meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left
unfinished at the meeting from which the adjournment took place. When a general meeting is adjourned for thirty (30) days or more, notice of
the adjourned meeting shall be given as in the case of an original meeting; save as aforesaid it shall not be necessary to give any notice of an
adjournment or of the business to be transacted at an adjourned general meeting.
56. At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is, before or on the
declaration of the result of the show of hands, demanded by the Chairman or any other Member present in person or by proxy.
57. Unless a poll be so demanded a declaration by the Chairman that a resolution has on a show of hands been carried, or carried unanimously, or
by a particular majority, or lost, and an entry to that effect in the Company’s Minute Book containing the Minutes of the proceedings of the
meeting shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favor of or against such
resolution.
58. The demand for a poll may be withdrawn.
59. If a poll is duly demanded it shall be taken in such manner as the Chairman directs and the result of the poll shall be deemed to be the resolution
of the general meeting at which the poll was demanded.
60. In the case of an equality of votes, whether on a show of hands or on a poll, the Chairman of the general meeting at which the show of hands
takes place or at which the poll is demanded, shall be entitled to a second or casting vote.
61. A poll demanded on the election of a Chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other
question shall be taken at such time as the Chairman of the general meeting directs and any business other than that upon which a poll has been
demanded or is contingent thereon may be proceeded with pending the taking of the poll.
VOTES OF MEMBERS
62. Except as otherwise required by law or as set forth herein, the holder of each Class A Ordinary Share issued and outstanding shall have one (1)
vote for each share held by such holder, and the holder of each Class B Ordinary Share issued and outstanding shall have fifteen (15) vote for
each share held by such holder, at the record date for determination of the Members entitled to vote on such matters, or, if no such record date is
established, at the date such vote is taken or any written consent of Members is solicited. No cumulative voting shall be allowed.

14
63. All votes put before the Members of the Company, or any class or subdivision thereof, shall be by way of poll and shall therefore be made
giving regards to the number of votes to which each Member is entitled in accordance with Article 54.
64. In the case of joint holders of record the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion
of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of
Members.
65. A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote whether on a
show of hands or on a poll, by his committee, receiver, curator bonis, or other person in the nature of a committee, receiver or curator bonis
appointed by that court, and any such committee, receiver, curator bonis or other persons may vote by proxy.
66. No Member shall be entitled to vote at any general meeting unless he is registered as a Member of the Company on the record date for such
meeting nor unless all calls or other sums presently payable by him in respect of shares in the Company have been paid.
67. No objection shall be raised to the qualification of any voter except at the general meeting or adjourned general meeting at which the vote
objected to is given or tendered and every vote not disallowed at such general meeting shall be valid for all purposes. Any such objection made
in due time shall be referred to the Chairman of the general meeting whose decision shall be final and conclusive.
68. On a poll votes may be given either personally or by proxy.
PROXIES
69. The instrument appointing a proxy shall be (a) in writing and executed under the hand of the appointor or of his attorney duly authorized in
writing, or, if the appointor is a corporation under the hand of an officer or attorney duly authorized in that behalf; or (b)) authorized by the
transmission of an electronic record by the Member to the person who will be the holder of the proxy or to a firm which solicits proxies or like
agent who is authorized by the person who will be the holder of the proxy to receive the transmission subject to any procedures the Board of
Directors may adopt from time to time to determine that the electronic record is authorized by the Member. A proxy need not be a Member of
the Company
70. The instrument appointing a proxy shall be deposited at the registered office of the Company or at such other place as is specified for that
purpose in the notice convening the meeting no later than the time for holding the meeting, or adjourned meeting provided that the Chairman of
the Meeting may at his discretion direct that an instrument of proxy shall be deemed to have been duly deposited upon receipt of telex, cable or
telecopy confirmation from the appointor that the instrument of proxy duly signed is in the course of transmission to the Company.
71. The instrument appointing a proxy may be in any usual or common form and may be expressed to be for a particular meeting or any
adjournment thereof or generally until revoked. An instrument appointing a proxy shall be deemed to include the power to demand or join or
concur in demanding a poll.
72. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the
principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the share in respect of which the
proxy is given provided that no intimation in writing of such death, insanity, revocation or transfer as aforesaid shall have been received by the
Company at the registered office before the commencement of the general meeting, or adjourned meeting at which it is

15
sought to use the proxy.
73. Any corporation which is a Member of record of the Company may in accordance with its Articles or in the absence of such provision by
resolution of its Directors or other governing body authorize such person as it thinks fit to act as its representative at any meeting of the
Company or of any class of Members of the Company, and the person so authorized shall be entitled to exercise the same powers on behalf of
the corporation which he represents as the corporation could exercise if it were an individual Member of record of the Company.
74. Shares of its own capital belonging to the Company or held by it in a fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares at any given time.
DIRECTORS
75. There shall be a Board of Directors consisting of between five (5) and nine (9) persons (exclusive of alternate Directors) who shall be appointed
in three classes hereinafter designated as Class I, Class II and Class III, each consisting of an equal number of directors, as nearly as possible.
The Directors designated in each Class shall be as designated following the adoption of the Original Articles.
76. The remuneration to be paid to the Directors shall be such remuneration as the Directors shall determine. Such remuneration shall be deemed to
accrue from day to day. The Directors shall also be entitled to be paid their traveling, hotel and other expenses properly incurred by them in
going to, attending and returning from meetings of the Directors, or any committee of the Directors, or general meetings of the Company, or
otherwise in connection with the business of the Company, or to receive a fixed allowance in respect thereof as may be determined by the
Directors from time to time, or a combination partly of one such method and partly the other.
77. The Directors may by resolution award special remuneration to any Director of the Company undertaking any special work or services for, or
undertaking any special mission on behalf of, the Company other than his ordinary routine work as a Director. Any fees paid to a Director who
is also counsel or solicitor to the Company, or otherwise serves it in a professional capacity shall be in addition to his remuneration as a
Director.
78. A Director or alternate Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction
with his office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine.
79. A Director or alternate Director may act by himself or his firm in a professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate Director.
80. A shareholding qualification for Directors may be fixed by the Company in general meeting, but unless and until so fixed no qualification shall
be required.
81. A Director or alternate Director of the Company may be or become a director or other officer of or otherwise interested in any company
promoted by the Company or in which the Company may be interested as Member or otherwise and no such Director or alternate Director shall
be accountable to the Company for any remuneration or other benefits received by him as a director or officer of, or from his interest in, such
other company.
82. No person shall be disqualified from the office of Director or alternate Director or prevented by such office from contracting with the Company,
either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company
in which any Director or alternate Director shall be in any way interested be or be liable to be avoided, nor shall any Director or alternate
Director so contracting or being so

16
interested be liable to account to the Company for any profit realized by any such contract or transaction by reason of such Director holding
office or of the fiduciary relation thereby established. A Director (or his alternate Director in his absence) shall be at liberty to vote in respect of
any contract or transaction in which he is so interested as aforesaid; PROVIDED, HOWEVER, that the nature of the interest of any Director or
alternate Director in any such contract or transaction shall be disclosed by him or the alternate Director appointed by him at or prior to its
consideration and any vote thereon.
83. A general notice or disclosure to the Directors or otherwise contained in the minutes of a Meeting or a written resolution of the Directors or any
committee thereof that a Director or alternate Director is a Member of any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under the preceding Article and after such general notice it shall not be
necessary to give special notice relating to any particular transaction.
ALTERNATE DIRECTORS
84. A Director who expects to be unable to attend Directors’ Meetings because of absence, illness or otherwise may appoint any person to be an
alternate Director to act in his stead and such appointee whilst he holds office as an alternate Director shall, in the event of absence therefrom of
his appointor, be entitled to attend meetings of the Directors and to vote thereat and to do, in the place and stead of his appointor, any other act
or thing which his appointor is permitted or required to do by virtue of his being a Director as if the alternate Director were the appointor, other
than appointment of an alternate to himself, and he shall ipso facto vacate office if and when his appointor ceases to be a Director or removes
the appointee from office. Any appointment or removal under this Article shall be effected by notice in writing under the hand of the Director
making the same.
POWERS AND DUTIES OF DIRECTORS
85. The business of the Company shall be managed by the Directors (or a sole Director if only one is appointed) who may pay all expenses incurred
in promoting, registering and setting up the Company, and may exercise all such powers of the Company as are not, from time to time by the
Statute, or by these Articles, or such regulations, being not inconsistent with the aforesaid, as may be prescribed by the Company in general
meeting required to be exercised by the Company in general meeting; PROVIDED, HOWEVER, that no regulations made by the Company in
general meeting shall invalidate any prior act of the Directors which would have been valid if that regulation had not been made.
86. The Directors may from time to time and at any time by powers of attorney appoint any company, firm, person or body of persons, whether
nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purpose and with such powers,
authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to
such conditions as they may think fit, and any such powers of attorney may contain such provisions for the protection and convenience of
persons dealing with any such attorneys as the Directors may think fit and may also authorize any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
87. All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for monies paid to the Company shall
be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall from time to time by
resolution determine.
88. The Directors shall cause minutes to be made in books provided for the purpose:
(a) of all appointments of officers made by the Directors;

17
(b) of the names of the Directors (including those represented thereat by an alternate or by proxy) present at each meeting of the Directors and
of any committee of the Directors;
(c) of all resolutions and proceedings at all meetings of the Company and of the Directors and of committees of Directors.
89. The Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held any other
salaried office or place of profit with the Company or to his widow or dependants and may make contributions to any fund and pay premiums
for the purchase or provision of any such gratuity, pension or allowance.
90. The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled
capital or any part thereof and to issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or
obligation of the Company or of any third party.
MANAGEMENT
91. (a) The Directors may from time to time provide for the management of the affairs of the Company in such manner as they shall think fit and
the provisions contained in the three next following paragraphs shall be without prejudice to the general powers conferred by this paragraph.
(b) The Directors from time to time and at any time may establish any committees, local boards or agencies for managing any of the affairs of
the Company and may appoint any persons to be members of such committees or local boards or any managers or agents and may fix their
remuneration.
(c) The Directors from time to time and at any time may delegate to any such committee, local board, manager or agent any of the powers,
authorities and discretions for the time being vested in the Directors and may authorize the members for the time being of any such local board,
or any of them to fill up any vacancies therein and to act notwithstanding vacancies and any such appointment or delegation may be made on
such terms and subject to such conditions as the Directors may think fit and the Directors may at any time remove any person so appointed and
may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be
affected thereby.
(d) Any such delegates as aforesaid may be authorized by the Directors to subdelegate all or any of the powers, authorities, and discretions for
the time being vested in them.
MANAGING DIRECTORS
92. The Directors may, from time to time, appoint one or more of their body (but not an alternate Director) to the office of Managing Director for
such term and at such remuneration (whether by way of salary, or commission, or participation in profits, or partly in one way and partly in
another) as they may think fit but his appointment shall be subject to determination ipso facto if he ceases for any cause to be a Director and no
alternate Director appointed by him can act in his stead as a Director or Managing Director.
93. The Directors may entrust to and confer upon a Managing Director any of the powers exercisable by them upon such terms and conditions and
with such restrictions as they may think fit and either collaterally with or to the exclusion of their own powers and may from time to time
revoke, withdraw, alter or vary all or any of such powers.
PROCEEDINGS OF DIRECTORS
94. Except as otherwise provided by these Articles, the Directors shall meet together for the

18
conduct of business, convening, adjourning and otherwise regulating their meetings as they think fit. Questions arising at any meeting shall be
decided by a majority of votes of the Directors and alternate Directors present at a meeting at which there is a quorum, the vote of an alternate
Director not being counted if his appointor is present at such meeting. In case of an equality of votes, the Chairman shall have a second or
casting vote.
95. A Director or alternate Director may, and the Secretary on the requisition of a Director or alternate Director shall, at any time summon a
meeting of the Directors by at least two (2) days’ notice in writing to every Director and alternate Director which notice shall set forth the
general nature of the business to be considered unless notice is waived by all the Directors (or their alternates) either at, before or after the
meeting is held; PROVIDED, HOWEVER, that if notice is given in person, by facsimile, electronic mail, telegraph or telex, the same shall be
deemed to have been given on the day it is delivered to the Directors or transmitting organization as the case may be. The provisions of Article
38 shall apply mutatis mutandis with respect to notices of meetings of Directors.
96. The quorum necessary for the transaction of the business of the Directors shall be a majority of the Directors then in office. If at any time there
is only a sole Director, then the quorum shall be one (1) Director. A Director and his appointed alternate Director shall be considered only one
person for this purpose. For the purposes of this Article, an alternate Director or proxy appointed by a Director shall be counted in a quorum at a
meeting at which the Director appointing him is not present.
97. The continuing Directors may act notwithstanding any vacancy in their body.
98. The Directors may elect a Chairman of their Board and determine the period for which he is to hold office, but if no such Chairman is elected,
or if at any meeting the Chairman is not present within five minutes after the time appointed for holding the same, the Directors present may
choose one of their number to be Chairman of the meeting.
99. The Directors may delegate any of their powers to committees consisting of such member or members of the Board of Directors (including
Alternate Directors in the absence of their appointors) as they think fit; any committee so formed shall in the exercise of the powers so
delegated conform to any regulations that may be imposed on it by the Directors.
100.A committee may meet and adjourn as it thinks proper. Questions arising at any meeting shall be determined by a majority of votes of the
members present, and in the case of an equality of votes the Chairman shall have a second or casting vote.
101.All acts done by any meeting of the Directors or of a committee of Directors (including any person acting as an alternate Director) shall,
notwithstanding that it be afterwards discovered that there was some defect in the appointment of any Director or alternate Director, or that they
or any of them were disqualified, be as valid as if every such person had been duly appointed and qualified to be a Director or alternate Director
as the case may be.
102.Members of the Board of Directors or of any committee thereof may participate in a meeting of the Board or of such committee by means of
conference telephone or other electronic means by which all persons participating in the meeting can hear each other and participation in a
meeting pursuant to this provision shall constitute presence in person at such meeting. A resolution in writing (in one or more counterparts),
signed by all the Directors for the time being or all the members of a committee of Directors (an alternate Director being entitled to sign such
resolution on behalf of his appointor) shall be as valid and effectual as if it had been passed at a meeting of the Directors or committee as the
case may be duly convened and held.
VACATION OF OFFICE OF DIRECTOR
103.The office of a Director shall be vacated:

19
(a) if he gives notice in writing to the Company that he resigns the office of Director;
(b) if he absents himself (without being represented by proxy or an alternate Director appointed by him) from three (3) consecutive meetings of
the Board of Directors without special leave of absence from the Directors, and they pass a resolution that he has by reason of such absence
vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or composition with his creditors generally;
(d) if he is found a lunatic or becomes of unsound mind; or
(e) if the term of his appointment expires pursuant to Article 93 below and he is not reappointed.
APPOINTMENT AND REMOVAL OF DIRECTORS
104.(a) At the first annual general meeting of the Company following the original adoption of the Original Articles the Class I Directors shall retire.
At the second annual general meeting of the Company following the adoption of the Original Articles the Class II Directors shall retire. At the
third annual general meeting of the Company following the adoption of the Original Articles, the Class III Directors shall retire.
(b) At each annual general meeting where a class of Directors retires, the members shall by ordinary resolution elect replacement Directors to
serve as Class I, II, or III (as the case may be) Directors, provided always that any retiring Director may stand for re-election.
(c) Subject to sub-article (a) above, each Director shall be appointed for a term of up to three (3) years and each Director shall retire at the
annual general meeting held in the calendar year of his retirement.
(d) Notwithstanding any other provision in these Articles, the Company may by Special Resolution remove any Director for negligence, breach
of fiduciary duty or other reasonable cause at any time before the expiration of his term.
(e) The Company may, by ordinary resolution, appoint another person in place of a Director removed from office under the immediately
preceding Article, and without prejudice to the powers of the Directors, in general meeting may appoint any person to be a Director to fill a
vacancy that may have arisen. A person appointed, pursuant to this paragraph or the paragraph below, in place of a Director removed or to fill a
vacancy shall hold office only until the close of the next following annual general meeting at which the class he is appointed to is due to retire.
(f)
The Directors shall have power at any time and from time to time to appoint any person to be a Director to fill a casual vacancy in any class
of Directors.
PRESUMPTION OF ASSENT
105.A Director of the Company who is present at a meeting of the Board of Directors at which action on any Company matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be entered in the Minutes of the meeting or unless he shall file his written
dissent from such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in
favor of such action.

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SEAL
106.(a) The Company may, if the Directors so determine, have a Seal which shall, subject to paragraph (c) hereof, only be used by the authority of
the Directors or of a committee of the Directors authorized by the Directors in that behalf and every instrument to which the Seal has been
affixed shall be signed by one person who shall be either a Director or the Secretary or Secretary-Treasurer or some person appointed by the
Directors for the purpose.
(b) The Company may have a duplicate Seal or Seals each of which shall be a facsimile of the Common Seal of the Company and, if the
Directors so determine, with the addition on its face of the name of every place where it is to be used.
(c) A Director, Secretary or other officer or representative or attorney may without further authority of the Directors affix the Seal of the
Company over his signature alone to any document of the Company required to be authenticated by him under Seal or to be filed with the
Registrar of Companies in the Cayman Islands or elsewhere wheresoever.
OFFICERS
107.The Company may have a President, a Secretary or Secretary-Treasurer appointed by the Directors who may also from time to time appoint
such other officers as they consider necessary, all for such terms, at such remuneration and to perform such duties, and subject to such
provisions as to disqualification and removal as the Directors from time to time prescribe.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
108.Subject to the Statute, the Directors may from time to time declare dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorize payment of the same out of the funds of the Company lawfully available therefor.
109.The Directors may, before declaring any dividends or distributions, set aside such sums as they think proper as a reserve or reserves which shall
at the discretion of the Directors, be applicable for any purpose of the Company and pending such application may, at the like discretion, be
employed in the business of the Company.
110.No dividend or distribution shall be payable except out of the profits of the Company, realized or unrealized, or out of the Share Premium
Account or as otherwise permitted by the Statute.
111.Subject to the rights of persons, if any, entitled to shares with special rights as to dividends or distributions, if dividends or distributions are to
be declared on a class of shares they shall be declared and paid according to the amounts paid or credited as paid on the shares of such class
outstanding on the record date for such dividend or distribution as determined in accordance with these Articles but no amount paid or credited
as paid on a share in advance of calls shall be treated for the purpose of this Article as paid on the share.
112.The Directors may deduct from any dividend or distribution payable to any Member all sums of money (if any) presently payable by him to the
Company on account of calls or otherwise.
113.The Directors may declare that any dividend or distribution be paid wholly or partly by the distribution of specific assets and in particular of
paid up shares, debentures, or debenture stock of any other company or in any one or more of such ways and where any difficulty arises in
regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional certificates and fix
the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon
the footing of the value so fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees as may seem
expedient to the Directors.

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114.Any dividend, distribution, interest or other monies payable in cash in respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint holders, to the holder who is first named on the register of Members or to
such person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the
order of the person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any dividends, bonuses, or other
monies payable in respect of the share held by them as joint holders.
115.No dividend or distribution shall bear interest against the Company.
CAPITALIZATION
116.The Company may upon the recommendation of the Directors by ordinary resolution authorize the Directors to capitalize any sum standing to
the credit of any of the Company’s reserve accounts (including Share Premium Account and capital redemption reserve fund) or any sum
standing to the credit of profit and loss account or otherwise available for distribution and to appropriate such sum to Members in the
proportions in which such sum would have been divisible amongst them had the same been a distribution of profits by way of dividend and to
apply such sum on their behalf in paying up in full unissued shares for allotment and distribution credited as fully paid up to and amongst them
in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalization, with full power
to the Directors to make such provisions as they think fit for the case of shares becoming distributable in fractions (including provisions
whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). The Directors may authorize any
person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalization and matters
incidental thereto and any agreement made under such authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
117.The Directors shall cause proper books of account to be kept with respect to:
(a) all sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place;
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state
of the Company’s affairs and to explain its transactions.
118.The Directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or
regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors and no
Member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by the
Statute or authorized by the Directors or by the Company in general meeting.
119.The Directors may from time to time cause to be prepared and to be laid before the Company in general meeting profit and loss accounts,
balance sheets, group accounts (if any) and such other reports and accounts as may be required by law.
AUDIT

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120.The Company may at any annual general meeting appoint an Auditor or Auditors of the Company who shall hold office until the next annual
general meeting and may fix his or their remuneration.
121.The Directors may before the first annual general meeting appoint an Auditor or Auditors of the Company who shall hold office until the first
annual general meeting unless previously removed by an ordinary resolution of the Members in general meeting in which case the Members at
that meeting may appoint Auditors. The Directors may fill any casual vacancy in the office of Auditor but while any such vacancy continues the
surviving or continuing Auditor or Auditors, if any, may act. The remuneration of any Auditor appointed by the Directors under this Article may
be fixed by the Directors.
122.Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be
entitled to require from the Directors and Officers of the Company such information and explanation as may be necessary for the performance
of the duties of the auditors.
123.Auditors shall at the next annual general meeting following their appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the accounts of the Company in general meeting during their tenure of
office.
NOTICES
124.Notices shall be in writing and may be given by the Company to any Member either personally or by sending it by facsimile, electronic mail,
telegraph or telex to him or to his address as shown in the register of Members, such notice, if mailed, to be forwarded airmail if the address be
outside the Cayman Islands.
125.(a) Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of 24 (24) hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by facsimile, electronic mail, telegraph or telex, service of the notice shall be deemed to be effected by properly
addressing, and sending such notice through a transmitting organization and to have been effected on the day the same is sent as aforesaid.
126.A notice may be given by the Company to the joint holders of record of a share by giving the notice to the joint holder first named on the
register of Members in respect of the share.
127.A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a share or shares in
consequence of the death or bankruptcy of a Member by sending it through the post as aforesaid in a pre-paid letter addressed to them by name,
or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by
the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same might have been
given if the death or bankruptcy had not occurred.
128.Notice of every general meeting shall be given in any manner hereinbefore authorized to:
(a) every person shown as a Member in the register of Members as of the record date for such meeting except that in the case of joint holders
the notice shall be sufficient if given to the joint holder first named in the register of Members; and
(b) every person upon whom the ownership of a share devolves by reason of his being

23
a legal personal representative or a trustee in bankruptcy of a Member of record where the Member of record but for his death or bankruptcy
would be entitled to receive notice of the meeting.
Any Member present, either personally or by proxy, at any meeting of the Company shall for all purposes be deemed to have received
due notice of such meeting, and, where requisite, of the purposes for which such meeting was convened. No other person shall be entitled to
receive notices of general meetings.
WINDING UP
129.If the Company shall be wound up the liquidator may, with the sanction of a Special Resolution of the Company and any other sanction required
by the Statute, divide amongst the Members in specie or kind the whole or any part of the assets of the Company (whether they shall consist of
property of the same kind or not) and may for such purpose set such value as he deems fair upon any property to be divided as aforesaid and
may determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may with the
like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributories as the liquidator, with the
like sanction, shall think fit, but so that no Member shall be compelled to accept any shares or other securities whereon there is any liability.
INDEMNITY
130.The Directors and officers for the time being of the Company and any trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives respectively shall be indemnified out of the assets of the
Company from and against all actions, proceedings, costs, charges, losses, damages and expenses which they or any of them shall or may incur
or sustain by reason of any act done or omitted in or about the execution of their duty in their respective offices or trusts, except such (if any) as
they shall incur or sustain by or through their own fraud, willful neglect or default respectively and no such Director, officer or trustee shall be
answerable for the acts, receipts, neglects or defaults of any other Director, officer or trustee or for joining in any receipt for the sake of
conformity or for the solvency or honesty of any banker or other persons with whom any monies or effects belonging to the Company may be
lodged or deposited for safe custody or for any insufficiency of any security upon which any monies of the Company may be invested or for any
other loss or damage due to any such cause as aforesaid or which may happen in or about the execution of his office or trust unless the same
shall happen through the fraud, willful neglect or default of such Director, Officer or trustee.
FINANCIAL YEAR
131.Unless the Directors otherwise prescribe, the financial year of the Company shall end on June 30 in each year and shall begin on July 1 in each
year.
AMENDMENTS OF ARTICLES
132.Subject to the Statute and to any quorum, voting or procedural requirements expressly imposed by these Articles in regard to the variation of
rights attached to a specific class of Shares of the Company, the Company may at any time and from time to time by Special Resolution change
the name of the Company or alter or amend these Articles or the Company’s Memorandum of Association, in whole or in part.
TRANSFER BY WAY OF CONTINUATION
133.If the Company is exempted as defined in the Statute, it shall, subject to the provisions of the Statute and with the approval of a Special
Resolution, have the power to register by way of continuation as a body corporate under the laws of any jurisdiction outside the Cayman

24
Islands and to be deregistered in the Cayman Islands.

1
Exhibit 1.1.6
THE COMPANIES ACT (AS REVISED)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
FOURTH AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION OF
RECON TECHNOLOGY, LTD
(Amended and Restated by Special Resolutions adopted on March 29, 2024)
1.
The name of the Company is Recon Technology, Ltd.
2.
The Registered Office of the Company shall be at the offices of Vistra (Cayman) Limited, P.O. Box 31119 Grand Pavilion, Hibiscus Way, 802
West Bay Road, Grand Cayman, KY1-1205, Cayman Islands, or at such other place as the Directors may from time to time decide.
3.
The objects for which the Company is established are unrestricted and shall include, but without limitation, the following:
(a) (i) To carry on the business of an investment company and to act as promoters and entrepreneurs and to carry on business as financiers,
capitalists, concessionaires, merchants, brokers, traders, dealers, agents, importers and exporters and to undertake and carry on and
execute all kinds of investment, financial, commercial, mercantile, trading and other operations.
(ii) To carry on whether as principals, agents or otherwise howsoever the business of realtors, developers, consultants, estate agents or
managers, builders, contractors, engineers, manufacturers, dealers in or vendors of all types of property including services.
(b) To exercise and enforce all rights and powers conferred by or incidental to the ownership of any shares, stock, obligations or other
securities including without prejudice to the generality of the foregoing all such powers of veto or control as may be conferred by virtue of
the holding by the Company of some special proportion of the issued or nominal amount thereof, to provide managerial and other
executive, supervisory and consultant services for or in relation to any company in which the Company is interested upon such terms as
may be thought fit.
(c) To purchase or otherwise acquire, to sell, exchange, surrender, lease, mortgage, charge, convert, turn to account, dispose of and deal with
real and personal property and rights of all kinds and, in particular, mortgages, debentures, produce, concessions, options, contracts, patents,
annuities, licenses, stocks, shares, bonds, policies, book debts, business concerns, undertakings, claims, privileges and causes in action of
all kinds.

2
(d) To subscribe for, conditionally or unconditionally, to underwrite, issue on commission or otherwise, take, hold, deal in and convert stocks,
shares and securities of all kinds and to enter into partnership or into any arrangement for sharing profits, reciprocal concessions or
cooperation with any person or company and to promote and aid in promoting, to constitute, form or organize any company, syndicate or
partnership of any kind, for the purpose of acquiring and undertaking any property and liabilities of the Company or of advancing, directly
or indirectly, the objects of the Company or for any other purpose which the Company may think expedient.
(e) To stand surety for or to guarantee, support or secure the performance of all or any of the obligations of any person, firm or company
whether or not related or affiliated to the Company in any manner and whether by personal covenant or by mortgage, charge or lien upon
the whole or any part of the undertaking, property and assets of the Company, both present and future, including its uncalled capital or by
any such method and whether or not the Company shall receive valuable consideration therefor.
(f) To engage in or carry on any other lawful trade, business or enterprise which may at any time appear to the Directors of the Company
capable of being conveniently carried on in conjunction with any of the aforementioned businesses or activities or which may appear to the
Directors of the Company likely to be profitable to the Company.
In the interpretation of this Memorandum of Association in general and of this Clause 3 in particular, no object, business or power specified or
mentioned shall be limited or restricted by reference to or inference from any other object, business or power, or the name of the Company, or
by the juxtaposition of two or more objects, businesses or powers and that, in the event of any ambiguity in this clause or elsewhere in this
Memorandum of Association, the same shall be resolved by such interpretation and construction as will widen and enlarge and not restrict the
objects, businesses and powers of and exercisable by the Company.
4.
Except as prohibited or limited by the Companies Act (as revised), the Company shall have full power and authority to carry out any object and
shall have and be capable of from time to time and at all times exercising any and all of the powers at any time or from time to time exercisable
by a natural person or body corporate in doing in any part of the world whether as principal, agent, contractor or otherwise whatever may be
considered by it necessary for the attainment of its objects and whatever else may be considered by it as incidental or conducive thereto or
consequential thereon, including, but without in any way restricting the generality of the foregoing, the power to make any alterations or
amendments to this Memorandum of Association and the Articles of Association of the Company considered necessary or convenient in the
manner set out in the Articles of Association of the Company, and the power to do any of the following acts or things, viz:
to pay all expenses of and incidental to the promotion, formation and incorporation of the Company; to register the Company to do business in
any other jurisdiction; to sell, lease or dispose of any property of the Company; to draw, make, accept, endorse, discount, execute and

3
issue promissory notes, debentures, bills of exchange, bills of lading, warrants and other negotiable or transferable instruments; to lend money
or other assets and to act as guarantors; to borrow or raise money on the security of the undertaking or on all or any of the assets of the
Company including uncalled capital or without security; to invest monies of the Company in such manner as the Directors determine; to
promote other companies; to sell the undertaking of the Company for cash or any other consideration; to distribute assets in specie to Members
of the Company; to make charitable or benevolent donations; to pay pensions or gratuities or provide other benefits in cash or kind to Directors,
officers, employees, past or present and their families; to purchase Directors and officers liability insurance and to carry on any trade or business
and generally to do all acts and things which, in the opinion of the Company or the Directors, may be conveniently or profitably or usefully
acquired and dealt with, carried on, executed or done by the Company in connection with the business aforesaid PROVIDED THAT the
Company shall only carry on the businesses for which a license is required under the laws of the Cayman Islands when so licensed under the
terms of such laws.
5.
The liability of each Member is limited to the amount from time to time unpaid on such Member’s shares.
6.
The share capital of the Company is US$58,000 divided into 500,000,000 Class A ordinary shares of a nominal or par value of US$0.0001 each
and 80,000,000 Class B ordinary shares of a nominal or par value of US$0.0001 each with power for the Company insofar as is permitted by
law, to redeem or purchase any of its shares and to increase or reduce the said capital subject to the provisions of the Companies Act (as revised)
and the Articles of Association and to issue any part of its capital, whether original, redeemed or increased with or without any preference,
priority or special privilege or subject to any postponement of rights or to any conditions or restrictions and so that unless the conditions of issue
shall otherwise expressly declare every issue of shares whether declared to be preference or otherwise shall be subject to the powers
hereinbefore contained.
7.
If the Company is registered as an exempted company in accordance with Part VII of the Companies Act (as revised), the Company will comply
with the provisions of such law relating to exempted companies and, subject to the provisions of the Companies Act and the Articles of
Association, it shall have the power to register by way of continuation as a body corporate limited by shares under the laws of any jurisdiction
outside the Cayman Islands and to be deregistered in the Cayman Islands.

Exhibit 2.2
Description of Securities
Registered under Section 12 of the Securities Exchange Act of 1934
As of June 30, 2024, Recon Technology, Ltd (the “Company,” “we,” “our” or “us”) had one class of securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended, as follows:
Title of each class
    
Symbol
    
Name of each exchange on which registered
Class A Ordinary Shares, par value US$0.0001 per
share
RCON
Nasdaq Capital Market
Capitalized terms used but not defined herein shall have the meanings given to them in the annual report on Form 20-F.
We (Recon Technology, Ltd) are a Cayman Islands exempted company with limited liability duly registered with the Cayman Islands Registrar of
Companies. Our affairs are governed by our Fourth Amended and Restated Memorandum and Articles of Association, the Companies Act (as
revised) of the Cayman Islands, which is referred to as the Companies Act below, and the laws of the Cayman Islands. Our corporate purposes are
unrestricted and we have the authority to carry out any object not prohibited by any law as provided by Section 7(4) of the Companies Act.
Our authorized share capital consists of US$58,000 divided into 500,000,000 Class A ordinary shares of a nominal or par value of US$0.0001 each
and 80,000,000 Class B ordinary shares of a nominal or par value of US$0.0001 each. As of the date of this prospectus, 7,987,959 Class A ordinary
shares and 20,000,000 Class B ordinary shares are issued and outstanding. We have issued and outstanding 4,456 options from our share option pool.
Ordinary Shares
Holders of Class A Ordinary Shares are entitled to cast one vote for each share on all matters submitted to a vote of shareholders, including the
election of directors and auditor. Holders of Class  B Ordinary Shares are entitled to cast fifteen votes on all matters submitted to a vote of
shareholders, including the election of directors and auditor. The holders of all ordinary shares are entitled to receive ratably such dividends, if any,
as may be declared by the Board of Directors out of funds legally available therefor and subject to any preference of any then authorized and issued
preferred shares. Such holders do not have any preemptive rights to subscribe for additional shares. All holders of ordinary shares are entitled to
share ratably in any assets for distribution to shareholders upon the liquidation, dissolution or winding up of the Company, subject to any preference
of any then authorized and issued preferred shares. All outstanding ordinary shares are fully paid and non-assessable.
On March 29, 2024, the Company held its annual meeting, at which the Company’s shareholders approved (i) a capital increase to the authorised
share capital by the creation of 350,000,000 additional Class A Shares with a nominal or par value of US$0.0925 each and 60,000,000 Class B
ordinary shares with a nominal or par value of US$0.0925 each; (ii) a share consolidation or reverse stock split of only the Class A Shares, at a ratio
of one-for-eighteen (the “2024  Reverse Stock Split”), such that there were then 27,694,610.80 Class A Shares with a nominal or par value of
US$1.67 (together with 60,000,000 Class B ordinary shares with a nominal or par value of US$0.0925 each); (iii) a subsequent share subdivision of
all shares at a ratio of 1:17,349.9459 into 480,500,000,000 Class A Shares with a nominal or par value of US$0.0001 each and 56,000,000,000
Class B ordinary shares with a nominal or par value of US$0.0001 each; and (iv) a final capital reduction by the cancellation of 480,000,000,000
unissued Class A Shares and the cancellation of 55,920,000,000 unissued Class B ordinary shares, such that the final authorized share capital of the
Company, following each of the above stages was amended from: US$15,725,000 divided into 150,000,000 Class A ordinary shares of a nominal or
par value of US$0.0925 each, and 20,000,000 Class B ordinary shares of a nominal or par value of US$0.0925 each, to: US$58,000 divided into
500,000,000 Class A Shares of a nominal or par value of US$0.0001 each and 80,000,000 Class B ordinary shares of a nominal or par value of
US$0.0001 each (collectively, the “Capital Amendment”). No fractional ordinary shares were issued to any shareholders in connection with the
Capital Amendment. Each shareholder will be entitled to receive one ordinary share in lieu of the fractional share that would have resulted from the
Capital Amendment.

Preferred Shares
Pursuant to our Articles and Cayman Islands law, our Company may by Special Resolution establish one or more series of preferred shares having
such number of shares, designations, relative voting rights, dividend rates, liquidation and other rights, preferences, powers and limitations as may
be fixed by the Special Resolution. Any preferred shares issued will include restrictions on voting and transfer intended to avoid having us constitute
a “controlled foreign corporation” for United States federal income tax purposes. Such rights, preferences, powers and limitations as may be
established could have the effect of discouraging an attempt to obtain control of us. The issuance of preferred shares could also adversely affect the
voting power of the holders of the ordinary shares deny shareholders the receipt of a premium on their ordinary shares in the event of a tender or
other offer for the ordinary shares and have a depressive effect on the market price of the ordinary shares.
Class B ordinary shares
Under the Fourth Amended and Restated Memorandum and Articles of Association of the Company, each Class B ordinary share is convertible into
one-eighteenth (1/18) of one Class A Share at any time by the holder. The number of Class B ordinary shares held by a holder will be automatically
and immediately converted into corresponding number of Class A Shares in the ratio of 1/18 upon any direct or indirect sale, transfer, assignment or
disposition of such number of Class B ordinary shares by the holder. Furthermore, Class A Shares are not convertible into Class B ordinary shares
under any circumstances. Finally, except for voting rights and conversion rights as set forth in the Fourth Amended and Restated Memorandum and
Articles of Association of the Company, the Class A Shares and the Class B ordinary shares shall have the same rights, preferences, privileges and
restrictions.
Limitations on the Right to Own Shares
There are no limitations on the right to own our shares.
Changes in Capital
We may from time to time by ordinary resolution increase the share capital by such sum, to be divided into shares of such amount, as the resolution
shall prescribe. An ordinary resolution is a resolution that must be approved by holders of a majority of outstanding voting shares to become
effective. The new shares shall be subject to the same provisions with reference to the payment of calls, lien, transfer, transmission, forfeiture and
otherwise as the shares in the original share capital. We may by ordinary resolution:
●
consolidate and divide all or any of our share capital into shares of larger amount than our existing shares;
●
in many circumstances, sub-divide our existing shares, or any of them, into shares of smaller amount provided that in the subdivision the
proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the
share form which the reduced share is derived; and
●
cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish
the amount of its share capital by the amount of the shares so cancelled.
We may by Special Resolution and subject to the provisions of Cayman Islands law, carry out a capital reduction. Our Articles of Association
provide that a Special Resolution is also required to reduce any capital redemption reserve fund. A special resolution is a resolution that must be
approved by holders of more than two-thirds (2/3) of the outstanding voting shares to become effective, provided, however a company’s Articles of
Association may impose a higher threshold. Our Articles of Association require that Special Resolutions receive at least two-thirds (2/3) approval.
Corporate Governance
●
We have adopted NASDAQ-mandated corporate governance measures, including a Board of Directors comprised of a majority of
independent directors. We have established an Audit Committee, a Nominating Committee and a Compensation Committee, and each
committee is comprised solely of independent

directors. We have also adopted a Code of Ethics and have taken other steps to ensure proper corporate governance.
●
Under Cayman Islands law, our Directors have a fiduciary duty to the Company. They have a duty to act in good faith in their dealings with
or on behalf of our company and exercise their powers and fulfill the duties of their office honestly. These duties have four essential
elements: (i) a duty to act in good faith in the best interests of the Company; (ii) a duty not to personally profit from opportunities that arise
from the office of director; (iii) a duty to avoid conflicts of interest; and (iv) a duty to exercise the powers of a director for the purpose for
which such powers were intended.
●
Cayman Islands law and our Articles of Association provide that shareholders may approve matters by way of a unanimous written
resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a
meeting being held.
●
Cayman Islands law and our Articles of Association allow our shareholders holding not less than ten percent (10%) of the paid up voting
share capital of the Company to requisition a shareholder’s meeting. As an exempted Cayman Islands company, we are not obliged by law
to call shareholders’ annual general meetings. However, our Articles of Association require us to call such meetings.
●
Under our Articles of Association, directors can be removed with cause or by a special resolution (being the vote of holders of a two thirds
majority of our shares), cast at a general meeting, or the unanimous written resolution of all shareholders.
●
All material related party transactions must be approved by our board of directors. Such material related party transactions must be made or
entered into on bona fide terms in the best interests of the Company and not with the effect of constituting a fraud on the minority
shareholders.
●
Under the Companies Act of the Cayman Islands and our Articles of Association, our Company may be voluntarily dissolved, liquidated or
wound up only by the vote of holders of two-thirds of our shares voting at a meeting or by ordinary resolutions at a meeting if the Company
is no longer able to pay its debts as they fall due or in each case by the unanimous written resolution of all shareholders. In addition, our
Company may be wound up by the Grand Court of the Cayman Islands if the Company is unable to pay its debts or if the court is of the
opinion that it is just and equitable that our company be wound up.
●
Our Memorandum and Articles of Association permit indemnification of officers and directors for losses, damages, costs and expenses
incurred in their capacities as such unless such losses or damages arise from fraud, willful neglect or default of such directors or officers.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers or persons
controlling us under the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable as a matter of United
States law.
●
There are no limitations imposed by our Memorandum and Articles of Association on the rights of non-resident or foreign shareholders to
hold or exercise voting rights on our shares. In addition, there are no provisions in our Memorandum and Articles of Association governing
the ownership threshold above which shareholder ownership must be disclosed.
●
Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or
corporate records except our Memorandum and Articles of Association. However, we will provide our shareholders with annual audited
consolidated financial statements.
Anti-takeover Effects
●
Our board of directors is divided into three (3) classes of directors. The current terms of the directors expire in 2023, 2024 and 2025.
Directors of each class are chosen for three-year terms upon the expiration of their current terms, and each year one class of directors is
elected by the shareholders. The staggered terms of our

directors may reduce the possibility of a tender offer or an attempt at a change in control, even though a tender offer or change in control
might be in the best interest of our shareholders.
●
As permitted under Cayman Islands law, our Articles of Association do not provide for cumulative voting.
●
A plan of merger or consolidation must be approved by (i) a shareholder resolution of each constituent company by a special resolution
(being a 2/3rd majority).
●
When a take-over offer is made and accepted (within four (4) months) by holders of not less than 90% of the shares affected, the offeror
may, within a two (2) month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An
objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed unless there is evidence of fraud, bad faith
or collusion. If the arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to
appraisal rights.
●
Under Cayman Islands law and our Articles of Association, if at any time the share capital is divided into more than one class of shares, the
rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be varied with the consent in
writing of the shareholders of two thirds (2/3) of the issued shares of that class or with the sanction of a resolution passed by not less than
two thirds (2/3) of such holders of the shares of that class.
●
As permitted by Cayman Islands law, our Memorandum and Articles of Association may only be amended by way of a Special Resolution
with the vote of holders of two-thirds (2/3) of our shares voting at a meeting or the unanimous written resolution of all shareholders.

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Exhibit 11.2
RECON TECHNOLOGY, LTD
Insider Trading Policy and Guidelines
with Respect to
Certain Transactions in Company Securities
This Policy provides guidelines to employees, executive officers and directors of, and consultants and contractors to Recon Technology, Ltd
(the “Company”) with respect to transactions in the Company’s securities.
Applicability of Policy
This Policy applies to all transactions in the Company’s securities, including ordinary shares, options for ordinary shares and any other
securities the Company may issue from time to time, such as preferred stock, warrants and convertible debentures, as well as to derivative securities
relating to the Company’s ordinary shares. It applies to all executive officers of the Company, all members of the Company’s Board of Directors, and
all employees of, and consultants and contractors to, the Company and its subsidiaries, who receive or have access to Material Non-public
Information (as defined below) regarding the Company. This group of people, members of their immediate families, and members of their
households are sometimes referred to in this Policy as “Insiders.” This Policy also applies to any person who receives Material Non-public
Information from any Insider. Any person who possesses Material Non-public Information regarding the Company is an Insider for so long as the
information is not publicly known. Any employee can be an Insider from time to time, and would at those times be subject to this Policy.
Statement of Policy
General Policy
It is the policy of the Company to oppose the unauthorized disclosure of any non-public information acquired in the work-place and the
misuse of Material Non-public Information in securities trading.
Specific Policies
1.
Trading on Material Non-public Information. No director, officer or employee of, or consultant or contractor to, the Company, and
no member of the immediate family or household of any such person, shall engage in any transaction involving a purchase or sale of the Company’s
securities, including any offer to purchase or offer to sell, during any period commencing with the date that he or she possesses Material Non-public
Information concerning the Company, and ending at the beginning of the second Trading Day following the date of public disclosure of that
information, or at such time as such  Non-public information is no longer material. As used herein, the term “Trading Day” shall mean a day on
which national stock exchanges and the Nasdaq Capital Market (“Nasdaq”) are open for trading. A “Trading Day” begins at the time trading begins
on such day. This restriction on trading does not apply to transactions made under a trading plan adopted pursuant to Securities and Exchange
Commission (the “SEC”) Rule 10b5-1(c) (17 C.F.R.

2
§ 240.10b5-1(c)) (“Rule 10b5-1(c)”) and approved in writing by the Company (an “approved Rule 10b5-1 trading plan”).
2.
Tipping. No Insider shall disclose (“tip”) Material Non-public Information to any other person (including family members) where
such information may be used by such person to his or her profit by trading in the securities of companies to which such information relates, nor
shall such Insider or related person make recommendations or express opinions on the basis of Material Non-public Information as to trading in the
Company’s securities.
3.
Confidentiality of Non-public Information. Non-public information relating to the Company is the property of the Company and
the unauthorized disclosure of such information is forbidden. In the event any executive officer, director or employee of the Company receives any
inquiry from outside the Company, such as a stock analyst, for information (particularly financial results and/or projections) that may be Material
Non-public Information, the inquiry should be referred to the Company’s Chief Executive Officer, who is responsible for coordinating and
overseeing the release of such information to the investing public, analysts and others in compliance with applicable laws and regulations.
Potential Criminal and Civil Liability and/or Disciplinary Action
1.
Liability for Insider Trading. Pursuant to federal and state securities laws, insiders may be subject to criminal and civil fines and
penalties as well as imprisonment for engaging in transactions in the Company’s securities at a time when they have knowledge of Material Non-
public Information regarding the Company.
2.
Liability for Tipping. Insiders may also be liable for improper transactions by any person (commonly referred to as a “tippee”) to
whom they have disclosed Material Non-public Information regarding the Company or to whom they have made recommendations or expressed
opinions on the basis of such information as to trading in the Company’s securities. The SEC has imposed large penalties even when the disclosing
person did not profit from the trading. The SEC, the stock exchanges and the National Association of Securities Dealers, Inc. use sophisticated
electronic surveillance techniques to uncover insider trading.
3.
Possible Disciplinary Actions. Employees of the Company who violate this Policy shall also be subject to disciplinary action by
the Company, which may include ineligibility for future participation in the Company’s equity incentive plans or termination of employment.
Trading Guidelines and Requirements
1.
Black-Out Period and Trading Window.
(a)
Black-Out Period. The period beginning at the close of market on the last day of the second calendar month of each fiscal quarter
and ending at the beginning of the second Trading Day following the date of public disclosure of the financial results for that quarter is a particularly
sensitive period of time for transactions in the Company’s ordinary shares from the perspective of compliance with applicable securities laws. This
sensitivity is due to the fact that executive

3
officers, directors and certain employees will, during that period, often possess Material Non-public Information about the expected financial results
for the quarter during that period. Accordingly, this period of time is referred to as a “black-out” period. All directors and executive officers and
those other employees identified by the Company from time to time and who have been notified that they have been so identified are prohibited from
trading during such period. In addition, from time to time Material Non-public Information regarding the Company may be pending. While such
information is pending, the Company may impose a special “black-out” period during which the same prohibitions and recommendations shall
apply. These restrictions on trading do not apply to transactions made under an approved Rule 10b5-1 trading plan.
(b)
Mandatory Trading Window. To ensure compliance with this Policy, the Company requires that all directors and executive officers
and those certain identified employees of the Company refrain from conducting transactions involving the purchase or sale of the Company’s
ordinary shares other than during the period (the “trading window”) commencing at the open of market on the second Trading Day following the
date of public disclosure of the financial results for a particular fiscal quarter or year and continuing until the close of market on the last day of the
second calendar month of the next fiscal quarter. This restriction on trading does not apply to transactions made under an approved Rule 10b5-1
trading plan.
From time to time, the Company may also prohibit directors, executive officers and potentially a larger group of employees, consultants and
contractors from trading securities of the Company because of material developments known to the Company and not yet disclosed to the public. In
such event, directors, officers and such employees, consultants and contractors may not engage in any transaction involving the purchase or sale of
the Company’s securities and should not disclose to others the fact of such suspension of trading. This restriction on trading does not apply to
transactions made under an approved Rule 10b5-1 trading plan. The Company would re-open the trading window at the beginning of the second
Trading Day following the date of public disclosure of the information, or at such time as the information is no longer material.
It should be noted that even during the trading window, any person possessing Material Non-public Information concerning the Company,
whether or not subject to the black-out period and trading window, should not engage in any transactions in the Company’s ordinary shares until
such information has been known publicly for at least one Trading Day, whether or not the Company has recommended a suspension of trading to
that person. This restriction on trading does not apply to transactions made under an approved Rule 10b5-1 trading plan. Trading in the Company’s
securities during the trading window should not be considered a “safe harbor,” and all directors, officers and other persons should use good
judgment at all times.
2.
Pre-Clearance of Trades. The Company has determined that all executive officers and directors of the Company and certain other
persons identified by the Company from time to time and who have been notified that they have been so identified must refrain from trading in the
Company’s securities, even during the trading window, without first complying with the Company’s “pre-clearance” process. Each such person
should contact the Company’s Insider Trading Compliance Officer prior to commencing any trade in the Company’s securities. The Insider Trading
Compliance Officer will consult as necessary with senior management of and/or counsel to the Company before clearing any proposed trade.
Although an Insider wishing to trade

4
pursuant to an approved Rule 10b5-1 trading plan need not seek preclearance from the Company’s Insider Trading Compliance Officer before each
trade takes place, such an Insider must obtain Company approval of the proposed Rule 10b5-1 trading plan before it is adopted.
3.
Individual Responsibility. Every officer, director and other employee, consultant and contractor has the individual responsibility to
comply with this Policy against insider trading. An Insider may, from time to time, have to forego a proposed transaction in the Company’s securities
even if he or she planned to make the transaction before learning of the Material Non-public Information and even though the Insider believes he or
she may suffer an economic loss or forego anticipated profit by waiting.
Applicability of Policy to Inside Information Regarding Other Companies
This Policy and the guidelines described herein also apply to Material Non-public Information relating to other companies, including the
Company’s customers and other business partners (“business partners”), when that information is obtained in the course of employment with, or the
performance of services on behalf of, the Company. All executive officers, directors, employees, consultants and contractors should treat Material
Non-public Information about the Company’s business partners with the same care required with respect to information related directly to the
Company.
Definition of Material Non-public Information
It is not possible to define all categories of material information. However, information should be regarded as material if there is a
reasonable likelihood that it would be considered important to an investor in making an investment decision regarding the purchase or sale of the
Company’s ordinary shares.
While it may be difficult under this standard to determine whether particular information is material, there are various categories of
information that are particularly sensitive and, as a general rule, should always be considered material. Examples of such information may include:
●
Financial results;
●
Known but unannounced future earnings or losses;
●
Execution or termination of significant contracts;
●
News of a pending or proposed mergers or acquisitions;
●
News of the disposition or acquisition of significant assets;
●
Significant developments related to intellectual property;
●
Significant developments involving corporate relationships;

5
●
Stock splits;
●
New equity or debt offerings; and
●
Significant litigation exposure due to actual or threatened litigation.
Either positive or negative information may be material.
Non-public information is information that has not been previously disclosed to the general public and is otherwise not available to the
general public.
Certain Exceptions
For purposes of this Policy, the Company considers that the exercise of stock options for cash under the Company’s stock option plan (but
not the sale of any shares issued upon such exercise or purchase and not a cashless exercise (accomplished by a sale of a portion of the shares issued
upon exercise of an option)) are exempt from this Policy, since the other party to these transactions is the Company itself and the price does not vary
with the market, but is fixed by the terms of the option agreement. In addition, for purposes of this Policy, the Company considers that bona fide
gifts of the securities of the Company are exempt from this Policy.
Inquiries
Please direct your questions as to any of the matters discussed in this Policy to the Company’s Insider Trading Compliance Officer, Jia Liu.

Exhibit 12.1
Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
and Securities and Exchange Commission Release 34-46427
I, Shenping Yin, certify that:
(1) I have reviewed this Form 20-F of Recon Technology, Ltd.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered
by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: October 30, 2024
/s/ Shenping Yin
Shenping Yin
Chief Executive Officer (Principal Executive Officer)

Exhibit 12.2
Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
and Securities and Exchange Commission Release 34-46427
I, Jia Liu, certify that:
(1) I have reviewed this Form 20-F of Recon Technology, Ltd.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered
by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: October 30, 2024
/s/ Jia Liu
Jia Liu
Chief Financial Officer (Principal Financial Officer)

Exhibit 13.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Recon Technology, Ltd. (the “Registrant”) on Form 20-F for the year ended June 30, 2024, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certifies pursuant to 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.
The Report, fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended;
and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Registrant.
Date: October 30, 2024
/s/ Shenping Yin
Shenping Yin
Chief Executive Officer
(Principal Executive Officer)

Exhibit 13.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Recon Technology, Ltd. (the “Registrant”) on Form 20-F for the year ended June 30, 2024, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certifies pursuant to 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.
The Report, fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended;
and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Registrant.
Date: October 30, 2024
/s/ Jia Liu
Jia Liu
Chief Financial Officer
(Principal Accounting Officer)

Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement on Form F-3 (File No. 333-257806) and Amendment No. 1 to Form F-3
(File No. 333-268657) of our report dated October 28, 2022 with respect to our audit of the consolidated financial statements of Recon Technology,
Ltd and Subsidiaries as of June 30, 2022 and for the year ended June 30, 2022, which is included in the Annual Report on Form 20-F for the year
ended June 30, 2024, filed with the Securities and Exchange Commission. We also consent to the reference to our firm under the heading “Experts”
in the Prospectus, which is part of such Registration Statement.
We were dismissed as auditors on February 1, 2023 and, accordingly, we have not performed any audit or review procedures with respect to any
financial statements included in Form 20-F for the periods after the date of our dismissal.

/s/ Friedman LLP
Friedman LLP
New York, New York
October 30, 2024

Enrome LLP
143 Cecil Street #19-03/04
GB Building Singapore 069542
admin@enrome-group.com
www.enrome-group.com
Exhibit 15.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Annual Report on Form 20-F on the consolidated financial statements of Recon
Technology, Ltd and its subsidiaries (the “Company”) of auditor’s opinion in the Report of Independent Registered Public Accounting Firm dated on
October 30, 2024, relating to the consolidated balance sheets of the Company as of June 30, 2024 and 2023, and the related consolidated statements
of operations and comprehensive income (loss), changes in shareholders’ equity, and cash flows for the years ended June 30, 2024 and 2023, and the
related notes, included in its Annual Report on Form 20-F.
/s/ Enrome LLP
Singapore
October 30, 2024

Exhibit 97.1
Recon Technology, Ltd
(the “Company”)
CLAWBACK POLICY
Introduction
The Board of Directors of the Company (the “Board”) believes that it is in the best interests of the Company and its shareholders to create and
maintain a culture that emphasizes integrity and accountability and that reinforces the Company’s pay-for-performance compensation philosophy.
The Board has therefore adopted this policy which provides for the recoupment of certain executive compensation in the event of an accounting
restatement resulting from material noncompliance with financial reporting requirements under  federal securities laws, rules, and regulations (the
“Policy”). This Policy is designed to comply with Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the SEC
rules or regulations thereunder and applicable standards of any national securities exchange on which the Company’s securities are listed (the
“Listing Standards”).
Administration
This Policy shall be administered by the Board or, if so designated by the Board, the Compensation Committee, in which case references herein to
the Board shall be deemed references to the Compensation Committee. Any determinations made by the Board shall be final and binding on all
affected individuals.
Covered Executives
This Policy applies to the Company’s current and former executive officers, as determined by the Board in accordance with the definition in Section
10D of the Exchange Act and the Listing Standards, and such other senior executives who may from time to time be deemed subject to the Policy by
the Board (“Covered Executives”).
Recoupment; Accounting Restatement
In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance
with any financial reporting requirement under federal securities laws, including any required accounting restatement to correct an error in
previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if
the error were corrected in the current period or left uncorrected in the current period, the Board will require reimbursement or forfeiture of any
excess Incentive Compensation received by any Covered Executive during the three completed fiscal years immediately preceding the date on which
the Company is required to prepare an accounting restatement.
Incentive Compensation
For purposes of this Policy, “Incentive Compensation” means any of the following; provided that, such compensation is granted, earned, or vested
based wholly or in part on the attainment of a financial reporting measure:
●
Annual bonuses and other short- and long-term cash incentives

2
●
Stock options
●
Stock appreciation rights
●
Restricted stock
●
Restricted stock units
●
Performance shares
●
Performance units
Financial reporting measures include:
●
Company stock price
●
Total shareholder return
●
Revenues
●
Net income
●
Earnings before interest, taxes, depreciation, and amortization (EBITDA)
●
Funds from operations
●
Liquidity measures such as working capital or operating cash flow
●
Return measures such as return on invested capital or return on assets
●
Earnings measures such as earnings per share
Excess Incentive Compensation: Amount Subject to Recovery
The amount to be recovered will be the excess of the Incentive Compensation paid to the Covered Executive based on the erroneous data over the
Incentive Compensation that would have been paid to the Covered Executive had it been based on the restated results, as determined by the Board,
without regard to any taxes paid by the Covered Executive in respect of the Incentive Compensation paid based on the erroneous data.
If the Board cannot determine the amount of excess Incentive Compensation received by the Covered Executive directly from the information in the
accounting restatement, then it will make its determination based on a reasonable estimate of the effect of the accounting restatement.
Method of Recoupment
The Board will determine, in its sole discretion, the method for recouping Incentive Compensation hereunder which may include, without limitation:
(a) requiring reimbursement of cash Incentive Compensation previously paid;
(b) seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards;
(c) offsetting the recouped amount from any compensation otherwise owed by the Company to the Covered Executive;
(d) cancelling outstanding vested or unvested equity awards; and/or
(e) taking any other remedial and recovery action permitted by law, as determined by the Board.

3
No Indemnification
The Company shall not indemnify any Covered Executives against the loss of any incorrectly awarded Incentive Compensation.
Interpretation
The Board is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the
administration of this Policy. It is intended that this Policy be interpreted in a manner that is consistent with the requirements of Section 10D of the
Exchange Act, any applicable rules or standards adopted by the Securities and Exchange Commission, and the Listing Standards.
Effective Date
This Policy shall be effective as of the date it is adopted by the Board (the “Effective Date”) and shall apply to Incentive Compensation that is
received by Covered Executives on or after October 2, 2023 (even if such Incentive Compensation was approved, awarded, or granted to Covered
Executives prior to October 2, 2023).
Amendment; Termination
The Board may amend this Policy from time to time in its discretion and shall amend this Policy as it deems necessary to reflect final regulations
adopted or amended by the Securities and Exchange Commission under Section 10D of the Exchange Act and to comply with the Listing Standards
and any other rules or standards adopted by a national securities exchange on which the Company’s securities are listed. The Board may terminate
this Policy at any time.
Other Recoupment Rights
Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to
the Company pursuant to the terms of any similar policy in any employment agreement, equity award agreement, or similar agreement and any other
legal remedies available to the Company.
Relationship to Other Plans and Agreements
The Board intends that this Policy will be applied to the fullest extent of the law. The Board may require that any employment agreement, equity
award agreement, or similar agreement entered into on or after the Effective Date shall, as a condition to the grant of any benefit thereunder, require
a Covered Executive to agree to abide by the terms of this Policy. In the event of any inconsistency between the terms of the Policy and the terms of
any employment agreement, equity award agreement, or similar agreement under which Incentive Compensation has been granted, awarded, earned
or paid to a Covered Executive, whether or not deferred, the terms of the Policy shall govern.
Impracticability
The Board shall recover any excess Incentive Compensation in accordance with this Policy unless such recovery would be impracticable, as
determined by the Board in accordance with Rule 10D-1 of the

4
Exchange Act and the listing standards of the national securities exchange on which the Company’s securities are listed.
Successors
This Policy shall be binding and enforceable against all Covered Executives and their beneficiaries, heirs, executors, administrators or other legal
representatives.

Exhibit 99.1
Recon Technology, Ltd Reports Financial Year Results for Fiscal Year 2024
BEIJING, October 30, 2024 /PRNewswire/ -- Recon Technology, Ltd (NASDAQ: RCON) (“Recon” or the “Company”), a China-based independent
solutions integrator in the oilfield service and environmental protection, electric power and coal chemical industries, today announced its financial
results for fiscal year 2024.
Fiscal Year Ended June 30, 2024 Financial Highlights:
-  Total revenue increase by approximately RMB1.7 million ($0.2 million) or 2.6% to RMB68.8 million ($9.5 million) for the year ended
June 30, 2024 from RMB67.1million ($9.2 million) for the same period in 2023.
-  Gross profit increased to RMB20.9 million ($2.9 million) for the year ended June 30, 2024, from RMB18.9 million ($2.6 million) for the
same period in 2023.
-  Gross margin increased to 30.3% for the year ended June 30, 2024 from 28.1% for the same period in 2023.
-  Net loss was RMB51.4 million ($7.1 million) for the year ended June 30, 2024, a decrease of RMB10.0 million ($1.4 million) from net
loss of RMB61.4 million ($8.5 million) for the same period of 2023.
    
For the Years Ended
June 30,
    
2024
    
2023
    
Increase /(Decrease)
    
Percentage
Change
(in RMB millions, except earnings per share; differences
due to rounding)
Revenue
RMB
68.8
RMB
67.1
RMB
1.7
2.6 %
Gross profit
20.9
18.9
2.0
10.7 %
Gross margin
30.3 %  
28.1 %  
2.2 %  
—
Net loss
(51.4)
(61.4)
(10.0)
(16.3)%
Net loss per share – Basic and diluted
(9.88)
(27.43)
17.55
(64.0)%

Management Commentary
Mr. Shenping Yin, Founder and CEO of Recon said, “Fiscal year ended 2024 was a year of change, challenge and opportunity for Recon. As the
economy gradually recovers, our established business volume has gradually increased, leading to an overall rise in revenue by the end of fiscal year
2024. Our gross margins improved due to improved management efficiency and the expansion of new business with high gross margins.
We believe that China’s investment and demand in the oil industry will not decrease in the near future, and we believe that there are still many
opportunities for growth in the oil industry. Recon will continue to benefit from this trend. We expect a significant increase in the volume of business
in the oilfield services segment in the coming year. We are also expanding our business focus from oilfield service segment to broader energy
sectors, including carbon-zero opportunities and alternative materials for primary petroleum products. We are actively exploring the chemical
recycling business of low-value plastics based on waste treatment and recycling, and have reached preliminary cooperation agreements and market
expansion and sales intentions with key upstream and downstream customers. Our drive has always been to maximize the long-term benefits for our
company and our shareholders based on our experience and resources in the petrochemical and energy industries.”
Fiscal Year Ended 2024 Financial Results:
Revenue
Total revenues for the year ended June 30, 2024 were approximately RMB68.8 million ($9.5 million), an increase of approximately RMB1.7 million
($0.2 million) or 2.6% from RMB67.1 million ($9.2 million) for the same period in 2023.
-  Revenue from automation product and software increased by RMB0.2 million ($0.03 million) or 0.8%. For the year ended June 30, 2024,
affected by temporary changes in market participation requirements from electricity industry customers, our business in the electronic
automation segment disrupted and revenue from non-oilfield customers decreased by RMB5.8 million ($0.8 million). However, due to the
recovery of oilfield production, sales to oilfield customers increased by RMB6.0 million ($0.8 million). Thus, our revenue from automation
product and software business increased slightly overall. We anticipate that revenue from the electronic business will resume and revenue
will recover.
-  Revenue from equipment and accessories increased by RMB4.2 million ($0.6million) or 26.0%. The increase in revenue was driven by
the continued growth of our oilfield business and the successful expansion of our offshore oilfield services.

-  Revenue from oilfield environmental protection decreased by RMB1.5 million ($0.2 million) or 8.1%. mainly due to a reduction in the
volume of oily wastewater provided by customers as their production intensity decreased. In addition, Gansu BHD’ s hazardous waste
operation permit expired in July 26, 2023, and the renewal process took longer than expected due to changing government regulations.
Production activates were not allowed during this period. As a result, revenue from oily sludge treatment was reduced.
-  Revenue from platform outsourcing services decreased by RMB1.1 million ($0.2million) or 22.4%. The decrease was mainly due to
reduced demand from former gas station customers as they upgraded their own online systems and limited cooperation with third parties.
During the period, we shifted our target market from gasoline users to diesel users and established partnerships with several major online
freight platform customers. We expect the increase in revenue from this segment to gradually form a new business base for the Company.
-  As of June 30, 2024, the factory for the chemical recycling is still under construction and has not started production and sales yet.
Cost of revenue
Cost of revenues decreased from RMB48.2 million for the year ended June 30, 2023 to RMB48.0 million ($6.6 million) for the same period in 2024.
For the years ended June 30, 2023 and 2024, cost of revenue from automation product and software was approximately RMB23.6 million
($3.2 million) and RMB23.9 million ($3.3 million), respectively, representing increase of approximately RMB0.3 million ($0.04 million) or
1.1%. The increase in cost of revenue from automation product and software was primarily attributable to increased revenue of automation
products and software.
For the years ended June 30, 2023 and 2024, cost of revenue from equipment and accessories was approximately RMB8.9 million ($1.2
million) and RMB14.1 million ($1.9 million), respectively, representing an increase of approximately RMB5.2million ($0.7million) or
57.6%. The increase in cost of revenue from equipment and accessories was primarily attributable to increased revenue of equipment and
accessories.
For the years ended June 30, 2023 and 2024, cost of revenue from oilfield environmental protection was approximately RMB14.0 million
($1.9 million) and RMB9.2 million ($1.3 million), respectively, representing a decrease of approximately RMB4.7 million ($0.6 million) or
33.8%. The decrease in the cost of revenue, mainly drawn from wastewater and oily sludge treatments, was in line with decrease in revenue
related to our oily sludge treatment.
For the years ended June 30, 2023 and 2024, cost of revenue from platform outsourcing services was approximately RMB1.7 million ($0.2
million) and RMB0.6 million ($0.1 million), respectively, representing a decrease of approximately RMB1.1 million ($0.2 million) or
63.2%. The primary reasons for the decrease in cost of revenue are the company's efforts to reduce costs through staff layoffs and salary
reductions, as well as the discontinuation of server leasing due to the transition from operational to maintenance services.
For the years ended June 30, 2023 and 2024, cost of revenue from chemical recycling was nil and RMB0.1 million ($0.02 million), which
was business and sales related tax. As of June 30, 2024, the factory for the chemical recycling is still under construction and has not started
production and sales yet.

Gross profit
Gross profit increased to RMB20.9 million ($2.9 million) for the year ended June 30, 2024 from RMB18.9 million ($2.6 million)for the same period
in 2023. Our gross profit as a percentage of revenue increased to 30.3% for the year ended June 30, 2024 from 28.1% for the same period in 2023.
- For the years ended June 30, 2023 and 2024, our gross profit from automation product and software was approximately RMB3.0 million
($0.4 million) and RMB3.0 million ($0.4 million), respectively, representing a decrease in gross profit of approximately RMB0.1 million
($0.01million) or 1.7%. The gross margin for automation product and software has remained relatively stable in this period.
- For the years ended June 30, 2023 and 2024, gross profit from equipment and accessories was approximately RMB7.3 million ($1.0
million) and RMB6.4 million ($0.9 million), respectively, representing a slight decrease of approximately RMB0.9 million ($0.1 million) or
12.7%. The reason for the decrease in gross margin is that oilfield customers have adopted a low-cost operating model and tightly
controlled budgets, which has narrowed the overall margins of the market. Consequently, we had to resort to lower margins to secure
business.
- For the years ended June 30, 2023 and 2024, gross profit from oilfield environmental protection was approximately RMB5.2 million ($0.7
million) and RMB8.3 million ($1.1 million), respectively, representing an increase of RMB3.2 million ($0.4 million) or 61.5%. We have
carried out the residual oil recovery service, The business line assists oilfield companies recover residual oils, including aged oil and spilled
oil through our unique formula and equipment to enhance the profitability for oilfield companies. This business contributes a relatively high
gross margin.
- For the years ended June 30, 2023 and 2024, gross profit from platform outsourcing services was approximately RMB3.4 million ($0.5
million) and RMB3.3 million ($0.5 million), respectively, representing a decrease of approximately RMB0.05 million ($0.01 million) or 1.5
%, The gross margin for platform outsourcing services has remained relatively stable in this period
For the years ended June 30, 2023 and 2024, gross profit losses from chemical recycling was nil and RMB0.1 million ($0.02 million),
respectively. As of June 30, 2024, the factory for the chemical recycling remains under construction and has not started production and
sales yet.

Operating expenses
Selling expenses decreased by 2.5%, or RMB0.3 million ($0.04 million), from RMB10.6 million ($1.5 million) in the year ended June 30, 2023 to
RMB10.4 million ($1.4 million) in the same period of 2024.
General and administrative expenses decreased by 17.0%, or RMB13.0 million ($1.8 million), from RMB76.8 million ($10.6 million) in the year
ended June 30, 2023 to RMB63.8 million ($8.8 million) in the same period of 2024.
Net recovery of credit losses of RMB9.0 million ($1.2 million) for the year ended June 30, 2023 as compared to net provision for credit losses of
RMB4.1 million ($0.6 million) for the same period in 2024.
Research and development expenses remained relatively stable with an increase by 62.3%, or RMB5.5 million ($0.8 million) from RMB8.8 million
($1.2 million) for the year ended June 30, 2023 to RMB14.3 million ($2.0 million) for the same period of 2024.
Impairment loss of property and equipment and other long-lived assets decreased by100.0%, or RMB1.0 million ($0.1 million), from RMB1.0
million ($0.1 million) in the year ended June 30, 2023 to nil in the same period of 2024.
Loss from operations
Loss from operations was RMB71.6 million ($9.9 million) for the year ended June 30, 2024, compared to a loss of RMB69.3 million ($9.5 million)
for the same period of 2023. This RMB2.3 million ($0.3 million) increase in loss from operations was primarily due to the increase in operating
expense as discussed above.
Change in fair value changes of warrant liability
The Company classified the warrants issued in connection with common share offering as liabilities at their fair value and adjusted the warrant
instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any
change in fair value is recognized in our statement of operations. Gain in change in fair value of warrant liability was RMB6.1 million ($0.8 million)
and RMB0.8 million ($0.1million) for the years ended June 30, 2023 and 2024, respectively. On December 14, 2023, we redeemed an aggregate of
17,953,269 (997,404 warrants post 2024 Reverse Split) warrants from the Sellers, and the difference between the repurchase price and fair value of
the warrants, a difference of RMB1.7 million ($0.2 million), was recognized as loss in fair value changes of warrant liability. The aforementioned
gain of RMB0.8 million ($0.1 million) from fair value changes of warrant liability and the loss of RMB1.7 million ($0.2 million) from fair value
changes of warrant liability combine to result in a net loss of RMB0.9 million ($0.1 million) in fair value changes of warrant liability.
Impairment loss on goodwill and intangible assets
The Company recognized the excess of purchase price over the fair value of assets acquired and liabilities assumed of the business acquired was
recorded as goodwill and fair value of identified intangible assets, which is customer relationship as a result of the step acquisition of FGS. In
conjunction with the preparation of our consolidated financial statement for years ended June 30, 2023 and 2024, the management performed
evaluation on the impairment of goodwill and intangible assets and recorded an impairment loss on goodwill and intangible assets of RMB10.0
million ($1.4 million) and nil for the years ended June 30, 2023 and 2024, respectively. As of June 30, 2023, goodwill and intangible assets of FGS
had fully accrued for impairment. The impairment was mainly due to the decision of the major customers to develop their own autonomous unified
system and to significantly reduce the procurement of third-party services. This change has had a significant and negative impact on FGS's business
model and enterprise value. We are currently working to find new ways and channels of cooperation to enhance the FGS business.
Interest income
Net interest income was RMB21.8 million ($3.0 million) for the year ended June 30, 2024, compared to net interest income of RMB11.1 million
($1.5 million) for the same period of 2023. The RMB10.7 million ($1.5 million) increase in net interest income was primarily due to the increased
interest-bearing loans to third parties and increased short-term investments we invested during the year ended June 30, 2024.

Other income (expenses), net.
Other net expenses was RMB0.7 million ($0.1 million) for the year ended June 30, 2024, compared to other net income of RMB0.7 million ($0.1
million) for the same period of 2023. The RMB1.3 million ($0.2 million) decrease other net income was primarily due to a decrease in subsidy
income of RMB0.2 million. The decrease in other net income was also attributable to an increase in foreign exchange transaction loss of RMB1.1
million ($0.2 million) due to the fluctuation of exchange rate of RMB against US dollars during the year ended June 30, 2024 compared to the same
period of 2023.
Net loss
As a result of the factors described above, net loss was RMB51.4 million ($7.1 million) for the year ended June 30, 2024, a decrease of RMB10.0
million ($1.4 million) from net loss of RMB61.4 million ($8.5 million) for the same period of 2023.
Cash and short-term investment
As of June 30, 2024, we had cash in the amount of approximately RMB110.0 million ($15.1million) and short-term investment in bank fixed income
product of approximately RMB88.1 million ($12.1 million). As of June 30, 2023, we had cash in the amount of approximately RMB104.1 million
($14.3 million) and short-term investment in bank fixed income product of approximately RMB184.2 million ($25.3 million).
About Recon Technology, Ltd (“RCON”)
Recon Technology, Ltd (NASDAQ: RCON) is the People’s Republic of China’s first NASDAQ-listed non-state owned oil and gas field service
company. Recon supplies China’s largest oil exploration companies, Sinopec (NYSE: SNP) and The China National Petroleum Corporation
(“CNPC”), with advanced automated technologies, efficient gathering and transportation equipment and reservoir stimulation measure for increasing
petroleum extraction levels, reducing impurities and lowering production costs. Through the years, RCON has taken leading positions within several
segmented markets of the oil and gas filed service industry. RCON also has developed stable long-term cooperation relationship with its major
clients. For additional information please visit: http://www.recon.cn/.
Forward-Looking Statements
Recon includes “forward-looking statements” within the meaning of the federal securities laws throughout this press release. A reader can identify
forward-looking statements because they are not limited to historical fact or they use words such as “scheduled,” “may,” “will,” “could,” “should,”
“would,” “expect,” “believe,” “anticipate,” “project,” “plan,” “estimate,” “forecast,” “goal,” “objective,” “committed,” “intend,” “continue,” or “will
likely result,” and similar expressions that concern Recon’s strategy, plans, intentions or beliefs about future occurrences or results. Forward-looking
statements are subject to risks, uncertainties and other factors that may change at any time and may cause actual results to differ materially from
those that Recon expected. Many of these statements are derived from Recon’s operating budgets and forecasts, which are based on many detailed
assumptions that Recon believes are reasonable, or are based on various assumptions about certain plans, activities or events which we expect will or
may occur in the future. However, it is very difficult to predict the effect of known factors, and Recon cannot anticipate all factors that could affect
actual results that may be important to an investor. All forward-looking information should be evaluated in the context of these risks, uncertainties
and other factors, including those factors disclosed under “Risk Factors” in Recon’s most recent Annual Report on Form 20-F and any subsequent
half-year financial filings on Form 6-K filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their
entirety by the cautionary statements that Recon makes from time to time in its SEC filings and public communications. Recon cannot assure the
reader that it will realize the results or developments Recon anticipates, or, even if substantially realized, that they will result in the consequences or
affect Recon or its operations in the way Recon expects. Forward-looking statements speak only as of the date made. Recon undertakes no obligation
to update or revise any forward-looking statements to reflect events or circumstances arising after the date on which they were made, except as
otherwise required by law. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking
statements included herein or that may be made elsewhere from time to time by, or on behalf of, Recon.
For more information, please contact:
The Company
Ms. Liu Jia
Chief Financial Officer
Recon Technology, Ltd
Phone: +86 (10) 8494-5799
Email: liujia@recon.cn

RECON TECHNOLOGY, LTD
CONSOLIDATED BALANCE SHEETS
As of June, 30
As of June, 30
As of June, 30
    
2023
    
2024
    
2024
RMB
RMB
US Dollars
ASSETS
Current assets
  
  
  
Cash
¥
 104,125,800
¥
109,991,674
$
15,135,358
Restricted cash
 731,545
848,936
116,817
Short-term investments
 184,184,455
88,091,794
12,121,834
Notes receivable
 3,742,390
1,341,820
 
184,641
Accounts receivable, net
 27,453,415
38,631,762
 
5,315,907
Inventories, net
 6,330,701
1,128,912
 
155,343
Other receivables, net
 2,185,733
3,352,052
 
461,258
Other receivables- related parties
—
275,976
37,976
Loans to third parties
 123,055,874
208,928,370
28,749,500
Purchase advances, net
 2,680,456
5,156,550
 
709,565
Contract costs, net
 49,572,685
48,335,817
6,651,230
Prepaid expenses
 350,119
401,586
 
55,260
Total Current Assets
 504,413,173
506,485,249
69,694,689
Property and equipment, net
 24,752,864
22,137,940
3,046,282
Construction in progress
—
219,132
30,154
Long-term other receivables, net
 3,640
—
—
Operating lease right-of-use assets, net (including ¥335,976 and ¥1,769,840 ($243,538) from a related party as of June
30, 2023 and June 30, 2024, respectively)
 2,654,900
23,547,193
3,240,202
Total Assets
¥
 531,824,577
¥
552,389,514
$
76,011,327
LIABILITIES AND EQUITY
  
  
 
  
Current liabilities
  
  
 
  
Short-term bank loans
¥
 12,451,481
¥
12,425,959
$
1,709,869
Accounts payable
 10,791,721
10,187,518
1,401,849
Other payables
 5,819,010
2,769,685
381,121
Other payable- related parties
 2,592,395
2,299,069
 
316,362
Contract liabilities
 2,748,365
1,820,481
 
250,507
Accrued payroll and employees’ welfare
 2,382,516
3,237,164
445,449
Taxes payable
 1,163,006
993,365
 
136,692
Short-term borrowings - related parties
 20,018,222
10,002,875
1,376,441
Operating lease liabilities - current (including ¥335,976 and ¥1,775,114 ($244,264) from a related party as of June 30,
2023 and June 30, 2024, respectively)
 3,066,146
3,741,247
514,812
Total Current Liabilities
 61,032,862
47,477,363
6,533,102
Operating lease liabilities - non-current (including ¥nil and ¥335,976 ($46,232) from a related party as of June 30,
2023 and June 30, 2024, respectively)
 25,144
3,971,285
546,467
Long-term borrowings - related party
—
10,000,000
1,376,046
Warrant liability - non-current
 31,615,668
6,969
959
Total Liabilities
 92,673,674
61,455,617
8,456,574
Commitments and Contingencies
  
 
Shareholders’ Equity
  
 
Class A ordinary shares, $0.0001 U.S. dollar par value, 500,000,000 shares authorized; 2,306,295 shares and
7,987,959 shares issued and outstanding as of June 30, 2023 and June 30, 2024, respectively*
 26,932
99,634
 
13,710
Class B ordinary shares, $0.0001 U.S. dollar par value, 80,000,000 shares authorized; 7,100,000 shares and 7,100,000
shares issued and outstanding as of June 30, 2023 and June 30, 2024, respectively*
 4,693
4,693
646
Additional paid-in capital*
 580,340,061
681,476,717
 
93,774,317
Statutory reserve
 4,148,929
4,148,929
 
570,912
Accumulated deficit
 (170,440,826)
(220,312,085)
 
(30,315,952)
Accumulated other comprehensive income
 35,127,173
37,136,649
 
5,110,173
Total Recon Technology, Ltd’ equity
 449,206,962
502,554,537
 
69,153,806
Non-controlling interests
 (10,056,059)
(11,620,640)
 
(1,599,053)
Total shareholders’ equity
 439,150,903
490,933,897
 
67,554,753
Total Liabilities and Shareholders’ Equity
¥
 531,824,577
¥
552,389,514
$
76,011,327
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024 and change in capital structure on March 29, 2024.

RECON TECHNOLOGY, LTD
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
    
For the years ended
June 30, 
    
2022
    
2023
    
2024
    
2024
 
RMB
 
RMB
 
RMB
 
US Dollars
Revenue
Revenue - third parties
¥
83,777,571
¥
67,114,378
¥
68,854,280
$
9,474,664
Revenue
 
 83,777,571  
 67,114,378
68,854,280  
9,474,664
Cost of revenue
Cost of revenue - third parties
64,352,834
 48,247,395
47,976,836
6,601,832
Cost of revenue
 64,352,834
 48,247,395
47,976,836
6,601,832
Gross profit
 
 19,424,737  
 18,866,983  
20,877,444  
2,872,832
Selling and distribution expenses
 
 10,150,802  
 10,638,978  
10,374,388  
1,427,563
General and administrative expenses
 
 83,281,958  
 76,784,396  
63,765,583  
8,774,436
Allowance for (net recovery of) credit losses
 
 (658,823) 
 (9,038,985) 
4,086,505  
562,322
Impairment loss of property and equipment and other long-lived assets
 —
 1,009,124
—
—
Research and development expenses
 
 8,964,217  
 8,806,205  
14,288,879  
1,966,215
Operating expenses
 
 101,738,154  
 88,199,718  
92,515,355  
12,730,536
Loss from operations
 
 (82,313,417) 
 (69,332,735) 
(71,637,911) 
(9,857,704)
Other income (expenses)
 
 
 
 
Subsidy income
 
 11,993  
 325,425  
131,428  
18,085
Interest income
 
 5,367,979  
 13,603,487  
22,897,763  
3,150,837
Interest expense
 
 (1,522,526) 
 (2,514,850) 
(1,070,449) 
(147,299)
Income from investment in unconsolidated entity
 
 15,411  
 —  
 —  
 —
Gain (loss) in fair value changes of warrants liability
 174,485,575
 6,116,000
(933,995)
(128,522)
Foreign exchange transaction gain (loss)
 
 (118,456) 
 241,652  
(881,695) 
(121,325)
Impairment loss on goodwill and intangible assets
 (2,266,893)
 (9,980,002)
 —
 —
Other income
 
 15,855  
 82,970  
59,049  
8,126
Other income, net
 
 175,988,938  
 7,874,682  
20,202,101  
2,779,902
Income (loss) before income tax
 
 93,675,521  
 (61,458,053) 
(51,435,810) 
(7,077,802)
Income tax expenses (benefit)
 
 (613,874) 
 18,339  
30  
4
Net income (loss)
 
 94,289,395  
 (61,476,392) 
(51,435,840) 
(7,077,806)
Less: Net loss attributable to non-controlling interests
 
 (1,297,400) 
 (2,309,091) 
(1,564,581) 
(215,294)
Net income (loss) attributable to Recon Technology, Ltd
 
¥
 95,586,795  
¥
 (59,167,301) 
¥
(49,871,259)
$
(6,862,512)
Comprehensive income (loss)
 
 
 
 
Net income (loss)
 
 94,289,395  
 (61,476,392) 
(51,435,840)
(7,077,806)
Foreign currency translation adjustment
 
 9,332,625  
 23,819,712  
2,009,476
 
276,513
Comprehensive income (loss)
 
 103,622,020  
 (37,656,680) 
(49,426,364)
 
(6,801,293)
Less: Comprehensive loss attributable to non- controlling interests
 
 (1,297,400) 
 (2,309,091) 
(1,564,581)
 
(215,294)
Comprehensive income (loss) attributable to Recon Technology, Ltd
 
¥
 104,919,420  
¥
 (35,347,589) 
¥
(47,861,783)
$
(6,585,999)
Earnings (loss) per share - basic and diluted*
¥
 55.52
¥
 (27.43)
¥
(9.88)
$
(1.36)
Weighted - average shares -basic and diluted*
 1,721,529
 2,157,158
5,048,952
5,048,952
*
Retrospectively restated for the 1-for-18 reverse stock split on May 1, 2024.

RECON TECHNOLOGY, LTD
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended June 30,
2022
2023
2024
2024
    
RMB
    
RMB
    
RMB
    
US Dollars
Cash flows from operating activities:
 
   
    
    
  
Net income (loss)
¥
94,289,395  
¥
(61,476,392) 
¥
(51,435,840)
$
(7,077,806)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
 
 
 
 
 
 
Depreciation and amortization
 
3,339,868  
 
3,683,586  
 
2,844,025
 
391,351
Loss (gain) from disposal of property and equipment
 
48,628  
 
(12,782) 
 
35,325
 
4,861
(Gain) loss in fair value changes of warrants liability
(174,485,575)
(6,116,000)
933,995
128,522
Amortization of offering cost of warrants
—
1,483,306
—
—
Allowance for (net recovery of) credit losses
 
(658,823) 
 
(9,038,985) 
 
4,086,505
 
562,322
Allowance for slow moving inventories
 
266,285  
 
484,644  
 
886,991
 
122,054
Impairment loss of property and equipment and other long-lived assets
—
1,009,124
—
—
Impairment loss on goodwill and intangible assets
2,266,893
9,980,002
—
—
Amortization of right of use assets
 
3,138,518  
 
3,252,066  
 
1,636,215
 
225,151
Restricted shares issued for management and employees
 
39,263,485  
 
26,191,707  
 
22,427,682
 
3,086,152
Restricted shares issued for services
8,935,919
5,805,840
1,070,143
147,257
Income from investment in unconsolidated entity
 
(15,411) 
 
—  
 
—
 
—
Deferred tax benefit
(624,087)
—
—
—
Accrued interest income from loans to third parties
(270,563)
(7,997,961)
(6,998,866)
(963,076)
Accrued interest income from short-term investment
 
—  
 
(2,901,955) 
 
(885,394)
 
(121,834)
Changes in operating assets and liabilities:
 
 
 
 
 
 
Notes receivable
 
(4,522,674) 
 
7,085,917  
 
2,400,570
 
330,329
Accounts receivable
 
3,811,866  
 
(495,784) 
 
(12,151,359)
 
(1,672,083)
Inventories
 
(689,291) 
 
(2,373,013) 
 
5,590,058
 
769,218
Other receivables
 
285,786  
 
(1,307,694) 
 
31,908
 
4,391
Other receivables-related parties
—
(64,122)
(275,976)
(37,976)
Purchase advances
 
865,430  
 
(2,575,198) 
 
(2,422,123)
 
(333,295)
Contract costs
 
15,422,513  
 
(14,236,539) 
 
(4,400,442)
 
(605,521)
Prepaid expense
 
(274,215) 
 
70,164  
 
(51,467)
 
(7,082)
Prepaid expense - related parties
 
158,000  
 
275,000  
 
—
 
—
Operating lease liabilities
 
(1,594,702) 
 
(3,061,303) 
 
(2,907,014)
 
(400,018)
Accounts payable
 
(5,523,938) 
 
(1,710,898) 
 
(604,203)
 
(83,141)
Other payables
 
(6,329,042) 
 
2,270,104  
 
(3,020,216)
 
(415,597)
Other payables-related parties
 
969,468  
 
352,260  
 
(293,326)
 
(40,363)
Contract liabilities
 
(5,578,999) 
 
641,087  
 
(927,884)
 
(127,681)
Accrued payroll and employees’ welfare
 
296,065  
 
131,971  
 
854,644
 
117,603
Taxes payable
961,964  
(1,036,483) 
(171,884)
(23,652)
Net cash used in operating activities
 
(26,247,237)
 
(51,688,331)
 
(43,747,933)
 
(6,019,914)
Cash flows from investing activities:
 
 
 
 
 
 
Purchases of property and equipment
 
(692,206) 
 
(940,673) 
 
(282,184)
 
(38,830)
Proceeds from disposal of property and equipment
 
—  
 
31,950  
 
20,000
 
2,752
Purchase of land use right
—
 
—
(15,000,251)
(2,064,103)
Repayments of loans to third parties
171,435,032
40,113,311
117,522,129
16,171,583
Payments made for loans to third parties
(171,071,510)
(103,146,761)
(196,437,504)
(27,030,700)
Payments and prepayments for construction in progress
—
 
—
(219,132)
(30,154)
Payments for short-term investments
 
—  
 
(290,051,964) 
 
(203,481,600)
 
(28,000,000)
Redemption of short-term investments
—
108,769,464
300,863,518
41,400,198
Net cash (used in) provided by investing activities
 
(328,684) 
 
(245,224,673) 
 
2,984,976
 
410,746
 
 
 
 
 
 
Cash flows from financing activities:
Proceeds from short-term bank loans
 
10,000,000  
 
13,491,481  
 
11,581,000
 
1,593,599
Repayments of short-term bank loans
 
(15,000,000) 
 
(11,040,000) 
 
(11,632,755)
 
(1,600,720)
Repayments of short-term borrowings
 
(530,000) 
 
—  
 
—
 
—
Proceeds from short-term borrowings-related parties
11,100,000
15,013,115
10,000,000
1,376,046
Repayments of short-term borrowings-related parties
 
(14,770,000) 
 
(9,000,000) 
 
(10,018,222)
 
(1,378,553)
Repayments of long-term borrowings-related party
 
(892,701) 
 
(1,499,667) 
 
—
 
—
Proceeds from warrants issued with common stock
—
17,493,069
—
 
—
Proceeds from sale of ordinary shares, net of issuance costs
 
—  
 
28,174,993  
 
77,711,533
 
10,693,463
Proceeds from sale of prefunded warrants, net of issuance costs
93,321
3,750,282
—
 
—
Redemption of warrants
 
—  
 
—  
 
(32,617,499)
 
(4,488,317)
Net cash (used in) provided by financing activities
 
(9,999,380) 
 
56,383,273  
 
45,024,057
 
6,195,518
Effect of exchange rate fluctuation on cash and restricted cash
 
10,275,148  
 
27,688,659  
 
1,722,165
 
236,978
Net increase (decrease) in cash and restricted cash
 
(26,300,153) 
 
(212,841,072) 
 
5,983,265
 
823,328
Cash and restricted cash at beginning of year
 
343,998,570  
 
317,698,417  
 
104,857,345
 
14,428,851
Cash and restricted cash at end of year
¥
317,698,417  
¥
104,857,345  
¥
110,840,610
$
15,252,179
 
 
 
 
 
 
Supplemental cash flow information
Cash paid during the year for interest
¥
1,427,174  
¥
1,200,699  
¥
659,472
$
90,945
Cash paid during the year for taxes
¥
10,214  
¥
18,339  
¥
2,137,166
$
294,729
Reconciliation of cash and restricted cash, beginning of year
 
 
 
 
 
 
Cash
¥
343,998,570
¥
316,974,857
¥
104,125,800
$
14,328,187
Restricted cash
—
723,560
731,545
100,664
Cash and restricted cash, beginning of year
¥
343,998,570
¥
317,698,417
¥
104,857,345
$
14,428,851
Reconciliation of cash and restricted cash, end of year
Cash
¥
316,974,857
¥
104,125,800
¥
109,991,674
$
15,135,362
Restricted cash
723,560
731,545
848,936
116,817
Cash and restricted cash, end of year
¥
317,698,417
¥
104,857,345
¥
110,840,610
$
15,252,179
Non-cash investing and financing activities
Cancellation of shares issued to Starry Lab
¥
(27,675,450)
¥
—
¥
—
$
—
Right-of-use assets obtained in exchange for operating lease obligations
¥
937,672
¥
75,182
¥
8,303,099
$
1,145,050
Reduction of right-of-use assets and operating lease obligations due to early termination of lease agreement
¥
—
¥
62,357
¥
61,301
$
8,454
Inventories transferred to and used as fixed assets
¥
—
¥
(65,456) 
¥
—
$
—
Receivable for disposal of property and equipment
¥
3,000
¥
—  
¥
—
$
—
Other payable due to non-controlling interest converted into capital contribution
¥
1,130,000
¥
—
¥
$