RECON TECHNOLOGY S-1/A Filing by RCON-Agreements

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As filed with the Securities and Exchange Commission on March 17, 2009                                                                           Registration No. 333-152964




                           SECURITIES AND EXCHANGE COMMISSION
                                                                        Washington, D.C. 20549



                                                      AMENDMENT #2
                                                           TO
                                                        FORM S-1
                                                 REGISTRATION STATEMENT
                                                                         UNDER
                                                                THE SECURITIES ACT OF 1933



                                      RECON TECHNOLOGY, LTD
                                                                 (Exact name of registrant as specified in its charter)


                    Cayman Islands                                                         1389                                                 Not Applicable
              (State or other jurisdiction of                                    (Primary Standard Industrial                                     (I.R.S. Employer
             Incorporation or organization)                                      Classification Code Number)                                   Identification Number)




                    Room 1401 Yong Feng Mansion                                                                            CT Corporati on System
                           123 Jiqing Road                                                                                   111 Eighth Avenue
              Nanjing, People ’s Republic of China 210006                                                                 New York, New York 10011
                             025-52313015                                                                                      (800) 624-0909
                  (Address, including zip code, and telephone number,                                               (Name, address, including zip code, and telephone
             including area code, of registrant’s principal executive offices)                                      number, including area code, of agent for service)




                                                                                      Copies to:

                                                                        Bradley A. Haneberg, Es q.
                                                                         Anthony W. B asch, Es q.
                                                                         Kaufman & Canoles, P.C.
                                                                      Three J ames Center, 12 Fl oor    th



                                                                          1051 East Cary Street
                                                                        Richmond, Virginia 23219
                                                                        (804) 771-5700 - Telephone
                                                                        (804) 771-5777 - Facsimile



Approximate date of co mmencement of proposed sale to the public: As soon as practicable after the effective date of this reg istration statement

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following bo x. 

If this Form is filed to reg ister additional securities for an offering pursuant to Rule 462(b) under the Securit ies Act, che ck the following bo x
and list the Securities Act registration statement number of the earlier effect ive registration statement for the same offering. 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following bo x and list the
Securities Act registration statement number of the earlier effect ive registration statement for the same o ffering. 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securit ies Act, check the following box and list the
Securities Act registration statement number of the earliest effective registration statement for the same offering. 

Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non -accelerated filer, or a smaller reporting
company. See definit ions of ―large accelerated filer,‖ ―accelerated filer,‖ and ―smaller reporting company‖ in Ru le 12b-2 of the Exchange Act.
(Check one):

Large accelerated filer                                                                                   Accelerated filer                     
Non-accelerated filer               (Do not check if a smaller reporting company)                         Smaller reporting co mpany            
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                                                    CALCULATION OF REGIS TRATION FEE


                                                                                                       Proposed Maximum           Amount of
                            Title of Each Class of Securities to be Registered                       Aggregate Offering Price   Registration Fee
Ordinary Shares     (1)
                                                                                                        $10,200,000    (2)
                                                                                                                                    $570
Placement Agent Warrants and Underlying Ordinary Shares              (3)
                                                                                                        $1,224,170    (2)
                                                                                                                                    $69
Total                                                                                                    $11,424,170               $639    (4)




(1)
      In accordance with Rule 416(a), the Reg istrant is also registering an indeterminate number of addit ional ordinary shares that shall be
      issuable pursuant to Rule 416 to prevent dilution resulting fro m share splits, share dividends or similar transactions.
(2)
      The registration fee for securities is based on an estimate of the Proposed Maximu m Aggregate Offering Price of the securitie s, and such
      estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(o).
      We have agreed to issue warrants to our placement agent, Anderson & Strudwick, Incorporated (the ―Placement Agent‖), to purchase up
(3)



      to 10% o f the aggregate number of ord inary shares sold by the Registrant (the ―Placement Agent’s Warrants‖). The price paid b y the
      Placement Agent for the Placement Agent’s Warrants is $0.001 per warrant. Assuming a maximu m p lacement and an offering price of
      $6.00 per share, the Placement Agent would receive Placement Agent ’s Warrants to purchase 170,000 ord inary shares at an aggregate
      purchase price of $170. The exercise price of the Placement Agent’s Warrants is equal to 120% of the price of the ordinary shares offered
      hereby. Assuming a maximu m placement and an exercise price of $7.20 per share, we would receive, in the aggregate, $1,224,000 upon
      exercise of the Placement Agent’s Warrants. The resale of the Placement Agent’s Warrants is registered hereunder. The ordinary shares
      underlying the Placement Agent’s Warrants are exercisable within one year of the date of this registration statement and are deemed to
      commence simu ltaneously with the Placement Agent’s Warrants and are being registered on a delayed or continuous basis pursuant to
      Rule 415 under the Securit ies Act of 1933, as amended.
(4)
      Partially paid; remainder paid herewith.



      The Registrant hereby amends this Registrati on Statement on such date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which specifically states that this Registrati on Statement shall thereafter become
effecti ve in accordance wi th Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become
effecti ve on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.
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The information in this prospectus i s not complete and may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange Commissi on i s effective. This prospectus i s not an offer to
sell these securitie s and is not soliciting an offer to buy the se securitie s in any state where the offer or sale is not
permitted.

                                           SUBJ ECT TO COMPLETION, DATED                              , 2009




                                                          RECON TECHNOLOGY, LTD

                                                  1,166,667 Ordi nary Share Mi nimum Offering
                                                  1,700,000 Ordi nary Share Maxi mum Offering

      This is the initial public offering of Recon Technology, Ltd, a Cay man Islands exempted company. We are offering a minimu m of
1,166,667 ordinary shares and a maximu m of 1,700,000 ord inary shares. Our officers and directors may, b ut have made no commit ment, nor
indicated they intend to, purchase shares in the offering. Purchases by our officers and directors may be made in order to re ach the minimu m
offering amount. We have not placed a limit on the number of shares our officers an d directors may purchase in this offering.

      We expect that the offering price will be between $5.00 and $7.00 per share. No public market currently exists for our shares . We have
applied for approval for quotation on the NASDAQ Cap ital Market under the symb ol ―RCON‖ for the ordinary shares we are o ffering.

      Investing in these ordinary shares involves significant risks. See ― Risk Factors ‖ beginning on page 6 of
this prospectus.
                                                                             Per Ordinary Share           Minimum Offering             Maximum Offering
Assumed public offering price                                            $                 6.00       $       7,000,002.00         $      10,200,000.00
Placement discount and accountable expense allowance                     $                 0.48       $         560,000.16         $         816,000.00
Proceeds to us, before expenses                                          $                 5.52       $       6,440,001.84         $       9,384,000.00

      We expect total cash expenses for this offering to be approximately $ [           ]. The placement agent must sell the min imu m nu mber of
securities offered ( 1,166,667 ord inary shares) if any are sold. The p lacement agent is required to use only its best efforts to sell the securities
being offered. The offering will terminate upon the earlier of: (i) a date mutually acceptable to us and our placement agent after which the
minimu m offering is sold or (ii) October 1, 2009. Until we sell at least 1,166,667 ord inary shares, all investor funds will be held in an escrow
account at SunTrust Bank, Rich mond, Virgin ia. If we do not sell at least 1,166,667 ordinary shares by October 1, 2009, all funds will be
promptly returned to investors (within one business day) without interest or deduction.

     These securities have not been approved or disapprove d by the Securities and Exchange Commission or any state securities
commission nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or
adequacy of this pros pectus. Any representati on to the contrary is a cri minal offense.



                                                              Anderson & Strudwick,
                                                                  Incorporated

                                                           Prospectus dated              , 2009
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      Except where the context otherwise requires and for purposes of this prospectus only:

      •   The terms ―we,‖ ―us,‖ ―our company,‖ ―our‖ and ―Recon‖ refer to Recon Technology, Ltd, a Cay man Islands exempted company;
          Recon Technology Co., Limited, a Hong Kong company; and Recon Technology (Jining) Co., Ltd., a PRC co mpany.
      •   ―Shares‖ and ―ordinary shares‖ refer to our ordinary shares.
      •   ―China‖ and ―PRC‖ refer to the People’s Republic of China.

      •   all references to ―RMB‖ and ―¥‖ are to the legal currency of Ch ina and all references to ―USD,‖ ―U.S. dollars,‖ ―dollars‖ and ―$‖ are
          to the legal currency of the Un ited States.
      •   ―BHD‖ refers to Beijing BHD Petro leu m Technology Co., Ltd., a PRC co mpany.
      •   ―Nanjing Recon‖ refers to Nanjing Recon Technology Co., Ltd., a PRC co mpany.

      •   ―ENI‖ refers to Jining ENI Energy Technology Co., Ltd., a PRC co mpany.

      For purpose of clarity, where the context requires us to differentiate between the entities generally referred to collectively as ―Recon‖,
and for purposes of this prospectus only:
      •   ―Recon-CI‖ refers to Recon Technology, Ltd, a Cay man Islands exempted co mpany.
      •   ―Recon-HK‖ refers to Recon Technology Co., Limited, a Hong Kong company.

      •   ―Recon-JN‖ refers to Recon Technology (Jining) Co., Ltd., a PRC co mpany.

       This prospectus contains translations of certain RM B amounts into U.S. dollar amounts at a specified rate solely fo r the conv enience of
the reader. Un less otherwise stated, the translations of RM B into U.S. dollars have been made at the rate of exchange of $1.00 t o RM B6.8225,
the approximate exchange rate prevailing on December 31, 2008. We make no representation that the RMB or U.S. dollar amo unts referred to
in this prospectus could have been or could be converted into U.S. dollars or RM B, as the case may be, at any particular rate or at all. Any
discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.

      Unless otherwise indicated, all informat ion in this prospectus assumes:
      •   a 53.04758-for-1 split of our ordinary shares to be effected before the completion of this offering;
      •   no person will exercise any outstanding options; and

      •   the sale of 1,700,000 ordinary shares at an assumed init ial public offering price of $6.00 per unit, the midpoint of the rang e set forth
          on the cover page of this prospectus.
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                                                           PROSPECTUS S UMMARY

        This summary highlights information that we present more fully in the rest of this prospectus. This summary does not contain all of
  the information you should consider before buying shares in this offering. This summary contains forward -looking statements that involve
  risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can
  identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,”
  “expect,” “we believe,” “we intend,” “may,” “will,” “should,” “could,” and similar expressions. These statements involve estimates,
  assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially fr om any future
  results, performances or achievements expressed or implied by the forward -looking statements. You should read the entire prospectus
  carefully, including the “Risk Factors” section and the financial statements and the notes to those statements.

  Our Company
        Recon Technology, Ltd, a Cay man Islands exempted company (―Recon-CI‖) is the parent company of Recon Technology Co.,
  Limited, our wholly -owned subsidiary in Hong Kong (―Recon-HK‖). Recon-HK is the parent company of Recon Technology (Jining) Co.,
  Ltd., a PRC co mpany (―Recon-JN‖). Recon-JN and Recon-HK are co llect ively referred to herein as the ―PRC Subsidiaries‖. Recon-JN
  operates Beijing BHD Petro leu m Technology Co., Ltd. (―BHD‖), Nanjing Recon Technology Co., Ltd. (―Nanjing Recon‖) and Jining ENI
  Energy Technology Co., Ltd. (―ENI‖) (co llect ively, the ―Do mestic Co mpanies‖) by contract. The Do mestic Co mpanies are not our
  subsidiaries.

          Through the Domestic Co mpanies, we provide services designed to automate and enhance the extraction of petro leum in Ch ina. To
  this end, the Domestic Co mpanies and we have developed specialized software and hardware to manage the oil ext ract ion process in
  real-t ime and to reduce the costs associated with extract ion. See ―Our Business – General‖. These products and services include:

         • RSCADA System . Nanjing Recon’s technology includes Recon’s supervisory control and data acquisition system (―RSCADA‖),
           an industrial co mputerized process control system for mon itoring, managing and controlling petroleu m ext raction. RSCA DA
           integrates the underground, ground and above-ground levels of the petroleum extract ion industry. RSCADA connects the
           above-ground level central control roo m with the ground level relay station and the relay station with the underground bottom
           intelligent terminal using 2.4G wireless frequency. RSCA DA has received grants and awards fro m the State Min istry of Science
           and Technology and the city of Nanjing.
         • Water System . In addit ion to RSCA DA, BHD has developed and imp lemented technology designed to find and block water
           content in petroleum. As China ’s extraction of o il has increased, the quantity of available o il has decreased and the water content
           in remaining o il has increased. In order to imp rove efficiency and profitability in ext raction, BHD has developed technology to
           reduce the amount of water in ext racted petroleum.
         • Oil Field Furnaces . 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 imp lemented a new oil field furnace that is advanced,
           highly automated, reliab le, easily operable, co mparat ively safe and highly heat efficient (90% efficiency).

         • Multipurpose Fissure Shaper . BHD has also developed a multipurpose fissure shaper to improve our ability to test for and extract
           petroleum. Before any petroleu m extractor can test for the presence of oil, it must first perforate a hole for testing. The d epth of
           the perforated hole is, of course, extremely important in the testing process: a hole that is too shallow may cause an extrac tor to
           miss an oil field entirely. BHD has developed a proprietary mu ltipurpose fissure shaper that is used with the perfora ting gun to
           effectively increase the perforation depth by between 46% and 80%, shape a great number of stratum fissures, improve the
           stratum diversion capability and, as a result, improve our ability to locate oil fields and increase the output of oil wells.
         • Acoustic pipeline monitoring system . Nan jing Recon’s acoustic oil and gas pipeline safety monitoring system has been widely
           used by Sinopec. We are also cooperating with Sinopec to implement our solutions in imports instrumentation, the introd uction of
           equipment and oilfield chemical additives.


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       Our principal executive offices are located at Roo m 1401 Yong Feng Mansion, 123 Jiqing Road, Nan jing, People ’s Republic of
  China (210006). Ou r website address is www.recon.cn, and information on our website is substantially in the Mandarin language .
  Information contained on our website or any other website is not a part of this prospectus.

  Our Corporate Structure
       We operate our business in China through the Domestic Co mpanies, wh ich are PRC limited liab ility co mpanies controlled by the
  same three PRC residents, Mr. Yin Shenping, Mr. Li Hongqi and Mr. Chen Guangqiang. Mr. Yin , Mr. Li and Mr. Chen are als o significant
  shareholders in and directors of our co mpany, and they serve, respectively, as our Chief Executive Officer, Ch ief Market ing Officer and
  Chief Technology Officer.

        Chinese laws and regulations currently do not prohibit or restrict foreign ownership in pet roleu m businesses. However, Chinese laws
  and regulations do prevent direct foreign investment in certain industries. To protect our shareholders from possible future foreign
  ownership restrictions, Mr. Yin, Mr. Li and Mr. Chen reorganized our co mpany, entered into agreements with Recon-JN and caused
  Recon-JN and each of the Do mestic Co mpanies to enter into a series of agreements that give our company (by virtue of its sole owner ship
  of Recon-HK and Recon-HK’s sole ownership of Recon-JN) effective control over each of the Do mestic Co mpanies.

        We have Exclusive Technical Consulting Service Agreements with each of the Do mestic Co mpan ies and Equity Interest Pledge
  Agreements and Exclusive Equ ity Interest Purchase Agreements with their shareholders. Through these contractual arrangements, we have
  the ability to substantially influence each of the Do mestic Co mpanies ’ daily operations and financial affairs, appoint their senior executives
  and approve all matters requiring shareholder approval. As a result of these contractual arrangements, which enable us to control the
  Do mestic Co mpanies, we are considered the primary beneficiary of each Do mestic Co mpany. In addition, we and the Do mestic Co mp anies
  are under common control, by virtue of the ownership of mo re than 60% of our co mpany and each of the Dome stic Co mpanies by three
  shareholders (Mr. Yin Shenping, Mr. Li Hongqi and Mr. Chen Guangqiang).

       Accordingly, we consolidate their results, assets and liabilities in our financial statements. For a description of these contractual
  arrangements, see ―Corporate Structure – Contractual Arrangements with Do mestic Co mpanies and their Shareholders.‖


                                                                         2
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       The following diagram illustrates our current corporate structure and the place of format io n, ownership interest and affiliation o f each
  of our subsidiaries and affiliates as of the date of this prospectus.




                                                                         3
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  The Offering

   Minimu m Shares offered:                                                 1,166,667 ordinary shares
   Maximu m Shares offered:                                                 1,700,000 ordinary shares
   Shares to be outstanding, if minimu m offering is sold:                  3,958,667 ordinary shares
   Shares to be outstanding, if maximu m offering is sold:                  4,492,000 ordinary shares
   Proposed NASDAQ Capital Market symbol:                                   ―RCON‖
   Risk factors:                                                            Investing in these securities involves a high degree of risk. As an
                                                                            investor, you should be able to bear a co mplete loss of your
                                                                            investment. You should carefully consider the information set
                                                                            forth in the ―Risk Factors‖ section of this prospectus before
                                                                            deciding to invest in the shares.
   Gross proceeds, if minimu m offering is sold:                            $7,000,002
   Gross proceeds, if maximu m o ffering is sold:                           $10,200,000
   Closing of offering:                                                     The offering contemplated by this prospectus will terminate upon
                                                                            the earlier of: (i) a date mutually acceptable to us and our
                                                                            placement agent after which the minimu m offering is sold or (ii)
                                                                            October 1, 2009.

  Placement
         We have engaged Anderson & Strudwick, Incorporated to conduct this offering on a ―best efforts, min imu m/ maximu m‖ basis. The
  offering is being made without a firm co mmit ment by the placement agent, which has no obligation or co mmit ment to purchase an y of our
  Shares. Although they have not formally co mmitted to do so, our affiliates who are not PRC residents or citizens may opt to purchase
  ordinary shares in connection with this offering. To the extent such individuals invest, they will purchase our shares with investment intent
  and without the intent to resell. Any ordinary shares purchased by our non -PRC affiliates shall contribute to the calculation of whether we
  achieved our minimu m offering. We have not placed limits on the number of ord inary shares eligible to be purchased by ou r non-PRC
  affiliates.


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  Summary Financial Informati on
         In the table below, we p rovide you with historical selected financial data for the fiscal years ended 2008 and 2007 and the s ix month
  period ended December 31, 2008. Th is informat ion is derived fro m our consolidated and combined financial statements includ ed elsewhere
  in this prospectus. Historical results are not necessarily indicat ive of the results that may be expected for any future period. When you read
  this historical selected financial data, it is impo rtant that you read it along with the historical financial statements and related notes and
  ―Management’s Discussion and Analysis of Financial Condition and Results of Operations ‖ included elsewhere in this prospectus.

                                                                      For the Fiscal Year                                   For the Six Months
                                                                       Ended June 30,                                     Ended December 31,
                                                         2007                 2008                2008                 2008                     2008
                                                          (¥)                  (¥)          ($) (unaudited)      (¥) (unaudited)          ($) (unaudited)
   Total Revenues                                      67,640,133         76,474,151           11,209,109           49,764,050                7,294,107
   Income (Loss) fro m Continuing Operations            8,436,299         13,265,077            1,944,314           10,971,695                1,608,163
   Income (Loss) fro m Discontinued
     Operations                                           (85,701 )           405,926               59,498          (2,259,335 )                (331,159 )
   Net Inco me Available for Co mmon
     Shareholders                                       8,350,598         13,654,184             2,001,347            8,678,073               1,271,978
   Basic Weighted Average Shares Outstanding               44,053             79,976                79,976               98,967                  98,967
        Basic Earn ings per Share                          189.56             170.73                 25.02                87.69                   12.85
   Diluted Weighted Average Shares
     Outstanding                                           44,053               81,625              81,625              101,599                  101,599
        Diluted Earnings per Share                         189.56               167.22               24.51                85.41                    12.52

                                                                              June 30,                                          December 31,
                                                           2007                 2008                 2008                 2008                  2008
                                                            (¥)                  (¥)           ($) (unaudited)      (¥) (unaudited)       ($) (unaudited)
   Total Assets                                          58,829,168           78,166,275          11,457,131            71,955,426             10,546,784
   Total Liab ilities                                    59,468,767           52,321,179           7,668,917            40,628,632              5,955,095
   Minority Interest                                        615,392              451,036              66,110               384,008                 56,286
   Redeemable Co mmon Shares                                    —              1,388,641             203,538             1,415,436                207,466
   Shareholders’ Equity (Deficit)                        (1,254,991 )         24,005,419           3,518,566            29,527,350              4,327,937

  Corporate Informati on
        Our principal executive offices are located at Roo m 1401, Yong Feng Mansion, 123 Jinqing Road, Nan jing, People ’s Republic of
  China 210006. Our telephone number at this address is 025-52313105 and our fax number is 025-52261799. Our registered office in the
  Cay man Islands is c/o Corporate Filing Serv ices Limited, 4th Floor, Harbour Centre, P.O. Bo x 613, Grand Cay man KYI- 1107.Cay man
  Islands.

       Investor inquiries should be directed to us at the address and telephone number of our p rincipal executive offices set forth above. Our
  website is www.recon.cn . The in formation contained on our website does not constitute a part of this prospectus. Our agent for service of
  process in the United States is CT Corporation System, located at 111 Eighth Avenue, New York, New York 10011.


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                                                                RIS K FACTORS

      Investment in our securities involves a high degree of risk. You should carefully consider the risks described below together with all of
the other information included in this prospectus before making an investment decision. The risks and uncertainties described below are n ot
the only ones we face, but represent the material risks to our business. If any of the following risks actually occurs, our b usiness, financial
condition or results of operations could suffer. In that case, you may lose all or part of your investment. You should not in vest in this offering
unless you can afford to lose your entire investment.


                                                          Risks Related to Our Business

We operate in a very competitive industry and may not be able to maintain our revenues and profitability.
      Since the 1990s, several international co mpanies engaged in supplying integrated automation services for the petroleu m ext rac tion
industry have been qualified in Ch ina. These competitors have significantly greater financial and market ing resources and name recognition
than we have. In addition, at least five domestic co mpetitors also compete with us and more co mpetitors may enter the market as Chinese
petroleum co mpanies seek to reduce oil production costs and improve efficiencies. We believe that wh ile the Chinese market fo r integrat ed
automation services for the petroleum extract ion industry is subject to intense competition, the number of large co mpetitors is relatively
limited. There can be no assurance that we will be able to effectively co mpete in our industry.

      In addition, our co mpetitors may introduce new systems. If these new systems are more attractive to customers than the systems we
currently use, our customers may switch to our co mpetitors ’ services, and we may lose market share. We believe that competition may beco me
more intense as more integrated automation service providers, including Chinese/foreign jo int ventures, are qualified to cond uct business. We
cannot assure you that we will be able to compete successfully against any new or existing co mpetitors, or against any new systems our
competitors may imp lement. A ll of these competitive factors could have a material adverse effect on our revenues and profitability. See ―Our
Business – Market Background‖.

We must continually research and develop new technologies and products to remain competitive.
      There are appro ximately 10 co mpanies in China that engage in the production and sale of automated services products for the petroleum
extraction industry, and we expect this number to gro w. Many co mpetitors have considerably greater financial, technologica l, market ing and
personnel resources than those currently available to us. We expect co mpetition to intensify in all fields in wh ich we are in volved in view of the
world ’s need for petroleu m.

     To achieve our strategy and obtain market share, we will need to continually research, develop and refine new technologies and offer new
products. Many factors may limit our ability to develop and refine new products, including access to new products and technologies, as well as
marketplace resistance to new products and technologies. We believe that the Domestic Co mpanies ’ 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 ou r and the
Do mestic Co mpanies’ 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.

     As new technologies are developed, and the Domestic Co mpanies and we may need to adapt and change our products and services, our
method of market ing or delivery or alter our current business in ways that may adversely affect revenue and out ability to ac hieve our proposed
business goals. Accordingly, there is a risk that the Domestic Co mpanies’ and our technology at a later date will not support a viable
commercial enterprise. See ―Our Business – Our Products‖.

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 revenues from the license and imp lementation of so ftware applications and hardware innovations for
the Chinese petroleum industry. The life cycle o f the Do mestic Co mpanies ’ and our products 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 the Chinese
petroleum industry.

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If the Do mestic Co mpanies and we are unable to continually imp rove our software and hardware to address the changing needs of the Ch inese
petroleum industry, we may experience a significant decline in the demand for the Do mestic Co mpanies ’ and our products and services. In
such a scenario, our revenues may significantly decline. See ―Our Business.‖

As a technology-oriented business, our ability to operate profitably is directly related to our ability to develop and protect our proprietar y
technology.
     We rely on a co mbination of trademark, trade secret, nondisclosure, copyright and patent law to protect the Do mestic Co mpanies ’ and our
software and hardware, which may afford only limited protection.

      We generally require the Do mestic Co mpanies ’ and our employees, consultants, advisors and collaborators to execute appropriate
confidentiality agreements with the Co mpany. These agreements typically provide that all material and confidential informatio n developed or
made known to the individual during the course of the individual’s relationship with the Co mpany will be kept confidential and not disclosed to
third parties except in specific circu mstances. These agreements may be breached, and in some instances, we may not have an a ppropriate
remedy availab le for breach of the agreements.

      Although the Chinese government has issued Nanjing Recon three copyrights on software and Nanjing Recon and BHD six patents o n
products, we cannot guarantee that competitors will be unable to develop technologies that are similar or su perior to the Do mestic Co mpanies ’
and our technology. Despite our efforts to protect the Domestic Co mpanies ’ and our proprietary rights, unauthorized part ies, in cluding
customers, may attempt to reverse engineer or copy aspects of the Do mestic Co mpanies ’ and our products or to obtain and use information that
the Domestic Co mpanies and we regard proprietary. Furthermore, our co mpetitors may independently develop substantially equiva lent
proprietary info rmation 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 Co mpanies ’ and our technology without proper authorizat ion.

      The Do mestic Co mpanies and we develop our software products on third-party middleware software programs that are licensed by our
customers fro m third part ies, 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 ab ility to ship certain of our products while we seek to imp lement
technology offered by alternative sources. While it may be necessary or desirable in the future to obtain other licenses, the re can be no
assurance that they will be able to do so on commercially reasonable terms or at all.

      In the future, the Do mestic Co mpanies and we may receive notices claiming that we are infringing the proprietary rights of th ird parties.
We cannot guarantee that the Domestic Co mpanies and we will not become the subject of infringement claims or legal proceedings by third
parties with respect to the Domestic Co mpanies ’ and our current programs or future software develop ments. Our standard software license
agreements contain an infringement indemn ity clause under which we agree to indemnify and hold harmless our customers and business
partners against liability and damages arising fro m claims of various copyright or other intellectual property in fringement b y our products.

        In addition, the Do mestic Co mpanies and we may init iate claims or lit igation against third parties for infringement of our propriet ary
rights or to establish the validity, scope or enforceability of our proprietary rights. Any such claims could be time consuming, result in costly
lit igation, cause product development or shipment delays or force the Do mestic Co mpanies or us to enter into royalty or licen se agreements
rather than dispute the merits of such claims, thereby impairing our financial performance by requ iring the Do mestic Co mpanies or us to pay
additional royalt ies 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 ext inguish protectio n 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 mean ingfully protect our rights in trade secrets,
technical know how and other non-patented technology. Any failure to enforce or protect the Do mestic Co mpanies ’ and our rig hts could cause
us to lose the ability to exclude others from issuing technology to develop or sell co mpeting products. Neither the Do mestic Co mpanies nor we
have been the subject of an intellectual property claim since our formation. See ―Our Business – Proprietary Rights‖ and ―Chin a’s Intellectual
Property Rights Enforcement System‖.

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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, fro m time to time, discover defects or errors in the Do mestic Co mpanies ’ and our software o nly after
use by a customer. We may also experience delays in shipment of our software during the period required to correct such error s. In addition, we
may, fro m time to time, experience d ifficult ies relat ing to the integration of the Do mestic Co mpanies’ and our software products with other
hardware or software in the customer’s environ ment 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 Do mestic Co mpanies ’ and our software. Since these software products are used
by our customers to perform mission-crit ical functions related to petroleum min ing and extraction, design defects, software errors, misuse of
these products, incorrect data fro m external sources or other potential problems within or out of our control that may arise fro m the use of the
Do mestic Co mpanies’ and our products could result in financial or other damages to our customers. We do not maintain product liab ility
insurance. Although our license agreements with customers contain provisions designed to limit our exposure to potential clai ms as well as any
liab ilit ies arising fro m such claims, such provisions may not effectively protect us against such claims and the liability an d 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. See ―Ou r Business.‖

Our fut ure success depends on our ability to help our customers find, develop and acquire petroleum reserves.
      To remain competit ive 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 explorat ion or acquisition activit ies, our customers ’ reserves, production and revenues
will decline rap idly. If the Do mestic Co mpanies ’ and our technology is less successful and efficient in helping our customers lo cate additional
reserves than our competitors ’ technology, our customers may terminate their relationships with us. See ―Our Business – Our Products‖.

Our customers are companies engaged in the petroleum industry, a nd, consequently, our fi nancial performance is dependent upon the
economic conditions of that industry.
       We have derived substantially all of our revenues to date fro m provid ing integrated automation services to Chinese petroleum companies
at oil fields within China. Our customers ’ success is intrinsically lin ked to economic condit ions in the petroleum industry in general and the
volatility of prices of crude oil and refined products in particular. The petroleu m industry, in turn, is subject to intense competitive pressures
and is affected by overall economic conditions. Demand for our services could be harmed by volatility in the petroleum indust ry. 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 the petroleum industry. See ―Our Business – Market
Backg round.‖

Our revenues 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 b usiness.
      We derive substantially all of our revenues from two customers, (i) CNPC and (ii) Sinopec.

      We provide products services to Sinopec under a series of agreements, each of which is terminable without notice. We first be gan to
provide services to Sinopec in 1998. Sinopec accounted for approximately 40% of our revenues in each of 2007 and 2008, and any termination
of our business relationships with Sinopec would materially harm our operations.

     We provide products services to CNPC under a series of agree ments, each of which is terminable without notice. We first began to
provide services to CNPC in 2000. CNPC accounted for approximately 60% of our revenues in each of 2007 and 2008, and any termination of
our business relationships with CNPC would materially harm our operations.

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       Because we derive such a high percentage of our revenues fro m CNPC and Sinopec, our revenue has been subject to high seasonality. We
recognize revenue when it is realized and earned. We consider revenue realized or realizable and earned when (1) we have persuasive evidence
of an arrangement, (2) delivery has occurred, (3) the sales price is fixed or determinable, and (4) collectability is reasonably assured. Because
these matters depend on reaching agreements with each of CNPC and Sinopec, 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. This seasonality limits our abilit y to make accurate long-term pred ictions about our performance and makes
it difficult to co mpare our revenues across quarters.

Changes in environmental and regulatory factors may harm our business.
      The oil d rilling industry in China to date has not been subject to the type and scope of regulation seen in Europe and the United States.
However, as China continues to adapt Western business and legal practices, the Ch inese government may imp lement new legislation or
regulations or may enfo rce existing laws mo re stringently. Either o f these scenarios may have a significant impact on our customers ’ mining
and extract ion operations and may require us or our customers to significantly change operations or to incur substantial costs. We believe that
the Domestic Co mpanies’ and our operations in China are in co mpliance with China’s applicable legal and regulatory requirements. However,
there can be no assurance that China’s central or local govern ments will not impose new, stricter regulat ions or interpretations of existing
regulations that would require additional expenditures. See ―Ou r Business‖.

Petroleum reserve degradation and depletion may reduce our customers’ and our profitability.
      Our profitability depends substantially on our ability to help our customers exp loit 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 thos e characteristics of
the depleting oil field. The Do mestic Co mpanies ’ 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 Co mpanies ’ and our products in the future.
See ―Our Business‖.

The PRC owns our largest domestic competitor.
     Our largest competitor, Beijing Tianshangxing Measurement & Control Technology Research Institute (China Aerospace and Industry
Corporation) (―CAIC‖) is a state-owned company. The Chinese government’s ownership of CAIC disadvantages our company in a nu mber of
ways:
      First, the Chinese government prevents direct foreign investment in certain industries, such as telecommunication services, o nline
commerce and advertising. Although the PRC removed these restrictions in our indust ry in 2000, there can be no guarantee that the PRC will
not re-nationalize the petroleu m industry in the future. See ―Risk Factors – The Chinese government could change its policies toward private
enterprise or even nationalize or exp ropriate private enterprises, which could result in the total loss of our investment in that country.‖

       Second, because CAIC is state-owned, it may have advantages over our company in dealing with local govern ment officials and leverage
over local co mpanies that we do not have. These relationships may limit our ab ility to co mpete with CAIC. In part icular, the PRC owns all o il
fields in China; as a result, we may be at a disadvantage to CAIC in providing our services to PRC -owned oil fields.

      Third, due to its relationship with the Ch inese government, CAIC may have access to funding that is not available to us. This access may
allo w it to grow its businesses at a rate we are not able to match. If we are unable to expand at a co mparable rate, we may lose market share or
be unable to generate profits. See ―Our Business – Market Background‖.

We are heavily dependent upon the services of experienced personnel who possess skills that are valuable in our industry, a nd we may have
to actively compete for their services.
      Our co mpany is much smaller than our main foreign competitors, including Schlu mberger Limited, Baltur Technologie Per Il Clim a,
Honeywell International, Emerson Process Management and Rockwell Automation, and we co mpete in large part on the basis of the quality of
services we are able to provide our clients. As a result, we are

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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 co mpanies engaged in the integrated automation services industry. Consequently, we expect that we will have to
actively co mpete for these employees. So me of our co mpetitors may be ab le 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 ab le to retain our current personnel, or that we will be able to attract, 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 train ing could be materially impaired. See ―Our Business – Employees.‖

We are substantially dependent upon our key personnel, particularly Yin Shenping, our Chief Executive Officer, Ms. Liu Ji a, our Chief
Financial Officer, Mr. Chen Guangqiang, our C hief Technology Officer, and Mr. Li Honqi, our Chief Marketing Officer.
      Our performance is substantially dependent on the performance of our executive officers and key employees. In particular, the services
of:

      •   Mr. Yin Shenping, Ch ief Executive Officer;
      •   Ms. Liu Jia, Chief Financial Officer;
      •   Mr. Chen Guangqiang, Ch ief Technology Officer; and

      •   Mr. Li Hongqi, Chief Marketing Officer

would be difficult to replace. We do not have in place ―key person‖ life insurance policies on any of our emp loyees. The loss of the services of
any of our executive officers or other key employees could substantially impair our ability to successfully development new s ystems and
develop new programs and enhancements. See ―Our Business – Employees‖ and ―Management.‖

We may not pay dividends.
      We have not previously paid any cash dividends, and we do not anticipate paying any dividends on our ordinary shares. Dividen d 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. Under Cay man law, we may only pay dividends fro m profits or credit fro m the share premiu m acc ount (the
amount paid over par value), and we must be solvent before and after the dividend payment. If we determine to pay dividends on any of our
ordinary shares in the future, as a holding company, we will be dependent on receipt of funds from our operating subsidiary. See ―Dividend
Policy.‖


                                                   Risks Related to Our Corporate Structure

PRC laws and regulations governing our businesses a nd the validity of certain of our contractual arrangements are uncertain. If we are
found to be in violation, we could be subject to sanctions. In addition, changes in such PRC laws and regulations may materially and
adversely affect our business.
      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, or the enforcement and performance of our contractual arrangements with the Do mestic
Co mpanies and their shareholders.

      Recon-CI, Recon-HK and Recon-JN are considered foreign persons or foreign invested enterprises under PRC law. As a result,
Recon-CI, Recon-HK and Recon-JN are subject to PRC law limitations on foreign ownership of do mestic companies. Although the primary
business of the Domestic Co mpanies falls within a category in which foreign investment is currently encouraged, the uncertain ty of PRC
regulations and governmental policies affecting foreign ownership may result in Recon-CI being required to hold (or, conversely, being
prohibited fro m hold ing), d irectly or indirectly, a given percentage of the Do mestic Co mpanies ’ equity interests. Our contractual arrangements
with the Do mestic Co mpanies and their shareholders, which allo w us to substantially control the Do mestic Co mpanies through Recon -JN, are
governed by Chinese law. We cannot assure you, however, that we will be able to enforce these contracts.

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      In addition, Chinese laws and regulations limiting foreign ownership of do mestic companies are relat ively new and may be subject to
change, and their official interpretation and enforcement may involve substantial uncertainty. The effective ness of newly enacted laws,
regulations or amend ments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations th at affect existing
and proposed future businesses may also be applied retroactively.

      The PRC government has broad discretion in dealing with vio lations of laws and regulations, including levying fines, revoking business
and other licenses and requiring actions necessary for compliance. In particular, licenses and permits issued or granted to us by relevant
governmental bodies may be revoked at a later time by higher regulatory bodies. We cannot predict the effect of the interpret ation of existing or
new PRC laws or regulations on our businesses. We cannot assure you that our current ownership and operating s tructure would not be found
in violat ion of any current or future PRC laws or regulat ions. As a result, we may be subject to sanctions, including fines, and could be required
to restructure our operations or cease to provide certain services. Any of these or similar actions could significantly d isrupt our business
operations or restrict us from conducting a substantial portion of our business operations, which could materially and advers ely affect our
business, financial condition and results of operations.

      Although we believe we co mp ly with current PRC regulations, we cannot assure you that the PRC government would agree that the se
operating arrangements comply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements
or policies that may be adopted in the future. If the PRC government determines that we do not comply with applicable law, it could revoke our
business and operating licenses, require us to discontinue or restrict our operations, restrict our right to collect revenues, require us to
restructure our operations, impose additional conditions or requirements with wh ich we may not be able to comp ly, impose restrictions on our
business operations or on our customers, or take other regulatory or enforcement actions against us that could be harmfu l to our business .

Our contractual arrangements with the Domestic Companies and their respective shareholders may not be as effective in providi ng control
over these entities as direct ownership.
       We have no equity ownership interest in the Domestic Co mpanies and rely on contractual arrangements to control and operate su ch
businesses. These contractual arrangements may not be as effective in providing control over the Do mestic Co mpanies as direct ownersh ip. For
example, BHD could fail to take actions required for our business or fail to pay dividends to Recon -JN despite its contractual obligation to do
so. If the Do mestic Co mpanies fail to perfo rm under their agreements with us, we may have to rely on legal remedies under PRC law, which
may not be effect ive. In addit ion, we cannot assure you that any of the Domestic Co mpanies ’ shareholders would always act in our best
interests.

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 -JN and the Do mestic Co mpanies, we are effectively
subject to the 5% PRC business tax on both revenues generated by Recon -JN’s operations in Ch ina and revenues derived from Recon-JN’s
contractual arrangements with the Do mestic Co mpanies. Moreover, we would be subject to adverse ta x consequences if the PRC tax authorities
were to determine that the contracts between Recon-JN and the Domestic Co mpanies 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 taxab le 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-JN, so we cannot predict the effect of such action on our company. Such a pricing adjustment could adversely affect us by:

      •   increasing our tax expenses without reducing tax expenses, which could subject Recon -JN to late pay ment fees and other penalties for
          under-payment of taxes; and/or
      •   resulting in Recon-JN’s loss of preferential tax treat ment.

The principal shareholders of the Domestic Companies have potential conflicts of interest with us, which may adversely affect our business.
      Yin Shenping, our Ch ief Executive Officer, Chen Guangqiang, our Chief Technology Officer, Li Hongqi, our Chief Marketing Officer,
are significant shareholders in our company. They are also the principal shareholders of

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each of the Do mestic Co mpanies and collect ively control the Do mestic Co mpanies. Conflicts of interests between their duties t o our company
and the respective Domestic Co mpanies may arise. For examp le, M r. Yin , Mr. Chen and Mr. Li could cause a Do mestic Co mpany to fail to
take actions required for our business or to fail to pay dividends to Recon -JN despite its contractual obligation to do so if makin g such payment
would harm the Do mestic Co mpany.

      As Mr. Yin, Mr. Chen and Mr. Li are also directors and executive officers of our co mpany, they have duties of loyalty and care to us
under Cay man Islands law when there are any potential conflicts of interests between our company and the Domestic Co mpanies. Each of
Mr. Yin, Mr. Li 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 Co mpanies requiring shareholder approval. We cann ot assure you,
however, that if conflicts of interest arise, they will act co mpletely in our interests or that conflicts of interests will b e resolved in our favor. In
addition, Mr. Yin , Mr. Chen and Mr. Li could v iolate their respective emp loyment agreements with us or his legal duties by diverting business
opportunities fro m us to others. If we cannot resolve any conflicts of interest between us and Mr. Yin, Mr. Chen and Mr. Li, as applicable, we
would have to rely on legal proceedings, which could result in the disruption of our business.

A redemption of shares held by our founders may be insufficient to cause our company to achieve projected earnings and may re duce our
founders’ involvement and stake in our company.
     As described in greater detail in the sections entitled ―Related Party Transactions – Founders’ Shares Subject to Redemption‖ and
―Placement - Market and Pricing Considerations,‖ our founders, Mr. Yin, Mr. Chen and Mr. Li, have agreed to place, on a pro rated basis, that
number of ordinary shares into escrow that is equal to 50% of the number of shares sold in this offering (such escrowed shares, the ―Founders’
Shares‖) pending determination of our audited net after-tax inco me for the year ending June 30, 2010. Our co mpany will redeem these
Founders’ Shares pro rata without further consideration to the extent necessary to cause our earnings per share to be at least $0.7459.

      We cannot guarantee that we will be able to redeem a sufficient nu mber of Founders ’ Shares to increase audited after-tax earnings per
share to $0.7459 if our co mpany either has lo w net inco me or any net losses in 2010. To the extent there are an insufficient number of
Founders’ Shares available for such redemption, our per-share after tax earnings may be less than $0.7459 for 2010.

      As noted above, Mr. Yin, M r. Chen and Mr. Li are integral to our co mpany’s success. Prior to the commencement of this offering, they
collectively own 95% of our issued and outstanding shares. Assuming a maximu m offering, they would collectively hold appro ximately
60.94% o f our shares upon completion of the offering. In the event all of the Founders ’ Shares are redeemed, M r. Yin , Mr. Chen and Mr. Li
would collectively hold appro ximately 51.46% of our shares. See ―Risk Factors - We are substantially dependent upon our key personnel,
particularly Yin Shenping, our Ch ief Executive Officer, Ms. Liu Jia, our Ch ief Financial Officer, M r. Chen Guangqiang, our Chief Technology
Officer, and Mr. Li Honqi, our Chief Marketing Officer.‖


                                                     Risks Related to Doing B usiness in China

Adverse changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic
growth of China, which could reduce the demand for our products and materia lly adversely affect our competitive position.
     We conduct substantially all of our operations and generate most of our revenues in China. Accordingly, our business, financial
condition, results of operations and prospects are affected significantly by econ omic, political and legal develop ments in China. The PRC
economy differs fro m 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 rapid growth rate;

      •   the higher level of control over foreign exchange; and
      •   the allocation 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 govern ment has implemented various measures to encourage economic growth and guide th e
allocation of resources. Some of these measures benefit the overall

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PRC economy, but may also have a negative effect on ou r 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 fro m a planned economy to a more market-oriented economy. The PRC government continues
to exercise significant control over economic growth in Ch ina through the allocation of resources, controlling payment of for eign
currency-denominated obligations, setting monetary policy and imposing policies that impact particu lar industries or companies in different
ways.

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-JN, which is a wholly foreign owned
enterprise in China. Recon-JN is generally subject to laws and regulations applicable to foreign investment in China and, in part icular, laws
applicable to foreign-invested enterprises. The PRC legal system is based on written statutes, and prior court decisions may be cited for
reference but have limited precedential value. Since 1979, a series of new PRC laws and regulations have significantly enhanc ed the
protections afforded to various forms of foreign investments in China. However, since these laws and regulations are relat ively new and the
PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform an d enforcement
of these laws, regulations and rules involve uncertainties, which may limit legal protections available to you and us. In add ition, any lit igation
in China may be protracted and result in substantial costs and diversion of resources and management at tention.

A slowdown in the Chinese economy may slow down our growth and profitability.
      The Chinese economy has grown at an approximately 9 percent rate for mo re than 25 years, making it the fastest growing major economy
in recorded history. In 2006, China ’s economy grew by 10.7%, the fastest pace in 11 years. China’s trade surplus increased by 74% in 2006,
reaching $177.5 b illion. China has stated that it will take steps, such as lowering tariffs on certain imports and raising ta xes on certain exports,
to slow the growth of its trade surplus. Such actions, if taken, could increase imports into Ch ina. Retail sales in China increas ed by 13.7% in
2006, with urban retail sales growing by 14.3% and ru ral retail sales rising by 12.6%.

     We cannot assure you that growth of the Chinese economy will be steady or that any slowdown will not have a negative effect on our
business. Several years ago, the Ch inese economy experienced deflat ion, wh ich may recur in the fo reseeable future. More recen tly, the Ch inese
government announced its intention to use macroeconomic tools and regulations to slow the rate of growth of the Ch inese economy, the resu lts
of which are difficult to predict. The recent global econo mic crisis has affected the Chinese economy, and it is impossible t o predict how much
harm will be done to China’s economy or how long a recovery will take. See ―Our Business – Market Backg round.‖

We do not have business interruption, litigation or natural disaster insurance.
      The insurance industry in Ch ina is still at an early state of development. In part icular PRC insurance companies offer limited business
products. As a result, we do not have any business liability or d isruption insurance coverage for our operations in China. An y business
interruption, litigation or natural disaster may result in our business incurring substantial costs and the diversion of resources.

Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.
      Most of our revenues and expenses are denominated in RMB. Under PRC law, the RMB is currently convertible under the ―current
account,‖ which includes dividends and trade and service-related fo reign exchange transactions, but not under the ―capital account,‖ which
includes foreign direct investment and loans. Currently, Recon-JN may purchase foreign currencies for settlement of current account
transactions, including payments of dividends to us, without the approval of the State Administration of Foreign Exchange, or SAFE, by
comply ing with certain procedural requirements. However, the relevant PRC government authorities may limit or eliminate our ability to
purchase foreign currencies in the future. Since a significant amount of our future revenues will be deno minated in RM B, any existing and
future restrictions on currency exchange may limit our ability to utilize revenues generated in RMB to fund our business activities outside
China that are denominated in foreign currencies.

      Foreign exchange transactions by Recon-JN under the capital account continue to be subject to significant foreign exchange controls and
require the approval of or need to register with PRC government authorities,

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including SAFE. In part icular, if Recon-JN borrows foreign currency through loans fro m us or other foreign lenders, these loans must be
registered with SAFE, and if we finance Recon-JN by means of additional capital contributions, these capital contributio ns must be approved
by certain government authorities, including the Nat ional Develop ment and Reform Co mmission, or the NDRC, the Ministry of Co m merce, or
MOFCOM , or their respective local counterparts. These limitations could affect Recon -JN’s ability to obtain foreign exchange through debt or
equity financing.

Recent 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-JN and
Recon-HK, limit Recon-JN’s and Recon-HK’s ability to distribute profits to us or otherwise materially adversely affect us.
       In October 2005, SAFE issued a public notice, the Notice on Relevant Issues in the Foreign Exchange Control over Financing and Return
Investment Through Special Purpose Co mpanies by Residents Inside China, or the SAFE notice, wh ich requires PRC residents, inc luding both
legal persons and natural persons, to register with the competent local SAFE branch before establishing or controlling any co mpany 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 reg istration with the local SAFE branch with respect to that offshore special purpose company in connection with any inc rease or
decrease of capital, transfer of shares, merger, div ision, equity investment or creation of any security interest over any as sets located in China.
Moreover, if the offshore special purpose company was established and owned the onshore assets or equ ity interests before the implementation
date of the SAFE notice, 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 regist ration and amend ment, the PRC subsidiaries of that offshore
special purpose company (Recon-JN and Recon-HK fo r our co mpany) may be prohibited fro m d istributing their profits and the proceeds fro m
any reduction in capital, share transfer or liquidation to the offshore special purpose company. Moreover, failure to co mply wit h the SAFE
registration and amend ment requirements described above could result in liability under PRC laws for evasion of applicab le fo reign exchange
restrictions.

      Due to lack of official interpretation, some of the terms and provisions in the SAFE notice remain unclear and imp lementation 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-JN’s,
Recon-HK’s and any prospective PRC subsidiaries ’ ability to conduct foreign exchange activities, such as the remittance of div idends and
foreign currency-denominated borrowings, may be subject to compliance with the SAFE notice by our co mpany ’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 resid ent 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.

The Chinese government could change its policies toward private enterprise or even nationalize or expropriate private enterpr ises, which
could result in the total loss of our investment in that country.
      Our business is subject to significant polit ical and economic uncertainties and may be adversely affected by political, econo mic and social
developments in China. Over the past several years, the Chinese government has pursued economic reform policies including t he
encouragement of private economic activity and greater economic decentralization. The Ch inese government may not continue to pursue these
policies or may significantly alter them to our detriment fro m t ime to time with litt le, if any, prio r 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 stockho lders, devaluations of currency or the nationalization or other
expropriat ion of private enterprises could have a material adverse effect on our business. Nationalization or expropriation c ould even result in
the total loss of our investment in China and in the total loss of your investment in us.

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We face risks related to health epidemics and other outbreaks.
      Adverse public health epidemics or pandemics could disrupt business and t he economies of the PRC and other countries where we do
business. Fro m December 2002 to June 2003, China and other countries experienced an outbreak of a h ighly contagious form o f a typical
pneumonia now known as severe acute respiratory syndrome, or SA RS. On July 5, 2003, the World Health Organization declared that the
SARS outbreak had been contained. However, a nu mber of isolated new cases of SARS were subsequently reported, most recently in central
China in April 2004. During May and June of 2003, many b usinesses in China were closed by the PRC government to prevent transmission of
SARS. Moreover, so me Asian countries, including Ch ina, have recently encountered incidents of the H5N1 strain of av ian influ e nza. We are
unable to predict the effect, if any, that avian influenza may have on our business. In particular, any future outbreak of SARS, avian influenza
or other similar adverse public developments may, among other things, significantly disrupt our business and force us to temp orarily close our
offices. Furthermo re, an outbreak may severely restrict the level of economic activ ity in affected areas, wh ich may in turn materially adversely
affect our financial condition and results of operations. We have not adopted any written preventive measures or contingency plans to combat
any future outbreak of av ian influenza, SA RS o r any other epidemic.

Shareholder rights under Cayman Islands law may differ materially from shareholder rights in the United States, which could a dversely
affect the ability of us and our shareholders to protect our and their interests.
       Our corporate affairs are governed by our amended and restated memorandu m and articles of association, by the Companies Law ( 2004
Revision) and the common law of the Cay man Islands. The rights of shareholders to take action against the directors, actions by minority
shareholders, and the fiduciary responsibilities of our d irectors to us under Cay man Islands law are to a large extent govern ed by the common
law of the Cay man Islands. The common law in the Cay man Islands is derived in part fro m co mparat ively l imited judicial precedent in the
Cay man Islands as well as fro m Eng lish common law, the decisions of whose courts are of persuasive authority but are not bind ing on a court
in the Cay man Islands. The rights of our shareholders and the fiduciary responsibil ities of our directors under Cay man Islands law in this area
may not be as clearly established as they would be under statutes or judicial p recedent in existence in some jurisdictions in the United States. In
particular, the Cay man Islands has a less developed body of securities laws as compared to the United States, and some states, such as
Delaware, have more fu lly developed and judicially interpreted bodies of corporate laws. Moreover, our co mpany could be involved in a
corporate combination in which d is senting shareholders would have no rights comparable to appraisal rights which would otherwise ordinarily
be available to dissenting shareholders of United States corporations. Also, our Cay man Islands counsel is not aware of a sig nificant number of
reported class actions or derivative actions having been brought in Cay man Islands courts. Such actions are ordinarily available in respect of
United States corporations in U.S. courts. Finally, Cay man 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 pro tecting their interests
in actions against the management, d irectors or our controlling shareholders than wou ld 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. See ―Description of Share Capital – Differences in Corporate Law.‖

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 Cay man Islands exempt co mpany, and our corporate affairs are governed by our Memorandu m and Articles of Association and
by the Cayman Islands Companies Law (2004 Revision) and other applicab le Cay man Islands laws. Certain o f our directors and of ficers reside
outside of the United States. In addition, the Co mpany’s assets will be located outside the United States. As a result, it may be d ifficu lt or
impossible to effect service of process within the Un ited States upon our directors or officers and o ur subsidiaries, or enforce ag ainst any of
them court judg ments obtained in United States ’ courts, including judgments relating to Un ited States federal securities laws. In addition, there
is uncertainty as to whether the courts of the Cay man Islands and o f other offshore jurisdictions would recognize or enforce judgments of
United States’ courts obtained against us predicated upon the

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civil liab ility provisions of the securities laws of the United States or any state thereof, or be co mpetent to hear original actions brought in the
Cay man Islands or other offshore jurisdictions predicated upon the securities laws of the United States or any state thereof. Furt hermo re,
because the majority of our assets are located in China, it would also be extremely d ifficu lt to access those assets to satisfy an award en tered
against us in United States court. See ―Enforceability of Civ il Liab ilit ies.‖


                                                         Risks Associated with this Offering

There may not be an active, liquid trading market for our ordinary shares.
      Prior to this offering, there has been no public market for our ord inary shares. An active trading market for our ord inary sh ares may not
develop or be sustained following this offering. You may not be able to sell your shares at the market price, if at all, if trad ing in our ordinary
shares is not active. The initial public offering price was determined by negotiations between us and the placement agent bas ed upon a number
of factors. The in itial public offering price may not be indicat ive of prices that will prevail in the trading market.

Investors risk loss of use of funds subscribed, with no right of return, during the offering period.
      We cannot assure you that all or any shares will be sold. Anderson & Strudwick, our placement agent, is offering our shares on a ―best
efforts, minimu m/ maximu m basis.‖ We have no firm co mmit ment fro m anyone, including our affiliates, to purchase all or any of the shares
offered. If subscriptions for a min imu m o f 1,166,667 shares are not received on or before October 1, 2009, escrow p rovisions require that all
funds received be promptly refunded. If refunded, investors will receive no interest on their funds . During the offering period, investors will not
have any use or right to return of the funds. Our directors, to the extent they are U.S. citizens and residents, may, but hav e made no
commit ment, nor indicated they intend to, purchase shares in the offerin g. We have not placed a limit on the number of shares such directors
may purchase in this offering. Any purchases by such directors will be made for investment purposes only and not for resale, b ut may be made
in order to reach the minimu m offering amount.

The market price for our ordinary shares may be volatile, which could result in substantial losses to investors.
      The market p rice for our o rdinary shares is likely to be volatile and subject to wide fluctuations in response to factors inc luding 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 co mmit ments;
      •   additions or departures of key personnel; or
      •   potential lit igation.

     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 particu lar co mpanies. As a result, to the extent shareholders sell our ordinary shares in negative market fluctuation,
they may not receive a price per share that is based solely upon our business performance. We cannot guarantee that sharehold ers will not lose
some of their entire investment in our ord inary shares.

If our financial condition deteriorates, we may be delisted by the NASDA Q Capital Market and our shareholders could find it difficult to
sell our shares.
       Upon complet ion of this offering, we expect our ord inary shares to trade on the NASDAQ Capital Market. We have not yet been
informed that our ordinary shares will trade on the NASDAQ Capital Market and can provide no assurance that our NASDAQ Capital Market
listing applicat ion will be approved. In order to qualify for init ial listing on the NASDAQ Capital Market upon the complet io n of this offering,
we must meet the following criteria:

      •   (i) We must have been in operation for at least two years, must have shareholder equity of at least $5,000,000 and must have a market
          value for our publicly held securities of at least $15,000,000; OR (ii) we must have shareholder equity of at least $4,000,000, must
          have a market value for our publicly held securities of at least $15,000,000 and must have a market value of our listed securities of at
          least

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          $50,000,000; OR (iii) we must have net income fro m continuing operations in our last fiscal year (or two of the last three fiscal years)
          of at least $750,000, must have shareholder equity of at least $4,000,000 and must have a market value for our publicly held securities
          of at least $5,000,000; and

      •   The market value of our shares held by non-affiliates must be at least $1,000,000;
      •   The market value of our shares must be at least $5,000,000;
      •   The min imu m b id price for our shares must be at least $4.00 per share;

      •   We must have at least 300 round-lot shareholders;
      •   We must have at least 3 market makers; and
      •   We must have adopted NASDAQ-mandated corporate governance measures, including a Board of Directors co mprised of a majority
          of independent directors, an Audit Co mmittee co mprised solely of independent directors and the adoption of a code of ethics among
          other items.

      The NASDA Q Capital Market also requires co mpanies to fulfill specific requirements in order for their shares to continue to b e listed. In
order to qualify for continued listing on the NASDAQ Capital Market, we must meet the following criteria:

      •   (i) Our shareholders’ equity must be at least $2,500,000; OR (ii) the market value of our listed securities must be at least $35,000,000;
          OR (iii) our net income fro m continuing operations in our last fiscal year (or t wo of the last three fiscal yea rs) must have been at least
          $500,000;
      •   The market value of our shares held by non-affiliates must be at least $500,000;
      •   The market value of our shares must be at least $1,000,000;

      •   The min imu m b id price for our shares must be at least $1.00 per share;
      •   We must have at least 300 shareholders;
      •   We must have at least 2 market makers; and

      •   We must have adopted NASDAQ-mandated corporate governance measures, including a Board of Directors co mprised of a majority
          of independent directors, an Audit Co mmittee co mprised solely of independent directors and the adoption of a code of ethics among
          other items.

     Although we believe that our ordinary shares will trade on the NASDAQ Cap ital Market upon closing of this offering, investors should
be aware that they will be required to commit their investment funds prior to the approval or disapproval of our l isting application by the
NASDA Q Capital Market. We will not close this offering unless our listing application is approved. If our shares are delisted from the
NASDA Q Capital Market at some later date, our shareholders could find it d ifficu lt to sell our shares.

      In addition, we have relied on an exempt ion to the blue sky registration requirements afforded to ―covered securities‖. Securities listed on
the NASDAQ Cap ital Market are ―covered securities.‖ If we were unable to meet the NASDAQ Capital Market’s listing standards, then we
would be unable to relay on the covered securities exempt ion to blue sky registration requirements and we wou ld need to regis ter the offering
in each state in which we planned to sell shares. Consequently, we will not comp lete this offering unless we meet the NASDA Q Capital
Market’s listing requirements.

       In addition, if our o rdinary shares are delisted fro m the NASDA Q Capital Market at some later date, we may apply to have our ordinary
shares quoted on the Bulletin Board maintained by NASDA Q or in the ―pink sheets‖ maintained by the National Quotation Bureau, Inc. The
Bulletin Board and the ―pink sheets‖ are generally considered to be less efficient markets than the NASDAQ Capital Market. In addition, if our
ordinary shares are delisted at some later date, our ord inary shares may be subject to the ―penny stock‖ regulations. These rules impose
additional sales practice requirements on broker-dealers that sell lo w-priced securities to persons other than established customers and
institutional accredited investors and require the delivery of a disclosure schedule explaining the nature and risks of the penny stock market. As
a result, the ability or willingness of broker-dealers to sell or make a market in our ordinary shares might decline. If our ordinary shares are
delisted fro m the NASDAQ Capital Market at so me later date or were to become su bject to the penny stock regulations, it is likely that the
price of our shares would decline and that our shareholders would find it difficult to sell their shares.

We will incur increased costs as a result of being a public company.
      As a public co mpany, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In
addition, the Sarbanes-Oxley Act, as well as new rules subsequently implemented by the SEC and NASDA Q, have required changes in
corporate governance practices of public companies. We expect these new
17
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rules and regulations to significantly increase our legal, accounting and financial co mp liance costs and to make certain corp orat e activities
more time -consuming and costly. In addition, we will incur addit ional costs associated with our public co mpany rep orting requirements.

Our classified board structure may prevent a change in o ur control.
      Our board of d irectors is divided into three classes of directors. The current terms of the directors expire in 2009, 2010 an d 2011.
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 cha nge in control, even
though a tender offer or change in control might be in the best interest of our shareholders. See ―Management – Board of Direct ors and Board
Co mmittees.‖

Future sales of our ordinary shares may depress our share price.
       The market p rice o f our ordinary shares could decline as a result of sales of substantial amounts of our ordinary shares in t he public
market, or the perception that these sales could occur. In addition, these factors could make it mo re difficult for us to raise funds through future
offerings of ordinary shares. There will be an aggregate of 2,792,000 ord inary shares outstanding before the consummation of t his offering and
4,492,000 ordinary shares outstanding immediately after this offering, if the maximu m offering is raised. All o f the ordinary shares sold in the
offering will be freely transferable without restriction or fu rther registration under the Securit ies Act, except for any sha res purchased by our
―affiliates,‖ as defined in Rule 144 of the Securities Act. The remaining ordinary shares will be ―restricted securities‖ as defined in Rule 144.
These shares may be sold in the future without registration under the Securities Act to the extent permitted by Rule 144 or o ther exemptions
under the Securities Act. See ―Shares Elig ible for Future Sale.‖

You will experience immediate and substantial dilution.
      The init ial public offering price of our ord inary shares is expected to be substantially higher than the pro forma net tangib le book value
per share of our ordinary shares. Therefore, assuming the co mpletion of the maximu m o ffering, if you purchase ordinary shares in this offering,
you will incur immediate dilution of appro ximately $[               ] or appro ximately [     ]% in the pro fo rma net tangible book value per
ordinary share fro m the price per share that you pay for the ordinary shares. Assuming the complet ion of the minimu m offering , if you
purchase ordinary shares in this offering, you will incur immed iate dilution of appro ximately $[               ] or appro ximately [    ]% in the pro
forma net tangible book value per ordinary share fro m the price per share that you pay for the ordinary shares. Accordingly, if you purchase
ordinary shares in this offering, you will incur immediate and su bstantial dilution of your investment. See ―Dilution.‖

We have not determined a specific use for a significant portion of the proceeds from this offering, and we may use the procee ds in ways
with which you may not agree.
     Our management will have considerable discretion in the application of the net proceeds received by us. You will not have the
opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. You must rely on the judgment of
our management regarding the applicat ion of the net proceeds of this offering. The net proceeds may be used for corporate purposes that do not
improve our efforts to achieve profitability or increase our share price. The net proceeds fro m this offering may be p laced in investments that
do not produce income or that lose value. See ―Use of Proceeds.‖

Our directors and officers will control a majority of our ordinary shares, decreasing your i nfluence on shareholder decisions .
     Assuming the sale of the maximu m offering, our o fficers and directors will, in the aggregate, beneficially own appro ximately 60.94% of
our outstanding shares. Assuming the sale of the minimu m offering, our officers and directors will, in the aggregate, benefic ially own
approximately 69.45% of our outstanding ordinary shares. As a result, our officers and directors will possess substantial ability to impact our
management and affairs and the outcome of matters submitted to shareholders for approval. These shareholders, acting individu ally or as a
group, could exert control and substantial influence over matters such as electing directors and approving mergers or other business
combination transactions. This concentration of ownership and voting power may also discourage, delay or

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prevent a change in control of our co mpany, wh ich could deprive our shareholders of an opportunity to receive a premiu m fo r t heir shares as
part of a sale of our co mpany and might reduce the price of our ordinary shares. These actions may be taken even if they are opposed by our
other shareholders, including those who purchase shares in this offering. See ―Principal Shareholders.‖

We will have an ongoing relationship with our placement agent that may impact our ability to obtain additional capital.
       In connection with this offering, we have sold our placement agent warrants to purchase up to 170,000 shares (assuming the ma ximu m
offering) for a no minal amount. These warrants are exercisable fo r a period of five years fro m the date of issuance at a price equal to 120% of
the price of the ordinary shares in this offering. Du ring the term o f the warrants, the holders thereof will be given the opp ortunity to profit fro m
a rise in the market price of our ord inary shares, with a resulting dilution in the interest of our other shareholders. The t erm on which we could
obtain additional capital during the life of these warrants may be adversely affected because the ho lders of these warrants might be expected to
exercise them when we are able to obtain any needed additional capital in a new offering of securit ies at a price greater tha n the exercise price
of the warrants. See ―Placement.‖

We will have an ongoing relationship with our placement agent that may impact our shareholders’ ability to impact decisions related to our
operations.
      In connection with this offering, we have agreed to allow our placement agent to designate two non -voting observers to our Bo ard of
Directors until the earlier of the date that:

      •   the investors that purchase shares in this offering beneficially own less than 10% of our outstanding shares; or
      •   the trading price per share is at least four (4) times the price of the ordinary shares in this offering for any consecutive 15 trad ing day
          period.

     Although our placement agent’s observers will not be able to vote, they may nevertheless influence the outcome of matters submitted to
the Board of Directors for approval by virtue of their presence at Board meet ings and availability to provide advice regarding matters before the
Board of Directors. We have agreed to reimburse the observers for their expenses for attending our Board meetings, subject to a maximu m
reimbursement of $6,000 per meet ing and $12,000 annually per observer. As of the date of this prospectus, Mr. L. McCarthy Downs, III and
Mr. Zhu Ming are serving as our placement agent’s observers to our Board of Directors. See ―Management – Board of Directors Observers.‖

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                                                    FORWARD-LOOKING STATEMENTS

       We have made statements in this prospectus, including under ―Prospectus Summary,‖ ―Risk Factors,‖ ―Management’s Discussion and
Analysis of Financial Condition and Results of Operations,‖ ―Our Business‖ and elsewhere that constitute forward-looking statements.
Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future
events. In some cases, you can identify forward-looking statements by terminology such as ―anticipate,‖ ―estimate,‖ ―plan,‖ ―project,‖
―continuing,‖ ―ongoing,‖ ―expect,‖ ―we believe,‖ ―we intend,‖ ―may,‖ ―will,‖ ―should,‖ ―could‖ and similar expressions. These statements
involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to d iffer materially
fro m any future results, performances or achievements exp ressed or imp lied by the forward-looking statements.

      Examples of forward-looking statements include:

      •   projections of revenue, earnings, capital structure and other financial items;
      •   statements of our plans and objectives;
      •   statements regarding the capabilities and capacities of our business operations;

      •   statements of expected future economic performance; and
      •   assumptions underlying statements regarding us or our business.

      The ultimate correctness of these forward-looking statements depends upon a number of known and unknown risks and events. We
discuss many of these risks under the heading ―Risk Factors‖ above. Many factors could cause our actual results to differ materially fro m those
expressed or imp lied in our forward-looking statements. Consequently, you should not place undue reliance on these forward -looking
statements.

      The forward-looking statements speak only as of the date on which they are made, and, except as required by law, we undertake no
obligation to update any forward-looking statement to reflect events or circu mstances after the date on which the statement is made or to reflect
the occurrence of unanticipated events.

     In addition, we cannot assess the impact of each factor on our business or the extent to wh ich any factor, or co mb ination of fact ors, may
cause actual results to differ materially fro m those contained in any forward -looking statements.

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                                                     OUR CORPORATE S TRUCTUR E

Corporate History
      On August 21, 2007 our co mpany was incorporated as an exempted company in the Cay man Islands by our founders, Yin Shenping, Li
Hongqi and Chen Guangqiang. On September 6, 2007, we established our wholly owned subsidiary, Recon -HK in Hong Kong. Other than
Recon-CI’s equity interest in Recon-HK, Recon-CI does not own any assets or conduct any operations. On November 15, 2007, Recon-HK
established one wholly owned subsidiary, Recon-JN, in Jining, Shandong Province of PRC. Other than Recon -JN, Recon-HK d oes not own any
assets or conduct any operations. Recon-JN was formed to operate BHD, Nanjing Recon and ENI by contract.

      Our relationships with the Do mestic Co mpanies and their shareholders are governed by a series of contractual arrangements between the
Do mestic Co mpanies, Recon-HK and Recon-JN dated January 1, 2008. We are able to substantially control the Do mestic Co mpanies through
these contractual arrangements. In addition, we and the Domestic Co mpanies are under co mmon control, by virtue of the ownersh ip of mo re
than 60% of our co mpany and each of the Domestic Co mpanies by three shareholders (Mr. Yin Shenping, Mr. Li Hongqi and Mr. Chen
Guangqiang). Accordingly, we have consolidated the Domestic Co mpanies ’ historical financial results in our financial statements as a variable
interest entity pursuant to U.S. GAAP fo llowing the date of the agreements and combined such results prior to the date of the agreements.

      In the opinion of Jingtian & Gongcheng, our PRC legal counsel, (1) our inner-PRC shareholding structure complies with, and
immed iately after this offering, will co mply with, current PRC laws and regulations; (2) the contractual arrangements between the Recon-JN
and (a) Recon-HK, (b) the Do mestic Co mpanies, and (c) the Do mestic Co mpanies’ shareholders are valid and binding on all parties to these
arrangements and do not violate relevant PRC laws or regulations; and (3) the business operations of Recon-JN and the Domestic Co mpanies
comply with current PRC laws and regulations.

                                                                      21
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Corporate Ownershi p Structure
      The following diagram illustrates our current corporate structure and the place of format ion as of the date of this prospectus.




                                                                        22
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Contractual Arrangements wi th Domestic Companies and their Sharehol ders
      Our relationships with the Do mestic Co mpanies and their shareholders are governed by a series of contractual arrangements. Th e term of
each agreement is 25 years, and our company (or Recon-JN to the extent we are not a party to the agreement in question) is able to renew each
agreement unilaterally fo r one or more additional terms, provided such renewal is permitted under applicable law at the time.

     Equity Interest Pledge Agreement. Recon-JN and the shareholders of each of the Do mestic Co mpanies have entered into Equity Interest
Pledge Agreements, pursuant to which each shareholder pledges all of h is shares of the Do mestic Co mpany to Recon -JN in order to guarantee
cash-flow pay ments under the applicable Exclusive Technical Consulting Service Agreement.

       Exclusive Equity Interest Purchase Agreement. Each of the shareholders of each of the Do mestic Co mpanies has entered into an
Exclusive Equity Interest Purchase Agreement, wh ich provides that Recon -HK will be entit led to acquire the Do mestic Co mpany’s shares from
its current shareholders upon certain terms and conditions, if such a purchase is or becomes allowable under PRC laws and regulations. If the
shares are acquired under the Exclusive Equity Interest Purchase Agreement, the purchase price will be determined at the time of exercise by
negotiation but will be the lowest price permitted at such time under Ch inese law. Recon-HK has not yet taken any corporate action to exercise
this right of purchase, and there is no guarantee that it will do so or will be permitted to do so by applicable law at such time as it may wish to
do so.

      Exclusive Technical Consulting Service Agreement. Each of the Do mestic Co mpanies and Recon-JN has entered into an Exclusive
Technical Consulting Service Agreement, which provides that Recon -JN will be the exclusive provider of technology services to the Domestic
Co mpany and that the Domestic Co mpany will pay 90% of net profits to Recon -JN for such services. Payments will be made o n a quarterly
basis, with any over- or underpayment to be reconciled once each Do mestic Co mpany ’s annual net profits are determined at its fiscal year end.
Any such payment fro m Recon-JN to Recon-CI would need to comply with applicable Chinese laws affecting payments fro m Chinese
companies to non-Chinese companies. See ―Risk Factors – Restrict ions on currency exchange may limit our ability to receive and use our
revenues effectively‖ and ―Our Business – Regulations on Foreign Exchange.‖

      Powers of Attorney. Each of Mr. Yin, Mr. Li and Mr. Chen has executed an irrevocable power of attorney to authorize Recon -JN to
exercise any and all shareholder rights associated with his ownership in each of the Do mestic Co mpanies, including the right to attend
shareholders’ meetings, the right to execute shareholders ’ resolutions, the right to sell, assign, transfer or pledge any or all of the equity interest
in each Do mestic Co mpany, and the right to vote such equity interest for any and all matters.

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                                                              US E OF PROCEEDS

      After deducting the estimated placement discount, accountable expenses payable to the placement agent and offering expenses paya ble by
us, we expect to receive net proceeds of approximately $ [      ] fro m this offering if the minimu m offering is sold and $ [   ] if the
maximu m o ffering is sold.

      We intend to use the net proceeds of this offering as follows, and we have ordered the specific uses of proceeds in order of prio rity. We
do not expect that our priorit ies for fund allocation would chang e if the amount we raise in this offering exceeds the size of the minimu m
offering but is less than the maximu m offering. To the extent we raise an amount between the maximu m o ffering and the minimu m offering,
we expect to utilize our offering proceeds in order of such priority. Although we have tentatively allocated certain funds to the possible
acquisition of comp limentary businesses, as of the date of this prospectus, we do not have any agreements, arrangements or un derstandings
with potential acquisition targets.

Description of Use                                                                                                     Percentage of Net Proceeds
Product research and development                                                                                                                      %
                                                                                                                                               15.0
Acquisition and business development in oil-field industry in China and globally.                                                              48.0
Sarbanes-Oxley comp liance                                                                                                                      5.0
Fixed asset purchases                                                                                                                           5.0
Emp loyee train ing                                                                                                                             2.0
General working capital                                                                                                                        25.0
Totals                                                                                                                                                %
                                                                                                                                              100.0

      Pending use of the net proceeds, we intend to invest our net proceeds in short -term, interest bearing, investment-grade obligatio ns. These
investments may have a material adverse effect on the U.S. federal inco me tax consequences of an investment in our ordinary shares. It is
possible that we may become a passive foreign investment company for U.S. federal inco me taxpayers, which could result in neg ative tax
consequences to you. These consequences are described in more detail in ―Taxation.‖

      While the net proceeds are so invested, they will be subject to the terms of an escrow agreement among our co mpany, the placement
agent and SunTrust Bank, Richmond, Virgin ia, which will serve as an escrow agent to ensure that the net proceeds are used as set forth in this
section. Virg inia law governs the escrow agreement. We will draw down the net proceeds from our account with the escrow agent to apply to
the purposes set forth above by providing a request for capital, along with a description of the purpose to which the requested funds will be put.
To the extent we are ab le to accomp lish our goals described above for less than the amount allocated, we may re -allocate such excess funds to
general working capital.

                                                                        24
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                                                               DIVIDEND POLICY

      We have never declared or paid any cash dividends on our ordinary shares. We anticipate that we will retain any earnings to s upport
operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in t he 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, includ ing future earnings, capital requirements, financial condit ions and future prospects and other factors the Board of
Directors may deem relevant.

      Because we are a holding co mpany 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 d ebt that we may incur is dependent upon dividends and other distributions paid. In
addition, Ch inese legal restrict ions permit payment of d ividends to us by our Chinese subsidiary only out of its accumu lated net profit, if any,
determined in accordance with Ch inese accounting standards and regulations. Under Ch inese law, our subsidiary is required to set aside a
portion (at least 10%) of its after-tax net income (after discharging all cu mulated loss), if any, each year for co mpulsory 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 ―Management’s Discussion and Analysis of Financial Condition and Results of Operations —Hold ing Co mpany Structure.‖

       Payments of dividends by our subsidiary in Ch ina to our co mpany are also subject to restrictions including primarily the rest rict ion that
foreign invested enterprises may only buy, sell and/or remit foreign currencies at those banks autho rized to conduct foreign exchange business
after providing valid co mmercial docu ments. There are no such similar foreign exchange restrictions in the Cay man Islands.

                                                                          25
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                                                               CAPITALIZATION

      The following table sets forth our capitalizat ion as of December 31, 2008 on a pro forma as adjusted basis giving effect to t he conversion
of redeemable ord inary shares and the sale of the minimu m offering and maximu m offering at an assumed public offering price of $ 6.00 per
share and to reflect the applicat ion of the proceeds after deducting the estimated placement d iscounts, accountable expenses payable to our
placement agent and our estimated offering expenses.

      You should read this table in conjunction with our financial statements and related notes appearing elsewhere in this prospec tus and ―Use
of Proceeds‖ and ―Description of Ord inary Shares.‖

                                               Mi ni mum Offering ( 1,166,667 Ordinary Shares)
                                                             December 31, 2008
                                                                U.S. Dollars
                                                                (unaudi ted)

                                                                    As Reported   (1)
                                                                                          Pro Forma Adjusted   (2)
                                                                                                                          Pro Forma Adjusted for IPO (3)
Redeemable shares
    Shares                                                                  2,632                         —                                         —
    Amount                                                         $      207,466         $               —           $                             —
                                                                                                                                                    —
Sharehol ders’ equity
    Ordinary shares                                                        50,000                      52,632                                3,958,667
    Amount                                                         $          557         $               583         $                          5,802
    Additional paid-in capital                                     $    1,323,415         $         1,530,855         $                        [       ]
    Statutory reserves                                             $      247,383         $           247,383         $                        247,383
    Retained earnings                                              $    2,756,582         $         2,756,582         $                      2,756,582
Total sharehol ders’ equity                                        $    4,327,937         $         4,535,403         $                        [       ]
           Total capi talization                                   $    4,535,403         $         4,535,403         $                        [           ]

(1)
      As reported;
(2)
      On a pro fo rma as adjusted basis giving effect to the automatic conversion of all of our 2,632 outs tanding redeemable ord inary shares
      into 2,632 non-redeemable ordinary shares immed iately prior to the closing of this offering;
(3)
      On a pro fo rma as adjusted basis giving effect to the automatic conversion of all of our 2,632 outstanding redeemable ord in ary shares
      into 2,632 non-redeemable ordinary shares immed iately prior to the closing of this offering, the forward split of 53.04758-for-1 of our
      ordinary shares to be effected prior to the co mpletion of this offering, and the sale of the min imu m offering of 1,166,667 shares, at an
      assumed public offering price of $6.00 per share and to reflect the application of the proceeds after deducting the estimated placement
      discounts, accountable expenses payable to our placement agent and our estimated offering expenses.

                                                                         26
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                                              Maxi mum Offering ( 1,700,000 Ordinary Shares)
                                                           December 31, 2008
                                                              U.S. Dollars
                                                              (unaudi ted)

                                                                                               Pro Forma Adju
                                                                         As Reported   (1)
                                                                                                    sted (2 )              Pro Forma Adjusted for IPO (3)
Redeemable shares
    Shares                                                                      2,632                     —                                           —
    Amount                                                              $     207,466          $          —            $                              —
                                                                                                                                                      —
Sharehol ders’ equity
    Ordinary shares                                                             50,000                 52,632                                 4,492,000
    Amount                                                              $          557         $          583          $                           6,584
    Additional paid-in capital                                          $    1,323,415         $    1,530,855          $                         [     ]
    Statutory reserves                                                  $      247,383         $      247,383          $                        247,383
    Retained earnings                                                   $    2,756,582         $    2,756,582          $                      2,756,582
Total sharehol ders’ equity                                             $    4,327,937         $    4,535,403          $                         [     ]
           Total capi talization                                        $    4,535,403         $    4,535,403          $                          [         ]

(1)
      As reported;
(2)
      On a pro fo rma as adjusted basis giving effect to the automatic conversion of all of our 2,632 outstanding redeemable ord inar y shares
      into 2,632 non-redeemable ordinary shares immed iately prior to the closing of this offering;
(3)
      On a pro fo rma as adjusted basis giving effect to the automatic conversion of all of our 2,632 outstanding redeemable ord inary shares
      into 2,632 non-redeemable ordinary shares immed iately prior to the closing of this offering, the forward split of 53.04758-for-1 of our
      ordinary shares to be effected prior to the co mpletion of this offering, and the sale of the maximu m offering of 1,700,000 shares, at an
      assumed public offering price of $6.00 per share and to reflect the application of the proceeds after deducting the estimated placement
      discounts, accountable expenses payable to our placement agent and our estimated offering expenses.

                                                                        27
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                                                       EXCHANGE RATE INFORMATION

      Our business is primarily conducted in China and all of our revenues are denominated in RM B. However, periodic reports made t o
shareholders will include current period amounts translated into U.S. dollars using the then current exchange rates, for the convenience of the
readers. The conversion of RMB into U.S. dollars in this prospectus is based on the noon buying rate in The City of New Yo rk for cable
transfers of RMB as certified for customs purposes by the Federal Reserve Ban k of New Yo rk. Unless otherwise stated, the translations of
RM B into U.S. dollars have been made at the rate of exchange of $1.00 to RMB6.8225, the approximate exchange rate prevailing on December
31, 2008. We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RM B,
as the case may be, at any particular rate, or at all. The PRC government imposes control over its foreign currency reserves in part through
direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade. The Co mpany does not currently
engage in currency hedging transactions.

         The following table sets forth informat ion concerning exchange rates between the RMB and the U.S . dollar for the periods indicated.

                                                                                                                    Noon Buying Rate
Period                                                                                               Period-End    Average (1)    Low       High
                                                                                                                  (RMB per U.S. Dollar)
2004                                                                                                    8.2765      8.2768       8.2764    8.2774
2005                                                                                                    8.0702      8.1940       8.0702    8.2765
2006                                                                                                    7.8041      7.9723       7.8041    8.0702
2007                                                                                                    7.2946      7.6072       7.2946    7.8127
2008                                                                                                    6.8225      6.9477       6.7800    7.2946
2009 (through March 6, 2009)                                                                            6.8395      6.8380       6.8225    6.8470
     January                                                                                            6.8392      6.8360       6.8225    6.8403
     February                                                                                           6.8395      6.8363       6.8241    6.8470
     March (through March 6, 2009)                                                                      6.8395      6.8417       6.8395    6.8438

(1)
         Averages are calculated using the daily rates during the relevant period.

                                                                         28
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                                                                      DILUTION

       If you invest in our ordinary shares, your interest will be diluted to the extent of the difference between the init ial public offering price per
ordinary share and the pro forma net tangible book value per ord inary share after the offering. Dilution results fro m the fact that the per
ordinary share offering price is substantially in excess of the book value per ordinary share attributable to the existing sh areholders for our
presently outstanding ordinary shares. Our net tangible book value attributable to ordinary shareholders at December 31, 2008 was
$[           ] or $[           ] per ord inary share. Net tangible book value per ord inary share as of December 31, 2008 represents the amount of
total tangible assets less total liabilit ies and minority interest, divided by the number of ord inary shares outstanding. The number of ord inary
shares used to calculate net tangible book value per o rdinary share assumes that (1) auto matic conversion of our outstanding redeemable shares
into non-redeemable ord inary shares will occur immediately prio r to the consummation of this offering, and (2) the forward split of
53.04758-for-1 o f our ord inary shares to be effected prior to the completion of this offering.

      If the minimu m offering is sold, we will have 3,958,667 ordinary shares outstanding upon completion of the minimu m offering. Our post
offering pro forma net tangible book value, which gives effect to (1) the automatic conversion of our outstanding redeemable shares into
non-redeemable ord inary shares will occur immediately prior to the consummation of th is offering; and (2) receipt of the net proceeds fro m the
offering and issuance of additional shares in the offering, but does not take into consideration any other changes in our net tangible book value
after December 31, 2008 will be appro ximately $[                ] or $[         ] per ordinary share. Th is would result in d ilut ion to investors in
this offering of appro ximately $[            ] per ord inary share or appro ximately [          ]% fro m the assumed offering price of $6.00 per
ordinary share. Net tangible book value per ordinary share wou ld increase to the benefit of present stockholders by $[                  ] per share
attributable to the purchase of the ordinary shares by investors in this offering. The number of ord inary shares used to calculate the increase to
benefit of present stockholders assumes that (1) auto matic conversion of our outstanding redeemable shares into non -redeemable ordinary
shares will occur immediately prior to the consummat ion of this offering, and (2) the fo rward split of 53.04758 -for-1 of our ord inary shares to
be effected prior to the co mpletion of this offering.

      If the maximu m offering is sold, we will have 4,492,000 ordinary shares outstanding upon completion of the min imu m offering. Our post
offering pro forma net tangible book value, which gives effect to (1) the automatic conversion of our outstanding redeemable shares into
non-redeemable ord inary shares will occur immediately prior to the consummation of th is offering; and (2) receipt of the net proceeds fro m the
offering and issuance of additional shares in the offering, but does not take into consideration any other changes in our net tangible book value
after December 31, 2008 will be appro ximately $[              ] or $[     ] per ordinary share. Th is would result in dilution to investors in this
offering of appro ximately $[      ] per ord inary share or appro ximately [      ]% fro m the assumed offering price of $6.00 per ordinary share.
Net tangible book value per ordinary share would increase to the benefit of present stockholders by $[          ] per share attributable to the
purchase of the ordinary shares by investors in this offering. The nu mber of ordinary shares used to calculate the increase to benefit of present
stockholders assumes that (1) automatic conversion of our outstanding redeemable shares into non -redeemable ordinary shares will occur
immed iately prior to the consummat ion of this offering, and (2) the forward split of 53.04758-for-1 of our ordinary shares to be effected prio r
to the completion of this offering.

     The following table sets forth the estimated net tangible book value per ordinary share after the closing of the offering and the dilution to
persons purchasing ordinary shares based on the foregoing min imu m and maximu m offering assumptions.

                                                                                                                       Minimum              Maximum
                                                                                                                      Offering (1)          Offering (2)
Assumed offering price of ordinary shares (per share)                                                             $              6.00   $              6.00
Net tangible book value per ordinary share before the offering (unaudited)                                        $          [      ]   $          [      ]
Increase per ordinary share attributable to payments by new investors                                             $          [      ]   $          [      ]
Pro forma net tangible book value per ordinary share after the offering                                           $          [      ]   $          [      ]
Dilution per ord inary share to new investors                                                                     $          [      ]   $          [      ]

(1)
      Assumes gross proceeds fro m offering of 1,166,667 o rdinary shares.
(2)
      Assumes gross proceeds fro m offering of 1,700,000 o rdinary shares.

                                                                           29
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                                                               Comparati ve Data

     The following charts illustrate our pro forma proportionate ownership. Upon comp letion of the offering under alternative min i mu m and
maximu m o ffering assumptions, of present shareholders and of investors in this offering, co mpared to the relat ive amounts p aid and
comparative to our capital by present shareholders as of the date the consideration was received and by investors in this off erin g, assuming no
changes in net tangible book value other than those resulting fro m the offering.

                                                                      Shares Purchased               Total Consideration                  Average
                                                                                                                                           Price
MINIMUM OFFERING                                                    Amount         Percent        Amount              Percent            Per Share
Existing stockholders                                               2,792,000        70.53 % $         [    ]              [     ]% $         [    ]
New investors                                                       1,166,667        29.47 % $      7,000,002              [     ]% $           6.00
Total                                                               3,958,667       100.00 % $         [    ]                  100 % $        [    ]

                                                                      Shares Purchased               Total Consideration                  Average
                                                                                                                                           Price
MAXIMUM OFFERING                                                    Amount         Percent        Amount              Percent            Per Share
Existing stockholders                                               2,792,000        62.15 % $        [    ]               [     ]% $         [    ]
New investors                                                       1,700,000        37.85 % $    10,200,000               [     ]% $           6.00
Total                                                               4,492,000       100.00 % $        [    ]                   100 % $        [    ]

      The discussion and tables above assume no exercise of stock options outstanding as of March 17, 2009. As of the consummat ion of this
offering, we expect to have options outstanding to purchase a total of [     ] ord inary shares, all o f wh ich are exercisable as of the
consummation of this offering with a weighted average exercise price of appro ximately $ [          ] per share. To the extent that any of these
options are exercised, there will be further dilution to investors who purchase shares after this offering.

                                                                        30
Table of Contents

                              S ELECTED HIS TORICAL AND UNAUDITED PRO FORMA CONDENS ED
                             CONSOLIDATED AND COMB INED FINANCIAL AND OPERATING DATA

      You should read the following selected financial data in conjunction with ―Management’s Discussion and Analysis of Financial
Condition and Results of Operations ‖ and the financial statements and related notes included elsewhere in this prospectus. The selected
statements of operations data are for the fiscal years ended 2008 and 2007. The selected balance sheet data set forth below, are as of June 30,
2008 and 2007. This selected financial data is derived fro m our consolidated and combined financial statements and should be read in
conjunction with the consolidated and combined financial statements and notes thereto which are included elsewhere in this pr ospectus.

                                                                      For the Fiscal Year                                    For the Six Months
                                                                       Ended June 30,                                      Ended December 31,
                                                         2007                 2008                 2008                 2008                     2008
                                                          (¥)                  (¥)           ($) (unaudited)      (¥) (unaudited)          ($) (unaudited)
Total Revenues                                         67,640,133             76,474,151        11,209,109           49,764,050                7,294,107
Income (Loss) fro m Continuing Operations               8,436,299             13,265,077         1,944,314           10,971,695                1,608,163
Income (Loss) fro m Discontinued Operations               (85,701 )              405,926            59,498           (2,259,335 )               (331,159 )
Net Inco me Available for Co mmon
  Shareholders                                          8,350,598             13,654,184          2,001,347            8,678,073               1,271,978
Basic Weighted Average Shares Outstanding                  44,053                 79,976             79,976               98,967                  98,967
     Basic Earn ings per Share                             189.56                 170.73              25.02                87.69                   12.85
Diluted Weighted Average Shares Outstanding                 44.53                 81,625             81,625              101,599                 101,599
     Diluted Earnings per Share                            189.56                 167.22              24.51                85.41                   12.52

                                                                                June 30,                                         December 31,
                                                            2007                  2008                2008                 2008                  2008
                                                             (¥)                   (¥)          ($) (unaudited)      (¥) (unaudited)       ($) (unaudited)
Total Assets                                              58,829,168            78,166,275         11,457,131            71,955,426             10,546,784
Total Liab ilities                                        59,468,767            52,321,179          7,668,917            40,628,632              5,955,095
Minority Interest                                            615,392               451,036             66,110               384,008                 56,286
Redeemable Co mmon Shares                                        —               1,388,641            203,538             1,415,436                207,466
Shareholders’ Equity (Deficit)                            (1,254,991 )          24,005,419          3,518,566            29,527,350              4,327,937

                                                                         31
Table of Contents

                                     MANAGEMENT’S DIS CUSSION AND ANALYS IS OF FINANCIAL
                                          CONDITION AND RES ULTS OF OPERATIONS

      The following discussion and analysis should be read in conjunction with our audited historical consolidated and combined fin ancial
statements and our unaudited pro forma condensed consolidated and combined financial statements, together with the respectiv e notes thereto,
included elsewhere in this prospectus. Our audited historical consolidated and combined financial statements have been prepar ed in
accordance with U.S. GAAP. Our unaudited pro forma financial information has been derived from our audited historical consolidated and
combined financial statements.

Overview
      Organization . We are a co mpany focused on production and service for oilfield exp loitation industry companies in the People ’s Republic
of Ch ina. We provide oilfield services and products, including well service, drilling service, production and field service; however, we do not
engage in the production of petroleum o r petroleu m products. We primarily derive our revenue fro m:

      •   Design, manufacture and installation of oil field servo mechanism systems engineering;
      •   Oil field underground operation technology and products:
            •   Oil producing well water seeking, sand proof, fracturing technology;

            •   Down flow well acidize injection, p lug-releasing, profile control technology;
            •   Gas well perforating and sand proof technology;
            •   Multi-effect underground packer devices and

            •   Gas well throttle controller.
      •   Oil field ground operation technology and products:
            •   Heating furnace automat ion control technology in oil field fathering and transportation System;

            •   Oil field h igh effect heating furnace;
            •   Oil field mu ltiphase separator;
            •   Oil field heat-exchange equip ment and;

            •   Supply Italian UNIGAS co mbustor.

      In the six months ended December 31, 2008, appro ximately 95.88% of our revenues came fro m hard ware sales, 2.81% came from
service, and 1.31% came fro m software sales. The rapid gro wth of our service business facilitated the development of our hardware business in
this period, causing the percentage of our revenues from hardware sales to increase significantly.

      The Do mestic Co mpanies’ and our solutions and new technology enable our customers to reduce their expenditures and improve their
integrated benefit by changing from manual to mechanized production methods. Our major clients, Sinopec and CNPC, are large o il and
refinery firms fo rmed fo llo wing the Chinese government’s decision to decentralize the oil and gas industry within Ch ina. Both companies are
ranked in the Fo rtune 500. We aim to continue extending our market share in the short -term and to be a leading non-government-owned service
provider to the oilfield exp loitation industry in the long-term. Our mission is to increase the automation and safety levels of industrial
petroleum p roduction in Ch ina, and imp rove the under-developed working process and management mode by using high -technology.

      We operate our business in China through the Domestic Co mpanies, wh ich are PRC limited liab ility co mpanies controlled by the same
three PRC residents, Mr. Yin Shenping, Mr. Li Hongqi and Mr. Chen Guangqiang. Mr. Yin , Mr. Li and Mr. Chen are also significant
shareholders in and directors of our co mpany, and they serve, respectively, as our Chief Executive Officer, Ch ief Market ing Officer and Ch ief
Technology Officer.

       Chinese laws and regulations currently do not prohibit or restrict foreign ownership in petroleu m businesses. However, Chinese laws and
regulations do prevent direct foreign investment in certain industries. To protect our shareholders from possible future fore ign ownership
restrictions, Mr. Yin, Mr. Li and Mr. Chen reorganized our co mpany, entered into agreements with Recon -JN and caused Recon-JN and each
of the Do mestic Co mpanies to enter into a series of agreements that give our company (by virtue of its sole ownership of Reco n-HK and
Recon-HK’s sole ownership of Recon-JN) effective control over each of the Do mestic Co mpanies.

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       We have Exclusive Technical Consulting Service Agreements with each of the Do mestic Co mpan ies and Equity Interest Pledge
Agreements and Exclusive Equ ity Interest Purchase Agreements with their shareholders. Through these contractual arrangements, we have the
ability to substantially influence each of the Do mestic Co mpanies ’ daily operations and financial affairs, appoint their senior executives and
approve all matters requiring shareholder approval. As a result of these contractual arrangements, which enable us to control the Do mestic
Co mpanies, we are considered the primary beneficiary of each Do mestic Co mpany. In addition, we and the Do mestic Co mpanies are under
common control, by v irtue of the ownership of mo re than 60% of our co mpany and each of the Do me stic Co mpanies by three shareholders
(Mr. Yin Shenping, Mr. Li Hongqi and Mr. Chen Guangqiang).

      Based on these agreements, the Domestic Co mpanies are our variable interest entities (―VIEs‖) and we consolidate them as required by
Financial Accounting Standards Board (―FASB‖) Interpretation No. 46R (―FIN 46R‖), Consolidation of Variable Interest Entit ies, an
Interpretation of ARB No. 51, because we are the primary beneficiary of the VIEs. Ou r consolidated assets do not include any collateral fo r the
obligations of the VIEs.

Factors Affecting Our B usiness
      Industry Background . As a whole, the Ch inese petroleum industry faces four primary challenges: (a) g lobal co mpetit ion; (b) environ ment
and development; (c) configuration of petroleu m resources; and (d) gradually increased profit margins. Co mpared to developed countries,
however, there are still certain lags in terms of modern ized management levels in China. In part icular, with the introduction of computer
techniques over the last ten years, the degree of automation in foreign countries has reached a higher lever, while Ch ina is still in the initial
stage.

      With deeper development of the oilfield industry, most oil fields in China have entered the third stage of oil ext raction. Du ring t his stage,
oil well output decreases, water content increases, and costs are higher.

      Through application of the automation system we provide, oil well head informat ion such as indicator diagrams, current diagrams, o il
pressure, oil temperature and the running status of oil wells, can be accurately passed on to management in real time. Manage ment may see
informat ion in the clear hu man-machine interface and make analysis and decisions enabling the realizat ion of remote controls over oil
extraction wells such as auto delayed start-up of the oil ext raction well after being switched on/off or intermittent extract ions. The system can
achieve failure protection and send timely alarms, for instance, the system is equipped with auto stop and alarms in the cases of blocking,
breaking of o il ext raction rods, and phase breaking to avoid the occurrence of major accidents. The measurement station can realize automatic
measurement of liquid and gas and transfer the data to the central control roo m in real time. With this system, the oil well heads and
measurement stations have no need to be monitored by personnel and in addition, in -t ime and accurate information transfers between the oil
extraction well and management have imp roved labor productivity, brought down manual work and consumptions, lowered costs for oil
extractions, eliminated failures in time, increased oil output, actualized automatic management fo r oil fields and integrated management above
and under-ground. The automation system also provides full and accurate data for research and development of petroleu m deposit projects as
well as a reliable technical basis for oil field productions and decision-making.

       Our automat ion system can also be used in connection with the delivery of liquefied natural gas. Ch ina is currently d iversify ing its energy
sources, and China imported 15% more liquefied natural gas in 2008 than in 2007. Although t he increase from 2.9 to 3.3 millio n tons for the
full year was significant, our optimis m about the future of liquefied natural gas in Ch ina (as well as the need for our services in the industry) is
tempered by a 23% drop fro m November to December 2008, wh ich coincided with the international market crisis.

     Apart fro m the above-mentioned factors, increasingly intense competition in the oil field market, increasing efficiency by reducing
redundant staff and reduction of cost is bound to facilitate the all-around generalization of the automation system.

      Accordingly, any significant change in the general demand for oil and liquefied natural gas in China, the PRC government ’s policy or the
strategies of major PRC energy co mpanies may significantly affect the demand for our service and products and, as a result, our revenues and
financial condition.

                                                                          33
Table of Contents

      In addition, our oil well water finding/blocking technology, mu ltipurpose fissure shaper, and high-efficiency heating furnace can increase
the oil field output, decrease the water content, save energy, lower consumption, reduce the oil extract ion cost, and strengt hen the competitive
force of the do mestic oil fields .

       Relevant Industry-Wide Factors . Management believes the Chinese oilfield service industry, and in particular the oilfield service market,
is likely to experience rapid g rowth in the near future. This belief is based on management ’s experience in the industry and its analysis of the
following recent trends:

      •   Management believes that larger co mpanies in China are becoming more sophisticated in managing and imp lementing their
          informat ion systems. Management believes that these tendencies are likely to create a strong demand for software integration and
          customized system development fro m these larger co mpanies. As a result, management believes that many oilfield service p roviders
          will attempt to reposition their businesses as development services providers, rather than ―off-the-rack‖ vendors. In the context of
          economic transformation, local manufacturers will likely face industrial restructuring as they try to grow to compete and fend o ff
          increased pressure from greatly shortened product lives. Management believes that the use of advanced information technologie s in
          management and control of manufacture is becoming more important to success in the market.
      •   Management believes that a significant number of Chinese manufactures, especially those in the oil and gas industry, still la ck
          sufficient technical applications and services for their needs. These companies tend to be more cost -sensitive. Management believes
          that such clients would be more likely to use our service and products to reduce expenses by third -parties like us. Management
          believes this will be an increasingly co mpetit ive market.
      •   Management also believes that high-tech and precise instruments will beco me increasingly prevalent in the oilfield service market, as
          China continues to be more dependent on oil and as oil resources continue to d ecline.

      Dependence on CNPC and Sinopec . We derive substantially all of our revenues from t wo customers, (i) CNPC and (ii) Sinopec.

     We provide products and services to Sinopec under a series of agreements, each of wh ich is terminable without notice. We first began to
provide services to Sinopec in 1998. Sinopec accounted for approximately 40% of our revenues in each of 2007 and 2008 and the six months
ended December 31, 2008, and any termination of our business relationships with Sinopec would materially h arm our operations.

     We provide products 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 60% of our revenues in each of 2007 and 2008 and the six months
ended December 31, 2008, and any termination of our business relationships with CNPC would materially harm our operations.

      In order to grow and to protect our company against the risks associated with our dependence on CNPC and Sinopec, management
intends to improve our service and expand our potential market. Management believes that a large number of Chinese petroleum co mpanies are
likely to require services and products such as those we provide.

     Nature of Operations . Our technicians and solutions were developed with strong industrial expertise in the oil and gas industry. Products
and services provided by us mainly include:

      •   RSCADA System . Nanjing Recon’s technology includes RSCADA, an industrial co mputerized process control system fo r monitoring,
          managing and controlling oilfield service extraction. RSCADA integrates the underground, ground and above -ground levels of the
          oilfield service ext raction industry. RSCA DA connects the above-ground level central control roo m with the ground level relay
          station and the relay station with the underground bottom intelligent terminal using the 2.4G wireless frequency. RSCA DA has
          received grants and awards from the State M inistry of Science and Technology and the city of Nanjing.
      •   Water System . In addit ion to RSCA DA, BHD has developed and imp lemented technology designed to find and block water content
          in oilfield service. As China’s ext raction of o il has increased, the quantity of available o il has decreased and the water content in
          remain ing oil has increased. In order to imp rove our efficiency and profitability in extract ion, we have developed technology to
          reduce the amount of water in our ext racted oilfield service.

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      •   Oil Field Furnaces . Crude oilfield service contains certain impurit ies that must be removed before the oilfield service can be sold,
          including water and natural gas. To remove the impurities and to prevent solidification and blockage in transport pipes, comp anies
          emp loy heating furnaces. BHD researched, developed and implemented a new oil field furnace that is advanced, highly automated,
          reliable, easily operable, and comparat ively safe and highly heat efficient (90% efficiency).

      •   Multipurpose Fissure Shaper . BHD has also developed a multipurpose fissure shaper to improve our ability to test for and extract
          oilfield service. Before any oilfield service extractor can test for the presence of oil, it must first perforate a hole for testing. The depth
          of the perforated hole is, of course, extremely impo rtant in the testing process: a hole that is too shallow may cause an extractor to
          miss an oil field entirely. We have developed a proprietary mult ipurpose fissure shaper that is used with the perforating gun to
          effectively increase the perforation depth by between 46 and 80%, shape a great number o f stratum fissures, improve the stratum
          diversion capability and, as a result, improve our ability to locate oil fields and increase the output of oil wells.

      As a technology development company, we put a priority on research, explo ration, design and innovation. For years we have bee n
increasing investments in attracting and training talents to continually improve our research and development capability. We currently have
more than 80 employees, 90% of who m graduated fro m college. We also cooperate with the Oilfield Service & Geology Research Laboratory
of Nanjing Un iversity.

Factors Affecting Our Results of Operati ons – Generally
      Our operating results in any period are subject to general conditions typically affect ing the Chinese oilfield service industry including:
      •   the amount of spending by our sophisticated customers, primarily those in the oil and gas industry;
      •   growing demand fro m large corporations for imp roved 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 fro m other o ilfield service solution providers, especially those targeting the Chinese oil and
          gas industry;
      •   the ongoing development of the oilfield service market in China; and

      •   inflation and other factors.

     Unfavorable changes in any of these general conditions could negatively affect the number and size of the projects we underta ke, 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 mo re directly affected by company -specific factors including:
      •   our revenue growth;
      •   the proportion of our business dedicated to large co mpanies;

      •   our ability to successfully develop, introduce and market new solutions and services;
      •   our ability to increase our revenues to businesses, both old customers and new in Ch inese oil and gas industry;
      •   our ability to effectively manage our operating costs and expenses; and

      •   our ability to effectively imp lement any targeted acquisitions and/or strategic alliances so as to provide efficient access t o markets and
          industries in the Chinese oil and gas industry.

Critical Accounti ng Policies and Esti mates
       Estimates and Assumptions . We prepare our financial statements in conformity with U.S. GAAP, wh ich requires us to make ju dgments,
estimates and assumptions. We continually evaluate these estimates an d assumptions based on the most recently availab le informat ion, our own
historical experience and various other assumptions that we believe to be reasonable under the circu mstances. Since the use o f estimates is an
integral co mponent of the financial reporting process, actual results could differ fro m those estimates. An accounting policy is considered
critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate
is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reaso nably
likely to occur periodically, could materially impact the consolidated and combined financial statements. We believe that th e follo wing policies
involve a higher degree of

                                                                           35
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judgment and comp lexity in their application and require us to make significant accounting estimates. The following descriptions of critical
accounting policies, judgments and estimates should be read in conjunction with our consolidated and combined finan cial statements and other
disclosures included in this prospectus. Significant accounting estimates reflected in our co mpany ’s consolidated and combined financial
statements include revenue recognition, allowance for doubtful accounts, and useful lives of property and equipment.

       Revenue Recognition . We recognize revenue when it is realized and earned. We consider revenue realized or realizable and earned when
(1) we have persuasive evidence of an arrangement, (2) delivery has occurred, (3) the sales price is fixed or determinable, and (4) co llectability
is reasonably assured. Delivery does not occur until products have been shipped or services have been provided to the client and the client has
signed a completion and acceptance report, risk of loss has transferred to the client, client acceptance provisions have lapsed, or we have
objective evidence that the criteria specified in client acceptance provisions have been satisfied. The sales price is not co nsidered to be fixed or
determinable until all contingencies related to the sale have been resolved.

      •   Hardware . Revenue fro m hardware sales is generally recognized when the product is shipped to the customer and when there are no
          unfulfilled co mpany obligations that affect the customer’s final acceptance of the arrangement.
      •   Services . We provide services on a fixed-p rice contract, and the contract terms generally are short term. Revenue is recognized on the
          completed contract method when delivery and acceptance is determined by a co mpletion report signed by the customer. Deferred
          revenue represents unearned amounts billed to customers related to post -contract maintenance agreements.
      •   Software . We sell self-developed software. For software sales, we recognize revenues in accordance with the provisions of Statement
          of Position No. 97-2, ―Software Revenue Recognition,‖ and related interpretations. Revenue fro m perpetual (one-t ime charge)
          licensed software is recognized at the inception of the license term. Revenue fro m term (monthly license charge) arrangements is
          recognized on a subscription basis over the period that the customer is using the license. We do not provide any rights of re turn or
          warranties on our software.

       Revenues applicable to mu ltip le-element fee arrangements are div ided among the elements such as software, hardware and post-contract
service using vendor-specific objective evidence of fair value. Such evidence consists of pricing of mu ltiple elements when those same
elements are sold as separate products or arrangements. Soft ware maintenance for the first year and init ial train ing are included in the purchase
price of the software. Init ial training is provided at the time of installat ion and is recognized as inco me as part of the pr ice of th e software since
it is minimal in value. Maintenance is valued based on the fee schedule used by us for providing the regular level of mainten ance service as
sold to customers when renewing their maintenance contracts on a standalone basis. Maintenance revenue is included in the income statement
under services and is recognized over the term of the agreement.

      Fair Values of Financial Instruments . The carry ing amounts reported in the consolidated and combined balance sheets for trade accounts
receivable, other receivables, advances to suppliers, trade accounts payable, accrued liabilities, advances from customer and notes payable
approximate fair value because of the immediate or short-term maturity of these financial instruments.

      Allowance for Doubtful Accounts . Trade receivables and other receivable accounts are recognized in itially at fair value and subsequently
measured at amortized cost using the effective interest method, less a provision made for impairment of these receivables. Provisions are
applied to trade and other receivables where events or change in circu mstances indicate that the balance may not be collectible. The
identification of doubtful debts requires the use of judgment and estimates of management. Our management must make estimates of the
collectability of our accounts receivable. Management specifically analy zes accounts receivable, historical bad debts, customer
credit-wo rthiness, current economic trends and changes in our customer pay ment terms when evaluating the adequacy of the allowance f or
doubtful accounts. Our allo wance for trade accounts receivable was ¥3,445,008 ($509,948) and ¥3,125,551 ($458,124) on June 30 and
December 31, 2008, respectively. The decrease between June and December is due in part to the removal of one entity fro m ou r consolid ated
balance sheets and in part to the growth of our business with our large clients, wh ich allowed us to change our standard of recording allo wance
for accounts receivable so that the result more accurately reflects our business risks. If the financial co ndition of our clients were to deteriorate,
resulting in their inability to make pay ments, an additional allowance might be required.

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       Property and Equip ment . We record property and equipment at cost. We depreciate property and equipment on a straight -line b asis over
their estimated useful lives using the following annual rates:

                    Motor Veh icles                                                10 years
                    Office Equ ip ment                                             2-5 years
                    Machinery                                                      5 years
                    Buildings                                                      20 years

     We expense maintenance and repair expenditures as they do not improve or extend an asset ’s productive life. These estimates are
reasonably likely to change in the future since they are based upon matters that are highly uncertain such as general economic conditions,
potential changes in technology and estimated cash flows fro m the use of these assets.

      Gains or losses on sales or retirements are included in the consolidated and combined statements of operations in the year of disposition.
Depreciat ion expense was ¥676,002, ¥ 997,538 ($146,213), ¥ 395,612 and ¥238,995 ($35,030) for the years ended June 30, 2007 and 2008 and
the six months ended December 31, 2007 and 2008, respectively.

                                                                        Chinese Yuan (Renminbi)                                        U.S. Dollars
                                                                                                      December 31,          June 30,               December 31,
                                                                      June 30,                            2008                2008                     2008

                                                          2007                     2008
                                                      (As Restated)                                   (Unaudited)          (Unaudited)               (Unaudited)
Motor vehicles                                    ¥       3,518,285          ¥     2,556,002      ¥      1,296,118     $       374,643           $      189,979
Office equip ment                                         1,910,732                2,241,985               777,301             328,616                  113,930
Property                                                        —                  5,740,750                   —               841,444                      —
Machinery                                                   210,000                      —                     —                   —                        —
Construction in progress                                    136,390                  450,340                   —                66,008                      —

Total property and equipment                              5,775,406               10,989,076             2,073,419           1,610,711                  303,909

Less: Accumulated depreciat ion                          (3,189,332 )             (2,582,117 )            (789,152 )          (378,471 )               (115,669 )
Property and equipment, net                       ¥       2,586,074                8,406,959             1,284,267           1,232,240                  188,240


      Software Develop ment Costs . We charge all of our develop ment costs to research and development until we have established
technological feasibility. We acknowledge technological feasib ility of our software when a detailed program design has been completed, or
upon the completion of a working model. Upon reaching technological feasibility, we capitalize addit ional software costs until t he software is
available for general release to customers. Although we have not established a budget or time table for software development, we anticipate the
need to continue the development of our software products in the future and the cost could be significant. We believe that, as in the past, the
costs of development will result in new products that will increase revenue and therefore justify costs. There is, however, a reasonable
possibility that we may be unable to realize the carry ing value of our software, and the amount not so realized may adversely affect our
financial position, results of operation or liquidity in the future.

      Cost of Revenue . Cost of our revenues includes wages, materials, handling charges, and other expenses associated with ma nufactured
products and service provided to customers; the cost of purchased raw materials such as steel products and chemical materials . We expect cost
of revenue to grow as our revenues grow. It is possible that we could incur development costs with litt le revenue recognition, but based upon
our past history, we expect our revenues to grow.

      Valuation of Long-Lived Assets . We review the carrying values of our long-lived assets for impairment whenever events or changes in
circu mstances indicate that they may not be recoverable. When such an event occurs, we project undiscounted cash flows to be generated from
the use of the asset and its eventual disposition over the remaining life of the asset. If pro jections indicate that the carrying value of the
long-lived asset will not be recovered, we reduce the carry ing value of the long -lived asset, by the estimated excess of the carrying value over
the projected discounted cash flows. In the past, we have not had to make significant adjustments to the carrying valu es of our long-lived
assets, and we do not anticipate a need to do so in the future. However, circu mstances could cause us to have to reduce the v alue of our
capitalized software mo re rapidly than we have in the past if our revenues were to significantly d ecline. Estimated cash flows from the use of
the long-lived assets are highly uncertain and therefore the estimation of the need to impair these assets is reasonably likely to cha nge in the
future.

                                                                             37
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Should the economy or acceptance of our software change in the future, it is likely that our estimate of the future cash flows fro m the use of
these assets will change by a material amount. See ―Management’s Discussion and Analysis of Financial Condition and Results of Operat ions
-Property and Equ ip ment‖ and ―- Software Development Costs.‖

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Results of Operations
      The following table presents the results of our operations for the periods indicated. Our historical reporting results are no t necessarily
indicative of the results to be expected for any future period.


                                                                 Chinese Yuan (Renminbi)                                                      U.S. Dollars
                                                For the Years                              For the Six Months                    For the Year           For the Six Months
                                                Ended June 30,                            Ended Decemb er 31,                   Ended June 30,         Ended Decemb er 31,
                                          2007                    2008                 2007                   2008                   2008                      2008
                                      (As Restated)                                 (Unaudited)            (Unaudited)           (Unaudited)               (Unaudited)
Revenues
    Hardware                      ¥     54,169,963       ¥       58,815,361     ¥    30,180,050         ¥   47,714,477      $       8,620,793        $         6,993,694
    Service                              6,500,286               12,838,841             624,937              1,400,000              1,881,838                    205,203
    Software                             6,222,143                4,819,949           6,689,272                649,573                706,478                     95,210
    Software - related party               747,741                      —                                                                 —
Total revenues                          67,640,133               76,474,151          37,494,259             49,764,050             11,209,109                  7,294,107
Cost of revenues                        41,812,810               46,009,585          23,065,310             31,141,366              6,743,801                  4,564,509
Gross profit                            25,827,323               30,464,566          14,428,949             18,622,684              4,465,308                  2,729,598

Operating expenses
    Selling and distribution
      expenses                            5,092,289               5,902,474            4,318,460              3,339,837                865,148                    489,533
    General and
      administrative expenses             9,644,590               7,214,913            2,747,910              3,232,178             1,057,517                     473,753
Total operating expenses                14,736,879               13,117,387            7,066,370              6,572,015             1,922,665                     963,286

Income from operations                  11,090,444               17,347,179            7,362,579            12,050,669              2,542,643                  1,766,312
Subsidy income                             155,556                  669,829              490,342             1,664,615                 98,179                    243,989
Non-operating income                        13,915                      —                                                                 —
Non-operating expenses                      (3,494 )               (297,860 )              (426,484 )          (114,400 )             (43,658 )                   (16,768 )
Interest income                             27,976                  212,648                   5,378              11,925                31,169                       1,748
Interest expense                          (127,927 )               (271,771 )                                                         (39,835 )
Investment loss                                —                   (511,969 )                                                         (75,041 )
Income before income taxes
  and minority interest                 11,156,470               17,148,056            7,431,815            13,612,809              2,513,457                  1,995,281
Provision for income taxes              (2,726,482 )             (3,770,747 )           (291,814 )          (2,621,184 )             (552,693 )                 (384,197 )
Minority interest, net of tax                6,311                 (112,232 )           (269,129 )             (19,930 )              (16,450 )                   (2,921 )

Income from continuing
  operations                              8,436,299              13,265,077            6,870,872            10,971,695              1,944,314                  1,608,163

Income (loss) from
  operations of discontinued
  subsidiaries, net of tax                  (85,701 )               405,926            5,607,791             (2,259,335 )               59,498                   (331,159 )

Net income                                8,350,598              13,671,003          12,478,663               8,712,360             2,003,812                  1,277,004
Accrued di vidend for
  redeemable common stock                        —                   16,819                     —                34,287                   2,465                     5,026

Net income available for
  common shareholders             ¥       8,350,598      ¥       13,654,184     ¥    12,478,663         ¥     8,678,073     $       2,001,347        $         1,271,978

Basic earnings per share:
    Income from continuing
       operations                 ¥          191.50      ¥           165.86     ¥           104.70      ¥        110.86     $             24.31      $              16.25

     Income (loss) from
       discontinued operations    ¥             (1.95 ) ¥                5.08   ¥             85.45     ¥         (22.83 ) $               0.74      $               (3.35 )

     Net income                   ¥          189.56      ¥           170.94     ¥           190.15      ¥          88.03    $             25.06      $              12.90
    Net income available for
      common shareholders       ¥   189.56   ¥   170.73   ¥        190.15   ¥     87.69   $    25.02   $     12.85

Basic weighted average
  ordinary shares
  outstanding                       44,053       79,976            65,627        98,967       79,976        98,967

Diluted earnings per share:
    Income from continuing
       operations               ¥   191.50   ¥   162.46   ¥        103.54   ¥    107.99   $    23.81   $     15.83

    Income (loss) from
      discontinued operations   ¥    (1.95 ) ¥     4.97   ¥         84.51   ¥    (22.24 ) $     0.73   $     (3.26 )

    Net income                  ¥   189.56   ¥   167.43   ¥        188.05   ¥     85.75   $    24.54   $     12.57

    Net income available for
      common shareholders       ¥   189.56   ¥   167.22   ¥        188.05   ¥     85.41   $    24.51   $     12.52

Diluted weighted average
  ordinary shares
  outstanding                       44,053       81,652            66,357       101,599       81,652       101,599


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Six Month Period Ended December 31, 2008 Compared to Six Month Peri od Ended December 31, 2007
      Revenue . During the first six months of 2008, all of our revenue was fro m unrelated parties. The total value of our revenues in this
period was ¥49,764,050 ($7,294,108), a ¥ 12,269,791 o r 32.70% increase fro m ¥37,494,259 for the six months ended December 31, 2007.

      We believe that our contracts will be fulfilled fo r the following reasons:

      •   These large corporate clients have never failed to finalize and fu lfill contracts with us; and
      •   These clients have agreed upon the contract terms and project value.

      Cost of Revenue . Our cost of revenue increased by ¥8,076,056, or 35.01%, to ¥31,141,366 ($4,564,509), for the six months ended
December 31, 2008, fro m ¥23,065,310 for the same period in 2007, largely due to our marketing and commun ications strategies and rising
prices of raw materials. Since the beginning of our fiscal year ending June 30, 2009, China’s main economic indicators have remained stable or
shown negative growth, so we believe the negative influence of prices is unlikely to last for a long period.

      Gross Profit . For the six months ended December 31, 2008, our gross profit increased to ¥18,622,684 ($2,729,598) fro m ¥14,428,949 fo r
the same period in 2007, an increase of ¥4,193,735, or 29.06%. For the six months ended December 31, 2008, our gross profit as a percentage
of revenue decreased slightly to 37.42%, fro m 38.61% for the same period in 2007. Th is percentage decrease was because we caused one of
our Do mestic Co mpanies, ENI, to develop a wholesale business in a new potential market to increase our market share in that i ndustry. Prior to
this development, ENI has primarily distributed to international and domestic co mpanies with well-known brands. Because of the challenging
geologic conditions of China’s oilfields, oilfield enterprises demand high quality equip ment to maximize oil extract ion. These clients have
turned to ENI’s products and services, causing ENI to gro w quickly. As a result, ENI has been able to increase its market share by serving its
existing customers and establishing its own brand. The decision may impact our gross profit rate over the short term, but o ur management
believes this strategy will benefit the company over the long term by allowing our co mpany to serve a broader market.

Year Ended June 30, 2008 Compared to Year Ended June 30, 2007
      Revenues . Our total revenues increased by approximately 13.10%, fro m ¥67,640,133 in 2007 to ¥76,474,151 ($11,209,110) in 2008.
Most of all, our service businesses have become the main increasing impetus and a major source of revenue, increasing by more than 90% fro m
the previous year. This increase resulted directly fro m our growing relat ionships with CNPC and Sinopec. Specifically, the Ch inese
government has attached great importance to the safety problems that exist in the Chinese energy industry by implementing numerous new
projects and initiatives designed to increase safety and security in the Ch inese energy industry. This replacement project is a Ch inese reform
project designed to eliminate hidden security dangers and develop key projects for saving energy and materials. As a result o f t he new policies,
the Chinese government has increased spending to replace equipment with potential safety problems. As such, we have experienced incre ased
sales and a greater demand for our maintenance services, which has increased our revenue. Additionally, as we have provided s ervices to
CNPC and Sinopec and our relationships have grown, they have chosen to continue to use our solutions. During the year ended J une 30, 2008,
substantially all o f our revenues were generated through our business engagements with the two largest Chin ese oil co mpanies. These
significant engagements made it possible for us to improve our service quality, products ’ popularity and adaptability fo r a very limited nu mber
of customers. Further, this long-term cooperation provides us more preferences for collecting receivables on time. We expect th at our gross
revenues will continue to increase over time as we:
      •   continue to cement our business relationships with CNPC and Sinopec and try to establish good cooperation with CNOOC;

      •   expand the adoption of our solutions into other markets outside the Chinese oil and gas industry; and
      •   introduce our solutions to businesses located outside of China.

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      Cost of Revenues . Our cost of revenues includes costs related to the design, implementation, delivery and maintenance of our software
solutions and raw materials. We have set up service and maintenance centers in Xinjiang, Jidong district, and other locat ions which can provide
our customers with technical consulting, repair and maintenance services. We purchase equipment based on each client ’s needs. Raw materials
used to produce our hardware products consist largely of steel products and chemical p roducts . Since 2006, the prices of steel and oil have
increased, resulting in increases in downstream products like our products. The Chinese government has taken measures against these rising
prices, but our business was still affected in 2007 and 2008 because o f these costs. Our cost of services also increased slightly because some
project periods extended due to bad construction conditions in Ch ina. We consider our cost of revenues to be variable and exp ect that our cost
of revenues will increase as our revenues grow.

       Our cost of revenues increased fro m ¥41,812,810 in 2007 to ¥46,009,585 ($6,743,801) in 2008, an increase of 10.04%. As a percentage
of revenues, our cost of revenues decreased from 61.82% in 2007 to 60.16% in 2008. Our salaries and benefits costs increased, due largely to
rising human resources costs associated with the implementation of new Chinese laws regarding employee benefits. We are subje ct to a general
trend of increasing salaries and employee welfare throughout China for the highly -skilled technical personnel we require to operate our
business. Although our cost of revenues dramatically increased, through effective management, we were able to effectively and profitably
utilize our increased business. As such, we were actually ab le to decreas e our cost of revenues as a percentage of revenues. We expect our cost
of revenues to stabilize over the next several years.

      Gross Profit . For the year ended June 30, 2008, our gross profit increased to ¥30,464,566 ($4,465,308) fro m ¥25,827,323 for th e same
period in 2007, an increase of ¥4,637,243, or appro ximately 18%. For the year ended June 30, 2008, our gross profit as a percentage of revenue
increased to 39.84%, fro m 38.18% for the same period in 2007. This increase in g ross profit can be attributed primarily to the increase in sales
volume to CNPC and Sinopec. We believe this increase in sales volume resulted, in part, fro m the Chinese government ’s policy to improve
safety and security in the energy industry.

Expenses.
Six Month Period Ended December 31, 2008 Compared to Six Month Period Ended December 31, 2007
      General and Administrative Expenses . General and ad ministrative expenses consist primarily of co mpensation and benefits to our
general management, finance and admin istrative staff, professional advisor fees, audit fees and other expenses incurred in connection with
general operations. For the six months ended December 31, 2008, our ad min istrative expenses increased to ¥3,232,178 ($473,753), fro m
¥2,747,910 for the six months ended December 31, 2007, a 17.62% increase fro m period-to-period. The increase in general and administrative
expenses was mainly attributable to an increase in our admin istrative business trips and audit fees due to the initiation of our IPO. In addition,
as a percentage of revenue, administrative expenses decreased to 6.50% for the six months ended December 31, 2008, fro m 7.35% for the same
period in 2007. We believe this percentage decrease resulted fro m our experience in oilfield industry and rapid revenue growt h, both of which
allo wed us to spend efficiently in this area.

      Selling and Distribution Expenses . For the six months ended December 31, 2008, our selling expenses decreased slightly fro m
¥4,318,460 in the six months ended December 31, 2007 to ¥3,339,837 ($489,533), due to decreased participation in industrial conventions as
well as advertising since we have been focusing on growing our existing relationships with large corporate clients, with whic h management
believes general advertising efforts would not be effective. As a percentage of revenue, our selling expense for the six months ended
December 31, 2008 and 2007 decreased fro m 11.52% to 6.71%, main ly due to management ’s imp lementation of more stringent cost controls
and increased sale inco me.

      Income fro m Operat ions . Income fro m operations was ¥12,050,669 ($1,766,313) fo r the six months ended December 31, 2008, a 63.67%
increase fro m ¥ 7,362,579 for the same period in 2007 because of high revenue in the last quarter of 2008 and lower selling exp enses.

      Income Tax Expense . Inco me taxes are provided based upon the liability method of accounting pursuant to SFAS No. 109, ―Accounting
for Inco me Taxes.‖ Under this approach, deferred inco me taxes are recorded to reflect the tax consequences on future years of differences
between the tax basis of assets and liabilities and their financial

                                                                        41
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reporting amounts. A valuation allo wance is recorded against deferred tax assets if it is not likely that the asset will be realized. In June 2006,
the Financial Accounting Standards Board issued Financial Interpretation No. 48, ―Accounting for Uncertainty in Inco me Taxes - an
interpretation of FASB Statement No 109‖ (―FIN 48‖). FIN 48 prescribes a recognition threshold and measurement attribute fo r the financial
statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on
de-recognition classification, interest and penalties, accounting in interim periods, disclosure, and transition. The interpreta tion is effective for
the fiscal years beginning after December 15, 2006. The impact of adoption of this interpretation on the Co mpany’s consolidated and combined
financial statements, if any, has not yet been determined.

      We have not been subject to any income taxes in the United States or the Cay man Islands. Enterprises doing business in PR C are
generally subject to federal (state) enterprise income tax at a rate of 30% and a local income tax at a rate of 3%; however, due to Nanjing
Recon’s location in a State Standard High Technology Develop ment Zone, it was granted a certification of High Technology Enterprise and
was taxed at a rate of 15% for taxab le income generated and was 50% exempt fro m this inco me tax fro m 2005 to 2007. We had min imal
operations in jurisdictions other than the PRC. Inco me tax expense for the six months ended December 31, 2008 was ¥2,621,184 ($384,197).
For the same period in 2007, inco me tax expense was ¥291,814. Th is increase resulted fro m increased revenues and a change in accounting
policy.

      Net Inco me . As a result of the factors described above, net income was ¥8,678,073 ($1,271,978) for the six months ended December 31,
2008, decreased by ¥3,800,590, or 30.46%, fro m ¥12,478,663 for the same period in 2007. Our net inco me fro m continuing operations
increased fro m ¥6,870,872 to ¥10,971,695 ($1,608,163), an increase of 59.68%.

Fiscal Year 2008 Compared to Fiscal Year 2007
      General and Administrative Expenses . General and ad ministrative expenses consist primarily of costs from our hu man resources
organization, facilities costs, depreciation expenses, professional advisor fees, audit fees and other expenses incurred in connection with
general operations. General and ad ministrative expenses decreased 25.19%, fro m ¥9,644,590 in 2007 to ¥7,214,913 ($1,057,517) in 2008.
General and administrative expenses were 14.26% of total revenues in 2007 and 9.43% of total revenues in 2008. We were able to efficiently
integrate our new employees into our business. We expect that as we continue to grow, our general and administrative expenses will increase.
In addition, we expect that becoming an independent public company may create a short-term increase in general and ad ministrative expenses
as a percentage of revenues. Many of these costs are expected to be non -recurring as they relate primarily to the establishment of additional
functions in connection with becoming a publicly-traded co mpany.

      Selling and Distribution Expenses . Selling and distribution expenses consist primarily of salaries and related expenditures of our sales
and marketing organization; sales commissions; costs of our marketing programs, including public relat ions, advertising, trade shows, and
collateral sales materials; and an allocation of our facilities and depreciation expenses. Selling expenses increased by 15.9 1%, from ¥5,092,289
in 2007 to ¥5,902,474 ($865,148) in 2008. Th is increase resulted primarily fro m our business expansion activities. As we continued to solidify
our business relationship with other co mpanies, we required extensive market ing efforts and incurred the costs associated the rewith. At present,
we are expanding our business in Daqing district. In order to successfully increase the scope of our client base, we expect t hat our selling
expenses will correspondingly increase. Selling expenses were 7.72% of total revenues in 2008 and 7.53% of total re venues in 2007. Th is
stable trend resulted fro m the fact that during 2008, we were able to generate additional revenues from our existing client b ase (CNPC and
Sinopec) without increasing our marketing efforts. As we increase the scope of our client base o ver the next several years, we expect to see our
selling expenses as a percentage of revenue increase as a result, in part, of our expanded marketing efforts. We expect that our market ing
efforts will require a period of t ime before resulting in additional sales.

      Income fro m Operat ions . Income fro m operations was ¥17,347,180 ($2,542,643) fo r year ended June 30, 2008, a 56.42% increase from
¥11,090,444 fo r the same period in 2007. This increase in inco me fro m operations can be attributed primarily to the in crease in sales volume to
CNPC and Sinopec, resulting fro m the Ch inese government’s policy to improve safety and security in the energy industry as our customers
seek to replace or repair equip ment to meet new safety policies.

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      Income Tax Expense . Inco me taxes are provided based upon the liability method of accounting pursuant to SFAS No. 109, ―Accounting
for Inco me Taxes.‖ Under this approach, deferred inco me taxes are recorded to reflect the tax consequences on future years of differences
between the tax basis of assets and liabilities and their financial reporting amounts. A valuation allo wance is recorded against deferred tax
assets if it is not likely that the asset will be realized. In June 2006, the Financial Accounting Standards Board issued Financial Interpretation
No. 48, ―Accounting for Uncertainty in Income Taxes —an interpretation of FASB Statement No 109‖ (―FIN 48‖). FIN 48 prescribes a
recognition threshold and meas urement attribute for the financial statement recognition and measurement of a tax position taken or expected to
be taken in a tax return. FIN 48 also provides guidance on de-recognition classification, interest and penalties, accounting in interim periods ,
disclosure, and transition. The interpretation is effective for the fiscal years beginning after December 15, 2006. The adoption of this
interpretation had no effect on the Company’s consolidated and combined financial statements.

      We have not been subject to any income taxes in the United States or the Cay man Islands. Enterprises doing business in PRC are
generally subject to federal (state) enterprise income tax at a rate of 30% and a local income tax at a rate of 3%; however, due to Nanjing
Recon’s location in a State Standard High Technology Develop ment Zone, it was granted a certification of High Technology Enterprise and
was taxed at a rate of 15% for taxab le income generated and was 50% exempt fro m this inco me tax fro m 2005 to 2007. We had min imal
operations in jurisdictions other than the PRC. Inco me tax expense for year ended June 30, 2008 was ¥3,770,747 ($552,693). For the year
ended June 30, 2007, inco me tax expense was ¥2,726,482. This increase resulted fro m our increased revenues from sales due to the Chinese
government replacement project.

      Interest Income . Our interest income represents the interest accrued as a result of bank deposits. Our interest income increased fro m
¥27,976 in 2007 to ¥212,648 ($31,169) in 2008. We expect that our interest inco me will dramat ically increase in the near future as we will earn
interest in the proceeds of the offering contemp lated hereby pending application thereof.

     Discontinued Operations . At the end of the fiscal year 2008, our co mpany comp leted the sale of Inner Mongolia Adar Energy
Technology, Ltd. and Beijing Weigu Windows Co, which were both the majority -owned subsidiaries of BHD. In the fourth quarter of 2008, we
determined that these two subsidiaries met the criteria for classification as discontinued o perations. The gain on the disposal of these
subsidiaries and the financial results associated with 2008 and prior periods are included in discontinued operations.

      In June 2008, an unrelated party purchased the equity interest in Beijing Adar Petro leu m Tec hnology, Ltd., a PRC co mpany previously
controlled by one of the Principal Shareholders (―Beijing Adar‖), which caused our Co mpany to cease to be a primary beneficiary of Beijing
Adar under FIN46 (R). As such, Beijing Adar was excluded fro m the consolidation basis upon the completion of this transaction, and its
financial results associated with 2008 and prior periods were reported as discontinued operations.

     Net Inco me Available For Co mmon Shareholders . As a result of the factors described above, net income available for co mmon
shareholders was ¥13,654,184 ($2,001,346) for the year in 2008, increased by ¥5,303,586, or 63.51%, fro m ¥8,350,598 for the year in 2007.

Li qui di ty and Capital Resources.
General
      Cash and Cash Equivalents . Cash and cash equivalents are comprised of cash on hand, demand deposits and highly liquid short-term debt
investments with stated maturit ies of no more than three months. At December 31, 2008, we had cash and cash equivalents in th e amount of
¥4,535,145 ($664,734). Our management believes that the revenues expected to be generated fro m operations along with the proceeds of t his
offering will be sufficient to finance our operations for the foreseeable future.

        Indebtedness . As of December 31, 2008, except for ¥3,996,859 ($585,835) o f notes payable, we d id not have any other outstanding loan
capital issued or agreed to be issued, bank overdrafts, loans, debt securities or similar indebtedness, liens, liabilities un der acceptance (other
than normal t rade bills) or acceptance credits, debentures, mortgages, charges, finance leases or hire purchase commit ments, guarantees or
other material contingent liabilities. In addit ion, there has not been any material change in our indebtedness, commit ments a nd contingent
liab ilit ies since June 30, 2008.

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       Holding Co mpany Structure . We are a holding co mpany with no operations of our own. All o f our operations are conducted through our
Chinese subsidiary. As a result, our ability to pay dividends and to finance any debt that we may incur is dependent upon dividends and o ther
distributions paid. In addition, Ch inese 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 Ch inese accounting standards and regulations. Under Chinese law , our subsidiary
is required to set aside a portion (at least 10%) of its after-tax net inco me (after d ischarging all cu mulated 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. When we were incorporated in Cay man Island in August 2007, 5,000,000 ordinary shares were
authorized, and 50,000 ordinary shares were issued to Mr. Yin Shenping, Mr. Chen Guangqiang and Mr. Li Hongqi, at a par value of $0.01
each. The 50,000 shares were allocated to previous capital con tributions by the above three shareholders. On December 10, 2007, our co mpany
sold 2,632 shares of common stock to an investor at an aggregate consideration of $200,000. To date, these are the only shares that have been
issued in our company. After giving effect to a 53.04758-for-1 split o f our ordinary shares to be effected before the complet ion of this offering,
we will have 2,792,000 ord inary shares outstanding immed iately prior to closing and up to 4,492,000 ordinary shares outstanding if the
maximu m nu mber of ordinary shares are sold.

      Off-Balance Sheet Arrangements . We have not entered into any financial guarantees or other commit ments 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 interes t 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, liquid ity, market risk or cred it support to us or engages in leasing, hedging
or research and development services with us.

      Operating Cash Flows . To date we have financed our operations primarily through cash flows fro m operations. As of December 31, 2008
we had total assets of ¥71,955,426 ($10,546,783), of which cash amounted to ¥4,535,145 ($664,734), and net accounts receivable amounted to
¥45,799,204 ($6,712,965). Working capital amounted to ¥30,042,527 ($4,403,448) and shareholders ’ equity amounted ¥29,527,350
($4,327,937). The current rat io equaled 1.74, up fro m 1.34 at June 30, 2008. The increase of this ratio reflects the seasonal nature of our
business.

Six Month Period Ended December 31, 2008 Compared to Six Month Period Ended December 31, 2007.
      Cash fro m Operating Activit ies . Net cash used in operating activities totaled ¥2,526,660 ($370,342) for the six month ended
December 31, 2008. While in the same period ended December 31, 2007, net cash provided by activities was ¥1,798,028. Th is was a decrease
of ¥4,324,688 for the six month period ended December 31, 2007. This decrease in net cash resulted primarily fro m the unfavorable world
economic situation. In v iew of the world-wild decline in economic conditions which has continued, all of our suppliers have reduced their
credit periods. At the same time as our suppliers reduced their payment periods, we have not shortened our cre dit periods. As a result, many
contracts are still within the contract due period, we are awaiting pay ment. In addition, our business is currently expanding and we expect to
see a delay between beginning new projects and receiving payment. These factors ha ve resulted in a reduction in our cash flow.

       Cash fro m Investing Activities . Net cash used in investing activities was ¥1,459,404 ($213,910) for the six months ended December 31,
2008, co mpared to net cash used for investing activities of ¥4,892,533 for the six months ended December 31, 2007. The cash used in investing
activities for the six months ended December 31, 2008 consisted primarily of purchases of property and equipment and a decrease in cash
resulting fro m de-consolidation of variable interest entities. The cash used for investing activities during the six months ended December 31,
2007 consisted of purchasing costs for software development and computer equip ment.

       Cash fro m Financing Activit ies . We used ¥513,351 ($75,244) in financing activit ies for the six months ended December 31, 2008. The
cash used in financing activities during the six months ended December 31, 2007 was ¥1,066,390. The decrease in cash used in financing
activities was primarily due to a decrease of cash used in purchases of property and equipment.

    Working Capital . Total current assets at December 31, 2008 amounted to ¥70,671,159 ($10,358,543), and total current liabilit ies
amounted to ¥40,628,632 ($5,955,094) at December 31, 2008.

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      Capital Resources . We have obtained working capital in 2007 and 2008 through operating activities and financing activit ies.

Comparison of Years Ended June 30, 2008 and 2007.
      Cash fro m Operating Activit ies . Net cash provided by operating activities was ¥10,262,817 ($1,504,260) for the year ended June 30,
2008. Th is was an increase of ¥12,376,250 over ¥2,113,433 for the year ended June 30, 2007. This increase in net cash resulted primarily fro m
the increase in net income of ¥5,320,405.

      The increase in receivables was primarily due to an increase in business contracts in fiscal 2008. The increase in inventory was due to
hardware purchase. The increase in accounts payable and accrued liabilit ies was due to the increase in raw materials such as steel products and
chemical materials. Both changes in account receivables and payables reflect the seasonal nature of our business. Our revenue has been subject
to high seasonality and the revenue recognized in the first quarter is us ually the smallest in proportion of that for the whole year in most cases,
due to our clients’ budgeting and planning schedule. Nevertheless, we continued to experience steady demand for our services from our oil
industrial client base.

      Cash fro m Investing Activities . Net cash used in investing activities was ¥13,278,359 ($1,946,260) for the year ended June 30, 2008,
compared to net cash used for investing activities of ¥-4,851,013 fo r the year ended June 30, 2007. The cash resulting fro m inv esting activities
for the year ended June 30, 2008 was fro m purchasing property and equipment and issuing note receivable of ¥ 6,500,000 ($952,730).

     Cash fro m Financing Activit ies . Cash flows provided by financing activ ities amounted to ¥6,787,423 ($994,859) for the year ended
June 30, 2008 and ¥6,369,713 for the year ended June 30, 2007. For the year ended June 30, 2008, cash used in financing activities was for the
payment of notes payables.

      Working Capital . Total current assets at June 30, 2008 amounted to ¥69,759,316 ($10,224,891), an increase of approximately
¥17,473,793 co mpared to ¥52,285,523 at June 30, 2007. The increase was attributable mainly to an increase in the amount of trade receivables
resulting fro m h igher revenues and inventories.

     Current liab ilit ies amounted to ¥52,021,179 ($7,624,944) at June 30, 2008, in co mparison to ¥56,371,307 at June 30, 2007. Th is decrease
has been attributed to the fact that our company paid out large sums of money to suppliers and received less payment fro m cus tomers.

     The current ratio increased fro m 0.93 at June 30, 2007 to 1.34 at June 30, 2008. The change in our current rat io was primarily d ue to the
growth of 2008 revenues, which resulted in substantial growth in current assets. We believe that this change in the current r atio indicates strong
operating liquid ity for us.

      Capital Resources . We have obtained working capital in 2007 and 2008 through operating activities and financing activit ies.

Quantitati ve and Qualitati ve Disclosures about Market Risk
      Interest Rate Risk . Our exposure to interest rate risk primarily relates to interest income generated by excess cash invested in liquid
investments with original maturities of three months or less. Such interest -earning instruments carry a degree of interest rate risk. We have not
used any derivative financial instruments to manage our interest rate exposure. We have not been exposed to material risks du e to changes in
interest rates. However, our future interest income may be lo wer than expected due to changes in market interes t rates.

      Foreign Exchange Risk . Virtually all o f our revenues and costs are denominated in RM B and substantially all of our assets and liabilit ies
are denominated in RM B. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be impacted by
fluctuations in the exchange rate between U.S. dollars and RMB. If the RM B depreciates against the U.S. dollar, the value of o ur RM B
revenues and assets as expressed in U.S. dollars in our financial statements will decline. A lthough the conversion of the RMB is highly
regulated in China, the value of the RM B against the value of the U.S. dollar or any other currency nonetheless may fluctuate in value within a
narrow band against a basket of certain foreign currencies. Ch ina is currently under significant in ternational pressures to liberalize this
government currency policy, and if such liberalization were to occur, the value of the RMB could appreciate or depreciate aga inst the U.S.
dollar. We do not use derivative instruments to reduce our exposure to foreign currency risk.

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     In addition, the RM B is not a freely convertible currency. Recon -JN, our Ch inese subsidiary, is not permitted to pay outstanding current
account obligations in foreign currency, but rather must present the proper documentation to a designated foreign exchange bank. We cannot
guarantee that all future local currency can be repatriated.

       Inflat ion . Although China has experienced an increasing inflat ion rate, inflation has not had a material impact on our results of oper ations
in recent years. According to the National Bureau of Statistics of China, the change in the consumer price index in Ch ina was 0.46%, (0.77%),
and 1.16% in 2001, 2002 and 2003, respectively. However in connection with a 3.9% increase in 2004, the Ch inese government an nounced
measures to restrict lending and investment in Ch ina in o rder to reduce inflationary pressures in China ’s economy. Following the government’s
actions, the consumer price index decreased to 1.8% in 2005 and to 1.5% in 2006. In 2007, the consumer price index increased to 4.8%. In
response, China’s central bank, the People ’s Bank of Ch ina, announced that the bank reserve ratio would rise half a percentage point to 15.5%
in an effo rt to reduce inflation pressures. China’s consumer price index growth rate reached 8.7% year -over-year in 2008. The results of the
Chinese government’s actions to combat inflation are difficult to predict. Adverse changes in the Chinese economy, if any, will likely impact
the financial performance of a variety of industries in China that use or would be candidates to use our services and products.

       Taxation . Under the current law o f the Cay man Islands, we are not subject to tax on inco me or capital gain. Prior to January 1, 2008,
under PRC laws and regulations, a company established in Ch ina was typically subject to a state oilfield service rise income tax rate of 30%
and a local oilfield service rise tax rate of 3% on its taxable inco me. PRC laws and regulations also provide foreign -invested oilfield service
rises established in certain areas in the PRC with preferential tax treat ment. Since January 1, 2008, Ch ina has mandated a unified oilfield
service rise inco me tax rate of 25% with unified preferential tax treat ment measures. As our Cayman Islands business entity is controlled by
PRC residents and managed from the PRC, it is categorized as Resident oilfield service enterprise under the 2007 PRC Enterprise Income Tax
Law (together with the Implementing Regulat ions promulgated thereunder, ―the New EIT Law‖). As a result of this classification, we are
subject to the PRC’s Enterprise Inco me Tax (―EIT‖).

      We currently are subject to reduced EIT at 15% on taxable profits in Ch ina as compared to the statutory rate of 25%. Maintain ing of this
preferential EIT treat ment is subject to us being recognized as a Qualify ing High Technology oilfield service enterprise after th e assessment per
new rules. We are currently recognized as a Qualifying High Technology oilfield service enterprise, but there can be no guara ntee that we will
continue to qualify as such in the future, under present or future applicable rules. Sales tax varies fro m 3% to 17%, depending on the nature of
the revenue. For revenues generated from those parts of our software solutions which are recognized by and registered with go vernment
authorities and meet government authorities ’ requirements to be treated as software products, we are entitled to receive a refund of 14% on the
total Value-added Tax (―VAT‖) paid at rate of 17%. Revenues from software products other than the above are subject to full VA T at 17%. In
addition, we are currently exempted fro m sales tax for revenues generated from development and transfer tailor-made software products for
clients; further, revenues from our consulting services are subject to a 5% sales tax. As a co mpany that qualifies to issue VAT invoices, we
must maintain a certain amount of revenue taxable in the name of VAT. As such, we may have to refuse some of the tax exemp tio n benefit in
our tailor-made software develop ment business and pay VAT for those parts of the revenue in order to maintain min imu m VAT revenue
thresholds. This practice may cease to apply if more of our software products is matured, recognized and registered as softwa re products in the
PRC.

       Any failure to remain eligib le and qualified for these favorable tax treat ments would likely have a materially adverse effect on our
company and would subject us to taxes significantly greater than we currently pay. For example, loss of the reduced EIT rate would raise our
taxab le rate to 25% and loss of the VAT refund would effectively increase our effect ive VAT rate by 14%.

Operating Lease Agreements
     We lease offices in Beijing, Nanjing, Shandong and Xiamen. The amounts of commit ments for non -cancelable operating leases for 2009,
2010 and 2011 were as follows. All the lease agreements will exp ire in 2010.

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                                                                                                                     Chinese Yuan
                                                                                                                        (RMB)               U.S. Dollars
                                                                                                                                            (Unaudited)
2009                                                                                                                ¥    456,860        $        60,018
2010                                                                                                                ¥     97,200        $        12,769
2011                                                                                                                ¥        —          $           —

Recently Issued Accounting Standards
      In June 2006, the Financial Accounting Standards Board (―FASB‖) issued Financial Interpretation No. 48, Accounting for Uncertainty in
Income Taxes—an interpretation of FASB Statement No 109 (―FIN 48‖). FIN 48 prescribes a recognition threshold and measurement attribute
for the financial statement recognition and meas urement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides
guidance on de-recognition classification, interest and penalties, accounting in interim periods, disclosure, and transition. The interpreta tion is
effective fo r the fiscal years beginning after December 15, 2006. The adoption of this interpretation had no impact on the Co mpany ’s
consolidated and combined financial statements.

       In September 2006, the Financial Accounting Standards Board issued SFAS No. 157, Fair Value Measurements (―SFAS No. 157‖),
which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures
about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years. In February 2008, the FASB issued FASB Staff Position (―FSP FIN‖) No. 157-2 which extended the effective date for certain
nonfinancial assets and nonfinancial liab ilit ies to fiscal years beginning after November 15, 2008. The Co mpany does not expect the adoption
of SFAS No. 157 to have a material impact on our consolidated and combined financial statements.

     In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (―SFAS
No. 159‖). SFAS No. 159 permits companies to choose to measure many financial instruments and certain other items at fair value. SFAS
No. 159 is effect ive for financial statements issued for fiscal years beginning after November 15, 2007. The Co mpany does not expect the
adoption of SFAS No. 159 to have a material impact on our consolidated and combined financial statements.

      In June 2007, the Emerging Issues Task Force of the FASB is sued EITF Issue No. 07-3, Accounting for Nonrefundable Advance
Payments for Goods or Services to be Used in Future Research and Development Activities , (―EITF 07-3‖) wh ich is effective for fiscal years
beginning after December 15, 2007. EITF 07-3 requires that nonrefundable advance payments for future research and development activ ities be
deferred and capitalized. Such amounts will be recognized as an expense as the goods are delivered or the related services are performed. EITF
07-3 is not expected to have a material impact on our results of operations or financial position.

      In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (―SFAS No.141(R)‖), and SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statements (―SFAS No. 160‖). SFAS No. 141(R) requires an acquirer to measure the
identifiable assets acquired, the liabilities assumed and any non -controlling interest in the acquiree at their fair values on the acquisition date,
with goodwill being the excess value over the net identifiable assets acquired. SFAS No. 160 clarifies that a non-controlling interest in a
subsidiary should be reported as equity in the consolidated financial statements, consolidated net income shall be adjusted t o include the net
income attributed to the non-controlling interest and consolidated comprehensive income shall be adjusted to include the comprehensive
income attributed to the non-controlling interest. The calcu lation of earn ings per share will continue to be based on income amo unts
attributable to the parent. SFAS No. 141(R) and SFAS No. 160 are effect ive for financial statements issued for fiscal years beginning after
December 15, 2008. Early adoption is prohibited. The Co mpany has not yet determined the effect on our consolidated financial statements, if
any, upon adoption of SFAS No. 141(R) or SFAS No. 160. SFAS No. 141(R) and SFAS No. 160 are not expected to have a material impact on
our results of operations or financial position.

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                                                                  OUR B US INESS

General
      We are a provider of co mputer software and hardware solutions to companies in the petroleum mining and extraction industry. W e
provide services designed to automate and enhance the extraction of petro leu m in Ch ina. To this end, the Do mestic Co mpanies and we have
developed specialized software and hardware to manage the oil ext raction process in real-t ime and to reduce the costs associated with
extraction.

       We believe that one of the most important advancements in China’s petroleu m industry has been the automation of significant segments
of the exploration and ext raction process. The Do mestic Co mpanies ’ and our automation products and services allow petroleu m min ing and
extraction co mpanies to reduce their labor requirements and improve the productivity of oil fields. The Do mestic Co mpanies ’ and our solutions
allo w our customers to locate productive oil fields more easily and accurately, imp rove control over t he extraction process, increase oil yield
efficiency in tert iary stage oil recovery, and improve the transportation of crude oil through the mining process.

Market B ackground
      China is the world’s second-largest consumer of petroleu m products, third-largest importer of petro leu m and sixth-largest producer of
petroleum. In the last twenty years, China’s demand for o il has more than tripled, wh ile its production of oil has only modestly increased.
China became a net importer o f petroleu m in 1983, and, as a res ult, o il production in Ch ina has been aimed at meeting domestic requirements.
The oil industry in Ch ina is dominated by three state-owned holding companies: China National Petroleu m Corporation (CNPC), China
Petroleu m and Chemical Corporation (Sinopec) and China National Offshore Oil Corporat ion (CNOOC). Foreign companies have also recently
become involved in Ch ina’s petroleum industry; however, according to Chinese law, China’s national o il co mpanies may take a majority (or
minority) stake in any co mmercia l discovery. As a result, the number of majo r foreign co mpanies involved in the industry is relatively limited:
Agip, Apache, BP, ChevronTexaco, ConocoPhillips, Eni, ExxonMobil, Husky Energy, Kerr-McGee, M itsubishi, Royal Dutch Shell, Saudi
Aramco, and Total.

       In the past, China’s petroleum co mpanies mined for petro leu m by leveraging its abundance of inexpensive labor, rather than fo cusing on
new technologies. For examp le, a typical, traditional oil field with an annual capacity of 1,000,000 tons would require between 10,000 and
20,000 laborers. By contrast, when Baker CAC products were emp loyed to exp lore and automate Cainan Oil Field, a desert oil field in
Xin jiang, annual capacity fo r the field reached 1,500,000 tons. Moreover, only 400 emp loyees were requ ired to manage the oil field. After the
introduction of Baker CA C’s products into China’s petroleum industry, Chinese companies have also sought to provide automation solutions.

       In the primary oil recovery stage, oil pressure in an oil reservoir may be h ig h enough to force oil to the surface. Approximately 20% of o il
may be harvested at this stage. The secondary oil recovery stage accounts for another 5% to 15% of o il recovery and involves such efforts as
pumps to extract petroleu m and inject ion of water, natural gas, carbon dio xide or other gasses into the oil reservoir to fo rce oil t o the surface.
Most oil fields in China have now entered into the tertiary stage of oil recovery, at which oil extraction beco mes increasing ly difficult and
inefficient. Tertia ry recovery generally focuses on decreasing oil viscosity to make extraction easier and accounts for between 5% and 15% of
oil recovery. Our efforts in tertiary recovery focus on reducing water content in crude oil in order to make extraction more efficient.

China’s Economic Development
      China’s population of appro ximately 1.3 billion people is expected to grow by roughly 15 million people per year. The country’s gross
national product has grown at a rate of appro ximately 9 percent for more than 25 years, ma king it the fastest growth rate for a major econo my
in recorded history. In the same 25 year period, China has moved more than 300 million people out of poverty and quadrupled the average
Chinese person’s income. The tremendous potential of this market is noted by the fact that 400 of the world’s largest 500 co mpanies are
investing in China.

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       These development factors have produced a burgeoning consumer goods market, as the spending power and aspirations of consumer s
rise. In response, industries are consolidating and modern retailers are penetrating second -tier and even some third -tier Chinese cities. We
believe that the need to modernize China’s supply chain infrastructure is increasing at a dramatic rate. The appearance of modern retailers in
China is also generating demand for mo re efficient and reliab le systems and services.

Our Products
      Recon-JN, through the Domestic Co mpanies, provides services designed to automate and enhance the extraction of petroleu m in China.
To this end, the Domestic Co mpanies and we have developed our own specialized software and hardware to manage the oil ext ract ion process
in real-t ime and to reduce the costs associated with extraction. We derive substantially all of our revenues from the license and imp lementation
of software applicat ions and hardware innovations for the Chinese petroleu m industry. These products and services include:

      •   RSCADA . RSCADA is Nanjing Recon’s industrial co mputerized process control system for mon itoring, managing and controlling
          petroleum extraction. RSCADA integrates the underground, ground and above -ground levels of the petroleum extract ion industry.
          RSCADA connects the above-ground level central control roo m with the ground level relay station and the relay station with the
          underground bottom intelligent terminal using the 2.4G wireless frequency. RSCADA has received grants and awards from the State
          Ministry of Science and Technology and the city of Nanjing.
      •   Oil Field Water Finding/Blocking Technology . BHD has developed and imp lemented technology designed to find and block water
          content in petroleum. As China ’s extraction of o il has increased, the quantity of available o il has decreased and the water content in
          remain ing oil has increased. In order to imp rove efficiency and profitability in extraction, BHD have developed technology to reduce
          the amount of water in our extracted petroleu m.

      •   High-Efficiency Heating Furnaces . Crude petroleu m 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 solidificat ion and blockage in transport pipes,
          companies employ heating furnaces. BHD researched, developed and imp lemented a new oil field furnace that is advanced, highly
          automated, reliable, easily operable, co mparatively safe and highly heat efficient (90% effic iency).
      •   Multi-Purpose Fissure Shaper . BHD has also developed a multipurpose fissure shaper to improve our ability to test for and extract
          petroleum. Before any petroleu m extractor can test for the presence of oil, it must first perforate a hole for testing. The depth of the
          perforated hole is, of course, ext remely important in the testing process: a hole that is too shallow may cause an extractor to miss an
          oil field entirely. BHD has developed a proprietary multipurpose fissure shaper that is use d with the perforating gun to effectively
          increase the perforation depth by between 46 and 80%, shape a great number of stratum fissures, imp rove the stratum diversion
          capability and, as a result, improve our ability to locate oil fields and increase the o utput of oil wells.
      •   Acoustic pipeline monitoring system . Nan jing Recon’s acoustic oil and gas pipeline safety monitoring system has been widely used
          by Sinopec. We are also cooperating with Sinopec to implement our solutions in imports instrumentation, the introduction of
          equipment and oilfield chemical additives.

Customers
     We have provided services to Sinopec and CNPC, the two major Chinese state -owned companies responsible for on-shore petroleum
mining and extract ion. We have conducted automation projects for plants in three of Ch ina ’s four highest producing oil fields, Daqing, Shengli
and Xinjiang. We have undertaken the automation projects at the following locations, among others:
      Sinopec

      •   Jiangsu Oil Field
      •   Shengli Oil Field
      •   Xin jiang Oil Field

      •   Zhongyuan Oil Field
      •   Sichuan Oil Field
      •   Jianghan Oil Field

      •   Puguang Oil Field

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      We provide products services to Sinopec under a series of agreements, each of which is terminable without notice. We first be gan to
provide services to Sinopec in 1998. Sinopec accounted for approximately 40% of our revenues in each of 2007 and 2008, and any termination
of our business relationships with Sinopec would materially harm our operations.

      CNPC

      •   Huatugou Oil Field
      •   Qinghai Oil Field
      •   Sebei Gas Field

      •   Lu liang Oil Field
      •   Tuha Oil Field
      •   Daqing Oil Field

      •   Jidong Oil Field
     We provide products 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 60% of our revenues in each of 2007 and 2008, and any termination of
our business relationships with CNPC would materially harm our operations.

Our Strengths
      •   Safety of Products . The automat ion 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 petro leu m co mpanies by enabling
          them to monitor, manage and control petroleum extract ion; increase the amount of petroleum ext racted 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
          Co mpanies are based in Ch ina, we are in a unique position to emphasize Chinese culture and business knowledge to obtain new
          customers. We believe that many Chinese businesses, including state-owned companies like Sinopec and CNPC, would p refer to hire
          a Ch inese company to assist in their business operations if a Ch inese 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 oil field
          management methods. We provide our software solutions in Mandarin for the benefit of our Ch inese customers, and all of ou r
          customer support is available fro m fluent personnel.
      •   Experienced, Successful Executive Management Team . Our executive management team has significant experience and success in the
          petroleum auto mation 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 co mparable p roducts.

      •   We own our own intellectual property . Because we own our intellectual property, we are able to avoid licensing fees or contravening
          licensing agreements.
Our Strategy
      Our goal is to help our customers execute improve their efficiency and profitability by providing them with software and hard ware
solutions and service to improve their ability to locate productive oil reservoirs, manage the oil extract ion process, reduce extraction costs, and
enhance recovery from extraction activ ities. Key elements of our strategy include:
      •   Increase our market share in China . We believe that as the Chinese economy and oil industry continue to develop, Chinese
          petroleum extraction automat ion companies will co mpete with international businesses at an increasing rate. Consequently, we
          believe we will have opportunities to take market share fro m foreign companies by developing positive business relationships in
          China’s petroleu m min ing and extraction

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          industry. We will also use strategic advertisements, predominantly in Ch ina’s northeast and northwest, where China’s major o il fields
          are located, to increase our brand awareness and market penetration. We will continue to develop new technologies designed to
          improve petroleu m min ing and extraction efficiency and profitability for our customers.

      •   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 in dustry
          that have traditionally held the highest profit margins.
      •   Offer services to foreign oil fields contracted by Chinese petroleum companies . As Sinopec and CNPC continue to invest in oil fields
          in other countries, we will focus on offering our services in these new locations based on our success in working with the comp anies
          in China.
      •   Seek opportunities with foreign countries in China . Even where o il fields in Ch ina are part ially operated by foreign co mpanies, a
          significant number of emp loyees will be Ch inese and will benefit fro m our Ch inese-language services. We believe our hardware and
          software solutions would beneficial to any petroleu m co mpany doing business in Ch ina and will market to foreign co mpanies ent ering
          the Chinese market.

      •   Provide services that generate high customer satisfaction levels . Ch inese 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.

Competiti on
      We face competit ion fro m a variety of foreign and domestic co mpanies involved in the petroleu m mining automat ion industry. Wh ile we
believe we effectively co mpete in our market, our co mpetitors occupy a substantial market share.

      A few of our existing competitors, as well as a number of potential new co mpetitors, have significantly greater financial, technical,
market ing and other resources than we do, wh ich could provide them with a significant co mpetitive advantage over us. We canno t guarantee
that we will be ab le to compete successfully against our current or future co mpetitors in our industry or that competition will not have a
material adverse effect on our business, operating results and financial condition.

      Our primary domestic co mpetitors include the fo llo wing:
      •   Beijing Tianshangxing Measurement & Control Technology Research Institute (China Aerospace Industry Corporation) ( “CAIC”) .
          CAIC is a state-owned venture, which has developed a system that was accredited by the China Aerospace Industry Corporation in
          1997. The system has been applied to ten oil wells in Jidong Oil Field and 50 o il wells in the No. 2 Oil Ext raction Factory of Shengli
          Oil Field.
      •   Beijing Satellite Science & Technology Co., Ltd . (―BSS‖). BSS has been retained to provide RSCADA system integrations for
          platforms at Shengli Oil Field at sea.

      •   Beijing Echo Technologies Development Co ., Ltd. (“BET”) . BET provides a co mbination of software and hardware products for
          industrial automatic control systems in the petroleu m industry. BET currently engages in research and development of software and
          hardware applied to industrial automat ic control systems, manufacturing and installat ion of industrial auto mation instruments and
          integration of automatic control products.
      •   Beijing Golden-Time Petroleum Measurement Technology Co., Ltd. ( “BGT”) . BGT develops analysis software used in oil fields and
          does not yet produce a substantial amount of hardware p roducts.
      •   Jinan GigaNano Industry Co., Ltd. (“JGI”) . JGI has developed a ratio monitoring system to provide real t ime measurement an d
          recording of oil extraction operating parameters.

      Our primary foreign competitors include the following:

      •   Schlumberger Limited (“Schlumberger”). Schlumberger is an oilfield services provide for oil and gas companies around the world.
          Schlu mberger recently launched the Contact family of mu ltistage fracturing and comp letion services, which have integrated
          stimulat ion technologies.
      •   Baltur Technologie Per IL Clima (“Baltur”) . Baltur designs advanced products for the high performance burner, boiler and air
          conditioning markets.
      •   Honeywell International, Inc. (“Honeywell”). Honeywell p rovides diversified products and services including aerospace products and
          services, control technologies for build ings, homes and industry, automotive products, turbochargers, and specialty materials .

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      •   Emerson Process Management (“Emerson”) . Emerson is a global supplier of products, services, and solutions that measure, analyze,
          control, automate, and imp rove process -related operations.

      •   Rockwell Automation, Inc. (“Rockwell”) . Rockwell provides industrial automat ion power, control and informat ion solutions to a
          wide range of industries. Rockwell provides both stand-alone, industrial co mponents and enterprise-wide integrated systems.

Research and Development
      We focus our research and development efforts on improving our development efficiency and the quality of our products and ser vices. As
of March 17, 2009, our research and development team consisted of 27 experienced engineers, develope rs and programmers. In addition, some
of our support emp loyees regularly participate in our research and development programs.

     In the fiscal years ended June 30, 2008 and 2007 and the six months ended December 31, 2008, we spent ¥101,288 ($14,846), ¥3,235 and
¥210,478 ($30,851), respectively, on research and development activities.

Proprietary Rights
      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
fro m our technology without paying for it. We rely on a co mbination of trademark, trade secret, copyright law and contractual restrictions to
protect the proprietary aspects of the Domestic Co mpanies ’ and our technology. We seek to protect the source code to the Domestic
Co mpanies’ and our software, documentation and other written materials under trade secret and copyright laws. While we actively t ake steps to
protect the Domestic Co mpanies ’ and our proprietary rights, such steps may not be adequate to prevent the infringement or misappropriation of
the Domestic Co mpanies’ and our intellectual property. Th is is particularly the case in China where t he laws may not protect our proprietary
rights as fully as in the United States.

      We license the Do mestic Co mpanies ’ 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 Co mpanies ’ and our intellectual property by requiring employees and independent consultants to execute
confidentiality agreements.

      Although the Domestic Co mpanies and we develop our software products, each is based upon middleware developed by third parties. We
integrate this technology, licensed by our customers fro m 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 dev eloped, 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 init iate claims or
lit igation against third parties for infringement of our proprietary rights or to protect our trade secrets. Although the Domestic Companies and
we may d isclaim certain intellectual property representations to our customers, these disclaimers may not be sufficient to fu lly 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 Do mestic Co mpanies and us to enter into royalty or license agreements. Royalty or licensing agreements, if requir ed, 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 indemn ity clause under which we agree to indemnify and hold
harmless our customers and business partners against liability and damages arising fro m claims of various copyright or other intellectual
property infringement by the Do mestic Co mpanies ’ and our products. We

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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.

China’s Intellectual Property Rights Enforcement System
       In 1998, China established the State Intellectual Property Office (―SIPO‖) to coordinate Ch ina’s intellectual property enforcement efforts.
SIPO is responsible for g ranting and enforcing patents, as well as coordinating intellectual property rights related to copyr ights and trademarks.
Protection of intellectual property in Ch ina follows a t wo-track system. The first track is ad min istrative in nature, whereby a holder of
intellectual property rights files a comp laint at a local ad min istrative office. Determining wh ich intellectual property agency can be confusing,
as jurisdiction of intellectual property matters is diffused throughout a number of government agencies and offices, wh ich ea ch typically
responsible for the protection afforded by one statute or one specific area of intellectual p roperty-related law. The second track is a judicial
track, whereby co mplaints are filed through the Chinese court system. Since 1993, Ch ina has maintained various intellectual p roperty tribunals.
The total volume o f 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 o ur company is
the inexperience of Ch ina in connection with the development and protection of int ellectual property rights. Similar to the Un it ed States, China
has chosen to protect software under copyright law rather than trade secrets, patent or contract law. As such, we will attemp t 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, Ch ina is currently in the proc ess of developing such
interpretations.

Regulati on on Software Products
       On October 27, 2000, the Min istry of Information Industry issued the Admin istrative Measures on Software Products, or the Software
Measures, to strengthen the regulation of software products and to encourage the development of t he Chinese software industry. Under the
Software Measures, a software developer must have all software p roducts imported into or sold in China tested by a testing or ganizat ion
approved by the Ministry of Information Industry. The software products must be registered with the Min istry of Informat ion Industry or with
its provincial branch. The sale o f unregistered software products in Ch ina is forb idden. Software products can be registered for five years, and
the registration is renewable upon expiration. Although Nanjing Recon’s current software products were reg istered in 2008, there can be no
guarantee that the registration will be renewed in 2013 o r that the Do mestic Co mpanies ’ and our future products will be registered.

Regulati on of Intellectual Property Rights
     China has adopted legislation governing intellectual property rights, including trademarks and copyrights. China is a signato ry to the
main international conventions on intellectual property rights and became a member of the Agreement on Trade Related Aspe cts of Intellectual
Property Rights upon its accession to the WTO in December 2001.

      Copyright . China adopted its first copyright law in 1990. The Nat ional People ’s Congress amended the Copyright Law in 2001 to widen
the scope of works and rights that are elig ible for copyright protection. The amended Copyright Law extends copyright protection software
products, among others. In addition, there is a voluntary registration system ad min istered by the China Copyright Protection Center. Unlike
patent and trademark reg istration, copyrighted works do not require registration for p rotection. Protection is granted to individuals fro m
countries belonging to the copyright international conventions or bilateral agreements of which China is a member. Nanjing Re con has two
copyrights for software programs.

       Trademark . The Ch inese Trademark Law, adopted in 1982 and rev ised in 1993 and 2001, protects registered trademarks. The Trademark
Office under the Chinese State Admin istration for Industry and Commerce handles trademark reg istrations 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 Do mestic Co mpanies and we have registered a number of product names with the
Trademark Office.

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Regulati ons on Foreign Exchange
      Foreign Currency Exchange . Pursuant to the Foreign Currency Admin istration Rules pro mulgated in 1996 and amended in 1997 and
various regulations issued by State Administration of Foreign Exchange, or the SAFE, and other relevant PRC government author ities, the
RM B is freely convertible only to the extent of current account items, such as trade related receipts and payments, interests and dividends.
Capital account items, such as direct equity investments, loans and repatriation of investment, require prior approval fro m t he SAFE or its
provincial b ranch for conversion of RM B into a foreign currency, such as U.S. dollars, and remittance of the foreign currency outside the PRC.
Payments for transactions that take place within the PRC must be made in RM B. Un less otherwise approved, PR C co mpanies must repatriate
foreign currency payments received fro m abroad. Fo reign-invested enterprises may retain foreign exchange in accounts with designated foreign
exchange banks subject to a cap set by SAFE or its local counterpart. Unless otherwise approved, domestic enterprises must convert all o f their
foreign currency receipts into RMB. Pay ments to Recon-CI, a Cay man Islands company, will need to co mply with these regulations on
conversion of RM B and pay ment of amounts outside China.

      Dividend Distribution . The principal regulations governing divided distributions by wholly fo reign -owned enterprises and Sino-foreign
equity joint ventures include:

      •   Wholly Foreign-Owned Enterprise Law (1986), as amended;
      •   Wholly Foreign-Owned Enterprise Law Imp lementing Ru les (1990), as amended;
      •   Sino-foreign Equity Joint Venture Enterprise Law (1979), as amended; and

      •   Sino-foreign Equity Joint Venture Enterprise Law Imp lementing Rules (1983), as amended.

      Under these regulations, wholly foreign-owned enterprises and Sino-foreign equity jo int ventures in the PRC may pay div idends only out
of their accu mulated profits, if any, as determined in accordance with PRC accounting standards and regulations. Addition ally, these
foreign-invested enterprises are required to set aside certain amounts of their accumulated profits each year, if any, to fund certain reserve
funds. These reserves are not distributable as cash dividends. These regulations apply to any dividen ds payable fro m Recon-JN to Recon-HK
and Recon-CI.

      Regulation of Foreign Exchange in Certain Onshore and Offshore Transactions . Under recent notices issued by the PRC St ate
Admin istration of Foreign Exchange, or SAFE, PRC residents are required to reg iste r with and receive approvals fro m SA FE in connection
with offshore investment activities. SAFE has stated that the purpose of these notices is to ensure the proper balance of foreign exchange and
the standardization of cross-border flow of funds.

      In January 2005, SAFE issued a notice stating that SAFE approval is required for any sale or transfer by PRC residents of a PRC
company’s assets or equity interests to foreign entities in exchange for the equity interests or assets of the foreign entities. The notice also states
that, when registering with the foreign exchange authorities, a PRC co mpany acquired by an offshore company must clarify wh et her the
offshore company is controlled or owned by PRC residents and whether there is any share or asset link betwee n or among the parties to the
acquisition transaction.

       In April 2005, SAFE issued another notice further exp lain ing and expanding upon the January notice. The April notice clarifie d that,
where a PRC co mpany is acquired by an offshore company in wh ich PRC residents directly or indirectly hold shares, such PRC residents must
(i) reg ister with the local SAFE branch regard ing their respective ownership interests in the offshore company, even if the trans action occurred
prior to the January notice, and (ii) file amend ments to such registration concerning any material events of the offshore company, such as
changes in share capital and share transfers. The April notice also expanded the statutory definition of the term ―foreign acquisition,‖ making
the notices applicable to any transaction that results in PRC residents directly or indirect ly holding shares in the offshore company that has an
ownership interest in a PRC co mpany. The April notice also provided that failure to co mply with the registration procedures set forth therein
may result in the imposition of restrictions on the PRC co mpany ’s foreign exchange activities and its ability to distribute profits to its offshore
parent company.

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      On October 21, 2005, SAFE issued a new public notice concerning PRC residents ’ investments through offshore investment vehicles.
This notice took effect on November 1, 2005 and rep laces prior SAFE notices on this topic. According to the November 2005 no tice:

      •   any PRC resident that created an off-shore holding company structure prior to the effective date of the November notice must submit
          a registration form to a local SAFE branch to register his or her ownership interest in the offshore company o n or before May 31,
          2006;
      •   any PRC resident that purchases shares in a public offering of a foreign co mpany would also be required to register such shar es an
          notify SAFE of any change of their ownership interest; and
      •   following the complet ion of an off-shore financing, any PRC shareholder may transfer proceeds fro m the financing into Ch ina for use
          within Ch ina.

      In accordance with the October 2005 notice, on August 6, 2007, our PRC shareholders previously filed appropriate registration materials
with their local SAFE offices.

     As a Cayman Islands company and, therefore, a foreign entity, if we purchase the assets or equity interest of a PRC co mpany o wned by
PRC residents, such PRC residents will be subject to the registration procedures described in the notices. Moreover, PRC residents who are
beneficial holders of our shares are required to reg ister with SAFE in connection with their investment in us.

     As a result of the lack of imp lementing ru les and other uncertainties concerning how the SAFE notices will be interpreted or
implemented, we cannot predict how they will affect our business operations or future strategy. For examp le, Recon -JN’s, Reco n-HK’s and any
prospective PRC subsidiaries’ ability to conduct foreign exchange activities, such as remittance of dividends and foreign currency denominated
borrowings, may be subject to compliance with SAFE registration requirements by such PRC residents, over whom we have no cont rol.
Although each of our shareholders has made the requisite filings, we have no control over the outcome of such registration pr ocedures. Such
uncertainties may adversely affect our business and prospects.

Empl oyees
     As of March 17, 2009, we had 96 emp loyees, all of whom were based in Ch ina. Of the total, 15 were in management, 6 were in te chnical
support, 27 were in research and development, 25 were engaged in sales and marketing, 12 were in financial affairs, and 11 were in
administration. We believe that our relations with our emp loyees are good. We have never had a work stoppage, and our emplo ye es are not
subject to a collective bargaining agreement.

Facilities
     We currently operate in three facilities throughout China. Our headquarters are located in Nanjing. See ―Management’s Discussion and
Analysis of Financial Condition and Results of Operations – Contractual Obligations and Commercial Co mmit ments.‖

               Office                                      Address                           Rental Term                        Space
          Nanjing Recon                    Yongfeng Mansion, 14 Floorth
                                                                                              5 years                        440 square
                                                No. 123 Jiq ing Road                                                           meters
                                                 Nanjing City, PRC
               BHD                      Jinglongguoji Mansion, 18 Floor   th
                                                                                              5 years                        450 square
                                          Chaoyang District, Beijing, PRC                                                      meters
                ENI                            Torch Industrial Garden                        5 years                        200 square
                                                    4 Bu ild ing
                                                      th
                                                                                                                               meters
                                          Jining, Shandong Province, PRC

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                                                                 MANAGEMENT

Executi ve 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                                                           37    Chief Executive Officer and Director
Ms. Liu Jia                                                                25    Chief Financial Officer
Mr. Chen Guangqiang                                                        43    Chief Technology Officer and Director
Mr. Li Hongqi                                                              34    Chief Marketing Officer and Director
Mr. Dennis O. Laing                                                        62    Independent Director
Mr. Nelson N.S. Wong                                                       44    Independent Director
Mr. Hu Jijun                                                               43    Independent Director
Ms. Liao Xiaorong                                                          38    Independent Director

      Yin Shenping. Mr. Yin is our Chief Executive Officer. In 2003 M r. Yin founded Nanjing Recon, a Chinese company that provides
services to automate and enhance the extraction of petroleu m in the PRC, 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 Co mpany fro m 1992 through 1994. M r. Yin has
founded and operated a number of co mpanies: Xiamen Hengda Hait ian Co mputer Network Co., Ltd. (1994), Baotou Hengda Haitian Co mputer
Network Co., Ltd. (1997) and Beijing Jingke Hait ian Electronic Technology Development Co., Ltd. (1999), and Jingsu Huasheng Information
Technology Co., Ltd. (2000). In 2000, Mr. Yin merged the former Nan jing Kingsley Software Engineering Co., Ltd. into Nanjing Recon.
Mr. Yin received his bachelor’s degree in 1991 fro m Nanjing Agricu ltural University in in formation systems.

      Liu Jia. Ms. Liu has served as our Chief Financial Officer since 2008. In 2008 Ms. Liu assisted Heilongjiang Province Jintian Group with
financial due diligence, field surveys and data analysis. While in co llege Ms. Liu served internships in Xinghua Cert ified Public Accountants,
Ltd.; Beijing Zhongweihuahao Accountants Affairs Office; Tiantong Securities Co., Ltd. and Industrial and Co mmercial Bank of Ch ina, which
internships focused on auditing, accounting and data analysis. Ms. Liu received her bachelor’s degree in 2006 fro m Beijing University of
Chemical Technology, School of Economics and Management and her master’s degree in industrial economics in 2009 fro m Beijing Wuzi
University.

      Chen Guangqiang. Mr. Chen has served as our Chief Technology Officer since 2003. Mr. Chen was a geological engineer for t he Fourth
Oil Extract ion Plant of Huabei Oil Field fro m 1985 through 1993. Fro m 1993 through 1999, M r. Chen was a chief engineer for Xinda
Co mpany, CNPC Development Bureau. Fro m 1999 through 2003, Mr. Chen served as the general manager of Beijing Adar. M r. Chen received
his bachelor’s degree in 1985 fro m Southwest Petroleum Institute.

     Li Hongqi. Mr. Li serves as our Chief Market ing Officer. He founded Jining ENI Energy & Technology Co., Ltd. and served as Ch ief
Marketing Officer since 2003. Mr. Li served as a sales manager for Beijing ITL Fiber-Optic Co mmunication Technology Co mpany from 1994
through 1997. Mr. Li served as a vice sales president for Beijing Oil-Land Trade Co mpany fro m 1998 through 2003. Mr. Li received his
bachelor’s degree in 1994 fro m the Second Artillery Force Co mmands Institute.

      Nelson N.S. Wong . Mr. Wong joined our Board of Directors in 2008. 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 su rveying, building surveying,
commercial, retail and industrial agency, and property and facilit ies management. Mr. Wong became the Vice Chairman and CEO of the Vigers
Group in 1993. In 1995 Mr. Wong established the CAN Group, where he has worked continuous ly and continues to serve as the Chairman and
Managing Partner. Mr. Wong received a bachelor’s degree in arts fro m the PLA Institute of International Relat ions in Nanjing in 1983.

      Hu Jijun . M r. Hu joined our Board of Directors in 2008. Fro m 1988 to 2003, M r. Hu served in a variety of positions at our No. 2
test-drill plant, including technician of installation, assets equipment work, electrical

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installation, control room production dispatcher, Deputy Chief Engineer of the Technology Battalion, and Deputy Director of P roduction. Fro m
2003 to 2005 he served as Head of the Integrated Battalion and he is currently the Head of the Transport Battalion, Senior Electric Eng ineer.
Mr. Hu graduated as an automated professional fro m the Ch ina University of Petroleu m in 1988.

      Liao Xiaorong . Ms. Liao jo ined our Board o f Directors in 2008. Fro m 1992 to 1993, Ms. Liao worked for the Liaohe Oilfield. Fro m
1993 to 1995 Ms. Liao served in the Storage and Transportation Room of the Liaohe Oilfield Design Institute. Fro m 2003 through the present,
Ms. Liao has served as a Senior Engineer in the finance department of Petro leu m Engineering for the Southwest Oil and Gas Branch of
Sinopec. Ms. Liao received her degree in oil and gas storage and transportation projects from Southwest Petroleum Un iversity.

      Dennis O. Laing . Mr. Laing joined our Board of Directors in 2008. M r. Laing has practiced law in Rich mond, Virg inia for over 30 years
and currently has his own practice, The Law Offices of Dennis O. Laing. Mr. Laing’s law pract ice centers upon business and corporate law
with special interest in energy, healthcare and technology sectors. Mr. Laing received a bachelor’s degree in govern ment fro m the University of
Virgin ia and a law degree fro m the University of Rich mond. Mr. Laing currently serves as a director of e-Future Informat ion Technology Inc.,
an enterprise solutions software and services company that is listed on the NASDAQ Capital Market (EFUT), and Sino-Global Sh ipping
America, Ltd., a shipping agency that is listed on the NASDAQ Capital Market (SINO).

Executi ve Compensati on
     The following table shows the annual compensation paid by us to Mr. Yin Shenping, our principal executive officer, fo r the years ended
June 30, 2007 and 2008. No other officer had total co mpensation during either of the previous two years of more than $100,000.


                                                        Summary Compensati on Table

                                                                                                                          All Other
Name                                                                                 Year       Salary       Bonus      Compensation       Total   (1)




Yin Shenping
  Chief Executive Officer (Principal Executive Officer)                             2008      $ 80,000       $ —       $         —       $ 80,000
                                                                                    2007      $ 80,000       $ —       $         —       $ 80,000

(1)
       Mr. Yin d id not receive any payments during 2008 or 2007 other than a base salary. Accordingly, we have omitted colu mns for other
       potential co mpensation categories.

Empl oyment Agreements
       We have employ ment agreements with each of our Chief Executive Officer, Chief Technology Officer, Chief Marketing Officer and
Chief Financial Officer. With the exception of the emp loyment agreement with our Chief Financial Officer, each of these emp lo yment
agreements provides for an indefin ite term. Such employ ment 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 meet ings of the Board of Directors, without special leave of absence
fro m 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 emp loy ment agreement for our Ch ief Financial Officer pro vides for a
two-year term, currently expiring on March 12, 2011. Such employ ment agreement may be terminated if the emp loyee 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 Ch ief Financial Officer
and provides her with thirty days ’ written notice of termination.

      Under Chinese law, we may only terminate emp loyment agreements without cause and without penalty by providing notice of
non-renewal one month prior to the date on which the employ ment agreement is scheduled to expire. If we fail to provide this notice or if we
wish to terminate an emp loyment 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 emp loyee 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.

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Stock Opti on Pool
      We have established a pool for stock options for the Domestic Co mpanies ’ and our employees. This pool will contain options to purchase
up to 449,200 of our ordinary shares, subject to a limit of 10% of the nu mber of ordinary shares outstanding at the conclusion of this offering.
The options will vest at a rate of 20% per year fo r five years and have an exercise price of the market price of our shares on the date the options
are granted. Our Board of Directors and shareholders have adopted a stock option plan to be imp lemented following the closing of this offering.
We expect to grant options to certain employees as of the closing of this offering; however, we have not yet determined the n umber of options
or the individuals to who m to grant such options. Any options granted as of the closing of this offering will have an exercis e price equal to the
offering price in this offering.

Board of Directors and Board Committees
      Our board of d irectors currently consists of seven (7) members. We expect that all current directors will continue to serve after this
offering. There are no family relationships between any of our executive officers and directors.

       The directors will be div ided into three classes, as nearly equal in nu mber as the then total number of d irectors permits. Class I directors
shall face re-election at our annual general meet ing of shareholders in 2008 and every three years thereafter. Class II directors shall fac e
re-elect ion at our annual general meet ing of shareholders in 2009 and every three years thereafter. Class III directors shall face re -elect ion at
our annual general meeting of shareholders in 2010 and every three years thereafter.

      If the nu mber of d irectors changes, any increase or decreas e will be apportioned among the classes so as to maintain the nu mber of
directors in each class as nearly as possible. Any additional directors of a class elected to fill a vacancy resulting fro m a n increase in such class
will hold office for a term that coincides with the remaining term o f that class. Decreases in the number of directors will not shorten the term of
any incumbent director. These board provisions could make it mo re difficult for third parties to gain control of our co mpany by making it
difficult to rep lace members of the Board of Directors.

      A director may vote in respect of any contract or transaction in wh ich he is interested, provided, however that the nature of the interest of
any director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote on that matter. A general
notice or disclosure to the directors or otherwise contained in the minutes of a meeting or a written resolution of the direc tors or any committee
thereof that a director is a shareholder of any specified firm o r co mpany 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 relatin g to any particular
transaction.

      There are no membership qualifications for directors. Further, there are no share ownership qualifications for directors unle ss so fixed by
us in a general meeting.

      The Board of Directors maintains a majority of independent directo rs who are deemed to be independent under the definition of
independence provided by NASDAQ Stock Market Ru le 4200(a)(15). Mr. Laing, M r. Wong, Mr. Hu, and Ms. Liao are our independent
directors.

       Currently, three co mmittees have been established under the board: the audit committee, the compensation committee and the nominating
committee. The audit co mmittee is responsible for overseeing the accounting and financial reporting processes of our company and audits of
the financial statements of our company, including the appointment, co mpensation and oversight of the work of our independent auditors. The
compensation committee of the board of directors reviews and makes recommendations to the board regarding our compensation po licies for
our officers and all forms of co mpensation, and also admin isters our incentive compensation plans and equity -based plans (but our board
retains the authority to interpret those plans). The corporate governance committee of the board of directors is responsible for the assessment of
the performance of the board, considering and making reco mmendations to the board with respect to the nominations or electio n s of directors
and other governance issues. All of these committees will consist solely of independent directors.

      There are no other arrangements or understandings pursuant to which our directors are selected or nominated.

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Board of Directors Observers
      In connection with this offering, we have agreed to allow our placement agent to designate two non -voting observers to our Bo ard of
Directors until the earlier of the date that:

      •   the investors that purchase shares in this offering beneficially own less than 10% of our outstanding shares; or
      •   the trading price per share is at least four t imes our in itial public offering price, for any consecutive 15 trading day period.

      Although our placement agent’s observers will not be able to vote, they may nevertheless significantly influence the outcome of matters
submitted to the Board of Directors for approval by virtue of their presence at Board meetings and availability to provide a dvice regarding
matters before the Board of Directors. We have agreed to reimburse the observers for their expenses for attending our Board m eetings, subject
to a maximu m reimbursement of $6,000 per meeting and $12,000 annually per observer. As of the date of this prospectus, Mr. L. McCarthy
Downs, III and Mr. Zhu Ming are serving as our placement agent’s observers to our Board of Directors.

      We have no other arrangement or understandings pursuant to which any of our other directors are selected or nominated .

Duties of Directors
      Under Cay man Islands law, our directors have a fiduciary duty to the company to act in good faith in their dealings with or o n b ehalf of
our 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 fro m opportunities that arise fro m the office o f director;
      •   a duty to avoid conflicts of interest; and
      •   a duty to exercise powers for the purpose for which such powers were intended.

       In general, the Co mpanies Law imposes various duties on officers of a co mpany with respect to certain matters of management a nd
administration of the company. The Co mpanies Law imposes fines on persons who fail to satisfy those requirements or the company itself.
However, in many circu mstances, an individual is only liable if he is knowingly guilty of the default or knowingly and willfu lly authorizes or
permits the default. In co mparison, 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 challeng ing the propriety of a
decision of the directors bears the burden of rebutting the applicability of the presump tions 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.

Director Compensation
      All d irectors hold office until the expiration of their respective terms and until t heir 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 discret ion of the Board of
Directors. Emp loyee directors do not receive any compensation for their services. Non-employee directors are entit led to receiv e $2,000 per
Board of Directors meeting attended. In addition, non-employee directors are entitled to receive compensation for their actual travel expenses
for each Board of Directors meet ing attended.

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Li mitation 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
indemn ified and secured harmless out of our assets and funds against all actions, proceedings, costs, charges, expenses, losses, damages or
liab ilit ies incurred or sustained by him or her in o r about the conduct of our business or affairs or in the execution or d is charge of his or her
duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liab ilit ies
incurred by him in defending (whether successfully or otherwise) any civil proceedings concerning us or our affairs in any co urt whether in the
Cay man Islands or elsewhere. No such director or of ficer will be liab le 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 property; 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 o r 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 fro m the execution or d ischarge of the duties, powers auth orities, or
discretions of his or her office or in relation thereto, unless the same shall happen through his or her own dishonesty.

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                                                        PRINCIPAL S HAREHOLDERS

      The following table sets forth informat ion with respect to beneficial o wnership of our ordinary shares as of March 17, 2009 and as
adjusted to reflect the sale of the ordinary shares offered by us in this offering, for each person known by us to beneficial ly own 5% o r more of
our ordinary shares, and all of our executive officers and directors indiv idually and as a group. 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 indica ted below, and
subject to applicable co mmunity property laws, the persons named in the table have sole voting and investment power with respect to all
ordinary shares shown as beneficially owned by them. Percentage of beneficial o wnership is based on 52,632 shares outstanding as of
March 17, 2009 (assuming no redemption of the redeemab le shares issued to Bloomsway Develop ment Ltd), and 3,958,667 ord inary shares
(minimu m offering) and 4,492,000 ordinary shares (maximu m offering) outstanding after complet ion of this offering. Our majo r shareholders
do not possess voting rights that differ form our other shareholders. The address of each of the below shareholders is c/o Re con Technology
Ltd, Roo m 1401 Yong Feng Mansion, 123 Jiqing Road, Nan jing, People’s Republic of Ch ina 210006.

                                                                                                                       Percentage       Percentage
                                                                                  Pro Forma as        Percentage       Ownership        Ownership
                                                                  Amount of        Adjusted for       Ownership           After            After
                                                                  Beneficial      53.04758-for-1        Before         Minimum          Maximum
                                                                  Ownership         Stock Split        Offering         Offering         Offering
Mr. Yin Shenping                                                     15,000             795,714            28.5 %            20.1 %           17.7 %
Mr. Li Hongqi                                                        20,000           1,060,951            38.0 %            26.8 %           23.6 %
Mr. Chen Guangqiang                                                  15,000             795,714            28.5 %            20.1 %           17.7 %
Bloomsway Develop ment Ltd                                            2,632             139,621             5.0 %             3.5 %            3.1 %
Total                                                                52,632           2,792,000           100.0 %            70.5 %           62.1 %
Directors and Executive Officers as a Group                          50,000           2,652,379             95.0 %           67.0 %           59.0 %

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                                                    RELAT ED PARTY TRANSACTIONS

Recei vables from Related Parties
     At December 31, 2008, (i) Nanjing Recon had had accounts receivable fro m related parties of ¥ 8,658,800 ($1,269,154) fro m Beijing
Yabei Nuoda Technology Co., Ltd., a PRC co mpany previously controlled by one of our principal shareholders, Mr. Chen Guangqiang (―Yabei
Nuoda‖) for sales of goods and services; and (ii) BHD had accounts receivable of ¥600,000 ($87,944) fro m Inner Mongolia Ad ar Energy
Technology, Ltd., a PRC co mpany controlled by one of our principal shareholders, Mr. Chen Guangqiang and his wife (―Inner Mongolia‖) and
accounts receivable of ¥450,000 ($65,958) fro m Wu Yi Hui, an employee of BHD, for pay ment for BHD ’s transfer of BHD’s interest in Inner
Mongolia.

     At June 30, 2008, Nan jing Recon had a receivable fro m a related party, Mr. Yin Shenping, of ¥99,550 ($14,591) for travel advances, and
Xiamen Hengda Haitian Internet Technology, Ltd., a PRC company previously controlled by Mr. Yin (―Hengda Hait ian‖), had a receivable o f
¥140,000 ($20,520) fro m a co mpany under common o wnership, Xiamen Huasheng, for sales of goods and services. Nanjing Recon also had a
purchase advance fro m a related party of ¥22,238 ($3,260) fro m a co mpany under common ownership of Mr. Yin, Nanjing Yo ukong, for the
purchase of goods.

Payable to Related Parties
       At December 31, 2008, (i) BHD had accounts payable to Ning xia BHD, a PRC co mpany previously controlled by one of our principal
shareholders, Mr. Chen Guangqiang, of ¥261,242 ($38,291) for the sale of goods that have not yet been delivered; (ii) BHD had short term
notes payable to Liu Jianchang, the general manager of BHD, of ¥650,000 ($95,273) and Mr. Chen and his wife, of ¥ 236,377 ($34,647);
(iii) Nanjing Recon had payables of ¥11,966 ($1,754) to Huasheng Haitian, ¥193,385 ($28,345) to Hengda Haitian, o f ¥330,000 ($48,369) to
Xiamen Recon, of ¥89,472 ($13,114) to Nan jing You kong, and of ¥50,000 ($7,329) to Xiamen Ying jia, all of which were under co mmon
ownership of Mr. Yin; (iv) Nanjing Recon had payables of ¥27,350 ($4,009) to Wang Bingbing and ¥41,187 ($6,037) to Zhai De Gu i, Nanjing
Recon’s emp loyees; (v) ENI had payables of ¥600,000 ($87,944) to Li Hongqi for working capital purposes; and (vi) Recon-JN had payables
of ¥4,179 ($613) to Chen Guangqiang for expenses paid on behalf of Recon -JN.

       At June 30, 2008, (i) BHD had payables to Ning xia BHD of ¥261,242 ($38,291) and to Huasheng Haitian, a PRC co mpany under
common ownership of M r. Yin Shenping, of ¥ 932,000 ($136,607) for goods purchased; (ii) BHD had payables to Mr. Chen an d his wife of
¥242,070 ($35,481) and to Wu Yi Hu i, its emp loyees, of ¥590,000 ($86,479) for funds extended to supplement BHD ’s working capital;
(iii) Nanjing Recon had accounts payable to Huasheng Haitian, a PRC co mpany under common ownership of Mr. Chen, of ¥ 52,070 ($7,632),
to Cheng Bo, one of Nanjing Recon’s employees, of ¥94,000 ($13,778), to Wang Bingbing, one of Nanjing Recon ’s emp loyees, of ¥67,800
($9,938) and to Xiamen Yingjia, a PRC co mpany under common o wnership of Mr. Yin, of ¥50,000 ($7,329) all for funds exten ded to
supplement Nan jing Recon’s working capital; (iv) Hengda Hait ian had accounts payable to Huasheng Haitian, a PRC co mpany under common
ownership of Mr. Yin , of ¥ 1,500 ($220) and to Xiamen Ying jia, a PRC co mpany under common ownership of Mr. Yin, of ¥428,000 ($62,734)
for funds extended to supplement Hengda Haitian’s working capital; (v) ENI had payables to Mr. Li Hongqi of ¥600,000 ($87,944) for funds
extended to supplement ENI’s working capital; (vi) Yabei Nuoda had accounts payable to Chen Dan, an employee, of ¥136,000 ($19,934) and
to Mr. Yin of ¥ 1,455,101 ($213,280) to supplement its working capital; and (vi) Recon-JN had payables of ¥582 ($85) to Chen Guangqiang for
expenses paid on behalf of Recon-JN.

Related Party Revenue
      There were no related party revenues during the year ended June 30, 2008 or the six month period ended December 31, 2008.

Contractual Arrangements wi th Domestic Companies and their S harehol ders
      We operate our business in China through a series of contractual arrangements with the Do mestic Co mpanies and their sharehold ers. For
a description of these contractual arrangements, see ―Our Co rporate Structure – Contractual Arrangements with Do mestic Co mpanies and their
Shareholders.‖

Relati onshi p with our Pl acement Agent
      In connection with this offering, we have agreed to allow our placement agent to designate two non -voting observers to our Bo ard of
Directors until the earlier of the date that:

      •   the investors that purchase shares in this offering beneficially own less than 10% of our outstanding shares; or

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      •   the trading price per share is at least four t imes our in itial public offering price, for any consecutive 15 trading day period.

      Mr. Downs, our placement agent’s Senior Vice President, currently serves as one of the placement agent’s observers to our Board of
Directors. Our p lacement agent’s observers may impact the decisions of our Board of Directors. The Corporate Governance Co mmittee of our
Board of Directors, wh ich is co mprised solely of independent directors, must approve any future transaction with o ur affiliates.

Founders’ Shares Subject to Redempti on
       As described in more detail in the section entitled ―Placement - Market and Pricing Considerations ‖ our company has been valued on a
forward-looking basis for purposes of this offering. We and our placement agent agreed to value our company at a mult iple of approximately
five times our projected 2010 audited net after-tax income. Based on the valuation of our company at approximately $16,752,000 using this
methodology, our earnings per share would be approximately $0.7459, assuming a maximu m offering (4,492,000 o rdinary shares outstanding
upon completion of the offering).

      Valu ing a co mpany on a forward-looking basis is subject to a number of risks, including the possibility that the company will not achieve
the projected income levels and that world markets may not maintain the same valuation for companies in general in the future . In order to
mitigate some of this risk, each of M r. Yin Shenping, Mr. Chen Guanqiang and Mr. Li Hongqi has agreed to place, on a pro rated basis, that
number of ordinary shares into escrow that is equal to 50% of the maximu m number of shares to be sold in this offering. Upon closing of this
offering, the escrow agent will return any shares in excess of 50% of the actual number of shares sold in the offering. Such escrowed shares are
referred to as the ―Founders’ Shares‖. The Founders’ Shares will remain in escrow with SunTrust Bank pending the filing of our co mpany’s
Form 10-K fo r the year ending June 30, 2010.

      To the extent our audited after-tax earn ings for the year ending June 30, 2010 are less than $0.7459 per share, our co mpany will redeem,
pro rata, the Founders’ Shares without any additional consideration to the extent necessary to cause our audited after-tax earnin gs per share to
be equal to $0.7459. We cannot guarantee that we will be able to redeem a sufficient nu mber of Founders ’ Shares to increase audited after-tax
earnings per share to $0.7459 if our co mpany either has low net inco me or any net losses in 2010. Any remaining Founders ’ Shares will be
released fro m escrow to Mr. Yin, Mr. Chen and Mr. Li upon the earlier of (i) the termination of this offering without closing or (ii) the filing of
the Form 10-K for the year ending June 30, 2010 after redeeming any Founders ’ Shares. See ―Risk Factors - A redemption of shares held by
our founders may be insufficient to cause our company to achieve projected earnings and may re duce our founders’ involvement and stake in
our company.‖

Future Rel ated Party Transactions
      The Corporate Governance Co mmittee of our Board of Directors must approve all related party transactions. All ma terial related party
transactions will be made or entered into on terms that are no less favorable to us than can be obtained from unaffiliated th ird parties. Related
party transactions that we have previously entered into were not approved by independent directors, as we had no independent directors at that
time.

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                                                      DESCRIPTION OF SHARE CAPITAL

      Our authorized capital stock consists of 5,000,000 ordinary shares, par value $0.001 per share. As of the date of this prospectus,
2,792,000 ordinary shares are issued and outstanding. An additional [         ] shares of ordinary shares have been reserved for issuance upon
exercise of outstanding options.

Ordinary Shares
      Holders of ord inary shares are entitled to cast one vote for each share on all matters submitted to a vote of shareholders, including the
election of directors. 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 availab le therefor and subject to any preference of any then authorized and issued preferred s tock. See ―Dividend
Policy.‖ Such holders do not have any preemptive or other rights to subscribe for additional shares. All holders of ord inary shares are ent itled
to share ratably in any assets for distribution to shareholders upon the liquidation, dissolution or winding up of the Co mpa ny, subject to any
preference of any then authorized and issued preferred stock. There are no conversion, redemption or sin king fund provisions applicable to the
ordinary shares. All outstanding ordinary shares are fully paid and nonassessable.

Li mitations on the Right to Own Shares
      There are no limitations on the right to own our ordinary shares.

Li mitations on Transfer of Shares
      Our Art icles of Association gives our directors, at their discretion, the right to decline to reg ister any transfer of shares .

Disclosure of Sharehol der Ownershi p
     There are no provisions in our Memorandum o f Association or Articles of Association governing the ownership threshold above w hich
shareholder ownership must be disclosed.

Changes in Capi tal
      We may fro m t ime to t ime by ordinary resolution increase the share capital by such sum, to be d ivided into shares of such amount, as the
resolution shall prescribe. The new shares shall be subject to the same provisions with reference to the payment of calls, lien, t ransfer,
transmission, forfeiture and otherwise as the shares in the original share capital. We may by ord inary resolution:

      •   consolidate and divide all or any of our share capital into shares of larger amount than our existing shares;
      •   convert all or any of our paid up shares into stock and reconvert that stock into paid up shares of any denomination;
      •   in many circu mstances, 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 wh ich 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
          dimin ish the amount of its share capital by the amount of the shares so cancelled.

      We may by special resolution reduce our share capital and any capital redemption reserve fund in any manner authorized by law .

Differences in Corporate Law
      The Cay man Islands Co mpanies Law is modeled after English law but does not follow many recent English law statutory enactment s. In
addition, the Co mpanies Law d iffers fro m laws applicab le to United States corporations and their shareholders. Set forth belo w is a summary o f
the significant differences between the provisions of the Companies Law applicab le to us and, for co mparison purposes, the laws applicable to
companies incorporated in the State of Delaware and their shareholders.

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      Mergers and similar arrangements
      Cay man Islands law does not provide for mergers as that expression is understood under United States corporate law. However, there are
statutory provisions that facilitate the reconstruction and amalgamation of co mpanies, provided that the arrangement is approved by a majority
in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition repre sent
three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by
proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement mu st be
sanctioned by the Grand Court of the Cay man Islands. While a dissenting shareholder has the right to express to the court the view that the
transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:

      •   the statutory provisions as to the dual majority vote have been met;
      •   the shareholders have been fairly represented at the meeting in question;
      •   the arrangement is such that a businessman would reasonably approve; and

      •   the arrangement is not one that would more properly be sanctioned under some other provision of the Co mpanies Law.

      When a take-over offer is made and accepted (within four months) by holders of not less than 90.0% o f the shares affected, the offerer
may, within a t wo 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 Cay man 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 righ t s, which would
otherwise ordinarily be available to dissenting shareholders of a Delaware corporation, providing rights to receive payment in cash for the
judicially determined value of the shares.

      Shareholders’ suits
      We are not aware of any reported class action or derivative action having been brought in a Cay man Islands court. In principle, the
company itself will normally be the proper plaintiff in actions against directors, and derivative actions may not generally be bro ught by a
minority shareholder. However, based on English authorities, who would in all likelihood be of persuasive authority in th e Cayman Islands,
there are exceptions to the foregoing principle, including when:
      •   a company acts or proposes to act illegally o r ultra vires;
      •   the act complained of, although not ultra vires, required a special resolution, which was not obtained; and

      •   those who control the company are perpetrating a ―fraud on the minority.‖

      Directors’ fiduciary duties
      Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This
duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good fait h, wit h the care that
an ordinarily prudent person would exercise under similar circu mstances. Under this duty, a director must inform himself of, and disclos e to
shareholders, all material in formation reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in
a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for pe rsonal gain or
advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take
precedence over any interest possessed by a director, officer o r controlling shareholder and not shared by the shareholders g enerally. In general,
actions of a director are presu med to have been made on an info rmed basis, in good faith and in the honest belief that the action taken was in
the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should
such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the
transaction was of fair value to the corporation.

       As a matter of Cay man Islands law, a d irector of a Cay man Islands company is in the position of a fiduciary with respect to the company
and therefore it is considered that he owes the follo wing duties to the company – a duty to act bona fide in the best interests of the company, a
duty not to make a profit out of his position as director (unless the company permits him to do so) and a duty not to put himself in a position
where the interests of the company conflict with his personal interest or his duty to a third -party. A director of a Cay man Islands company owes
to the

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company a duty to act with skill and care. It was previously considered that a director need not exh ibit in the performance o f his duties a greater
degree of skill than may reasonably be expected fro m a person of his knowledge and experience. Ho wever, Engl ish and Co mmonwealth courts
have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be fo llowed in the
Cay man Islands.

      Shareholder action by written consent
     Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by
amend ment to its certificate of incorporation. Cay man Islands law and our art icles of association provide that shareholders may approve
corporate 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.

      Shareholder proposals
      Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders,
provided it comp lies with the notice provisions in the governing documents. A special meet ing may be called by the board of d irectors or any
other person authorized to do so in the governing documents, but shareholders may be precluded fro m calling special meetings. Cay man
Islands law and our articles of association allow our shareholders holding not less than 10% of the paid up voting share capital of the Co mpany
to requisition a shareholder’s meeting. As an exempted Cay man Islands company, we are not obliged by law to call shareholders ’ annual
general meetings. However, our art icles of association require us to call such meetings.

      Cumulative voting
       Under the Delaware General Corporation Law, cu mu lative voting for elections of directors is not permitted unless the corporat ion’s
certificate of incorporation specifically provides for it. Cu mu lative voting potentially facilitates the representation of minority shareholders on a
board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which
increases the shareholder’s voting power with respect to electing such director. As permitted under Cay man Islands law, our art icles of
association do not provide for cu mulative voting. As a result, our shareholders are not afforded any less protections or righ ts on this issue than
shareholders of a Delaware corporation.

      Removal of directors
     Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the
approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Und er our art icles of
association, directors can be removed with cause or by the vote of holders of a majority of our shares, cast at a general mee ting, or the
unanimous written resolution of all shareholders.

      Transactions with interested shareholders
      The Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations where by,
unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of in corporatio n, it is
prohibited fro m engaging in certain business combinations with an ‖interested shareholder‖ for three years fo llo wing the date that such person
becomes an interested shareholder. An interested shareholder generally is a person or group wh o or which o wns or owned 15% or more of the
target’s outstanding voting stock within the past three years. This has the effect of limiting the ability of a potential acquirer t o make a
two-tiered b id for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to
the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the
transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware public
corporation to negotiate the terms of any acquisition transaction with the target ’s board of directors.

      Cay man Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the
Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a comp any and its
significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and not with
the effect of constituting a fraud on the minority shareholders.

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      Dissolution; Winding up
       Under the Delaware General Corporation Law, un less the board of directors approves the proposal to dissolve, dissolution must be
approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolu tion is initiated by the board of
directors may it be approved by a simp le majority of the corporation ’s outstanding shares. Delaware law allows a Delaware corporation to
include in its certificate of incorporation a supermajority voting requirement in con nection with dissolutions initiated by the board. Under the
Co mpanies Law o f the Cay man 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 the unanimous written resolution of all shareholders. In addition, our
company may be wound up by the Grand Court of the Cay man Islands if the co mpany is unable to pay its debts or if the court is of the opinion
that it is just and equitable that our company is wound up.

      Variation of rights of shares
      Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a maj ority of
the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under Cay man Islands law and our articles of
association, if our share capital is divided into more than one class of shares, we may vary the rights attached to any class only with the vote at
a class meeting of holders of t wo-thirds of the shares of such class or unanimous written resolution, provided that if such variation has the
effect of altering our articles of association, the variation will need to be approved in the manner described under the head ing ―Amend ment of
governing documents.‖

      Amendment of governing documents
      Under the Delaware General Corporation Law, a corporation ’s governing documents may be amended with the approval of a majority of
the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Cay man Islands law, our
memo randum and art icles of association may only be amended with the vote of holders of two -thirds of our shares voting at a meet ing or the
unanimous written resolution of all shareholders.

      Indemnification of directors and executive officers and limitation of liability
     Cay man Islands law does not limit the extent to which a co mpany ’s articles of association may provide for indemnification of o fficers
and directors, except to the extent any such provision may be held by the Cay man Islands courts to be contrary to public policy, such as to
provide indemn ification against civil fraud or the consequences of committing a crime. Ou r memo randum and art icles of associa tion permit
indemn ification of officers and directors for losses, damages, costs and expenses incurred in their capacit ies as such unless such losses or
damages arise fro m dishonesty, fraud or default of such directors or officers. This standard of conduct is generally the same as permitted under
the Delaware General Corporation Law to a Delaware corporation.

     Insofar as indemnificat ion for liabilit ies arising under the Securit ies Act of 1933 may be permitted to our directors, office rs or persons
controlling us under the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Co mmission such
indemn ification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable as a matte r of United States
law.

      Rights of non-resident or foreign shareholders
      There are no limitations imposed by our memorandu m 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 provisio ns in our memorandum and articles of association governing the
ownership threshold above which shareholder ownership must be disclosed.

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      Inspection of books and records
      Holders of our ord inary shares will have no general right under Cay man Islands law to inspect or obtain copies of our list of shareholders
or corporate records except our memo randum and art icles of association. However, we will provide our shareholders wit h annual audited
consolidated financial statements.

Stock Opti on Plans
      Our Board of Directors and shareholders have approved a stock option plan to be imp lemented following the comp letion of this offering.
This plan authorizes the issuance of up to 10% of the number o f ordinary shares outstanding after this offering. Pursuant to this plan, we may
issue options to purchase our ordinary shares to our employees and directors (other then the director nominated by our placement agent). The
Co mpensation Committee of the Board of Directors will ad min ister the plan. The options will have exercise prices equal to the fair market
value of our ordinary shares on the date of grant. In addition, the options will vest over five years (20% per year) and have terms of ten years.

Certain Effects of Authorized but Unissued Stock
     Assuming a maximu m offering, after this offering, we will have [         ] ordinary shares remaining authorized but unissued. Authorized
but unissued ordinary shares are available for future issuance without shareholder approval. Issuance of these shares will dilute your percentage
ownership in us.

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                                                   SHARES ELIGIB LE FOR FUT URE S ALE

      Prior to this offering, there has been no market for our ordinary shares, and a liquid t rading market fo r our ordinary shares may not
develop or be sustained after this offering. Future sales of substantial amounts of ordinary shares, including shares issued upon exercise of
outstanding options and exercise of the warrants offered in this prospectus in the public market after this offering or the a nticip ation of those
sales could adversely affect market prices prevailing fro m time to time and could impair our ab ility to raise capital through sales of our equit y
securities.

      Upon the completion of a maximu m offering, we will have outstanding 4,492,000 ordinary shares, assuming no exercise o f outstanding
options. Of these shares, the ordinary shares sold in this offering will be freely tradable without restriction under the Sec urities Act unless
purchased by our ―affiliates‖ as that term is defined in Rule 144 under the Securit ies Act. The re main ing appro ximately 2,792,000 ordinary
shares outstanding will be restricted shares held by existing shareholders. As of March 17, 2009, all of our ordinary shares were held by four
(4) shareholders. Of these, 2,632 are classified outside of shareholder equity because they are subject to redemption.

Lock-Up Agreements
      Our founders, Mr. Yin, Mr. Li and Mr. Chen, have agreed to encumber their o rdinary shares in our company in t wo ways. First, they have
agreed to place, on a pro rated basis, that number of ordinary shares into escrow that is equal to 50% of the maximu m nu mber o f shares to be
sold in this offering. Upon closing of this offering, the escrow agent will return any shares in excess of 50% of the actual nu mber of shares sold
in the offering. Our co mpany may redeem these escrowed shares without additional consideration if our after -tax per-share earnings are less
than $0.7459 to the extent needed to increase the effective after -tax per-share earnings to that level. See ―Risk Factors – A redemption of shares
held by our founders may be insufficient to cause our company to achieve projected earnings and may reduce our founders ’ involvement and
stake in our co mpany,‖ ―Related Party Transactions – Founders’ Shares Subject to Redemption‖ and ―Placement - Market and Pricing
Considerations.‖

       Second, Mr. Yin, Mr. Li and Mr. Chen have entered into lock-up agreements as to any shares they currently own or later acquire in our
company, including the escrowed shares described in the previous paragraph. Pursuant to the lock-up agreements, these shareholders have
agreed (1) not to sell or otherwise dispose of any shares of common stock for a period of 90 days after the date of this prospectus and (2) not to
sell or otherwise dispose of more than fifty percent (50%) of their ord inary shares in the follo wing 100 days. Upon the expirat ion of these
lock-up agreements, additional ord inary shares will be availab le for sale in the public market.

      These lock-up agreements apply to our ordinary shares and to securities convertible into, or exchangeable or exercisable for, o r repayable
with, our ordinary shares. These lock-up agreements also apply to ordinary shares owned now or acquired later by the person executing the
agreement or for which the person executing the agreement later acquires the power of disposition.

Rule 144
       In general, under Rule 144 as currently in effect, beginning 90 days after the effective date of the reg istration statement o f wh ich this
prospectus is a part, a person (or persons whose shares are aggregated) who is deemed to be an affiliate of our co mpany at the time of sale, o r at
any time during the preceding three months, and who has beneficially owned restricted shares for at least six months, would b e entitled to sell
within any three-month period a nu mber of our co mmon shares that does not exceed the greater of 1% of the then outstanding common shares
or the average weekly trading volu me of co mmon shares during the four calendar weeks preceding such sale. Sales under Rule 14 4 are subject
to certain manner of sale provisions, notice requirements and the availability of current public informat ion about our company. A person wh o
has not been our affiliate at any time during the three months preceding a sale, and who has beneficially owned his or her co mmon shares for at
least six months, would be entitled under Ru le 144 to sell such shares without regard to any manner of sale, notice provision s or volu me
limitat ions described above. Any such sales must comply with the public in formation provision of Rule 14 4 until our co mmon shares have
been held for one year.

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Rule 701
      Securities issued in reliance on Ru le 701 are also restricted and may be sold by shareholders other than affiliates of our company subject
only to manner of sale provisions of Rule 144 and by affiliates under Rule 144 without compliance with its six-month holding period
requirement.

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                                                                     TAXATION

The following sets forth the material Cayman Islands and U.S. federal income tax consequences of an investment in our ordinar y shares. It
is based upon laws and relevant interpretations thereof in effect as of t he date of this prospectus, all of which are subject to change. This
discussion does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences
under state, local and other tax laws.

Cayman Islands Taxation
      The Cay man Islands currently levy no taxes on individuals or corporations based upon profits, inco me, gains or appreciat ion a nd there is
no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to our co mp any levied by the
Govern ment of the Cay man Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought
within the jurisdiction of the Cay man Islands. The Cay man Islands are not party to any double tax trea ties. There are no exchange control
regulations or currency restrictions in the Cay man Islands.

     Pursuant to Section 6 of the Tax Concessions Law (1999 Revision) of the Cay man Islands, we have obtained an undertaking from the
Governor-in-Council:

      •   that no law wh ich is enacted in the Cay man Islands imposing any tax to be levied on profits or inco me or gains or appreciation shall
          apply to us or our operations; and
      •   that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on the shares, debentu res or other of
          our obligations.

The undertaking for us is for a period of t wenty years fro m August 21, 2007.

U.S. Federal Income Taxation
       The following discussion describes the material U.S. federal inco me tax consequences to you if you are a U.S. Holder (as defin ed below)
of an investment in the ordinary shares and you hold the ordinary shares as capital assets. This discussion is based on the tax laws of the United
States as in effect on the date of this prospectus, including the Internal Revenue Code of 1986, as amended, U.S. Treasury re gulations in effect
as of the date of this prospectus and judicial and ad ministrative interpretations thereof available on or before such date. All of the foregoing
authorities are subject to change, which change could apply on a retroactive basis and could affect the tax consequences desc ribed below.

      The following discussion does not deal with the U.S. federal income tax consequences relevant to you if you are in a special tax situation
such as:
      •   banks;

      •   certain financial institutions;
      •   insurance companies;
      •   broker dealers;

      •   U.S. expatriates;
      •   traders that elect to mark-to-market;
      •   tax-exempt entit ies;

      •   persons that have a functional currency other than the U.S. dollar;
      •   persons liable fo r alternative minimu m tax;
      •   persons holding an ordinary share as part of a straddle, hedging, conversion or integrated transaction;

      •   persons that actually or constructively own 10% o r more of our voting stock; or
      •   persons holding ordinary shares through partnerships or other pass -through entities.

      Prospective purchasers are urged to consult their tax advisors about the application of the U.S. Federal Inco me Tax Rules to their
particular circumstances as well as the state, local and foreign tax consequences to them of the purchase, ownership and disposition of ordinary
shares.

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     For purposes of this discussion, you are a U.S. Holder if you are a beneficial o wner of ord inary shares and you are, for U.S. federal
income tax purposes,

      •   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 Un ited
          States, any State thereof or the District of Colu mb ia;
      •   an estate whose income is subject to U.S. federal income ta xation regard less of its source; or

      •   a trust that (1) is subject to the primary supervision of a court with in the United States and one or more U.S. persons have the
          authority to control all substantial decisions of the trust or (2) was in existence on August 20, 1996, was treated as a U.S. person under
          the Internal Revenue Code on the previous day and has a valid election in effect under applicab le U.S. Treasury regulations t o be
          treated as a U.S. person.

      If you are a partner in a partnership or other entity taxable as a partnership that holds ordinary shares, your tax treat ment will depend on
your status and the activities of the partnership. If you are a partner of a partnership holding our ordinary shares, you sho uld consult your tax
advisor regarding the U.S. federal income tax consequences to you of the purchase, ownership and disposition of our ordinary shares.

Taxation of dividends and other distributions on the ordinary shares
       Subject to the passive foreign investment company rules discussed below, the gross amount of all our distributions to you wit h respect to
the ordinary shares will be included in your gross income as dividend inco me on the date of receipt by you, but only t o the extent that the
distribution is paid out of our current or accu mulated earnings and profits (as determined under U.S. federal inco me tax p rin ciples). The
dividends will not be eligib le for the dividends -received deduction allowed to corporations in respect of dividends received from other U.S.
corporations.

      If you are a non-corporate U.S. Ho lder, including an individual, for taxable years beginning before January 1, 2011, dividends may
constitute ―qualified div idend income‖ which is taxed at the lower long-term capital gains rate provided that (1) the ordinary shares are readily
tradable on an established securities market in the United States, (2) we are not a passive foreign investment company (as discussed below) for
either our taxable year in wh ich the dividend was paid or the preceding taxable year, and (3) certain hold ing period requirements are met.
Under Internal Revenue Serv ice authority, our ordinary shares are considered for the purpose of clause (1) above to be readily t radable on an
established securities market in the United States if they are listed on the NASDAQ Capital Market. You are urged to consult your ta x advisors
regarding the availability of the lo wer rate for d ividends paid with respect to our ordinary shares.

      Div idends will constitute foreign source income for U.S. fo reign tax credit limitation purposes. For this purpose, dividends distributed by
us with respect to the ordinary shares will be ―passive income‖ or, in the case of certain U.S. Ho lders, ―financial services inco me‖ for taxab le
years beginning on or before January 1, 2007. For taxab le years beginning after December 31, 2006, d ividends distributed by us with respect to
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, it will be treate d first as a
tax-free return of your tax basis in your 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 inco me tax principles. Th erefore, you should
expect that any distribution we make will be treated as a dividend.

Taxation of disposition of shares
      Subject to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange
or other taxab le disposition of an ordinary share equal to the difference between the amount realized for the ord inary share and your tax basis in
the ordinary share. The gain or loss will be capital gain or loss. If you are a non -corporate U.S. Ho lder, including an individual, who has held
the ordinary share for more than one year, you will be elig ible for reduced tax rates. The deductibility of capital losses is subject to limitations .
Any such gain or loss that you recognize will be treated as U.S. source income or loss for foreign tax credit limitation purp oses.

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Passive foreign investment company
      We do not believe that we were a passive foreign investment company, or PFIC, for the taxable year ended June 30, 2008, and we do not
expect to be a PFIC for our current taxable year ending June 30, 2009. Ho wever, our actual PFIC status will not be determinable until the close
of our current taxable year. Accordingly, there is no guarantee that we will not be a PF IC fo r the current taxable year. However, we must make
a separate determination each year as to whether we are a PFIC. As a result, our PFIC status may change. If we are a PFIC for any year during
which you hold ordinary shares, we will continue to be treated as a PFIC to you for all succeeding years during which you hold ordinary shares.

      A non- U.S. corporation is considered to be a PFIC for any taxable year if either:

      •   at least 75% of its gross income is passive income, or
      •   at least 50% of the average quarterly value of its assets during a taxable year is derived fro m assets that produce, or that are held for
          the production of, passive income.

     We will be treated as owning a proportionate share of the assets and earnings and a proportionate share of the income of any other
corporation in wh ich we o wn, directly or indirectly, mo re than 25% (by value) of the stock.

       In applying the asset test described above, the value of our assets will be deemed to be equal to the sum of the ag gregate value of our
outstanding equity plus our liab ilities. For purposes of the asset test, our goodwill, wh ich is measured as the sum of the ag gregate value of
outstanding equity plus liabilities, less the value of known assets, should be treated as a n on-passive asset. Therefore, a decrease in the market
price of our ordinary shares and associated decrease in the value of our goodwill would cause a reduction in the value of our no n-passive assets
for purposes of the asset test. If there is such a reduction in goodwill and the value of our non-passive assets, the percentage of the value of our
assets that is attributable to passive assets may increase, and if such percentage, based on an average of the quarterly valu es during a taxable
year, exceeds 50%, we will be a PFIC fo r such taxable year. Accordingly, fluctuations in the market price o f our shares may res ult in us being a
PFIC for any year. In addition, the co mposition of our income and assets will be affected by how, and how quickly, we spend the cash we raise
in this offering.

       If we are a PFIC for any taxab le year during which you hold ordinary shares, dividends paid by us to you will not be elig ible for the
reduced rate of taxation applicab le to non-corporate U.S. Ho lders, including individuals. See ―Taxat ion of div idends and other distributions on
the ordinary shares‖ above. Additionally, you will be subject to special tax rules, d iscussed below, with respect to any ―excess distribution‖ that
you receive and any gain you realize fro m a sale o r other disposition (including a pledge) of the 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 taxab le years or your holding period prior to the current year for the
ordinary shares will be treated as an excess distribution. Under these special tax ru les:
      •   the excess distribution or gain will be allocated ratably on a daily basis over your holding period for the ord inary shares,

      •   the amount allocated to the current taxab le year, and any taxable year prior to the first taxab le year in which we became 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 applicable
          to underpayments of tax will be imposed on the resulting tax attributable to each such year.

       Alternatively, if the ordinary shares constitute ―marketable stock‖ in a PFIC, you may make a mark-to-market election fo r the ordinary
shares to elect out of the tax treat ment discussed in the two preceding paragraphs. We expect that our ordinary shares will q ualify as marketable
stock for U.S. federal income tax purposes. Marketable stock is stock that is regularly t raded in other than de minimis quant ities on a qualified
exchange, which includes the NASDAQ Cap ital Market. If you make a mark-to-market election fo r the ordinary s hares, you will include in
income each year an amount equal to the excess, if any, o f the fair market value of the ordinary shares as of the close of yo ur taxable year over
your adjusted basis in such ordinary shares. You are allowed a deduction for the excess, if any, of the adjusted basis of the 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 ordinary shares included in your inco me for prior taxab le years. A mounts included in your income under a mark-to-market election,

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as well as gain on the actual sale or other disposition of the ordinary shares, are treated as ordinary income. Ordinary loss treatment also applies
to the deductible portion of any mark-to-market loss on the ordinary shares, as well as to any loss realized on the actual sale or disposition of
the ordinary shares, to the extent that the amount of such loss does not exceed the net mark -to-market gains previously included for such
ordinary shares. Your basis in the ordinary shares will be adjusted to reflect any such income or loss amounts. The tax ru les that apply to
distributions by corporations that are not PFICs would apply to d istributions by us.

      In addition, we do not intend to prepare or provide you with the informat ion necessary to make a ―qualified electing fund‖ elect ion.

      If you hold ordinary shares in any year in which we are a PFIC, you will be required to file Internal Revenue Serv ice Form 86 21
regarding distributions received on the ordinary shares and any gain realized on the disposition of the o rdinary shares.

      You are urged to consult your tax advisor regarding the application of the PFIC rules to your investment in ordinary shares.

Information reporting and backup withholding
      Div idend payments with respect to ordinary shares and proceeds from th e sale, exchange or redemption of ordinary shares may be subject
to information report ing to the Internal Revenue Serv ice and possible backup withholding at a current rate of 28%. Backup wit hholding will not
apply, however, if you are a corporation or other exempt recip ient or if you furnish a correct taxpayer identification nu mber and make any other
required certification. If you are required to establish your exempt status, you must provide such certificat ion on Internal Revenue Service
Form W-9. You are urged to consult your tax advisor regard ing the application of the U.S. info rmation report ing and backup withholding rules.

       Backup withholding is not an additional tax. A mounts 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 ap propriate claim
for refund with the Internal Revenue Serv ice and furnishing any required informat ion in a t imely manner.

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                                                 ENFORCEAB ILITY OF CIVIL LIAB ILITIES

      We are incorporated in the Cay man Islands because of the following benefits found there:

      •   political and economic stability;
      •   an effective judicial system;
      •   a favorable tax system;

      •   the absence of exchange control or currency restrict ions; and
      •   the availability of p rofessional and support services.

      However, certain d isadvantages accompany incorporation in the Cay man Islands. These disadvantages include:
      •   the Cayman Islands has a less developed body of securities laws as compared to the United States and provides significantly less
          protection to investors; and political and economic stability;

      •   Cay man Islands companies may not have standing to sue before the federal courts of the United States.

      We have been advised that there is uncertainty as to whether the courts of the Cayman Islands or Ch ina would :
      •   recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the c ivil
          liab ility provisions of the securities laws of the United States or any state in the United States; or
      •   entertain original actions brought in the Cay man Islands or Ch ina against us or our directors or officers predicated upon the securities
          laws of the Un ited States or any state in the United States.

      We have been advised that a final and conclusive judgment in the federal or state courts of the United States under which a sum of money
is payable, other than a sum payable in respect of taxes, fines, penalties or similar charges, may be subject to enforcement proceedings as a debt
in the courts of the Cayman Islands under the common law doctrine of obligation.

      Jingtian & Gongcheng has advised us further that the recognition and enforcement of foreign judgments are provided for under Chinese
Civil Procedure Law. Chinese courts may recognize and enforce foreign judgments in ac cordance with the requirements of Ch inese Civil
Procedure Law based either on treaties between China and the country where the judgment is made or on reciprocity between jur isdictions.

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                                                                   PLACEMENT

      We have engaged Anderson & Strudwick, Incorporated to conduct this offering on a ―best efforts, min imu m/ maximu m‖ basis. The
offering is being made without a firm co mmit ment by the placement agent, which has no obligation or co mmit ment to purchase any of our
Shares. Although they have not formally co mmitted to do so, our affiliates may opt to purchase ordinary shares in connection with this
offering. To the extent such individuals invest, they will purchase our shares with investment intent and without the intent to resell. Any
ordinary shares purchased by our affiliates shall contribute to the calculation of whether we have achieved our minimu m offer ing. We have not
placed limits on the number of ordinary shares elig ible to be purchased by our affiliates.

      Unless sooner withdrawn or canceled by either us or the placement agent, the offering will continue until the earliest of (i) the date the
maximu m o ffering is sold, (ii) October 1, 2009, o r (iii) such other date mutually acceptable to us and our placement agent after which the
minimu m offering is sold (the ―Offering Date‖). Unt il the closing of the offering, all p roceeds from the sale of the ordinary shares will be
deposited in escrow with SunTrust Bank (the ―Escrow Agent‖). Investors must pay in full for all ord inary shares at the time of investment.
Proceeds deposited in escrow with the Escrow Agent may not be withdrawn by investors prior to the earlier of the closing of t he offering or the
Offering Termination Date. If the offering is withdrawn or canceled or if the 1,166,667 share min imu m offering are not sold a nd proceeds
therefro m are not received by us on or prior to the Offering Termination Date, all proceeds will be pro mptly returned by the Escrow Agent
without interest or deduction to the persons from wh ich they are received (within one business day) in accordance with applic able securities
laws.

      Pursuant to that certain placement agreement by and between the placement agent and us, the obligations of the placement agent to solicit
offers to purchase the ordinary shares and of investors solicited by the placement agent to purchase the ordinary shares are subject to approval
of certain legal matters by counsel to the placement agent an d to various other conditions which are customary in a t ransactions of this type,
including, that, as of the closing of the offering, there shall not have occurred (a) a suspension or material limitat ion in trading in securities
generally on the or the publication of quotations on the NASDAQ Stock Market (National Market System or Cap ital Market); (ii) a general
moratoriu m on co mmercial banking activit ies in the United States or China; (iii) the engagement by the United States or China in hostilities
which have resulted in the declaration of a national emergency or war if any such event would have a material adverse effect, in th e placement
agent’s reasonable judgment, as to make it imp racticable or inadvisable to proceed with the solicitation of offers to c onsummat e the offering
with respect to investors solicited by the placement agent on the terms and conditions contemplated herein.

      We have agreed to indemnify the placement agent against certain liab ilities, including liab ilities under the Securit ies Act o f 1933, or to
contribute to payments the placement agent may be required to make in respect of those liabilit ies.

     The placement agent is offering the ordinary shares, subject to prior sale, when, as and if issued to and accepted by it, sub ject to
conditions contained in the placement agreement, such as the receipt by the placement agent of officers ’ cert ificates and legal opinions. The
placement agent reserves the right to withdraw, cancel or mod ify offers to the public and to reject orders in whole or in p art. The placement
agent intends to offer our ord inary shares to its retail customers in states whereby we have qualified the issuance of such s hares.

Commissions and Discounts
      The placement agent has advis ed us that it proposes to offer the ordinary shares to the public at the init ial public offering price on the
cover page of this prospectus. The following table shows the public offering price, p lacement discount and accountable expens es to be paid by
us to the placement agent and the proceeds, before expenses, to us.

                                                                                         Per Share           Minimum Offering         Maximum Offering
Assumed public offering price                                                            $    6.00       $       7,000,002.00     $      10,200,000.00
Placement discount and accountable expense allowance                                     $    0.48       $         560,000.16     $         816,000.00
Proceeds to us, before expenses                                                          $    5.52       $       6,444,001.84     $       9,384,000.00

      The expenses of this offering, not including the placement discount and accountable expenses payable to our placement agent, are
estimated at $[      ] and are payable by us. The placement agent may offer the ordinary

                                                                          76
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shares to certain securities dealers at the public offering price, less a concession not in excess of 7.0% of the offering price per ordinary share.
The placement agreement further provides that the placement agent will receive fro m us an accountable expen se allo wance of 1.0% o f the
aggregate public offering price of the ordinary shares, which allowance amounts to $102,000 assuming the closing of a maximu m offering.
This 1.0% expense allowance is separate from and in addition to the 7.0% p lacement discount.

Placement Agent’s Warrants
       We have agreed to sell to the placement agent at a price of $0.001 per warrant, placement agent ’s warrants to purchase 10% o f t he
number of shares issued by us in connection with the offering. The placement agent ’s warrants will be exercisable at 120% of t he offering price
per ordinary share for a period of five years. The placement agent’s warrants may not be sold, transferred, pledged, assigned or hypothecated
for a period of 180 days after the date of this prospectus, except to officers or partners and stockholders of the placement agent. We have
agreed to file, during the five year period co mmencing on the date of this prospectus at our cost, at the request of the hold ers of a majority of
the placement agents warrants and the underlying ordinary shares, and to use our best efforts to cause to become effective a registration
statement under the Securities Act, as required to permit the public sale of ordinary shares issued or issuable upon exercise of the placement
agent’s warrants.

      For the life of the placement agent’s warrants, the holders thereof are given, at nominal costs, the opportunity to profit fro m a rise in the
market price of our ordinary shares with a resulting dilution in the interest of other shareholders. Further, the holders may be expected to
exercise the placement agent’s warrant at a time when we would, in all likelihood, be able to obtain equity capital on terms more favorable than
those provided in the placement agent’s warrants.

Lock-Up Agreements
      Our founders, Mr. Yin, Mr. Li and Mr. Chen, have agreed to encumber their o rdinary shares in our company in t wo ways. First, they have
agreed to place, on a pro rated basis, that number of ordinary shares into escrow that is equal to 50% of the maximu m nu mber o f shares to be
sold in this offering. Upon closing of this offering, the escrow agent will return any shares in excess of 50% of the actual nu mber of shares sold
in the offering. Our co mpany may redeem these escrowed shares without additional consideration if o ur after-tax per-share earnings are less
than $0.7459 to the extent needed to increase the effective after -tax per-share earnings to that level. See ―Risk Factors – A redemption of shares
held by our founders may be insufficient to cause our company to ach ieve projected earnings and may reduce our founders ’ involvement and
stake in our co mpany,‖ ―Related Party Transactions – Founders’ Shares Subject to Redemption‖ and ―Placement—Market and Pricing
Considerations.‖

       Second, Mr. Yin, Mr. Li and Mr. Chen have entered into lock-up agreements as to any shares they currently own or later acquire in our
company, including the escrowed shares described in the previous paragraph. Pursuant to the lock-up agreements, these shareholders have
agreed (1) not to sell or otherwise dispose of any shares of common stock for a period of 90 days after the date of this prospectus and (2) not to
sell or otherwise dispose of more than fifty percent (50%) of their ord inary shares in the follo wing 100 days. Upon the expirat ion of thes e
lock-up agreements, additional ord inary shares will be availab le for sale in the public market.

      These lock-up agreements apply to our ordinary shares and to securities convertible into, or exchangeable or exercisable for, o r repayab le
with, our ordinary shares. These lock-up agreements also apply to ordinary shares owned now or acquired later by the person executing the
agreement or for which the person executing the agreement later acquires the power of disposition.

Market and Pricing Considerations
      There is not an established market fo r our ordinary shares. We negotiated with our placement agent to determine the offering price of our
ordinary shares. Our co mpany’s pre-IPO market value has been determined based on a mu ltip le of appro ximately five times our projected
earnings for 2010. Noting past offerings completed by our placement agent and the current equity securities market in the United States, we
believe that these multiples appro ximate valuation mu ltiples utilized in similar offerings for similarly -sized co mpanies.

      In addition to prevailing market conditions, the factors considered in determining the applicab le mu ltiples were:

      •   The history of, and the prospects for, our co mpany and the industry in which we co mpete;

                                                                         77
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      •   An assessment of our management, its past and present operation, and the prospects for, and timing of, our future revenues;

      •   The present state of our development; and
      •   The factors listed above in relation to market values and various valuation measures of other companies engaged in activities similar
          to ours.

      Using the above valuation methodology, we calculated an approximate enterprise value of $16,752,000. Th is result ed in a per share price
of $6.00, based on 2,792,000 shares issued and outstanding prior to this offering. We have used this price in connection with this offering.

      An active trading market for our ord inary shares may not develop. It is possible that after this offering the ordinary shares will not trade in
the public market at or above the initial offering price.

Discretionary Shares
       The placement agent will not sell any ordinary shares in this offering to accounts over which it exercises discretionary authority, without
first receiving written consent from those accounts.

Listing on the NASDAQ Capital Market
      We have applied to list our ordinary shares on the NASDAQ Capital Market under the symbol ―RCON.‖ As this offering is a best-efforts
offering, the NASDAQ Capital Market has indicated that it is unable to admit our ordinary shares for listing until the comp le tio n of the offering
and, consequently, the satisfaction of NASDA Q Capital Market listing standards. If so admitted, we expect our o rdinary shares to begin trading
on the NASDAQ Capital Market on the day follo wing the closing of this offering. If our ordinary shares are eventually listed on the NASDAQ
Capital Market, we will be subject to continued listing requirements and corporate governance standards. We expect these new rules and
regulations to significantly increase our legal, accounting and financial co mpliance costs. We and our placement agent agree that we will not
close this offering unless we satisfy the NASDAQ Capital Market’s listing standards and will be ab le to trade on the NASDAQ Capital Market;
however, we have not yet received such admission and have no assurance that we will receive such a dmission.

Price Stabilization, Short Positions and Penalty Bi ds
      In order to facilitate the offering of the ordinary shares, the placement agent may engage in transactions that stabilize, ma intain or
otherwise affect the price of the ordinary shares. Specif ically, the placement agent may sell more o rdinary shares than it is obligated to
purchase under the placement agreement, creating a naked short position. The placement agent must close out a covered short s ale by
purchasing ordinary shares in the open market. A naked short position is mo re likely to be created if the placement agent is concerned that there
may be down ward pressure on the price of the ordinary shares in the open market after pricing that could adversely affect inv estors who
purchase in the offering. As an additional means of facilitating the offering, the placement agents may bid for, and purchase, ordinary share s in
the open market to stabilize the price o f the ordinary shares. These activities may raise or maintain the market price of the ord inary shares
above independent market levels or prevent or retard a decline in the market price of the ord inary shares. The placement agen t is not required to
engage in these activities, and may end any of these activities at any time.

      We and the placement agent have agreed to indemnify each other against certain liab ilit ies, including liab ilit ies under the Securities Act.


                                                                LEGAL MATTERS

      Certain matters of Un ited States federal law will be passed on for us by Kaufman & Canoles, P.C., Rich mond, Virgin ia. Certain matters
of United States federal law will be passed upon for the placement agent by Kaufman & Canoles, P.C., Rich mond, Virgin ia. Certain legal
matters relating to the offering as to Chinese law will be passed upon for us by Jingtian & Gongcheng, Beijing, People’s Republic of China.
Certain legal matters relating to the offering as to Cayman Islands law will be passed upon for us by Corporate Filing Serv ic es Limited.

                                                                          78
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                                                                     EXPERTS

      Our consolidated and combined balance sheets as of June 30, 2008 and 2007, and our consolidated and combined statements of
operations, stockholders’ equity (deficit), and cash flows for the years ended June 30, 2008 and 2007, presented in Ch inese Yuan (RM B), have
been included herein and in the registration statement in reliance upon the report of Hansen Barnett & Maxwell, P.C., an independent registered
public accounting firm, appearing elsewhere herein, and upon the authority of that firm as experts in accounting and auditing .


                                             WHER E YOU CAN FIND MORE INFORMATION

      We have filed with the SEC a reg istration statement on Form S-1, as amended, under the Securit ies Act of 1933 with respect to our
ordinary shares offered by this prospectus. This prospectus does not contain all of the informat ion set forth in the registration statement and the
exhibits to the registration statement. For further information regarding us and our ordinary shares offered hereby, please r efer t o the
registration statement and the exh ibits filed as part of the registration statement.

      This registration statement, including exh ibits thereto may be inspected without charge at the Public Reference Roo m maintain ed by the
SEC at 100 F Street, NE, Washington, D.C. 20549. You may obtain copies of the registration statement, including the exh ibits thereto, after
payment of the fees prescribed by the SEC. For addit ional informat ion regarding the operation of the Public Reference Roo m, y ou may call the
SEC at 1-800-SEC-0330. The SEC also maintains a website wh ich provides on-line access to reports and other informat ion regarding
registrants that file electronically with the SEC at the address: http://www.sec.gov.

                                                                         79
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                                              EXPENS ES RELATING TO THIS OFFERING

     The following table sets forth the main estimated expenses in connection with this offering, other than the placement discoun ts, expenses
and commissions, which we will be required to pay:

U.S. Securit ies and Exchange Co mmission registration fee                                                                $                  307
FINRA filing fee                                                                                                                           1,600
NASDA Q listing fee                                                                                                                       50,000
Blue Sky Fees                                                                                                                         [            ]
Legal fees and expenses for Ch inese counsel                                                                                          [            ]
Legal fees and expenses for Cay man Islands counsel                                                                                   [            ]
Legal fees and expenses for U.S. securities counsel                                                                                   [            ]
Accounting fees and expenses                                                                                                          [            ]
Printing fees                                                                                                                         [            ]
Other fees and expenses                                                                                                               [            ]
Total                                                                                                                                 [            ]

All amounts are estimated, except the U.S. Securit ies and Exchange Co mmission registration fee, the NASDA Q listing fee and th e FINRA
filing fee.

                                                                      80
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                                                    RECON TECHNOLOGY, LTD

                                               INDEX TO FINANCIAL STATEMENTS

                                                                                                                     PAG
                                                                                                                      E

Report of Independent Registered Public Accounting Firm                                                              F-2
Consolidated and Comb ined Balance Sheets as of June 30, 2007 and 2008                                               F-3
Consolidated and Comb ined Statements of Operat ions for the Years Ended June 30, 2007 and 2008                      F-5
Consolidated and Comb ined Statements of Shareholders’ Equity (deficit) for the Years Ended June 30, 2007 and 2008   F-6
Consolidated and Comb ined Statements of Cash Flows for the Years Ended June 30, 2007 and 2008                       F-7
Notes to the Consolidated and Combined Financial Statements                                                          F-9

                                                                   F-1
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              H ANSEN , B ARNETT & M AXWELL , P . C .                                       Registered wi th the Public Company
                     A Professional Corporation                                                Accounti ng Oversight Board
               CERTIFIED PUBLIC A CCOUNTANTS

                       5 Triad Center, Suite 750                        A Member of the Forum of Firms
                    Salt Lake City, UT 84180-1128
                         Phone: (801) 532-2200
                          Fax: (801) 532-7944
                          www.hb mcpas.com
                             REPORT OF INDEPENDENT REGIS TER ED PUB LIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
of Recon Technology, Ltd:

We have audited the accompanying consolidated and combined balance sheets of Recon Technology, Ltd (―the Co mpany‖), as of June 30,
2007 and 2008, and the related consolidated and combined statements of operations, stockholders' equity (deficit), and cash f lows for the years
then ended. These financial statements are the responsibility of the Co mpany's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Co mpany Accounting Oversight Board (United States). Th ose
standards require that we plan and perfo rm the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over fina ncial reporting.
Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circu mstances, but not for the purpose of expressing an opinion on the effectiveness of the company ’s internal control over financial reporting.
Accordingly, we exp ress no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by ma nagement, as well as evaluating the overall
financial statement presentation. We believe our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated and combined financial
position of Recon Technology, Ltd as of June 30, 2007 and 2008, and the consolidated and combined results of their operations and their cash
flows fo r the years then ended in conformity with accounting principles generally acce pted in the United States of America.

As discussed in Note 1, to the accompanying consolidated and combined financial statements, the Company has restated the acco mpanying
2007 co mbined financial statements.

                                                                                           /s/ Hansen, Barnett & Maxwell, P.C.
                                                                                           HANS EN, B ARNETT & MAXWELL, P.C.

Salt Lake City, Utah
November 11, 2008, except for Note 14,
  as to wh ich the date is March 10, 2009

                                                                        F-2
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                                                RECON TECHNOLOGY, LTD
                                       CONSOLIDATED AND COMB INED B ALANCE S HEETS

                                                                                                Chinese Yuan (Renminbi)                 U.S. Dollars
                                                                                                                                         June 30,
                                                                                                            June 30,                       2008

                                                                                                2007                    2008
                                                                                            (As Restated)                               (Unaudited)
ASSETS
Current assets
Cash and cash equivalents                                                               ¥       5,262,679         ¥     9,034,560   $      1,324,230
Marketable securities                                                                                 —                   530,618             77,775
Trade accounts receivable, less allowance of ¥ 5,823,921 and ¥3,445,008 ($504,948),
  respectively                                                                                30,934,591               32,936,062          4,827,565
Trade accounts receivable-related parties, less allo wance of ¥487,428 and ¥267,230
  ($39,169), respectively                                                                         376,027                      —                   —
Other receivable, less allowance of ¥ 2,048,280 and ¥2,360,058 ($345,923),
  respectively                                                                                  3,587,623               2,597,239            380,687
Other receivable-related parties, less allowance of ¥796,343 and ¥1,314,684
  ($192,698), respectively                                                                           6,415                239,550              35,112
Purchase advances, less allowance of ¥ 961,119 and ¥1,770,216 ($259,467),
  respectively                                                                                  3,345,961               3,574,929            523,991
Purchase advances-related parties, less allo wance of ¥458,664 and ¥240,084
  ($35,190), respectively                                                                           4,900                  22,238              3,260
Prepaid expenses                                                                                    9,386                 113,475             16,632
Inventories, less provision of ¥36,016 and ¥61,568 ($9,024), respectively                       5,631,150               9,839,652          1,442,236
Short-term notes receivable, less allowance of ¥ 0 and ¥1,766,000 ($258,849),
  respectively                                                                                        —                 7,089,187          1,039,089
Deferred tax assets                                                                             3,126,791               3,781,806            554,314

Total current assets                                                                          52,285,523               69,759,316        10,224,891

Non-current assets
Property and equipment, net of accu mulated depreciation of ¥ 3,189,332 and
  ¥2,582,117 ($378,471), respectively                                                           2,586,074               8,406,959          1,232,240
Advances for purchase of fixed assets                                                           3,957,571                     —                  —
Total non-current assets                                                                        6,543,645               8,406,959          1,232,240

Total assets                                                                            ¥     58,829,168          ¥    78,166,275   $    11,457,131


                    The accompanying notes are the integral part of these consolidated and combined financial statements.

                                                                     F-3
Table of Contents

                                               RECON TECHNOLOGY, LTD
                                CONSOLIDATED AND COMB INED B ALANCE S HEETS (CONTINUED)

                                                                                                Chinese Yuan (Renminbi)                    U.S. Dollars
                                                                                                                                            June 30,
                                                                                                           June 30,                           2008

                                                                                               2007                        2008
                                                                                           (As Restated)                                   (Unaudited)
LIAB ILITIES AND S HAREHOLDERS ’ EQUITY (DEFICIT)
Current liabilities
Trade accounts payable                                                                 ¥      26,216,609              ¥   18,470,423   $      2,707,284
Trade accounts payable-related parties                                                           617,918                   1,386,778            203,265
Other payables                                                                                 1,551,711                   4,031,975            590,982
Other payables - related parties                                                                     —                     1,152,914            168,987
Deferred inco me                                                                               4,482,226                   6,612,800            969,263
Advances from customers                                                                        4,494,341                   1,543,026            226,167
Accrued payroll                                                                                  112,833                      91,722             13,444
Accrued employees’ welfare                                                                     1,239,797                   1,042,351            152,781
Accrued expense                                                                                1,849,207                   1,742,447            255,397
Other current liab ility                                                                             —                       262,304             38,447
Taxes payable                                                                                  4,540,592                   8,975,562          1,315,583
Interest payable                                                                                 213,360                     106,903             15,669
Short-term notes payable                                                                      10,612,713                   3,913,668            573,641
Short-term notes payable - related parties                                                           —                     2,330,569            341,600
Long-term notes payable, current portion                                                         440,000                     357,737             52,435

Total current liabilities                                                                     56,371,307                  52,021,179          7,624,945
Long-term notes payable, net of current portion                                                 3,047,460                    300,000              43,972
Long-term notes payable - related parties                                                          50,000                        —                   —

Total liabilities                                                                             59,468,767                  52,321,179          7,668,917
Mi nority i nterest                                                                               615,392                    451,036              66,110
Redeemable ordinary shares                                                                             —                   1,388,641            203,538
Sharehol ders’ equity (deficit)
Ordinary shares, $0.01 U.S. dollar par value, 5,000,000 shares authorized; 47,029
  and 105,465 shares outstanding, respectively                                                     3,574                       8,012              1,174
Additional paid-in capital                                                                     8,492,426                  19,044,788          2,791,468
Statutory reserves                                                                             1,254,822                   1,687,772            247,383
Retained earnings (deficit)                                                                  (11,005,813 )                 3,264,847            478,541

Total sharehol ders’ equity (deficit)                                                          (1,254,991 )               24,005,419          3,518,566

Total liabilities and sharehol ders ’ equity (deficit)                                 ¥      58,829,168              ¥   78,166,275   $    11,457,131


                      The accompanying notes are the integral part of these consolidated and combined financial statements.

                                                                      F-4
Table of Contents

                                             RECON TECHNOLOGY, LTD
                               CONSOLIDATED AND COMB INED STATEMENTS OF OPERATIONS

                                                                                       Chinese Yuan (Renminbi)                 U.S. Dollars
                                                                                              For the Years                    For the Year
                                                                                             Ended June 30,                   Ended June 30,
                                                                                      2007                  2008                   2008
                                                                                  (As Restated)                                (Unaudited)
Revenues
    Hardware                                                                  ¥     54,169,963       ¥    58,815,361      $       8,620,793
    Service                                                                          6,500,286            12,838,841              1,881,838
    Software                                                                         6,222,143             4,819,949                706,478
    Software - related party                                                           747,741                   —                      —

Total Revenues                                                                      67,640,133            76,474,151             11,209,109
Cost of revenues                                                                    41,812,810            46,009,585              6,743,801

Gross Profit                                                                        25,827,323            30,464,566              4,465,308

Operating expenses
    Selling and distribution expenses                                                5,092,289             5,902,474                865,148
    General and administrative expenses                                              9,644,590             7,214,913              1,057,517

Total operating expenses                                                            14,736,879            13,117,387              1,922,665

Income from operations                                                              11,090,444            17,347,179              2,542,643
Subsi dy income                                                                        155,556               669,829                 98,179
Non-operating income                                                                    13,915                   —                      —
Non-operating expenses                                                                   (3,494 )           (297,860 )              (43,658 )
Interest income                                                                         27,976               212,648                 31,169
Interest expense                                                                      (127,927 )            (271,771 )              (39,835 )
Investment loss                                                                             —               (511,969 )              (75,041 )

Income before income taxes and mi nority interest                                   11,156,470            17,148,056              2,513,457
Provision for income taxes                                                          (2,726,482 )          (3,770,747 )             (552,693 )
Mi nority i nterest, net of tax                                                          6,311              (112,232 )              (16,450 )

Income from continuing operati ons                                                   8,436,299            13,265,077              1,944,314

Income (loss) from operations of discontinued subsidi aries, net of tax
  (including g ain on disposal of ¥0 and ¥374,980 ($54,568), respecti vely)             (85,701 )            405,926                  59,498

Net income                                                                           8,350,598            13,671,003              2,003,812
Accrued di vi dend for redeemable ordinary shares                                          —                  16,819                  2,465

Net income avail able for common sharehol ders                                ¥      8,350,598       ¥    13,654,184      $       2,001,347


Basic earnings per share:
    Income fro m continuing operations                                        ¥          191.50      ¥         165.86     $            24.31

     Income (loss) fro m discontinued operations                              ¥           (1.95 )    ¥             5.08   $              0.74

     Net inco me                                                              ¥          189.56      ¥         170.94     $            25.06

     Net inco me available for co mmon shareholders                           ¥          189.56      ¥         170.73     $            25.02

Basic weighted average ordinary shares outstanding                                       44,053                79,976                 79,976


Diluted earnings per share:
     Income fro m continuing operations                                       ¥          191.50      ¥         162.46     $            23.81
    Income (loss) fro m discontinued operations                                   ¥          (1.95 )   ¥          4.97     $     0.73

    Net inco me                                                                   ¥        189.56      ¥       167.43      $    24.54

    Net inco me available for co mmon shareholders                                ¥        189.56      ¥       167.22      $    24.51

Diluted weighted average ordinary shares outstanding                                       44,053              81,652          81,652


                   The accompanying notes are the integral part of these consolidated and combined financial statements.

                                                                   F-5
Table of Contents

                                            RECON TECHNOLOGY, LTD
                    CONSOLIDATED AND COMB INED STATEMENTS OF S HAREHOLDERS ’ EQUIT Y (DEFICIT)

                                                                                       Chinese Yuan (Renminbi)
                                                                            Additional            Statutory          Retained Earnings
                                           Ordinary Shares                Paid-in Capital         Reserves                (Deficit)            Total

                                         Shares       Amount
Balance as of June 30, 2006 (As
   Restated)                              38,897     ¥ 2,954          ¥       7,024,046       ¥      793,564     ¥        (19,466,153 )    ¥   (11,645,589 )
Issuance for cash - principal
   shareholders (As Restated)              8,132             620              1,468,380                   —                        —             1,469,000
Transfer fro m retained earn ings to
   statutory reserves                        —               —                       —               461,258                 (461,258 )                —
Accumulated deficit absorbed by
   minority parties                          —               —                       —                    —                   571,000             571,000
Net inco me for the year (As
   Restated)                                 —               —                       —                    —                 8,350,598            8,350,598

Balance as of June 30, 2007 (As
  Restated)                               47,029         3,574                8,492,426            1,254,822              (11,005,813 )         (1,254,991 )
Capital contribution - principal
  shareholders                            62,848         4,773               11,349,027                   —                        —           11,353,800
Increase (decrease) due to
  de-consolidation                        (4,412 )           (335 )            (796,665 )                 —                    (50,574 )          (847,574 )
Transfer fro m retained earn ings to
  statutory reserves                         —               —                       —               773,833                 (773,833 )                —
Accumulated deficit offset by
  statutory reserves                         —               —                       —              (340,883 )                340,883                  —
Accumulated deficit absorbed by
  minority parties                           —               —                       —                    —                 1,100,000            1,100,000
Net inco me available for co mmon
  sharesholders for the year                 —               —                       —                    —                13,654,184          13,654,184

Balance as of June 30, 2008              105,465     ¥ 8,012          ¥      19,044,788       ¥    1,687,772     ¥          3,264,847      ¥   24,005,419


                     The accompanying notes are the integral part of these consolidated and combined financial statements.

                                                                             F-6
Table of Contents

                                              RECON TECHNOLOGY, LTD
                                CONSOLIDATED AND COMB INED STATEMENTS OF CASH FLOWS

                                                                                           Chinese Yuan (Renminbi)              U.S.Dollars
                                                                                                 For the Years                 For the Year
                                                                                                Ended June 30,                Ended June 30,
                                                                                         2007                    2008              2008
                                                                                     (As Restated)                             (Unaudited)
Cash flows from operating acti vities:
    Net income (loss) available for common sharehol ders                         ¥       8,350,598        ¥    13,654,184     $   2,001,347
    Adjustments to reconcile net income to net cash provi ded by
       operating acti vi ties:
         Depreciat ion                                                                     676,002                997,538           146,213
         Allowance for inventory                                                                                   80,102            11,741
         Gain on sale of p roperty and equipment                                                —                (292,690 )         (42,901 )
         Gain on sale of subsidiaries                                                           —                (381,631 )         (55,937 )
         Minority interest                                                                   (6,311 )             112,232            16,450
         Accrued dividend for redeemable ord inary shares                                       —                  16,819             2,465
Changes in operating assets and liabilities, net of effect of disconti nued
  operations:
         Trade accounts receivable, net                                                (16,561,646 )           (5,432,464 )        (796,257 )
         Trade accounts receivable-related parties, net                                         —                 387,485            56,795
         Other receivable, net                                                          (2,105,240 )            1,656,064           242,736
         Other receivable related parties, net                                            (382,442 )             (233,135 )         (34,171 )
         Purchase advance, net                                                          (1,792,968 )             (187,588 )         (27,495 )
         Prepaid expense                                                                      5,356              (928,843 )        (136,144 )
         Inventories                                                                    (1,337,423 )             (126,089 )         (18,481 )
         Deferred tax assets                                                            (1,106,049 )           (4,288,604 )        (628,597 )
         Other current assets                                                                   —              (1,105,813 )        (162,083 )
         Trade accounts payable                                                          4,152,951             (2,084,405 )        (305,521 )
         Trade accounts payable-related parties                                            (35,646 )              833,402           122,155
         Other payables                                                                     54,846             (1,353,820 )        (198,435 )
         Other payables-related parties                                                   (660,000 )             (677,293 )         (99,273 )
         Deferred inco me                                                                3,243,570              2,290,390           335,711
         Advances from customers                                                           642,635                566,861            83,087
         Accrued payroll                                                                     (7,167 )               4,282               628
         Accrued employees’ welfare                                                        225,759              1,718,153           251,836
         Accrued expense                                                                        —                 360,763            52,878
         Taxes payable                                                                   4,441,308              4,746,466           695,708
         Interest payable                                                                   88,432                (69,549 )         (10,194 )

Net cash (used in) provi ded by operati ng acti vities                           ¥      (2,113,433 )      ¥    10,262,817     $   1,504,261

                    The accompanying notes are the integral part of these consolidated and combined financial statements.

                                                                      F-7
Table of Contents

                                           RECON TECHNOLOGY, LTD
                        CONSOLIDATED AND COMB INED STATEMENTS OF CASH FLOWS (CONTINUED)

                                                                                            Chinese Yuan (Renminbi)                  U.S.Dollars
                                                                                                  For the Years                     For the Year
                                                                                                 Ended June 30,                    Ended June 30,
                                                                                         2007                    2008                   2008
                                                                                     (As Restated)                                  (Unaudited)
Cash flows from investing acti vi ties:
    Purchases of property and equipment                                          ¥       (893,442 )      ¥      (4,907,116 )   ¥        (719,255 )
    Advances for purchase of fixed assets                                              (3,957,571 )                    —                     —
    Proceeds from sale of property and equipment                                              —                    269,500                39,502
    Cash paid for investment                                                                  —                   (530,618 )             (77,775 )
    Payment of note receivable                                                                —                 (6,901,600 )          (1,011,594 )
    Decrease in cash resulting fro m de-consolidation of variable interest
       entities                                                                                —                (1,208,525 )            (177,138 )

Net cash used in investing acti vi ties                                                (4,851,013 )            (13,278,359 )          (1,946,260 )

Cash flows from financing acti vities:
    Proceeds from stock issuance                                                        1,469,000               11,353,800             1,664,170
    Proceeds from short-term notes payable                                              3,820,000                3,415,179               500,576
    Proceeds from long-term notes payable                                               2,100,000                    7,737                 1,134
    Repayment of short-term notes payable                                              (1,400,287 )             (7,763,655 )          (1,137,949 )
    Repayment of long-term notes payable                                                 (500,000 )             (2,747,460 )            (402,706 )
    Proceeds from minority parties                                                        881,000                1,150,000               168,560
    Proceeds from issuance of redeemable shares                                               —                  1,371,822               201,073

Net cash provi ded by financing acti vities                                             6,369,713                6,787,423               994,858

Net change in cash                                                                       (594,733 )              3,771,881               552,859
Cash and cash equi valents at beginni ng of peri od                                     5,857,412                5,262,679               771,371

Cash and cash equi valents at end of period                                      ¥      5,262,679        ¥       9,034,560     $       1,324,230


Supplemental cash flow information
    Cash paid during the period for interest                                     ¥         39,495        ¥         378,228     $          55,438
    Cash paid during the period for taxes                                        ¥      1,342,026        ¥       3,117,583     $         456,956


                     The accompanying notes are the integral part of these consolidated and combined financial statements.

                                                                      F-8
Table of Contents

                                              RECON TECHNOLOGY, LTD
                             NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

NOTE 1. ORGANIZATION AND BAS IS OF PRES ENTATION
Organization —Recon Technology, Ltd (The ―Co mpany‖) was incorporated under the laws of the Cay man Islands on August 21, 2007 by
Mr. Yin Shenping, Mr. Chen Guangqiang and Mr. Li Hongqi (―The Principal Shareholders ‖) as a company with limited liab ilit y. The Co mpany
provides services designed to automate and enhance the extract ion of petroleu m in the People ’s Republic of China (the ―PRC‖). Its wholly
owned subsidiary, Recon Technology, Co., Limited (―Recon-HK‖) was incorporated on September 6, 2007 in Hong Kong. Other than the
equity interest in Recon-HK, the Co mpany does not own any assets or conduct any operations. On November 15, 2007, Recon-HK established
one wholly owned subsidiary, Jin ing Recon Technology, Ltd. (―Recon-JN‖) under the laws of the PRC. Other than the equity interest in
Recon-JN, Recon-HK does not own any assets or conduct any operations.

Recon-JN conducts its business through the following PRC legal entit ies that are consolidated as variab le interest entities and operate in the
Chinese petroleum industry:

        •    Beijing BHD Petroleu m Technology Co., Ltd. (―BHD‖),
        •    Nanjing Recon Technology Co., Ltd. (―Nanjing Recon‖),
        •    Jining ENI Energy Technology Co., Ltd. (―ENI‖)

        •    Beijing Yabei Nuoda Technology Co., Ltd. (―Yabei Nuoda‖)
        •    Beijing Adar Petroleu m Technology, Ltd. (―Adar Petro leu m‖)
        •    Inner Mongolia Adar Energy Technology (―Inner Mongolia Adar‖)

        •    Beijing Weigu Windows Co. Technology (―Beijing Weigu‖)
        •    Xiamen Recon Technology (―Xiamen Recon‖)
        •    Xiamen Hengda Haitian (―Hengda Hait ian‖)

Chinese laws and regulations currently do not prohibit or restrict foreign ownership in petroleu m busine sses. However, Chinese laws and
regulations do prevent direct foreign investment in certain industries. To protect our shareholders from possible future fore ign ownership
restrictions, the Principal Shareholders, who also hold the controlling interest of B HD, Nanjing Recon and ENI, reorganized the corporate and
shareholding structure of these entities by entering into certain exclusive agreements with Recon -JN, wh ich entitles Recon-JN t o receive a
majority of the residual returns, and no other entity will absorb a majority of their expected losses. Recon-JN also entered into a share pledge
agreement with the Principal Shareholders, who pledged all their equity interest in these entities to Recon -JN. In addit ion, Recon-HK entered
into an option agreement to acquire the Principal Shareholders ’ equity interest in these entities if or when permitted by the PRC laws.

Based on these exclusive agreements, the Co mpany consolidates the variable interest entities (―VIEs‖) as required by Financial Accounting
Standards Board (―FASB‖) Interpretation No. 46R (―FIN 46R‖), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51
because the Company is the primary beneficiary of the VIEs.

On April 8, 1995, Adar Petro leu m was organized under the laws of the PRC. A Principal Shareholder of the Co mpany holds a controlling
interest of Adar Petroleu m. Adar Petroleu m has significant transactions with BHD which result in BHD being the primary beneficiary of Adar
Petroleu m, until Adar Petroleu m was sold by the Principal Shareholder to unrelated parties on June 30, 2008. Adar Petroleu m is consolidated
based on FIN 46R for all periods presented to the date of disposition.

On August 28, 2000 a Principal Shareholder of the Co mpany purchased a controlling interest in BHD wh ich was organized under the laws of
the PRC on June 29, 1999. On April 18, 2007, BHD organized Inner Mongolia Adar under the laws of the PRC, of which BHD owned a
majority interest. On May 11, 2007 BHD created another subsidiary, Beijing Weigu, of which BHD held a majority interest. On June 21, 2008
Beijing Weigu was sold to unrelated parties. On June 24, 2008 Inner Mongolia Adar was sold to unrelated parties. Inner Mongolia Adar and
Beijing Weigu are consolidated with BHD for all periods presented to the date of disposition. BHD is comb ined with the Co mp any through the
date of the exclusive agreements, and is consolidated following the date of the agreements based on FIN 46R.

                                                                        F-9
Table of Contents

                                              RECON TECHNOLOGY, LTD
                             NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

On January 21, 2003, ENI was organized under the laws the PRC. A Principal Shareholder of the Co mpany owns a controlling interest of ENI .
ENI is co mbined with the Co mpany through the date of the exclusive agreements, and is consolidated following the date of the agreements
based on FIN 46R.

On October 20, 2004, t wo Principal Shareholders of the Co mpany purchased a controlling interest in Yabei Nuoda, wh ich was organized unde r
the laws of the PRC on December 13, 2002. Yabei Nuoda has significant transactions with Nanjing Recon which result in Nanjing Recon being
the primary beneficiary of Yabei Nuoda. Yabei Nuoda is consolidated with Nanjing Recon based on FIN 46R fo r all periods prese nted.

On August 27, 2007 the Principal Shareholders the Co mpany purchased a majority o wnership of Nanjing Recon fro m a related party who was a
majority owner of Nan jing Recon. Nan jing Recon was organized under the laws of the PRC on July 4, 2003. Nanjing Recon is combined with
the Co mpany through the date of the exclusive agreements, and is consolidated following the date of the agreements based on FIN 46R.

On January 15, 1996, Hengda Haitian was organized under the laws of the PRC. A Principal Shareholder of the Co mpany owns a controlling
interest in Hengda Hait ian. Nanjing Recon had significant transactions with Hengda Hait ian wh ich resulted in Nan jing Recon being the primary
beneficiary of Hengda Haitian. Hengda Haitian held a majority interest in Xiamen Recon, wh ich was organized by Hengda Haitian and Nanjing
Recon under the laws of the PRC on June 29, 2006. Xiamen Recon is consolidated with Hengda Hait ian for all periods presented. Hengda
Hait ian is consolidated with Nan jing Recon based on FIN 46R for all periods presented.

Nature of Operations – The Co mpany sells and installs hardware systems related to heating, maintenance and processes customized for
petroleum extraction in China. The Co mpany has also developed its own specialized co mputer software and hardware to manage th e oil
extraction process in real-t ime to reduce the costs associated with extract ion. The products and services provided by the Company include:

        •    Oil Field Water Finding/Blocking Technology —The Company developed this technology designed to find and block water
             content in petroleum.
        •    High-Efficiency Heating Furnaces —High-Efficiency Heating Furnaces are designed to remove the impurities and to prevent
             solidification blockage in transport pipes carrying crude petroleum. Crude petroleu m contains certain impurities that must be
             removed before the petroleum can be sold, including water and natural gas.
        •    Multi-Purpose Fissure Shaper —Multipurpose fissure shapers improve the ext ractors ’ ability to test for and extract petroleu m
             which must be perforated into the earth before any petroleum extractor can test for the presence of oil.

        •    Supervisory Control and Data Acquisition (“SCADA”) —SCADA is an industrial co mputerized process control system for
             monitoring, managing and controlling petroleum ext raction. SCADA integrates undergro und and above-ground activities of the
             petroleum extraction industry.

                                                                      F-10
Table of Contents

                                              RECON TECHNOLOGY, LTD
                             NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

Restatement of Financial Statements —During September 2008, the Co mpany realized that the June 30, 2007 co mb ined finan cial statements
needed to be revised to include an additional entity that should have been consolidated with Nanjing Recon under FIN 46(R). A s a result the
Co mpany has restated its combined financial statements for the year ended June 30, 2007 to correct the errors to all the accounts affected. The
effects of the restatements were as follows:

                                                                                         As Previously         Effect of
                                                                                           Reported           Restatement          As Restated
Combined Bal ance Sheets
As of June 30, 2007
Cash and cash equivalents                                                            ¥      2,475,231     ¥     2,787,448      ¥      5,262,679
Trade accounts receivable, net                                                             30,502,243             432,348            30,934,591
Trade accounts receivable -related parties, net                                                   —               376,027               376,027
Other receivable, net                                                                       3,609,616             (21,993 )           3,587,623
Other receivable -related parties, net                                                        376,027            (369,612 )               6,415
Purchase advances, net                                                                      3,331,774              14,187             3,345,961
Purchase advances - related parties, net                                                          —                  4,900                4,900
Prepaid expenses                                                                                  337                9,049                9,386
Inventories, net                                                                            4,645,932             985,218             5,631,150
Deferred tax assets                                                                         2,795,924             330,867             3,126,791
Property and equipment, net                                                                 1,724,988             861,086             2,586,074
Advances for purchase of fixed assets                                                         786,448           3,171,123             3,957,571
Total assets                                                                               50,248,520           8,580,648            58,829,168
Trade accounts payable                                                                     24,160,229           2,056,380            26,216,609
Trade accounts payable-related parties                                                        311,966             305,952               617,918
Other payables                                                                              1,486,656              65,055             1,551,711
Deferred inco me                                                                            2,775,565           1,706,661             4,482,226
Advances from customers                                                                     3,788,313             706,028             4,494,341
Accrued payroll                                                                                30,725              82,108               112,833
Accrued employees’ welfare                                                                    772,492             467,305             1,239,797
Taxes payable                                                                               4,202,509             338,083             4,540,592
Accrued expense                                                                                   —             1,849,207             1,849,207
Short-term notes payable                                                                    9,592,713           1,020,000            10,612,713
Long-term notes payable, current portion                                                      140,000             300,000               440,000
Long-term notes payable, net of current portion                                             1,247,460           1,800,000             3,047,460
Total liabilities                                                                          48,771,988          10,696,779            59,468,767
Mi nority i nterest                                                                         1,039,870            (424,478 )             615,392
Ordinary shares                                                                                 3,800               (2,104 )              1,696
Additional paid-in capital                                                                  7,402,200           1,092,104             8,494,304
Statutory reserves                                                                            913,939             340,883             1,254,822
Retained earnings (deficit)                                                                (7,883,277 )        (3,122,536 )         (11,005,813 )
Total sharehol ders’ equity (deficit)                                                         436,662          (1,691,653 )          (1,254,991 )
Total liabilities and sharehol ders ’ equity (deficit)                               ¥     50,248,520     ¥     8,580,648      ¥     58,829,168

                                                                      F-11
Table of Contents

                                             RECON TECHNOLOGY, LTD
                            NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                               (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

                                                                                  As Previously           Effect of
                                                                                  Reported (1)           Restatement           As Restated
Combined Statements of Operati ons for the year ended June 30, 2007
     Hardware                                                                 ¥      43,398,243      ¥    10,771,720       ¥     54,169,963
     Service                                                                          3,869,564            2,630,722              6,500,286
Total Revenues                                                                       54,237,691           13,402,442             67,640,133
Cost of revenues                                                                     31,076,286           10,736,524             41,812,810
Gross Profit                                                                         23,161,405            2,665,918             25,827,323
     Selling and distribution expenses                                                4,975,932              116,357              5,092,289
     General and administrative expenses                                              7,344,254            2,300,336              9,644,590
Total operating expenses                                                             12,320,186            2,416,693             14,736,879
Income from operation                                                                10,841,219              249,225             11,090,444
Interest income                                                                          19,563                 8,413                27,976
Income before income taxes and mi nority interest                                    10,898,832              257,638             11,156,470
Provision for income taxes                                                           (2,057,532 )           (668,950 )           (2,726,482 )
Mi nority i nterest, net of tax                                                          58,374              (52,063 )                6,311
Net Income from continui ng operations                                                8,899,674             (463,375 )            8,436,299
Net income                                                                    ¥       8,813,973      ¥      (463,375 )     ¥      8,350,598
Basic and diluted earnings (loss) per ordi nary share                         ¥          421.88      ¥         (22.18 )    ¥         399.70
Weighted average ordinary shares outstanding                                             20,892               20,892                 20,892

                                                                                  As Previously           Effect of
                                                                                    Reported             Restatement           As Restated
Combined Statements of Cash Flows for the year ended June 30, 2007
Cash flows from operating acti vities:
Net income                                                                    ¥        8,813,973     ¥       (463,375 )    ¥       8,350,598
Adjustments to reconcile net income to net cash provi ded by operating
  acti vi ties:
     Depreciat ion                                                                       539,773              136,229                676,002
     Minority interest                                                                   (58,374 )             52,063                 (6,311 )
Changes in operating assets and liabilities, net of effect of disconti nued
  operations:
     Trade accounts receivable, net                                                 (16,719,042 )             157,396           (16,561,646 )
     Trade accounts receivable-related parties, net                                         —                      —                     —
     Other receivable, net                                                           (2,747,648 )             642,408            (2,105,240 )
     Other receivable related parties, net                                             (376,027 )               (6,415 )           (382,442 )
     Purchase advance, net                                                           (1,795,686 )                2,718           (1,792,968 )
     Prepaid expense                                                                       (337 )                5,693                 5,356
     Inventories                                                                       (814,421 )            (523,002 )          (1,337,423 )
     Deferred tax assets                                                               (775,182 )            (330,867 )          (1,106,049 )
     Other current assets                                                                   —                      —                     —
     Trade accounts payable                                                           5,490,936            (1,337,985 )           4,152,951
     Trade accounts payable-related parties                                            (341,598 )             305,952               (35,646 )
     Other payables                                                                    (788,937 )             843,783                54,846
     Other payables-related parties                                                    (660,000 )                  —               (660,000 )
     Deferred inco me                                                                 1,538,005             1,705,565             3,243,570
     Advances from customers                                                            787,317              (144,682 )             642,635
     Accrued payroll                                                                    (89,275 )              82,108                 (7,167 )
     Accrued employees’ welfare                                                         162,622                63,137               225,759
     Taxes payable                                                                    4,173,164               268,144             4,441,308
     Interest payable                                                                    88,432                    —                 88,432
Net cash (used in) provi ded by operati ng acti vities                               (3,572,305 )           1,458,872            (2,113,433 )
Cash flows from investing acti vi ties:
     Purchases of property and equipment                                                (663,662 )           (229,780 )             (893,442 )
     Advances for purchase of fixed assets                                              (786,448 )         (3,171,123 )           (3,957,571 )
Net cash used in investing acti vi ties                                                  (1,450,110 )        (3,400,903 )          (4,851,013 )
Cash flows from financing acti vities:
     Proceeds from stock issuance                                                         1,469,000                 —               1,469,000
     Proceeds from short-term notes payable                                               2,800,000           1,020,000             3,820,000
     Proceeds from long-term notes payable                                                      —             2,100,000             2,100,000
Net cash provi ded by financing acti vities                                               3,249,713           3,120,000             6,369,713
Net change in cash                                                                       (1,772,702 )         1,177,969              (594,733 )
Cash and cash equi valents at beginni ng of the year                                      4,247,933           1,609,479             5,857,412
Cash and cash equi valents at end of the year                                      ¥      2,475,231      ¥    2,787,448      ¥      5,262,679

(1)   The amounts in the column ―As Prev iously Reported‖ for co mbined statements of operations reflect the reclassification of d iscontinued
      operations as discussed in Note 12.

                                                                     F-12
Table of Contents

                                              RECON TECHNOLOGY, LTD
                             NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

NOTE 2. S IGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Translating Financial Statements —The accompanying consolidated and combined financial statements were
prepared in accordance with accounting principles generally accepted in the United States of America (―U.S. GAAP‖). They are comb ined
through the date of the exclusive agreements, and they are consolidated following the date of the agreements. The accompanyin g consolidated
and combined financial statements include the financial statements of the Co mpany, its subsidiaries, and VIEs for wh ich the Co mpany is the
primary beneficiary. A ll inter-co mpany transactions and balances between the Company, its subsidiaries and VIEs are eliminat ed upon
consolidation.

Convenience Translation —The Co mpany’s functional currency is the Chinese Yuan (Ren minbi) and the accompanying consolidated and
combined financial statements have been expressed in Ch inese Yuan. The consolidated and combined financial statements as of and for the
period ended June 30, 2008 have been translated into United States dollars (―U.S. dollars‖) solely for the convenience of the readers, are not
presented in accordance with accounting principles generally accepted in the Un ited States of America and are unaudited. The consolidated and
combined financial statements have been translated into U.S. dollars at the rate of ¥6.8225 = US$1.00, the appro ximate exchan ge rates
prevailing on December 31, 2008. These translated U.S. dollar amounts should not be construed as representing Chinese Yuan amounts or that
the Chinese Yuan amounts have been or could be converted into U.S. dollars.

Accounting Estimates —The preparation of the consolidated and combined financial statements in conformity with accounting princip les
generally accepted in Un ited States of America requires that management make estimates and assumptions that affect the report ed amounts of
assets and liabilit ies and disclosure of contingent assets and liabilit ies at the dates of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Estimates are adjusted to reflect actual experience when necessary. Significant accounting
estimates reflected in the Co mpany’s consolidated and combined financial statements include revenue recognition, allowance for doubtful
accounts, and useful lives of property and equipment. Since the use of estimates is an integral co mponent of the financial report ing process, our
actual results could differ fro m those estimates.

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

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

Marketable Securities —The Co mpany accounts for marketable securities in accordance with Statement of Financial Accounting Standards
(―SFAS‖) No. 115, ―Accounting for Certain Investments in Debt and Equity Securities ‖ (―SFAS No. 115‖). The Co mpany invests in certain
marketable securities in the Chinese stock exchanges. All marketable securities are classified as trading securities and are reported at fair value
based on quoted market p rices. The unrealized gains and losses on these securities are included in earn ings. At June 30, 2008, the Co mpany
had trading securities consisting of corporate equity securities with a fair value of ¥ 530,618 ($77,775). During the year ended June 30, 2008,
the Co mpany experienced realized loss of ¥38,237 ($5,605) and unrealized loss of ¥473,732 ($69,437), wh ich are included in earnings on the
income statement for the year. The securit ies were purchased during the year ended June 30, 2008 and thus there is no balance as of June 30,
2007.

Trade Accounts and Other Receivables —Accounts receivable are recorded when revenue is recognized and are carried at original invoiced
amount less a provision for any potential uncollectible amounts. Provision is made against trade accounts and other receivables to the extent
they are considered to be doubtful. Other receivables are fro m t ransactions with non -trade customers.

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

                                                                       F-13
Table of Contents

                                              RECON TECHNOLOGY, LTD
                             NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

Inventories —Inventories are stated at the lower of cost or net realizable value, on a first -in-first-out basis. The method of determining
inventory costs is used consistently from year to year. A llo wance for inventory obsolescence is provided when the market valu e of certain
inventory items are lower than the cost.

Short-term Notes Receivable —Short-term lending to other companies are recorded as short-term notes receivable. As of June 30, 2008, the
Co mpany had a short-term note in the amount of ¥6,689,187 ($980,460), which bears a annual interest rate at 4% and will be held to maturity
at October 10, 2009. Other notes receivables bear no interest and are due on demand.

Valuation of Long-lived Assets —The carrying values of the Co mpany’s long-lived assets are reviewed for impairment annually or whenever
events or changes in circu mstances indicate that they may not be recoverable. When such an event occurs, the Co mpany projects the
undiscounted cash flows to be generated from the use of the asset and its eventual disposit ion over the remaining life of the asset. If projections
indicate that the carrying value of the long-lived asset will not be recovered, the carrying value of the long -lived asset is reduced by the
estimated excess of the carrying value over the projected discounted cash flows.

Advances from Customers —The Co mpany, as is common practice in the PRC, will often receive advance payments from its customers for its
products. The advances are recognized as revenue when the products are delivered. The Co mpany had advances from its customers in the
amount of ¥4,494,341 and ¥1,543,026 ($226,167) at June 30, 2007 and 2008, respectively.

Revenue Recognition —The Co mpany recognizes revenue when the four fo llo wing criteria are met: (1) persuasive evidence of an
arrangement, (2) delivery has occurred or services provided, (3) the sales price is fixed or determinable, and (4) collectability is reasonably
assured. Delivery does not occur until products have been shipped or services have been provided to the client and the client has signed a
complet ion and acceptance report, risk of loss has transferred to the client, client acceptance provisions have lapsed, or th e Co mpany has
objective evidence that the criteria specified in client acceptance provisions have been satisfied. The sales price is not considered to be fixed or
determinable until all contingencies related to the sale have been resolved.

Hardware:
      Revenue fro m hard ware sales is generally recognized when the product is shipped to the customer and when there are no u nfulfilled
      company obligations that affect the customer’s final acceptance of the arrangement.

Services:
      The Co mpany provides services on a fixed-price contract and the contract terms generally are short term. Revenue is recognized on the
      completed contract method when delivery and acceptance is determined by a co mpletion report signed by the customer. Deferred revenue
      represents unearned amounts billed to customers related to post-contract maintenance agreements.

Software:
      The Co mpany sells self-developed software. For software sales, the Co mpany recognizes revenues in accordance with the provisions of
      Statement of Position No. 97-2, ―Software Revenue Recognition,‖ and related interpretations. Revenue fro m perpetual (one-time charge)
      licensed software is recognized at the inception of the license term. Revenue fro m term (monthly license charge) arrangements is
      recognized on a subscription basis over the period that the customer is using the license. We do not provide any rights of re turn or
      warranties on our software.
      Revenues applicable to mu ltip le-element fee arrangements are bifurcated among the elements such as software, hard ware and
      post-contract service using vendor-specific objective evidence of fair value. Such evidence consists of pricing of mu ltiple elements when
      those same elements are sold as separate products or arrangements. Software maintenance for the first year and init ial training are
      included in the purchase price of the software. In itial training is provided at the time of installation and is recognized as income as part of
      the price of the software since it is minimal in value. Maintenance is valued based on the fee schedule used by the Company f or providing
      the

                                                                        F-14
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                                              RECON TECHNOLOGY, LTD
                             NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

      regular level of maintenance service as sold to customers when renewing their maintenance contracts on a stand alone basis. Maintenance
      revenue is included in the inco me statement under services and is recognized over the term of the agreement.

Cost of Revenues —When the criteria for revenue recognition have been met, costs incurred are recognized as cost of revenue. Cost of
revenues include wages, materials, handling charges, and other expenses associated with manufactured products and service provided to
customers; the cost of purchased equipment and pipes.

Advertising Expenses —Advertising costs are expensed when incurred. Total advertising expenses were ¥729,800 and ¥0 ($0) for the years
ended June 30, 2007 and 2008 respectively.

Subsidy Income —The Co mpany received subsidy income of ¥ 155,566 and ¥669,829 ($98,179) fro m the local govern ment for the years ended
June 30, 2007 and 2008, respectively. This income is given by the government to support local software co mpanies. Subsidy income is
recognized when received and is included in the statements of operations.

Income Taxes —Income taxes are provided based upon the liability method of accounting pursuant to SFAS No. 109, Accounting for Income
Taxes . Provisions for inco me taxes are based on taxes payable or refundable for the current year and deferred taxes. Deferred taxe s 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 liabilit ies are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred
tax assets and liabilities are ad justed through the provision for inco me taxes. The Co mpany has not been subject to any income taxes in the
United States or the Cay man Islands.

Business Segments —The Co mpany operates in one industry which includes the sale of products for the oil field construction solely to
customers in China; therefore, no business segment information has been p resented.

Net Earnings (Loss) per Ordinary Share —Basic earnings (loss) per share is computed by dividing net inco me (loss) available for co mmon
shareholders by the weighted average number of ordinary shares outstanding. Diluted earnings (loss) per share a re computed by dividing net
income (loss) available fo r co mmon shareholders by the weighted -average number of ordinary shares and dilutive potential ordinary share
equivalents outstanding. Potential ordinary share equivalents consist of contingently issuab le shares of redeemab le ordinary shares disclosed in
Note 6.

                                                                        F-15
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                                             RECON TECHNOLOGY, LTD
                            NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                               (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

                                                                                                   Chinese Yuan (Renminbi)             U.S. Dollars
                                                                                                                                       For the Year
                                                                                                         For the Years                Ended June 30,
                                                                                                        Ended June 30,                     2008

                                                                                                 2007                     2008
                                                                                             (As Restated)                                (Unaudited)
Basic weighted average ordinary shares outstanding                                                  44,053                   79,976             79,976
Effect of redeemable co mmon stock (Note 6)                                                            —                      1,676              1,676
Diluted weighted average ordinary shares outstanding                                                44,053                   81,652             81,652
Net income from continuing operations                                                    ¥      8,436,299         ¥      13,265,077   $      1,944,314
     Basic earn ing per share                                                                      191.50                    165.86              24.31
     Diluted earnings per share                                                                    191.50                    162.46              23.81
Income (loss) from discontinued operations                                               ¥         (85,701 )      ¥         405,926   $         59,498
    Basic earn ing per share                                                                         (1.95 )                   5.08               0.74
    Diluted earnings per share                                                                       (1.95 )                   4.97               0.73
Net income avail able for common sharehol ders                                           ¥      8,350,598         ¥      13,654,184   $      2,001,347
     Basic earn ings per share                                                                     189.56                    170.73              25.02
     Diluted earnings per share                                                          ¥         189.56         ¥          167.22   $          24.51

Recently Enacted Accounting Standards —In June 2006, the Financial Accounting Standards Board (―FASB‖) issued Financial Interpretation
No. 48, Accounting for Uncertainty in Inco me Taxes —an interpretation of FASB Statement No 109 (―FIN 48‖). FIN 48 prescribes a
recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to
be taken in a tax return. FIN 48 also provides guidance on de-recognition classification, interest and penalties, accounting in interim periods,
disclosure, and transition. The interpretation is effective for the fiscal years beginning after December 15, 2006. The adoption of this
interpretation had no impact on the Company’s consolidated and combined financial statements.

In September 2006, the Financial Accounting Standards Board issued SFAS No. 157, Fair Value Measurements (―SFAS No. 157‖), which
defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about
fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal
years. In February 2008, the FASB issued FASB Staff Position (―FSP FIN‖) No. 157-2 wh ich extended the effective date for certain
nonfinancial assets and nonfinancial liab ilit ies to fiscal years beginning after Novembe r 15, 2008. The Co mpany does not expect the adoption
of SFAS No. 157 to have a material impact on our consolidated and combined financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (―SFAS No. 159‖).
SFAS No. 159 permits companies to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 is
effective fo r financial statements issued for fiscal years beginning after November 15, 2007. The Co mpany does not expect the adoption of
SFAS No. 159 to have a material impact on our consolidated and combined financial statements.

In June 2007, the Emerging Issues Task Force of the FASB issued EITF Issue No. 07-3, Accounting for Nonrefundable Advance Payments for
Goods or Services to be Used in Future Research and Development Activities , (―EITF 07-3‖) wh ich is effective for fiscal years beginning after
December 15, 2007. EITF 07-3 requires that nonrefundable advance payments for future research and development activities be deferred and
capitalized. Such amounts will be recognized as an expense as the goods are delivered o r the related services are performed. EITF 07-3 is not
expected to have a material impact on our results of operations or finan cial position.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (―SFAS No.141(R)‖), and SFAS No. 160, Non controlling
Interests in Consolidated Financial Statements (―SFAS No. 160‖). SFAS No. 141(R) requires an acquirer to measure the identifiable assets
acquired, the liabilit ies assumed and any

                                                                     F-16
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                                              RECON TECHNOLOGY, LTD
                             NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

non-controlling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiab le
assets acquired. SFAS No. 160 clarifies that a non-controlling interest in a subsidiary should be reported as equity in the consolidated and
combined financial statements, consolidated and combined net income shall be adjusted to include the net income attributed to the
non-controlling interest and consolidated and combined co mprehensive income shall be adjusted to include the comprehensive income
attributed to the non-controlling interest. The calculation of earnings per share will continue to be based on income amounts attributable to the
parent. SFAS No. 141(R) and SFAS No. 160 are effective for financial statements issued for fiscal years beginning after December 15, 2008.
Early adoption is prohibited. The Co mpany has not yet determined the effect on our consolidated and combined financial statements, if any,
upon adoption of SFAS No. 141(R) or SFAS No. 160. SFAS No. 141(R) and SFAS No. 160 are not expected to have a material impact on our
results of operations or financial position.

NOTE 3 . ACCOUNTS RECEIVAB LE
Accounts receivable consisted of the follo wing at June 30, 2007 and 2008:

                                                                                           Chinese Yuan (Renminbi)                     U.S. Dollars
                                                                                                                                        June 30,
                                                                                                     June 30,                             2008

                                                                                         2007                        2008
                                                                                     (As Restated)                                     (Unaudited)
      Trade accounts receivable                                                  ¥     36,758,512               ¥   36,381,070     $     5,332,513
      Allowance for doubtful accounts                                                  (5,823,921 )                 (3,445,008 )          (504,948 )

      Trade accounts receivable, net                                             ¥     30,934,591               ¥   32,936,062     $     4,827,565


                                                                        F-17
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                                                 RECON TECHNOLOGY, LTD
                                NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                   (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

NOTE 4. INVENTORIES
Inventory consisted of the following at June 30, 2007 and 2008:

                                                                                        Chinese Yuan (Renminbi)                          U.S. Dollars
                                                                                                                                          June 30,
                                                                                                  June 30,                                  2008

                                                                                      2007                        2008
                                                                                  (As Restated)                                          (Unaudited)
            Purchased products                                                ¥        5,667,166             ¥    9,901,220          $      1,451,260
            Inventory provision                                                          (36,016 )                  (61,568 )                  (9,024 )

            Total inventories                                                 ¥        5,631,150             ¥    9,839,652          $      1,442,236


NOTE 5 . PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed on a straight -line basis over the estimated useful lives of the assets as
follows:

                       Motor vehicles                                                                                            10 Years
                       Office equip ment                                                                                        2-5 Years
                       Machinery                                                                                                  5 Years
                       Buildings                                                                                                 20 Years

Gains or losses on sales or retirements are included in the consolidated and combined statements of operations in the year of disposition.
Depreciat ion expense was ¥676,002 and ¥997,538 ($146,213) for the years ended June 30, 2007 and 2008, respectively. Property and
equipment consisted of the follo wing at June 30, 2007 and 2008:

                                                                                             Chinese Yuan (Renminbi)                             U.S. Dollars
                                                                                                                                                  June 30,
                                                                                                       June 30,                                     2008
                                                                                           2007                          2008
                                                                                       (As Restated)                                             (Unaudited)
      Motor vehicles                                                               ¥       3,518,285              ¥      2,556,002           $          374,643
      Office equip ment                                                                    1,910,732                     2,241,985                      328,616
      Property                                                                                   —                       5,740,750                      841,444
      Machinery                                                                              210,000                           —                            —
      Construction in process                                                                136,390                       450,340                       66,008

      Total property and equipment                                                         5,775,406                  10,989,076                   1,610,711
      Less: Accumulated depreciat ion                                                     (3,189,332 )                (2,582,117 )                  (378,471 )

      Property and equipment, net                                                  ¥       2,586,074              ¥      8,406,959           $     1,232,240


As disclosed in Note 8, t wo office buildings with carrying amounts of ¥2,515,819 ($368,753) and ¥2,964,519 ($434,521) are p ledged as
collateral on two of the Co mpany’s notes payable as of June 30, 2008.

NOTE 6. S HAREHOLDERS’ EQUITY (DEFICIT)
Ordinary Shares —When the Co mpany was incorporated in Cay man Islands on August 21, 2007, 5,000,000 ord inary shares were authorized,
and 50,000 ordinary shares were issued to the Principal Shareholders, at a par value of $0.01 each. The accompanying consolid ated and
combined financial statements have been restated on a retroactive basis to reflect the issuance of shares as though they had been is sued on the
dates of the capital contributions and de-consolidation of the Principal Shareholders based on the proportion of each amount to the total through
December 31, 2008, resulting in 50,000 shares being outstanding at December 31, 2008 wh ich resulted in more shares being reflected
outstanding in prior periods. See Note 14 fo r amounts after June 30, 2008.

                                                                       F-18
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                                             RECON TECHNOLOGY, LTD
                            NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                               (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

Statutory Reserves —According to the Articles of Association, the Co mpany is required to transfer a certain portion of its net profit, as
determined under PRC accounting regulations, from retained earn ings to the statutory reserve fund, which are co mprised of a s urplus reserve
and an employee benefit reserve. In the year ended June 30, 2008, the Co mpany reversed part of its employee benefit reserve in an amount of
¥340,883 to retained earnings, because the new Chinese Corporate Law abolished the employee benefit reserve. As of June 30, 2007 and 2008,
the balance of total statutory reserves was ¥1,254,822 and ¥1,687,772 ($247,383), respectively.

Redeemable Ordinary Shares —On December 10, 2007, the Co mpany signed an Ordinary Shares Subscription Agreement (the ―Agreement‖)
to sell 2,632 ordinary shares to an investor at an aggregate consideration of $200,000. Net total proceeds of $200,000 were receive d by the
Co mpany during March and April, 2008.

The ordinary shares issued are subject to redemption under certain conditions. In th e event that the Company fails to list on a recognized stock
exchange or complete a qualified IPO within 18 months after the signature of the Agreement, the Co mpany shall repay all the c onsideration
and plus 5% of the consideration per annum to the investo r. The three Principal Shareholders, Nanjing Recon, ENI, and BHD s everally and
jointly guaranteed the payment.

The shares issued are only conditionally redeemable as described above and are therefore not classified as a liability. Howev er, redemption of
the shares is not solely with in the control of the Co mpany; therefore, the shares are classified outside of permanent equity. During the year
ended June 30, 2008, the Co mpany accrued dividends in the amount of ¥16,819 ($2,465) on the redeemab le ord inary shares, which are reported
as part of the carrying value of the redeemable o rdinary shares in the accompanying balance sheets.

NOTE 7. INCOME TAXES
The Co mpany is not subject to any income taxes in the United States or the Cay man Islands. Befo re the imp lementa tion of the new Enterprise
Income Tax Law (―EIT Law‖) as discussed below, Foreign Invested Entities (―FIE‖) established in the PRC were generally subject to an
enterprise income tax (―EIT‖) rate of 33.0%, wh ich includes a 30.0% state income tax and a 3.0% local income tax. As approved by the local
tax authority in the PRC, Nanjing Recon was entitled to a 50% tax exempt ion for 2006 and 2007. Nanjing Recon was also granted a tax holiday
during the years 2006 and 2007 which entitled them to an additional tax e xemption of 50%. As a result, Nanjing Recon was subject to an
effective tax rate of 7.5% for 2006 and 2007 and 15% for 2008.

On March 16, 2007, the Nat ional People ’s Congress of China passed the new EIT Law, and on December 6, 2007, the State Co uncil of Ch ina
passed the Imp lementing Rules for the EIT Law (―Imp lementing Ru les‖) wh ich took effect on January 1, 2008. The new amend ed Corporate
Income Tax Law introduces a wide range of changes which include, but are not limited to, the unification of the income tax rate for
domestic-invested and foreign-invested enterprises at 25%, which reduces the Co mpany’s income tax rate fro m 33% to 25% in 2008 and after.
The Co mpany had minimal operations in jurisdictions other than the PRC.

                                                                      F-19
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                                              RECON TECHNOLOGY, LTD
                             NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

The temporary d ifferences and carry-forward wh ich give rise to the deferred inco me tax asset are as follows:

                                                                                                        Chinese Yuan (Renminbi)                        U.S. Dollars
                                                                                                                                                        June 30,
                                                                                                                    June 30,                              2008

                                                                                                        2007                           2008
                                                                                                    (As Restated)                                      (Unaudited)
      Net operating loss carryforwards                                                          ¥        966,937            ¥      2,583,690          $     378,701
      Allowance for doubtful trade receivables                                                         1,984,752                   1,029,066                150,834
      Allowance for doubtful other receivables                                                           166,098                     101,802                 14,922
      Inventory obsolescence reserve                                                                       9,004                      67,248                  9,857

      Total deferred inco me tax assets                                                         ¥      3,126,791            ¥      3,781,806          $     554,314


Due to the change in tax rate during the fiscal year, the statutory tax rate for June 30, 2008 is a blended rate of appro ximately 30%, which was
calculated as 33% during the six months ended December 31, 2007 and 25% during the six months ended June 30, 2008. For th e years ended
June 30, 2007 and 2006 the statutory rate was 33%. The reconciliat ion of inco me tax (benefit) co mputed by applying the statutory income tax
rate to pre-tax income (loss) to the actual tax (benefit) is as follo ws:

                                                                                            Chinese Yuan (Renminbi)                              U.S. Dollars
                                                                                                                                                For the Years
                                                                                                 For the Years                                 Ended June 30,
                                                                                                Ended June 30,                                      2008


                                                                                        2007                             2008
                                                                                    (As Restated)                                                 (Unaudited)
      Income tax calculated at statutory rates                                  ¥      3,478,368              ¥       4,455,648               $            653,081
      Nondeductible expenses                                                             287,666                        382,395                             56,050
      Benefit of operating loss carryforwards                                           (849,015 )                      862,675                            126,446
      Benefit of favorable tax rate                                                      (63,236 )                     (566,866 )                          (83,088 )
      Benefit of tax holiday                                                            (127,301 )                     (777,423 )                         (113,950 )
      Tax effect of change in tax rates                                                      —                         (585,682 )                          (85,846 )

      Provision for inco me taxes                                               ¥      2,726,482              ¥       3,770,747               $           552,693

The provision for inco me taxes consisted of the following:

                                                                                                 Chinese Yuan (Renminbi)                            U.S. Dollars
                                                                                                                                                   For the Years
                                                                                                         For the Years                            Ended June 30,
                                                                                                        Ended June 30,                                 2008


                                                                                                2007                            2008
                                                                                            (As Restated)                                             (Unaudited)
      Current                                                                           ¥      1,383,353             ¥      1,494,503             $         219,055
      Deferred                                                                                 1,343,129                    2,276,244                       333,638

      Provision for inco me taxes                                                       ¥      2,726,482             ¥      3,770,747             $         552,693

If the Co mpany had not been granted a ―tax holiday‖ during the years ended June 30, 2007 and 2008, the provision for inco me t axes would
have been ¥2,853,783 and ¥4,548,170 ($666,643), respectively. Net inco me after income tax for the years ended June 30, 2007 and 2008 would
have been ¥8,223,297 and ¥12,893,580 ($1,889,861), respectively. Basic earnings per co mmon share for the years ended June 30, 2007 and
2008 would have been ¥394 and ¥340 ($50), respectively. Diluted earnings per common share for the years ended June 30, 2007 and 2008
would have been ¥394 and ¥327 ($48), respectively.

                                                                       F-20
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                                              RECON TECHNOLOGY, LTD
                             NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

NOTE 8. NOTES PAYAB LE
Short-term notes payable consist of the follo wing:

                                                                                                     Chinese Yuan (Renminbi)            U.S. Dollars
                                                                                                                                         June 30,
                                                                                                              June 30,                     2008

                                                                                                     2007                   2008
                                                                                                 (As Restated)                          (Unaudited)
Short-term notes payable due to non-rel ated parties:
¥8,000,000 short-term line of cred it, no interest                                           ¥       6,192,713        ¥        49,058   $     7,190
Short-term notes payable, no interest                                                                2,800,000              2,000,000       293,148
Due on-demand note payable to a supplier, no interest                                                  600,000                    —             —
Due on-demand note payable to a customer, no interest                                                      —                  114,610        16,799
Due on-demand note payable to a customer, no interest                                                      —                  300,000        43,972
Due on-demand note payable to a supplier, no interest                                                  900,000                700,000       102,602
Due on-demand note payable to a supplier, no interest                                                  120,000                100,000        14,657
Short-term note payable to a customer, interest at 6%, matures December 9, 2008                            —                  650,000        95,273

Total short-term notes payable due to non-related parties:                                   ¥     10,612,713         ¥     3,913,668   $   573,641


                                                                                                 Chinese Yuan (Renminbi)                U.S. Dollars
                                                                                                                                         June 30,
                                                                                                           June 30,                        2008

                                                                                               2007                       2008
                                                                                           (As Restated)                                (Unaudited)
Short-term notes payable due to rel ated parties:
Due on-demand note payable to a related party, no interest                             ¥             —            ¥        136,000      $    19,933
Due on-demand note payable to a principal shareholder, no interest, secured by an
  office build ing                                                                                   —                    1,114,569         163,367
Due on-demand note payable to a related party, no interest                                           —                      300,000          43,972
Short-term note payable to a related party, interest at 6%, matures December 9, 2008                 —                      190,000          27,849
Short-term note payable to a related party, interest at 6%, matures December 9, 2008                 —                      590,000          86,479
Total short-term notes payable due to related parties:                                 ¥             —            ¥       2,330,569     $   341,600


                                                                    F-21
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                                               RECON TECHNOLOGY, LTD
                              NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                 (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

Long-term notes payable consist of the following:

                                                                                                        Chinese Yuan (Renminbi)                  U.S. Dollars
                                                                                                                                                  June 30,
                                                                                                                    June 30,                        2008

                                                                                                        2007                        2008
                                                                                                    (As Restated)                                (Unaudited)
Long-term notes payable:
Long-term note payable, interest at 6%, matures May 5, 2008                                     ¥         140,000              ¥            —    $        —
Long-term note payable to a principal shareholder, interest at 6%, matures August 5,
  2008                                                                                                     50,000                     57,737           8,464
Long-term note payable to a supplier, interest at 3%, matures December 30, 2008                           500,860                        —               —
Long-term note payable to a supplier, interest at 6%, matures June 30, 2009                               446,600                        —               —
Long-term note payable to a supplier, interest at 6%, matures December 30, 2009                           200,000                        —               —
Long-term note payable to a customer, interest at 3%, matures December 30, 2009                           100,000                        —               —
Long-term note payable, interest at 7.92%, matures June 18, 2014, secured by an
  office build ing                                                                                     2,100,000                     600,000          87,944

Total long-term notes payable:                                                                         3,537,460                     657,737          96,408
Less: current maturit ies of long-term debt                                                             (440,000 )                  (357,737 )       (52,435 )

Long-term notes payable, net of current porti on:                                               ¥      3,097,460               ¥     300,000     $    43,972



NOTE 9. CONCENTRATIONS
In fiscal year 2007, the Co mpany’s two largest customers accounted for approximately 60% and 40% of its revenue; in fiscal y ear 2008, the
largest two customers represented about 33% and 28% of the Co mpany ’s revenue. In fiscal year 2008, the Co mpany’s largest supplier
accounted for 17% of its cost of revenue. In fiscal year 2007, the Co mpany’s largest supplier accounted for 33% of its cost of revenue.

NOTE 10. COMMITMENTS AND CONTINGENCIES
The Co mpany leases offices in Beijing, Nan jing, Shandong and Xiamen. The amounts of commit ments for non -cancelable operating leases for
2009 and 2010 were as follows. All the lease agreements expire in 2010.

                                                                                Chinese Yuan (Renminbi)                   U.S. Dollars
                                                                                                                          (Unaudited)
                       2009                                                 ¥                   456,860                  $         66,964
                       2010                                                                      97,200                            14,247

NOTE 11. RELATED PARTY TRANSACTIONS
Receivable from related parties —At June 30, 2008, the Co mpany had receivables fro m related parties of ¥ 239,550 ($35,112), of which
¥99,550 was fro m a principal shareholder for t ravel advances and ¥140,000 was fro m a co mpany under common ownership for sales of goods
and services. The Company also had a purchase advance from a related party of ¥22,238 ($3,260) fro m a co mpany under common ownership
for the purchase of goods.

At June 30, 2007, the Co mpany had account receivables from related parties of ¥376,027 fo r sales of goods and services to companies under
common ownership. The Co mpany also had a receivable fro m a related party of ¥6,415 fro m a co mpany under common ownership for paying
expenses on behalf of the other party. The Co mpany also had a purchase advance from a related party of ¥4,900 fro m a co mpan y under
common ownership for the purchase of goods.

                                                                     F-22
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                                              RECON TECHNOLOGY, LTD
                             NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

Payable to related parties —At June 30, 2008, the Co mpany owed related parties ¥1,386,778 ($203,265), due to companies under common
ownership for payments of expenses made on behalf of the Co mpany. The Co mpany also owed related parties ¥1,152,914 ($168,987), due to
principal shareholders for payments of expenses on behalf of the Co mpany.

At June 30, 2007, the Co mpany owed related parties ¥617,918, of wh ich ¥567,918 was due to companies under common o wnership for
payments of expenses made on behalf of the Co mpany and ¥50,000 was due to a company under common ownership fo r loan p ayments made
on behalf of the company.

Related party revenue —During the year ended June 30, 2007, the Co mpany had revenues from the sale of software to a co mp any under
common ownership in the amount of ¥747,741. There were no related party revenues during the year ended June 30, 2008.

NOTE 12. DISCONTINUED OPERATIONS AND DECONSOLIDATION OF A VARIAB LE INTER ES T ENTITY
At the end of the fiscal year 2008, the Co mpany co mpleted the sale of Inner Mongolia Adar Energy Technology, Ltd. and Beijing Weigu
Windows Co, wh ich were both the majority-o wned subsidiaries of BHD. In the fourth quarter of 2008, the Co mpany determined that these two
subsidiaries met the criteria for classification as discontinued operations. The gain on the disposal of these subsidiaries a nd the financial results
associated with 2008 and prior periods are included in d iscontinued operations.

In June 2008, an unrelated party purchased the equity interest in Beijing Adar fro m one of the Principal Shareholders, wh ich caused the
Co mpany to no longer be a primary beneficiary of Beijing Adar under FIN46 (R). As such, Beijing Adar was excluded fro m th e consolidation
basis upon the completion of th is transaction, and its financial results associated with 2008 and prior periods were reported as discontinued
operations.

Summarized Statements of Income data fo r discontinued operations is as follows:

                                                                                                  Chinese Yuan (Renminbi)                U.S. Dollars
                                                                                                                                         For the Year
                                                                                                         For the Years                  Ended June 30,
                                                                                                        Ended June 30,                       2008


                                                                                                 2007                     2008
                                                                                                                                            (Unaudited)
Revenue                                                                                    ¥    5,625,092        ¥       12,078,367     $     1,770,373

Income(loss) before provision for income tax                                                       (85,701 )                193,379               28,344
Provision for inco me tax                                                                              —                   (162,433 )            (23,808 )

Income fro m discontinued operations, net of tax                                                   (85,701 )                 30,946                4,536
Gain on disposal of discontinued operations, net of tax                                                —                    374,980               54,962

Discontinued operations, net of tax                                                        ¥       (85,701 )     ¥          405,926     $         59,498


                                                                        F-23
Table of Contents

                                               RECON TECHNOLOGY, LTD
                              NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                 (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

Summarized Balance Sheet data for d iscontinued operations is as follows:

                                                                                                  Chinese Yuan (Renminbi)              U.S. Dollars
                                                                                                                                       For the Year
                                                                                                         For the Years                Ended June 30,
                                                                                                         Ended June 30,                    2008


                                                                                                  2007                    2008
                                                                                                                                          (Unaudited)
Assets of discontinued operations:
    Current assets                                                                        ¥      6,650,451          ¥    10,113,265   $      1,482,340
    Fixed assets, net                                                                               99,533                2,069,454            303,328

           Total assets of discontinued operations                                               6,749,984               12,182,720          1,785,668
Liabilities of discontinued operations                                                    ¥      5,338,401          ¥    10,240,190   $      1,500,944


NOTE 13. PARENT COMPANY ONLY CONDENS ED FINANCIAL INFORMATION
Basis of presentation —For the purpose of presenting parent company only condensed financial information, the basis used in this presentation
assumes the reorganization and the change of the reporting entity had taken place for all periods presented.


                                                         RECON TECHNOLOGY, LTD
                                                        CONDENS ED B ALANCE S HEETS

                                                                                              Chinese Yuan (Renminbi)                     U.S. Dollars
                                                                                                                                           June 30,
                                                                                                     June 30,                                2008

                                                                                         2007                            2008
                                                                                                                                          (Unaudited)
ASSETS
   Cash and cash equivalents                                                       ¥               —            ¥        1,370,000    $        200,806
   Long-term investment in variable interest entities                                              —                    24,044,363    $      3,524,275

Total assets                                                                       ¥               —            ¥       25,414,363    $      3,725,081


LIAB ILITIES AND S HAREHOLDERS ’ EQUITY
Current liabilities
    Other payable                                                                  ¥               —            ¥              582    $              86
    Other payable—related party                                                                    —                        19,721                2,891

Total current Liabilities                                                                       —                           20,303                2,977
    Liabilities assumed on variable interest entities                                     1,254,991                            —                    —

Total Liabilities                                                                         1,254,991                         20,303               2,977
Redeemable ordinary shares                                                                      —                        1,388,641             203,538

Sharehol ders’ equity
    Ordinary shares, $0.01 U.S. dollar par value, 5,000,000 shares authorized;
      47,029 and 105,465 shares outstanding, respectively                                     3,574                          8,012               1,174
    Additional paid-in capital                                                            8,492,426                     19,044,788           2,791,468
    Statutory reserves                                                                    1,254,822                      1,687,772             247,383
    Retained earnings                                                                   (11,005,813 )                    3,264,847             478,541

Total sharehol ders’ equity                                                              (1,254,991 )                   24,005,419           3,518,566

Total liabilities and sharehol ders ’ equity                                       ¥               —            ¥       25,414,363           3,725,081
F-24
Table of Contents

                                               RECON TECHNOLOGY, LTD
                              NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                 (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

                                                       RECON TECHNOLOGY, LTD
                                                 CONDENS ED STATEMENTS OF OPERATIONS

                                                                                             Chinese Yuan (Renminbi)                      U.S. Dollars
                                                                                                                                          For the Year
                                                                                                    For the Years                        Ended June 30,
                                                                                                    Ended June 30,                            2008


                                                                                             2007                    2008
                                                                                                                                          (Unaudited)
General, ad ministrative and selling expense                                         ¥              —        ¥           (25,959 )   $           (3,806 )

Operating loss                                                                                      —                    (25,959 )               (3,806 )

Equity in profit of variable interest entities                                              8,350,598              13,696,928                2,007,612
Interest income                                                                                   —                        34                        5

Net inco me                                                                                 8,350,598              13,671,003                2,003,811
Div idends on redeemable ordinary shares                                                          —                   (16,819 )                 (2,465 )

Net Income available from common sharehol ders                                       ¥      8,350,598        ¥     13,654,184        $       2,001,346



                                                       RECON TECHNOLOGY, LTD
                                                 CONDENS ED STATEMENTS OF CAS H FLOWS

                                                                                         Chinese Yuan (Renminbi)                          U.S. Dollars
                                                                                                                                          For the Year
                                                                                             For the Years                               Ended June 30,
                                                                                             Ended June 30,                                   2008

                                                                                    2007                          2008
                                                                                                                                          (Unaudited)
Cash flows from operating acti vities:
Net inco me available for co mmon shareholders                                  ¥   8,350,598            ¥       13,654,184          $       2,001,346
Adjustments to reconcile net inco me (loss) to net cash provided by (used in)
  operating activities:
     Equity in (profit) loss of subsidiary                                          (8,350,598 )                 (13,696,928 )              (2,007,611 )
     Expense paid by shareholders as contribution                                          —                           3,800                       557
     Div idends on redeemable ordinary shares                                                                         16,819                     2,465
Changes in current assets and liabilit ies
     Other payable                                                                           —                              582                      85
     Other payable—related party                                                             —                           19,721                   2,891

Net cash used in operating acti vities                                                       —                           (1,822 )                  (267 )

Cash flows from financing acti vities:
Proceeds from issuance of redeemable ordinary shares                                         —                     1,371,822                   201,073

Net cash provi ded by financing acti vities                                                  —                     1,371,822                   201,073

Net (decrease) increase in cash                                                              —                     1,370,000                   200,806
Cash and cash equi valents at beginni ng of year                                             —                           —                         —

Cash and cash equi valents at end of year                                       ¥            —           ¥         1,370,000         $         200,806


                                                                      F-25
Table of Contents

                                             RECON TECHNOLOGY, LTD
                            NOTES TO CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                               (INFORMATION IN UNITED S TATES DOLLARS IS UNAUDITED)

NOTE 14. S UBS EQUENT EV ENTS
On September 26, 2008 the Principal Shareholder disposed part of his equity interest and ceased to have a controlling interest in Hengda
Hait ian and Xiamen Recon. On December 19, 2008 the Principal Shareholders disposed part of their equity interest and ceased to have a
controlling interest in Yabei Nuoda. As a result, the Co mpany is no longer the primary beneficiary of He ngda Haitian, Xiamen Recon and
Yabei Nuoda and they will be excluded fro m the consolidation basis following the dates of their disposition in subsequent fin ancial statements.
In consideration of the de-consolidations of the three entities, the accompanying consolidated and combined financial statement s have been
restated on a retroactive basis to reflect the issuance of shares as though they had been issued on the dates of the capital contributions and
de-consolidations of the Principal Shareholders based on the proportion of each amount to the total through December 31, 2008, resulting in
50,000 shares being outstanding at December 31, 2008, wh ich resulted in more shares being reflected outstanding in prio r periods, as discussed
in Note 6.

                                                                      F-26
Table of Contents

                                                   RECON TECHNOLOGY, LTD

                                              INDEX TO FINANCIAL STATEMENTS

                                                                                                                    PAGE
Condensed Consolidated Balance Sheets as of December 31, 2008 (Unaudited)                                           F-28
Condensed Consolidated and Combined Statements of Operations for the Six Months Ended December 31, 2007 and 2008
  (Unaudited)                                                                                                       F-29
Condensed Consolidated and Combined Statements of Shareholders’ Equity for the Six Months Ended December 31, 2008
  (Unaudited)                                                                                                       F-30
Condensed Consolidated and Combined Statements of Cash Flo ws for the Six Months Ended December 31, 2007 and 2008
  (Unaudited)                                                                                                       F-31
Notes to the Condensed Consolidated and Co mbined Financial Statements (Unaudited)                                  F-33

                                                                 F-27
Table of Contents

                                                   RECON TECHNOLOGY, LTD
                                          CONDENS ED CONSOLIDATED BALANCE S HEETS
                                                        (UNAUDIT ED)

                                                                                                               Chinese Yuan
                                                                                                                (Renminbi)         U.S. Dollars
                                                                                                               December 31,       December 31,
                                                                                                                   2008               2008
ASSETS
Current assets
Cash and cash equivalents                                                                                  ¥      4,535,145   $         664,734
Trade accounts receivable, less allowance of ¥3,125,551 ($458,124)                                               37,140,404           5,443,812
Trade accounts receivable-related parties, less allo wance of ¥0 ($0)                                             8,658,800           1,269,154
Other receivable, less allowance of ¥ 266,597 ($39,076)                                                           4,764,421             698,339
Other receivable-related parties, less allowance of ¥1,834,920 ($268,951)                                         1,050,000             153,903
Purchase advances, less allowance of ¥ 787,677 ($115,453)                                                         4,662,921             683,462
Prepaid expenses                                                                                                    699,245             102,491
Inventories                                                                                                       8,356,860           1,224,897
Deferred tax assets                                                                                                 803,363             117,752

Total current assets                                                                                             70,671,159         10,358,544

Non-current assets
Property and equipment, net of accu mulated depreciation of ¥ 789,152 ($115,669)                                  1,284,267             188,240

Total non-current assets                                                                                          1,284,267             188,240

Total assets                                                                                               ¥     71,955,426   $     10,546,784


LIAB ILITIES AND S HAREHOLDERS ’ EQUITY
Current liabilities
Trade accounts payable                                                                                     ¥     16,437,892   $       2,409,366
Trade accounts payable-related parties                                                                              886,065             129,874
Other payables                                                                                                    1,857,291             272,230
Other payables—related parties                                                                                      722,716             105,931
Deferred inco me                                                                                                  2,868,826             420,495
Advances from customers                                                                                           1,017,311             149,111
Accrued employees’ welfare                                                                                          438,905              64,332
Taxes payable                                                                                                    12,289,367           1,801,300
Interest payable                                                                                                    113,400              16,621
Short-term notes payable                                                                                          3,110,482             455,915
Short-term notes payable—related parties                                                                            886,377             129,920

Total liabilities                                                                                                40,628,632           5,955,095
Mi nority i nterest                                                                                                 384,008              56,286
Redeemable ordinary shares                                                                                        1,415,436             207,466
Sharehol ders’ equity
Ordinary shares, $0.01 U.S. dollar par value, 5,000,000 shares authorized; 50,000 shares outstanding                  3,800                 557
Additional paid-in capital                                                                                        9,029,000           1,323,415
Statutory reserves                                                                                                1,687,772             247,383
Retained earnings                                                                                                18,806,778           2,756,582

Total sharehol ders’ equity                                                                                      29,527,350           4,327,937

Total liabilities and sharehol ders ’ equity                                                               ¥     71,955,426   $     10,546,784


                The accompanying notes are the integral part of these condensed consolidated and combined financial statements.
F-28
Table of Contents

                                           RECON TECHNOLOGY, LTD
                       CONDENS ED CONSOLIDATED AND COMB INED STATEMENTS OF OPERATIONS
                                                (UNAUDIT ED)

                                                                 Chinese Yuan (Renminbi)                      U.S. Dollars
                                                                                                           For the Six Months
                                                                      For the Six Months                   Ended December 31,
                                                                      Ended December 31,                          2008

                                                               2007                         2008
Revenues
    Hardware                                              ¥   30,180,050           ¥       47,714,477      $       6,993,694
    Service                                                      624,937                    1,400,000                205,203
    Software                                                   6,689,272                      649,573                 95,210

Total Revenues                                                37,494,259                   49,764,050              7,294,107
Cost of revenues                                              23,065,310                   31,141,366              4,564,509

Gross Profit                                                  14,428,949                   18,622,684              2,729,598

Operating expenses
    Selling and distribution expenses                          4,318,460                    3,339,837                489,533
    General and administrative expenses                        2,747,910                    3,232,178                473,753

Total operating expenses                                       7,066,370                    6,572,015                963,286

Income from operations                                         7,362,579                   12,050,669              1,766,312
Subsi dy income                                                  490,342                    1,664,615                243,989
Non-operating expenses                                          (426,484 )                   (114,400 )              (16,768 )
Interest income                                                    5,378                       11,925                  1,748

Income before income taxes and mi nority interest              7,431,815                   13,612,809              1,995,281
Provision for income taxes                                      (291,814 )                 (2,621,184 )             (384,197 )
Mi nority i nterest, net of tax                                 (269,129 )                    (19,930 )                (2,921 )

Income from continuing operati ons                             6,870,872                   10,971,695              1,608,163

Income (loss) from discontinued operations, net of tax         5,607,791                   (2,259,335 )             (331,159 )

Net income                                                    12,478,663                    8,712,360              1,277,004
Accrued di vi dend for redeemable ordinary shares                    —                         34,287                  5,026

Net income for common sharehol ders                       ¥   12,478,663           ¥        8,678,073      $       1,271,978

Basic earnings per share:
    Income fro m continuing operations                    ¥       104.70           ¥           110.86      $            16.25

     Income (loss) fro m discontinued operations          ¥           85.45        ¥           (22.83 )    $             (3.35 )

     Net inco me                                          ¥       190.15           ¥               88.03   $            12.90

     Net inco me available for co mmon shareholders       ¥       190.15           ¥               87.69   $            12.85

Basic weighted average ordinary shares outstanding                65,627                       98,967                  98,967

Diluted earnings per share:
     Income fro m continuing operations                   ¥       103.54           ¥           107.99      $            15.83

     Income (loss) fro m discontinued operations          ¥           84.51        ¥           (22.24 )    $             (3.26 )

     Net inco me                                          ¥       188.05           ¥               85.75   $            12.57
    Net inco me available for co mmon shareholders                        ¥        188.05       ¥         85.41       $          12.52

Diluted weighted average ordinary shares outstanding                               66,357              101,599                 101,599


             The accompanying notes are the integral part of these condensed consolidated and combined financial statements.

                                                                  F-29
Table of Contents

                                             RECON TECHNOLOGY, LTD
                    CONDENS ED CONSOLIDATED AND COMB INED STATEMENTS OF S HAREHOLDERS ’ EQUITY
                                                  (UNAUDIT ED)

                                                                                     Chinese Yuan (Renminbi)
                                                                             Additional             Statutory        Retained Earnings
                                             Ordinary Shares               Paid-in Capital          Reserves              (Deficit)           Total

                                          Shares           Amount
Balance as of June 30, 2008               105,465      ¥       8,012   ¥       19,044,788       ¥    1,687,772   ¥          3,264,847    ¥   24,005,419
Increase (decrease) due to
  de-consolidations                       (55,465 )         (4,212 )          (10,015,788 )                 —               6,863,858        (3,156,142 )
Net inco me available for co mmon
  sharesholders for the period                —                 —                      —                    —               8,678,073         8,678,073

Balance as of December 31, 2008            50,000      ¥       3,800   ¥          9,029,000     ¥    1,687,772   ¥         18,806,778    ¥   29,527,350


                The accompanying notes are the integral part of these condensed consolidated and combined finan cial statements.

                                                                           F-30
Table of Contents

                                            RECON TECHNOLOGY, LTD
                        CONDENS ED CONSOLIDATED AND COMB INED STATEMENTS OF CAS H FLOWS
                                                 (CONTINUED)
                                                 (UNAUDIT ED)

                                                                                    Chinese Yuan (Renminbi)                      U.S. Dollars
                                                                                                                              For the Six Months
                                                                                         For the Six Months                   Ended December 31,
                                                                                         Ended December 31,                          2008

                                                                                  2007                         2008
Cash flows from operating acti vities:
Net income avail able for common sharehol ders                              ¥    12,478,663           ¥         8,678,073     $       1,271,978
Adjustments to reconcile net income to net cash provi ded by
  operating acti vi ties:
     Depreciat ion                                                                  395,612                       238,995                35,030
     Gain on sale of p roperty and equipment                                       (360,168 )                         —                     —
     Allowance for short-term notes receivables                                         —                       2,704,594               396,423
     Minority interest                                                              269,129                        19,930                 2,921
     Accrued dividend for redeemable ord inary shares                                   —                          34,287                 5,026
     Unrealized gain or loss on marketable securities                                   —                          55,516                 8,137
     Gain on currency remeasurement                                                     —                          (7,492 )              (1,098 )
Changes in operating assets and liabilities:
     Trade accounts receivable, net                                             (11,468,504 )                 (10,627,525 )          (1,557,717 )
     Trade accounts receivable-related parties, net                               1,247,429                    (2,519,601 )            (369,308 )
     Other receivable, net                                                        1,581,062                    (3,338,538 )            (489,342 )
     Other receivable related parties, net                                        2,839,135                        99,550                14,591
     Purchase advance, net                                                       (6,851,816 )                  (1,285,685 )            (188,448 )
     Prepaid expense                                                                   (222 )                    (588,270 )             (86,225 )
     Inventories                                                                 (2,595,194 )                     521,981                76,509
     Trade accounts payable                                                       8,754,325                       344,504                50,497
     Trade accounts payable-related parties                                      (2,584,289 )                   2,572,520               377,064
     Other payables                                                               7,762,030                    (2,687,106 )            (393,859 )
     Other payables-related parties                                              (1,313,380 )                     (91,143 )             (13,359 )
     Deferred inco me                                                            (1,707,097 )                  (1,631,382 )            (239,118 )
     Advances from customers                                                     (8,344,688 )                    (476,326 )             (69,817 )
     Accrued payroll                                                                152,335                       (38,346 )               (5,621 )
     Accrued employees' welfare                                                       4,253                      (292,467 )             (42,868 )
     Accrued expense                                                                994,373                       299,734                43,933
     Taxes payable                                                                  570,440                     5,374,137               787,708
     Interest payable                                                               (25,400 )                     113,400                16,621

Net cash (used in) provi ded by operati ng acti vities                      ¥     1,798,028           ¥        (2,526,660 )   $        (370,342 )

                The accompanying notes are the integral part of these condensed consolidated and combined financial statements.

                                                                     F-31
Table of Contents

                                            RECON TECHNOLOGY, LTD
                        CONDENS ED CONSOLIDATED AND COMB INED STATEMENTS OF CAS H FLOWS
                                                 (CONTINUED)
                                                 (UNAUDIT ED)

                                                                                     Chinese Yuan (Renminbi)                     U.S. Dollars
                                                                                                                              For the Six Months
                                                                                          For the Six Months                  Ended December 31,
                                                                                          Ended December 31,                         2008

                                                                                   2007                        2008
Cash flows from investing acti vi ties:
    Purchases of property and equipment                                       ¥   (7,285,266 )         ¥        (683,097 )    $        (100,124 )
    Advances for purchase of fixed assets                                          3,171,123                         —                      —
    Proceeds from sale of property and equipment                                     721,610                         —                      —
    Cash paid for investments                                                     (1,500,000 )                       —                      —
    Proceeds from short-term notes receivable                                            —                       170,000                 24,918
    Decrease in cash resulting fro m de-consolidation of variable interest
       entities                                                                             —                   (946,307 )             (138,704 )

Net cash used in investing acti vi ties                                           (4,892,533 )                 (1,459,404 )            (213,910 )

Cash flows from financing acti vities:
    Proceeds from stock issuance                                                   6,500,000                         —                      —
    Proceeds from short-term notes payable                                        (3,263,610 )                   698,962                102,450
    Repayment of long-term notes payable                                          (2,170,000 )                       —                      —
    Repayment of short-term notes payable                                                —                      (478,576 )              (70,147 )
    Repayment of short-term notes payable-related party                                  —                      (376,000 )              (55,112 )
    Repayment of long-term notes payable-related party                                   —                      (357,737 )              (52,435 )

Net cash (used in) provi ded by operati ng acti vities                             1,066,390                    (513,351 )               (75,244 )

Net change in cash                                                                (2,028,115 )                 (4,499,415 )            (659,496 )
Cash and cash equi valents at beginni ng of peri od                                5,262,679                    9,034,560             1,324,230

Cash and cash equi valents at end of period                                   ¥    3,234,564           ¥       4,535,145      $         664,734


Supplemental cash flow information
    Cash paid during the period for interest                                  ¥          —             ¥             —        $             —
    Cash paid during the period for taxes                                     ¥      811,912           ¥         811,267      $         118,911


                The accompanying notes are the integral part of these condensed consolidated and combined financial statements.

                                                                      F-32
Table of Contents

                                            RECON TECHNOLOGY, LTD
                     NOTES TO CONDENS ED CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                                 (UNAUDIT ED)

NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS
Organization —Recon Technology, Ltd (The ―Co mpany‖) was incorporated under the laws of the Cay man Islands on August 21, 2007 by
Mr. Yin Shenping, Mr. Chen Guangqiang and Mr. Li Hongqi (―The Principal Shareholders ‖) as a company with limited liab ilit y. The Co mpany
provides services designed to automate and enhance the extract ion of petroleu m in the People ’s Republic of China (the ―PRC‖). Its wholly
owned subsidiary, Recon Technology, Co., Limited (―Recon-HK‖) was incorporated on September 6, 2007 in Hong Kong. Other than the
equity interest in Recon-HK, the Co mpany does not own any assets or conduct any operations. On November 15, 2007, Recon-HK established
one wholly owned subsidiary, Jin ing Recon Technology, Ltd. (―Recon-JN‖) under the laws of the PRC. Other than the equity interest in
Recon-JN, Recon-HK does not own any assets or conduct any operations.

Recon-JN conducts its business through the following PRC legal entit ies that are consolidated as variable interest entities and operate in the
Chinese petroleum industry:

        •    Beijing BHD Petroleu m Technology Co., Ltd. (―BHD‖),
        •    Nanjing Recon Technology Co., Ltd. (―Nanjing Recon‖),
        •    Jining ENI Energy Technology Co., Ltd. (―ENI‖)

        •    Beijing Yabei Nuoda Technology Co., Ltd. (―Yabei Nuoda‖)
        •    Beijing Adar Petroleu m Technology, Ltd. (―Adar Petro leu m‖)
        •    Inner Mongolia Adar Energy Technology (―Inner Mongolia Adar‖)

        •    Beijing Weigu Windows Co. Technology (―Beijing Weigu‖)
        •    Xiamen Recon Technology (―Xiamen Recon‖)
        •    Xiamen Hengda Haitian (―Hengda Hait ian‖)

Chinese laws and regulations currently do not prohibit or restrict foreign ownership in petroleu m businesses. However, Chinese laws and
regulations do prevent direct foreign investment in certain industries. To protect our shareholders from possible future fore ign ownership
restrictions, the Principal Shareholders, who also hold the controlling interest of BHD, Nanjing Recon and ENI, reorganized the corporate and
shareholding structure of these entities by entering into certain exclusive agreements with Recon -JN, wh ich entitles Recon-JN t o receive a
majority of the residual returns and no other entity will absorb a majority of their expected losses. Recon -JN also entered into a share pledge
agreement with the Principal Shareholders, who pledged all their equity interest in these entities to Recon -JN. In addit ion, Recon-HK entered
into an option agreement to acquire the Principal Shareholders ’ equity interest in these entities if or when permitted by the PRC laws.

Based on these exclusive agreements, the Co mpany consolidates the variable interest entities (―VIEs‖) as required by Financial Accounting
Standards Board (―FASB‖) Interpretation No. 46R (―FIN 46R‖), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51
because the Company is the primary beneficiary of the VIEs.

On April 8, 1995, Adar Petro leu m was organized under the laws of the PRC. A Principal Shareholder of the Co mpany holds a controlling
interest of Adar Petroleu m. Adar Petroleu m had significant transactions with BHD wh ich resulted in BHD being the primary bene ficiary of
Adar Petroleu m, until Adar Petroleu m was sold by the Principal Shareholder to unrelated parties on June 30, 2008. Adar Petroleum is
consolidated with BHD based on FIN 46R for all periods presented to the date of disposition.

On August 28, 2000 a Principal Shareholder of the Co mpany purchased a controlling interest in BHD wh ich was organized under the laws of
the PRC on June 29, 1999. On April 18, 2007, BHD organized Inner Mongolia Adar under the laws of the PRC, of which BHD owned a
majority interest. On May 11, 2007 BHD created another subsidiary, Beijing Weigu, of which BHD held a majority interest. On June 21, 2008
Beijing Weigu was sold to unrelated parties. On June 24, 2008 Inner Mongolia Adar was sold to unrelated parties. Inner Mongolia Adar and
Beijing Weigu are consolidated with BHD for all periods presented to the date of disposition. BHD is comb ined with the Co mp any through the
date of the exclusive agreements, and is consolidated following the date of the agreements based on FIN 46R.

                                                                       F-33
Table of Contents

                                            RECON TECHNOLOGY, LTD
                     NOTES TO CONDENS ED CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                                 (UNAUDIT ED)

On January 21, 2003 ENI was organized under the laws of the PRC. A Principal Shareholder o f the Co mpany owns a controlling interest of
ENI. ENI is co mbined with the Co mpany through the date of the exclusive agreements, and is consolidated following the date of the
agreements based on FIN 46R.

On October 20, 2004 two Principal Shareholders of the Co mpany purchased a controlling interest in Yabei Nuoda which was organized under
the laws of the PRC on December 13, 2002. Yabei Nuoda had significant transactions with Nan jing Recon which resulted in Nanjing Recon
being the primary beneficiary o f Yabei Nuoda. On December 19, 2008 the Principal Shareholders disposed part of their equity interest and
ceased to have a controlling interest in Yabei Nuoda, as discussed in Note 12. Yabei Nuoda is consolidated with Nanjing Recon based on FIN
46R for all periods presented to the date of disposition.

On August 27, 2007 the Principal Shareholders the Co mpany purchased a majority ownership of Nanjing Recon fro m a related party who was a
majority owner of Nan jing Recon. Nan jing Recon was organized under the laws of the PRC on July 4, 2003. Nanjing Recon is combined with
the Co mpany through the date of the exclusive agreements, and is consolidated following the date of the agreements based on FIN 46R.

On January 15, 1996, Hengda Haitian was organized under the laws of the PRC. A Principal Shareholder of the Co mpany owns a controlling
interest in Hengda Hait ian. Nanjing Recon had significant transactions with Hengda Hait ian wh ich resulted in Nan jing Recon being the primary
beneficiary of Hengda Haitian. Hengda Haitian held a majority interest in Xiamen Recon, wh ich was organized by Hengda Haitian and Nanjing
Recon under the laws of the PRC on June 29, 2006. On September 26, 2008 the Principal Shareholder disposed part of his equity interest and
ceased to have a controlling interest in Hengda Haitian and Xiamen Recon. Xiamen Recon is consolidated with Hengda Haitian fo r all periods
presented. Hengda Haitian is consolidated with Nanjing Recon bas ed on FIN 46R for all periods presented to the date of disposition.

Nature of Operations —The Co mpany sells and installs hardware systems related to heating, maintenance and processes customized for
petroleum extraction in China. The Co mpany has also developed its own specialized co mputer software and hardware to manage the oil
extraction process in real-t ime to reduce the costs associated with extract ion. The products and services provided by the Company include:
        •    Oil Field Water Finding/Blocking Technology —The Company developed this technology designed to find and block water
             content in petroleum.

        •    High-Efficiency Heating Furnaces —High-Efficiency Heating Furnaces are designed to remove the impurities and to prevent
             solidification blockage in transport pipes carrying crude petroleum. Crude petroleu m contains certain impurities that must be
             removed before the petroleum can be sold, including water and natural gas.
        •    Multi-Purpose Fissure Shaper —Multipurpose fissure shapers improve the ext ractors ’ ability to test for and extract petroleu m
             which must be perforated into the earth before any petroleum extractor can test for the pre sence of oil.
        •    Supervisory Control and Data Acquisition (“SCADA”) —SCADA is an industrial co mputerized process control system for
             monitoring, managing and controlling petroleum ext raction. SCADA integrates underground and above -ground activities of the
             petroleum extraction industry.

NOTE 2. S IGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Translating Financial Statements —The accompanying condensed consolidated and combined financial statements
were prepared in accordance with accounting principles generally accepted in the United States of A merica (―U.S. GAAP‖). Th ey are
combined through the date of the exclusive agreements, and they are consolidated following the date of the agreements. The accompanying
condensed consolidated and combined financial statements include the financial statements of the Company,

                                                                      F-34
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                                           RECON TECHNOLOGY, LTD
                    NOTES TO CONDENS ED CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                                (UNAUDIT ED)

its subsidiaries, VIEs for which the Co mpany is the primary beneficiary. All inter-co mpany transactions and balances between the Co mpany,
its subsidiaries and VIEs are eliminated upon consolidation. In the opinion of management, all adjustments considered necessa ry for a fair
presentation have been included, and such adjustments are of a normal recurring nature.

Convenience Translation —The Co mpany’s functional currency is the Chinese Yuan (Ren minbi) and the accompanying condensed
consolidated and combined financial statements have been expressed in Chinese Yuan. The condensed consolidated and combined financial
statements as of and for the period ended December 31, 2008 have been translated into United States dollars (―U.S. dollars‖) solely for the
convenience of the readers, are not presented in accordance with accounting principles generally accepted in the United States of America and
are unaudited. The condensed consolidated and combined financial statements have been translated into U.S. dollars at the rat e of ¥ 6.8225 =
US$1.00, the approximate exchange rates prevailing on December 31, 2008. These translated U.S. dollar amounts should not be construed as
representing Chinese Yuan amounts or that the Chinese Yuan amounts have been or could be converted into U.S. dollars.

Accounting Estimates —The preparation of the condensed consolidated and combined financial statements in conformity with accounting
principles generally accepted in Un ited States of America requires that management make estimates and assumptions that affect the reported
amounts of assets and liabilit ies and disclosure of contingent assets and liabilit ies at the dates of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Estimates are adjusted to reflect actual experience when necessary. Significant
accounting estimates reflected in the Co mpany’s condensed consolidated and combined financial statements include revenue recognition,
allo wance for doubtful accounts, and useful lives of property and equipment. Since the use of estimates is an integral co mpon ent of the
financial report ing process, actual results could differ fro m those estimates.

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

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

Trade Accounts and Other Receivables —Accounts receivable are recorded when revenue is recognized and are carried at original invoiced
amount less a provision for any potential uncollectible amounts. Provision is made against trade accounts and other receivables to the extent
they are considered to be doubtful. Other receivables are fro m t ransactions with n on-trade customers.

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

Inventories —Inventories are stated at the lower of cost or net realizable value, on a specific identification basis. The method of determining
inventory costs is used consistently from year to year. A llo wance for inventory obsolescence is provided when the market valu e of certain
inventory items are lower than the cost.

Valuation of Long-lived Assets —The carrying values of the Co mpany’s long-lived assets are reviewed for impairment annually or whenever
events or changes in circu mstances indicate that they may not be recoverable. When such an event occurs, the Co mpany projects the
undiscounted cash flows to be generated from the use of the asset and its eventual disposition over the remaining life of the asset. If projections
indicate that the carrying value of the long-lived asset will not be recovered, the carrying value of the long-lived asset is reduced by the
estimated excess of the carrying value over the projected discounted cash flows.

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                                            RECON TECHNOLOGY, LTD
                     NOTES TO CONDENS ED CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                                 (UNAUDIT ED)

Advances from Customers —The Co mpany, as is common practice in the PRC, will often receive advance payments from its customers for its
products. The advances are recognized as revenue when the products are delivered. The Co mpany had advances from its customers in the
amount of ¥1,017,311 ($149,111) at December 31, 2008.

Revenue Recognition —The Co mpany recognizes revenue when the four fo llo wing criteria are met: (1) persuasive evidence of an
arrangement, (2) delivery has occurred or services provided, (3) the sales price is fixed or determinable, and (4) collectability is reasonably
assured. Delivery does not occur until products have been shipped or services have been provided to the client and the client has signed a
complet ion and acceptance report, risk of loss has transferred to the client, client acceptance provisions have lapsed, or th e Co mpany has
objective evidence that the criteria specified in client acceptance provisions have been satisfied. The sales price is not considered to be fixed or
determinable until all contingencies related to the sale have been resolved.

Hardware:
      Revenue fro m hard ware sales is generally recognized when the product is shipped to the custome r and when there are no unfulfilled
      company obligations that affect the customer’s final acceptance of the arrangement.

Services:
      The Co mpany provides services on a fixed-price contract and the contract terms generally are short term. Revenue is recognized on the
      completed contract method when delivery and acceptance is determined by a co mpletion report signed by the customer. Deferr ed revenue
      represents unearned amounts billed to customers related to post-contract maintenance agreements.

Software:
      The Co mpany sells self-developed software. For software sales, the Co mpany recognizes revenues in accordance with the provisions of
      Statement of Position No. 97-2, ―Software Revenue Recognition,‖ and related interpretations. Revenue fro m perpetual (one-time charge)
      licensed software is recognized at the inception of the license term. Revenue fro m term (monthly license charge) arrangements is
      recognized on a subscription basis over the period that the customer is using the license. We do not provide any rights of re turn or
      warranties on our software.
      Revenues applicable to mu ltip le-element fee arrangements are bifurcated among the elements such as software, hard ware and
      post-contract service using vendor-specific objective evidence of fair value. Such evidence consists of pricing of mu ltiple elements when
      those same elements are sold as separate products or arrangements. Software maintenance fo r the first year and init ial training are
      included in the purchase price of the software. In itial training is provided at the time of installation and is recognized as income as part of
      the price of the software since it is minimal in value. Maintenance is valued based on the fee schedule used by the Company for providing
      the regular level of maintenance service as sold to customers when renewing their maintenance contracts on a stand alone basis.
      Maintenance revenue is included in the inco me statement under services and is recognized over the term of the agreement.

Cost of Revenues —When the criteria for revenue recognition have been met, costs incurred are recognized as cost of revenue. Cost of
revenues include wages, materials, handling charges, and other expenses associated with manufactured products and service provided to
customers; the cost of purchased equipment and pipes.

Subsidy Income —The Co mpany received subsidy income of ¥ 490,342 and ¥1,664,615 ($243,989) fro m the local govern ment for the six
months ended December 31, 2007 and 2008, respectively. Th is income is given by the government to support local software companies.
Subsidy income is recognized when received and is included in the statements of operations.

Income Taxes —Income taxes are provided based upon the liability method of accounting pursuant to SFAS No. 109, Accounting for Income
Taxes . Provisions for inco me taxes are based on taxes payable or refundable for the current year and deferred taxes. Deferred taxe s are
provided on differences between the

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                                            RECON TECHNOLOGY, LTD
                     NOTES TO CONDENS ED CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                                 (UNAUDIT ED)

tax bases of assets and liabilit ies and their reported amounts in the financial statements, and tax carry forwards. Deferred tax assets and
liab ilit ies are included in the financial statements at currently enacted income tax rates applicable to the period in wh ich 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 liabilit ies are adjusted
through the provision for income taxes. The Co mpany has not been subject to any income taxes in the United States or the Cay man Islands.

Business Segments —The Co mpany operates in one industry which includes the sale of products for the oil field construction solely to
customers in China; therefore, no business segment information has been presented.

Net Earnings (Loss) per Ordinary Share — Basic earn ings (loss) per share is computed by dividing net income (loss) available for co mmon
shareholders by the weighted average number of ordinary shares outstanding. Diluted earnings (lo ss) per share are computed by dividing net
income (loss) available fo r co mmon shareholders by the weighted -average number of ordinary shares and dilutive potential ordinary share
equivalents outstanding. Potential ordinary share equivalents consist of cont ingently issuable shares of redeemab le ordinary shares disclosed in
Note 6.

                                                                                            Chinese Yuan (Renminbi)                   U.S. Dollars
                                                                                                                                   For the Six Months
                                                                                                 For the Six Months                Ended December 31,
                                                                                                 Ended December 31,                       2008
                                                                                          2007                        2008
Basic weighted average ordinary shares outstanding                                           65,627                      98,967                98,967
Effect of redeemable co mmon stock (Note 6)                                                     730                       2,632                 2,632
Diluted weighted average ordinary shares outstanding                                         66,357                     101,599               101,599
Net income from continuing operations                                               ¥     6,870,872          ¥    10,971,695      $         1,608,163
     Basic earn ings per share                                                               104.70                   110.86                    16.25
     Diluted earnings per share                                                              103.54                   107.99                    15.83
Income (loss) from discontinued operations                                          ¥     5,607,791          ¥    (2,259,335 )    $          (331,159 )
    Basic earn ings (loss) per share                                                          85.45                    (22.83 )                 (3.35 )
    Diluted earnings (loss) per share                                                         84.51                    (22.24 )                 (3.26 )
Net income                                                                          ¥   12,478,663           ¥        8,712,360   $         1,277,004
     Basic earn ings per share                                                              190.15                        88.03                 12.90
     Diluted earnings per share                                                             188.05                        85.75                 12.57
Net income avail able for common sharehol ders                                      ¥   12,478,663           ¥        8,678,073   $         1,271,978
     Basic earn ings per share                                                              190.15                        87.69                 12.85
     Diluted earnings per share                                                     ¥       188.05           ¥            85.41   $             12.52

Recently Enacted Accounting Standards —In September 2006, the Financial Accounting Standards Board (―FASB‖) issued SFAS No. 157,
Fair Value Measurements (―SFAS No. 157‖), which defines fair value, establishes a framework for measuring fair value in gen erally accepted
accounting principles and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. In February 2008, the FASB issued FASB Staff Position (―FSP FIN‖)
No. 157-2 which extended the effective date for certain nonfinancial assets and nonfinancial liabilities to fiscal years beginning after
November 15, 2008. In October 2008, the FASB issued Staff Position (FSP FIN‖) No. 157-3 which clarifies the application of Statement 157
in a market that is not active. The Co mpany adopted SFAS No. 157 on July 1, 2008, and that adoption did not have a material effect on the
Co mpany’s condensed consolidated and combined financial statements.

                                                                         F-37
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                                            RECON TECHNOLOGY, LTD
                     NOTES TO CONDENS ED CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                                 (UNAUDIT ED)

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (―SFAS No. 159‖).
SFAS No. 159 permits companies to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 is
effective fo r financial statements issued for fiscal years beginning after November 15, 2007. The Co mpany adopted SFAS No. 159 on Ju ly 1,
2008, and that adoption did not have a material effect on the Co mpany ’s condensed consolidated and combined financial statements.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations , and SFAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements. SFAS No. 141(R) requires an acquirer to measure the identifiable assets acquired, the liabilit ies assumed and any
non-controlling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiab le
assets acquired. SFAS No. 160 clarifies that a non-controlling interest in a subsidiary should be reported as equity in the consolidated financial
statements, consolidated net income shall be ad justed to include the net income attributed to the non -controlling interest and consolidated
comprehensive income shall be adjusted to include the comprehensive income attributed to the non -controlling interest. The calculation of
earnings per share will continue to be based on income amounts attributable to the parent. SFAS No. 141(R) and SFAS No. 160 are effective
for financial statements issued for fiscal years beginning after December 15, 2008. Early adoption is prohibited. The Co mpany has not yet
determined the effect on its condensed consolidated and combined financial statements, if any, upon adoption of SFAS No. 141(R) or SFAS
No. 160.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities . SFAS No. 161 is intended
to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to
better understand their effects on an entity's financial position, financial performance, and cash flows. SFAS No. 161 is effect ive for financial
statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Co mpany
does not expect the adoption of SFAS No. 161 to have a material impact on its condensed consolidated and combined financial statements.

In May 2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee Insurance Contracts . SFAS No. 163 requires that an
insurance enterprise recognize a claim liability prio r to an event of default (insured event) when there is evidence that cre dit deteriorat ion has
occurred in an insured financial obligation. Th is Statement also clarifies how SFAS No. 60, Accounting and Reporting by Insurance
Enterprises, as amended , applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account
for premiu m revenue and claim liabilities. This Statement also requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within
those fiscal years, except for some disclosures about the insurance enterprise's risk-management activities. Early application is not permitted.
The Co mpany does not expect the adoption of SFAS No. 161 to have a material impact on its condens ed consolidated and combined financial
statements.

In May 2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in
Cash upon Conversion (Including Partial Cash Settlement) . FSP No. APB 14-1 Clarifies that convertible debt instruments that may be settled
in cash upon conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Op inion No. 14, Accounting for
Convertible Debt and Debt Issued with Stock Purchase Warrants, and specifies that issuers of such instruments should separately account for
the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when intere st cost is recognized
in subsequent periods. Effect ive for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. The Co mpany does not expect the adoption of SFAS No. 161 to have a material impact on its condensed consolidated and
combined financial statements.

In June 2008, the FASB issued FSP No. EITF 03-6-1, ― Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities ‖ (―FSP 03-6-1‖), which classifies

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                                           RECON TECHNOLOGY, LTD
                    NOTES TO CONDENS ED CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                                (UNAUDIT ED)

unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents as participating securities and
requires them to be included in the co mputation of earnings per share pursuant to the two -class method described in SFAS No. 128, ―Earnings
per Share.‖ FSP 03-6-1 is effective fo r financial statements issued for fiscal years beginning after December 15, 2008, and interim periods
within those years. It requires all prior period earn ings per share data presented to be adjusted retrospectively. The Co mpan y is currently
evaluating the effect, if any, that the adoption of FSP 03-6-1 will have on its consolidated financial position, results of operations and cash
flows.

In September 2008, the FASB issued FSP No. 133-1 and FIN 45-4, ―Disclosures about Credit Derivatives and Certain Guarantees: An
Amend ment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarificat ion of the Effect ive Date of FASB Statement No. 161‖
(―FSP 133-1‖). FSP 133-1 requires more extensive disclosure regarding potential adverse effects of changes in credit risk on the financial
position, financial performance, and cash flows of sellers of credit derivatives. FSP 133 -1 also amends FASB Interpretation No. 45,
―Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, ‖ to require
additional disclosure about the current status of the payment or performance risk o f a guarantee. FSP 133 -1 also clarifies the effective date of
FASB Statement No. 161, ―Disclosures about Derivative Instruments and Hedging Activities,‖ by stating that the disclosures required should
be provided for any reporting period (annual or quarterly interim) beginning after November 15, 2008. The Co mpany is currently evaluating
the effect, if any that the adoption of FSP 133-1 will have on its consolidated financial position, results of operations and cash flows.

In December 2008, the FASB issued Staff Position (―FSP‖) FAS 140-4 and FIN 46(R)-8, Disclosures by Public Entit ies (Enterprises) about
Transfers of Financial Assets and Interests in Variable Interest Entities, which pro mptly imp roves disclosures by public companies until the
pending amendments to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities (―SFAS No. 140‖), and FIN No. 46, Consolidation of Variable Interest Entities (revised December 2003) —an interp retation of ARB
No. 51 (―FIN 46(R)‖), are finalized and approved by the Board. The FSP amends SFAS No. 140 to require public co mpanies to provide
additional disclosures about transfers of financial assets and variable interests in qualifying special-purpose entities. It also amends FIN 46(R)
to require public co mpanies to provide additional d isclosures about their involvement with variable interest entities. This F SP is effective for
reporting periods ending after December 15, 2008. The Co mpany is currently assessing the effect of FAS 140-4 and FIN 46(R)-8 on its
consolidated financial position and results of operations.

NOTE 3 . ACCOUNTS RECEIVAB LE
Accounts receivable consisted of the follo wing at December 31, 2008:

                                                                                                    Chinese Yuan
                                                                                                     (Renminbi)             U.S. Dollars
                                                                                                    December 31,           December 31,
                                                                                                        2008                   2008
            Trade accounts receivable                                                           ¥     40,265,955       $      5,901,936
            Allowance for doubtful accounts                                                           (3,125,551 )             (458,124 )

            Trade accounts receivable, net                                                      ¥     37,140,404       $      5,443,812


                                                                       F-39
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                                            RECON TECHNOLOGY, LTD
                     NOTES TO CONDENS ED CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                                 (UNAUDIT ED)

NOTE 4. INVENTORIES
Inventory consisted of the following at December 31, 2008:

                                                                                                          Chinese Yuan
                                                                                                           (Renminbi)         U.S. Dollars
                                                                                                          December 31,       December 31,
                                                                                                              2008               2008
            Purchased goods and Raw materials                                                         ¥      7,842,643   $      1,149,526
            Work in p rocess                                                                                   335,277             49,143
            Fin ished goods                                                                                    178,940             26,228

            Total inventories                                                                         ¥      8,356,860   $      1,224,897



NOTE 5 . PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed on a straight -line basis over the estimated useful lives of the assets as
follows:

                                     Motor vehicles                                                    10 Years
                                     Office equip ment                                                2-5 Years
                                     Machinery                                                          5 Years
                                     Buildings                                                         20 Years

Gains or losses on sales or retirements are included in the condensed consolidated and combined statements of operations. Dep reciation
expense was ¥395,612 and ¥238,995 ($35,030) for the six months ended December 31, 2007 and 2008, respectively. Property and equipment
consisted of the following at and December 31, 2008:

                                                                                                     Chinese Yuan
                                                                                                      (Renminbi)          U.S. Dollars
                                                                                                     December 31,         December 31,
                                                                                                         2008                 2008
            Motor vehicles                                                                       ¥        1,296,118      $      189,979
            Office equip ment                                                                               777,301             113,930

            Total property and equipment                                                                  2,073,419             303,909
            Less: Accumulated depreciat ion                                                                (789,152 )          (115,669 )

            Property and equipment, net                                                          ¥        1,284,267      $      188,240



NOTE 6. S HAREHOLDERS’ EQUITY
Ordinary Shares —When the Co mpany was incorporated in Cay man Islands on August 21, 2007, 5,000,000 ord inary shares were authorized,
and 50,000 ordinary shares were issued to the Principal Shareholders, at a par value of $0.01 each. The accompanying condense d consolidated
and combined financial statements have been restated on a retro active basis to reflect the issuance of shares as though they had been issued on
the dates of the capital contributions and deconsolidation of the Principal Shareholders based on the proportion of each amou nt to the total
through December 31, 2008 resulting in 50,000 shares being outstanding at December 31, 2008 which resulted in mo re shares being reflected
outstanding in prior periods.

Statutory Reserves —According to the Articles of Association, the Co mpany is required to transfer a certain portion of its net profit, as
determined under PRC accounting regulations, from retained earn ings to the statutory reserve fund, which are co mprised of a s urplus reserve
and an employee benefit reserve. As of December 31, 2008, the balance of total statutory reserves was ¥1,687,772 ($247,383).

                                                                       F-40
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                                           RECON TECHNOLOGY, LTD
                    NOTES TO CONDENS ED CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                                (UNAUDIT ED)

Redeemable Ordinary Shares— On December 10, 2007, the Co mpany signed an Ordinary Shares Subscription Agreement (the ―Agreement‖)
to sell 2,632 ordinary shares to an investor at an aggregate consideration of $200,000. Net total proceeds of $200,000 were received by the
Co mpany during March and April, 2008.

The ordinary shares issued are subject to redemption under certain conditions. In the event that the Company fails to list on a recognized stock
exchange or complete a qualified IPO within 18 months after the signature of the Agreement, the Co mp any shall repay all the consideration
and plus 5% of the consideration per annum to the investor. The three Principal Shareholders, Nanjing Recon, ENI, and BHD s ev erally and
jointly guaranteed the payment.

The shares issued are only conditionally redeemable as described above and are therefore not classified as a liability. However, redemption of
the shares is not solely with in the control of the Co mpany; therefore, the shares are classified outside of permanent equity. During the six
months ended December 31, 2008, the Co mpany accrued dividends in the amount of ¥34,287 ($5,026) on the redeemab le ordin ary shares,
which are reported as part of the carrying value of the redeemab le ordinary shares in the accompanying condensed consolidated balance sheets.

NOTE 7. INCOME TAXES
The Co mpany is not subject to any income taxes in the United States or the Cay man Islands. Befo re the imp lementation of the n ew Enterprise
Income Tax Law (―EIT Law‖) as discussed below, Foreign Invested Entities (―FIE‖) established in the PRC were generally subject to an
enterprise income tax (―EIT‖) rate of 33.0%, wh ich includes a 30.0% state income tax and a 3.0% local income tax. As approved by the local
tax authority in the PRC, Nanjing Recon was entitled to a 50% tax exempt ion for 2006 and 2007. Nanjing Recon was also granted a tax holiday
during the years 2006 and 2007 which entitled them to an additional tax exemption of 50%. As a result, Nanjing Recon was subject to an
effective tax rate of 7.5% for 2006 and 2007 and 15% for 2008.

On March 16, 2007, the Nat ional People ’s Congress of China passed the new EIT Law, and on December 6, 2007, the State Co uncil of Ch ina
passed the Imp lementing Rules for the EIT Law (―Imp lementing Ru les‖) wh ich took effect on January 1, 2008. The new amend ed Corporate
Income Tax Law introduces a wide range of changes which include, but are not limited to, the unification of the income tax ra te for
domestic-invested and foreign-invested enterprises at 25%, which reduces the Co mpany’s income tax rate fro m 33% to 25% in 2008 and after.
The Co mpany had minimal operations in jurisdictions other than the PRC.

NOTE 8. S HORT-TERM NOTES PAYAB LE
Short-term notes payable consist of the follo wing:

                                                                                                                    Chinese Yuan
                                                                                                                     (Renminbi)     U.S. Dollars
                                                                                                                    December 31,    December 31,
                                                                                                                        2008            2008
Short-term notes payable due to non-rel ated parties:
Short-term notes payable due on demand, no interest                                                             ¥      1,870,482    $   274,163
Short-term note payable, interest at 6%, matures December 9, 2009                                                        590,000         86,479
Short-term note payable, no interest, matures May 10, 2009                                                               650,000         95,273

Total short-term notes payable due to non-related parties:                                                      ¥      3,110,482    $   455,915


                                                                      F-41
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                                           RECON TECHNOLOGY, LTD
                    NOTES TO CONDENS ED CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                                (UNAUDIT ED)

                                                                                                                   Chinese Yuan
                                                                                                                    (Renminbi)            U.S. Dollars
                                                                                                                   December 31,           December 31,
                                                                                                                       2008                   2008
Short-term notes payable due to rel ated parties:
Short-term note payable to a related party, interest at 6%, matures December 9, 2009                               ¥   650,000            $    95,273
Short-term note payable to a related party, interest at 6%, matures December 9, 2009                                   190,000                 27,849
Due-on-demand note payable to a principal shareholder, no interest                                                      46,377                  6,798

Total short-term notes payable due to related parties                                                              ¥   886,377            $   129,920



NOTE 9. COMMITMENTS AND CONTINGENCIES
The Co mpany leases offices in Beijing, Nan jing and Shandong. The amounts of commit ments for non -cancelable operating leases for 2009 and
2010 were as fo llo ws. All the lease agreements expire in 2010.

                                                                                                    Chinese Yuan
            Year                                                                                     (Renminbi)            U.S. Dollars
            2009                                                                                        456,860                   67,285
            2010                                                                                         97,200                   14,315

NOTE 10. RELATED PARTY TRANSACTIONS
Receivable from related parties —At December 31, 2008, the Co mpany had net trade receivables fro m related parties of ¥ 8,658,800
($1,269,154) for the sale of goods to related parties and net other receivables fro m related parties of ¥ 1,050,000 ($153,903).

Payable to related parties —At December 31, 2008, the Co mpany owed related parties ¥886,065 ($129,874) fo r the purchase of goods. The
Co mpany also had other payables to related parties of ¥722,716 ($105,931) due to Principal Shareholders and companies under common
ownership for payments of expenses made on behalf of the Co mpany.

NOTE 11. DISCONTINUED OPERATIONS AND DECONSO LIDATION OF VARIAB LE INTER ES T ENTITIES
In June 2008, the Co mpany comp leted the sale of Inner Mongolia Adar Energy Technology, Ltd. and Beijing Weigu Windows Co, which were
both the majority-owned subsidiaries of BHD. In the fourth quarter of 2008, the Co mp any determined that these two subsidiaries met the
criteria for classification as discontinued operations. Their financial results associated with the six months ended December 31, 2007 are
included in discontinued operations.

In June 2008, an unrelated party purchased the equity interest in Beijing Adar fro m one of the Principal Shareholders, wh ich caused the
Co mpany to no longer be a primary beneficiary of Beijing Adar under FIN46 (R). As such, Beijing Adar was excluded fro m th e co nsolidation
basis upon the completion of th is transaction, and its financial results associated with the six months ended December 31, 2007 were reported
as discontinued operations.

On September 26, 2008, one Principal Shareholder sold part of h is equity interest in Xiamen Hengda Haitian Internet Technology, Ltd. Upon
the completion of the transaction, the Principal Shareholder no longer holds a controlling interest in Hengda Haitian, and th e Company ceases
to be Hengda Haitian’s primary beneficiary under FIN46 (R). Consequently Hengda Haitian was excluded fro m the consolidation basis and its
financial results associated with current period and prior periods were reported as discontinued operations.

                                                                     F-42
Table of Contents

                                           RECON TECHNOLOGY, LTD
                    NOTES TO CONDENS ED CONSOLIDATED AND COMB INED FINANCIAL STATEMENTS
                                                (UNAUDIT ED)

On September 26, 2008 the shareholders of Beijing Yabei Nuoda Technology Development Co., Ltd approved that two Principal Shareholders
transferred part of their equity interest in Yabei to unrelated parties. On December 19, 2008 the Principal Shareholders signed the equity
transfer agreement with the transferees. Upon the completion of the transaction, the Principal Shareholders no longer hold a controlling interest
in Yabei Nuoda, and the Company ceases to be Yabei Nuoda’s primary beneficiary under FIN46(R). Consequently Yabei Nuoda was excluded
fro m the consolidation basis and its financial results associated with current period and prior periods were reported as disc ontinued operations.

Summarized Statements of Income data fo r discontinued operations is as follows:

                                                                                        Chinese Yuan (Renminbi)                     U.S. Dollars
                                                                                                                                 For the Six Months
                                                                                             For the Six Months                  Ended December 31,
                                                                                             Ended December 31,                         2008
                                                                                      2007                        2008
Revenue                                                                         ¥   20,215,715            ¥       3,465,245      $         507,914

Income (loss) before provision for inco me tax                                        5,709,171                   (2,259,335 )            (331,159 )
Provision for inco me tax                                                              (101,380 )                        —                     —

Discontinued operations, net of tax                                             ¥     5,607,791           ¥       (2,259,335 )   $        (331,159 )


                                                                       F-43
Table of Contents




No dealer, salesperson or other person is authorized to gi ve any
informati on or to represent anything not contained in this
pros pectus. You must not rely on any unauthorized information
or representations. This pros pectus is an offer to sell only the
shares offered hereby, but onl y under circumstances and i n
jurisdicti ons where it is lawful to do so. The information
contained in this pros pectus is current only as of its date.




                      TAB LE OF CONTENTS

Prospectus Summary                                                     1
Risk Factors                                                           6
Forward-Looking Statements                                            20
Our Corporate Structure                                               21
Use Of Proceeds                                                       24
Div idend Policy                                                      25
Capitalization                                                        26
Exchange Rate Information                                             28
Dilution                                                              29
Selected Historical And Unaudited Pro Forma Condensed
   Consolidated Financial And Operating Data                          31
Management’s Discussion And Analysis Of Financial
   Condition And Results Of Operations                               32
Our Business                                                         48
Management                                                           56
Principal Shareholders                                               61
Related Party Transactions                                           62
Description Of Share Capital                                         64
Shares Elig ible For Future Sale                                     69
Taxation                                                             71
Enforceab ility Of Civil Liabilities                                 75
Placement                                                            76
Legal Matters                                                        78
Experts                                                              79
Where You Can Find More In formation                                 79
Expenses Relat ing To This Offering                                  80
Index to Financial Statements                                       F-1

Until                (90 days after the commencement of this
offering), all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealer’s obligation to
deliver a prospectus when acting as a placement agent and with
respect to unsold allot ments or subscriptions.
RECON TECHNOLOGY, LTD

     Ordinary Shares

 1,166,667 Share Mini mum

 1,700,000 Share Maxi mum



        Prospectus



  Anderson & Strudwick,
      Incorporated




                            81
Table of Contents

                                                                      PART II

                                            INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.      Other Expenses o f Issuance and Distribution.
     The estimated expenses payable by us in connection with the offering described in this registration statement (other than the placement
discounts and commissions) will be as follows. With the exception of the filing fees for the U.S. Securities Exchange Co mmission, FINRA and
NASDA Q, all amounts are estimates.

U.S. Securit ies and Exchange Co mmission registration fee                                                                      $                  307
FINRA filing fee                                                                                                                                 1,600
NASDA Q listing fee                                                                                                                             50,000
Blue Sky Fees                                                                                                                               [            ]
Legal fees and expenses for Ch inese counsel                                                                                                [            ]
Legal fees and expenses for Cay man Islands counsel                                                                                         [            ]
Legal fees and expenses for U.S. securities counsel                                                                                         [            ]
Accounting fees and expenses                                                                                                                [            ]
Printing fees                                                                                                                               [            ]
Other fees and expenses                                                                                                                     [            ]
Total                                                                                                                                       [            ]

Item 14.      Indemnification of Directors and Officers
       Cay man Islands law and our articles of association provide that we may indemnify our directors, officers, advisors and truste e acting in
relation to any of our affairs against actions , proceedings, costs, charges, losses, damages and expenses incurred by reason of any act done or
omitted in the execution of their duty in their capacit ies as such. Under our articles of association, indemn ification is not available, however, if
those events were incurred or sustained by or through their own willful neglect or default.

     Insofar as indemnificat ion for liabilit ies arising under the Securit ies Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised tha t in the opinion of the
Securities and Exchange Co mmission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable .

Item 15.      Recent Sales of Unregistered Securities
      In the past three years, we (i) issued 15,000 ord inary shares to Mr. Li Hongqi and 20,000 ord inary shares each to Mr. Yin Shenping and
Mr. Chen Guangqiang, in connection with the format ion of Recon -CI and (ii) issued 2,632 o rdinary shares to Bloo msway Development Ltd in
return for $200,000, in t ransactions that were not required to registered under the Securities Act of 1933. All issuances of ordinary shares to
Mr. Li, M r. Yin , Mr. Chen and Bloo msway Develop ment Ltd were deemed to be exempt under the Securities A ct by virtue of Section 4(2)
thereof as a transaction not involving any public offering and not to fall within Section 5 under the Securit ies Act by virtue of being issuances
of securities by non-U.S. co mpanies to non-U.S. citizens or residents, conducted outside the United States and not using any element of
interstate commerce.

                                                                         II-1
Table of Contents

Item 16.        Exhibits and Financial Statement Schedules

        (a)    Exh ib its
        The following exhib its are filed herewith or incorporated by reference in this prospectus:

Exhibit
Number        Document
 1.1          Amended Form o f Placement Agreement (1)
 3.1          Amended and Restated Articles of Association of the Registrant (2)
 3.2          Amended and Restated Memorandum of Association of the Registrant (2)
 4.2          Form of Placement Agent Warrant (included in Exh ib it 10.31) (3)
 5.1          Opinion of Co rporate Filing Serv ices Limited, Cay man Islands counsel (2)
10.1          Translation of Exclusive Technical Consulting Service Agreement between Recon Technology (Jining) Co., Ltd. and Beijing BHD
              Petroleu m Technology Co., Ltd. (3)
10.2          Translation of Power of Attorney for rights of Chen Guangqiang in Beijing BHD Pet roleu m Technology Co., Ltd. (3)
10.3          Translation of Power of Attorney for rights of Yin Shenping in Beijing BHD Petroleu m Technology Co., Ltd. (3)
10.4          Translation of Power of Attorney for rights of Li Hongqi in Beijing BHD Petroleu m Technology Co., Ltd. (3)
10.5          Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology (Jining) Co. Ltd., Chen Guangqiang and
              Beijing BHD Petroleu m Technology Co., Ltd. (3)
10.6          Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology (Jining) Co. Ltd., Yin Shenping and
              Beijing BHD Petroleu m Technology Co., Ltd. (3)
10.7          Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology (Jining) Co. Ltd., Li Hongqi and Beijing
              BHD Petroleu m Technology Co., Ltd. (3)
10.8          Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co., Ltd., Chen Guangqiang and Beijing BHD
              Petroleu m Technology Co., Ltd. (3)
10.9          Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co., Ltd., Yin Shenping and Beijing BHD
              Petroleu m Technology Co., Ltd. (3)
10.10         Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co., Ltd., Li Hongqi and Beijing BHD
              Petroleu m Technology Co., Ltd. (3)
10.11         Translation of Exclusive Technical Consulting Service Agreement between Recon Technology (Jining) Co., Ltd. and Jining ENI
              Energy Technology Co., Ltd. (3)
10.12         Translation of Power of Attorney for rights of Chen Guangqiang in Jining ENI Energy Technology Co., Ltd. (3)
10.13         Translation of Power of Attorney for rights of Yin Shenping in Jining ENI Energy Technology Co., Ltd. (3)
10.14         Translation of Power of Attorney for rights of Li Hongqi in Jin ing ENI Energy Technology Co., Ltd. (3)
10.15         Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology (Jining) Co. Ltd., Chen Guangqiang and
              Jining ENI Energy Technology Co., Ltd. (3)
10.16         Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology (Jining) Co. Ltd., Yin Shenping and
              Jining ENI Energy Technology Co., Ltd. (3)
10.17         Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology (Jining) Co. Ltd., Li Hongqi and Jining
              ENI Energy Technology Co., Ltd. (3)
10.18         Translation of Equity Interest Pledge Agreement between Recon Technolo gy (Jining) Co., Ltd., Chen Guangqiang and Jining ENI
              Energy Technology Co., Ltd. (3)
10.19         Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co., Ltd., Yin Shenping and Jining ENI
              Energy Technology Co., Ltd. (3)
10.20         Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co., Ltd., Li Hongqi and Jin ing ENI Energy
              Technology Co., Ltd. (3)
10.21   Translation of Exclusive Technical Consulting Service Agreement bet ween Recon Technology (Jining) Co., Ltd. and Nan jing Recon
        Technology Co., Ltd. (3)

                                                                II-2
Table of Contents

10.22      Translation of Power of Attorney for rights of Chen Guangqiang in Nanjing Recon Technology Co., Ltd. (3)
10.23      Translation of Power of Attorney for rights of Yin Shenping in Nanjing Recon Technology Co., Ltd. (3)
10.24      Translation of Power of Attorney for rights of Li Hongqi in Nanjing Recon Technology Co., Ltd. (3)
10.25      Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology (Jining) Co. Ltd., Chen Guangqiang and
           Nanjing Recon Technology Co., Ltd. (3)
10.26      Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology (Jining) Co. Ltd., Yin Shenping and
           Nanjing Recon Technology Co., Ltd. (3)
10.27      Translation of Exclusive Equity Interest Purchase Agreement between Recon Technology (Jining) Co. Ltd., Li Hongqi and Nan jing
           Recon Technology Co., Ltd. (3)
10.28      Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co., Ltd., Chen Guangqiang and Nanjing
           Recon Technology Co., Ltd. (3)
10.29      Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co., Ltd., Yin Shenping and Nanjing Recon
           Technology Co., Ltd. (3)
10.30      Translation of Equity Interest Pledge Agreement between Recon Technology (Jining) Co., Ltd., Li Hongqi and Nanjing Recon
           Technology Co., Ltd. (3)
10.31      Form of Warrant Agreement (3)
10.32      Form of Escrow Agreement (3)
10.33      Amended Form o f Lock-Up Agreement (1)
10.34      Emp loy ment Agreement between Recon Technology (Jining) Co., Ltd. and Mr. Yin Shenping (1)
10.35      Emp loy ment Agreement between Recon Technology (Jining) Co., Ltd. and Ms. Liu Jia (2)
10.36      Emp loy ment Agreement between Recon Technology (Jining) Co., Ltd. and Mr. Chen Guangqiang (1)
10.37      Emp loy ment Agreement between Recon Technology (Jining) Co., Ltd. and Mr. Li Hongqi (1)
10.38      Summary Translation of Technical Serv ice Contract by and between Natural Gas Development Co mpany of Qinghai Oilfield and
           Beijing BHD Petroleu m Technology Co., Ltd. (1)
10.39      Summary Translation of Sales Contract, by and between the West Site Depart ment of Bazhou, Zhongyuan Petroleum Exp loration
           Bureau Project Construction Corporation and Jining ENI Energy Technology Co., Ltd. (3)
10.40      Exh ib it withdrawn.
10.41      Ordinary Shares Subscription Agreement dated December 31, 2007 between the Reg istrant and Bloo msway Develop ment Ltd (1)
10.42      Translation of Contract for the Sale of Industrial and Mineral Products between Nanjing Recon Technology Co., Ltd. and
           PetroChina Qinghai Oilfield Co., Ltd. (1)
10.43      Translation of Contract of Material Reserves and Sales between Beijing BHD Petroleu m Technology Co., Ltd. and Petro China
           Qinghai Oilfield Co., Ltd. (1)
10.44      Translation of Contract of Material Reserves and Sales between Beijing BHD Petroleu m Technology Co., Ltd. and Petro China
           Qinghai Oilfield Co., Ltd. (1)
10.45      Translation of Contract for Purchasing Vacuum-Heating-Furnace between Beijing BHD Petro leu m Technology Co., Ltd. and
           PetroChina Huabei Oilfield Co., Ltd. (1)
10.46      Translation of Contract of the Sale of Goods between Beijing BHD Petro leu m Technology Co., Ltd. and PetroCh ina Huabei Oilfield
           Co., Ltd. (1)
10.47      Summary Translation of Chuan East to Chuan West Transferring Gas Pipe Project Product Collective Contract between Jining ENI
           Energy Technology Co., Ltd. and Southwest Oil Gas Co mpany of Sinopec. (1)
10.48      Summary Translation of Industrial Product Purchasing Agreement between Jining ENI Energy Technology Co., Ltd. and Southwest
           Oil Gas Co mpany of Sinopec. (1)
10.49      Summary Translation of Purchase Agreement between Jining ENI Energy Technology Co., Ltd. and Southwest Oil Gas Co mpany of
           Sinopec. (1)
10.50         Summary Translation of Chuan East to Chuan West Transferring Gas Pipe Project Product Collective Contract bet ween Jining ENI
              Energy Technology Co., Ltd. and Southwest Oil Gas Co mpany of Sinopec. (1)
21.1          Subsidiaries of the Registrant (3)
23.1          Consent of Hansen Barnett & Maxwell (1)
23.2          Consent of Jingtian & Gongcheng (3)
23.3          Consent of Kaufman & Canoles (1)
23.4          Consent of Corporate Filing Serv ices Limited (included in Exh ibit 5.1) (2)
24.1          Power o f Attorney (included on page II-6 of the Registration Statement) (3)
99.1          Stock Option Plan (2)


(1)     Filed herewith.
(2)     To be filed by amendment.
(3)     Previously filed.

        (b)    Financial Statement Schedules
              None.

                                                                          II-3
Table of Contents

Item 17.      Undertakings
      The Registrant hereby undertakes:
      (a) to file, during any period in which offers or sales are being made, a post -effective amendment to this registration statement to:
            (i) include any prospectus required by section 10(a)(3) of the Securit ies Act;

             (ii) reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information
in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securit ies offered (if th e total dollar value of
securities offered would not exceed that which was registered) and any deviation fro m the lo w or high end of the estimated ma ximu m o ffering
range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximu m aggregate offering price set forth in the ―Calculation of Registratio n Fee‖ table in
the effective registration statement; and

           (iii) include any material information with respect to the plan of distribution not previously disclosed in the registration statement or
any material change to such information in the reg istration statement.

      (b) that, for the purpose of determining any liability under the Securities A ct, each post-effective amend ment shall be deemed t o be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

      (c) to file a post-effective amend ment to remove fro m registration any of the securities that remain unsold at the end of the offering.

      (d) that insofar as indemn ification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant, the Registrant has been advised that in the opinion of the SEC, such indemn ification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemn ification against such liabilities (other than the
payment by the Registration of expenses incurred or paid by a director, officer or contro lling person to the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer o r controlling person in connection with the securit ies being registered,
the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemn ification by it is against public policy as expressed in the Securities Act a nd will be governed
by the final adjudicat ion of such issue.

       (e) that, for the purpose of determining liability under the Securit ies Act to any purchaser, each prospectus filed pursuant to Rule 424(b)
as part of a registration statement relating to an offering, other than registration statemen ts relying on Rule 430B o r other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or
made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is par t of the
registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was
made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prio r to
such date of first use.

       (f) that, for the purpose of determining liability of the Reg istrant under the Securities Act to any purchaser in the in itial distribution of the
securities, regardless of the underwriting method used to sell the securities to the purcha ser, if the securities are offered or sold t o such
purchaser by means of any of the following co mmunications, the Registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
            (i) any preliminary prospectus or prospectus of the Registrant relating to the offering filed pursuant to Rule 424;

                                                                           II-4
Table of Contents

              (ii) any free writing prospectus relating to the offering prepared by or on behalf of the Registrant or used or referred to by the
Registrant;

             (iii) the portion of any other free writ ing prospectus relating to the offering containing material information about the Reg istrant or
its securities provided by or on behalf of the Registrant; and

              (iv) any other communicat ion that is an offer in the offering made by the Registrant to the purchaser.

                                                                          II-5
Table of Contents

                                                                  SIGNATURES

       Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable groun ds to believe
that it meets all of the requirements for filing on Form S-1 and has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the People ’s Republic of China, on the 17th day of March, 2009.

                                                                                         RECON TECHNOLOGY, LTD,
                                                                                         a Cay man Islands exempted company

                                                                                         By:        /s/ Yin Shenping
                                                                                         Name:      Yin Shenping
                                                                                         Title:     Chief Executive Officer
                                                                                                    (Principal Executive Officer)
                                                                                         Date:      March 17, 2009

     Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the fo llowing
persons in the capacities and on the dates indicated:

Signature                                                                                Title                                          Date


/s/ Yin Shenping                                          Chief Executive Officer and Director
                                                          (Principal Executive Officer)                                       March 17, 2009
Yin Shenping

/s/ Liu Jia                                               Chief Financial Officer                                             March 17, 2009
Liu Jia                                                   (Principal Accounting and Financial Officer)

*                                                         Director                                                            March 17, 2009
Chen Guangqiang

*                                                         Director                                                            March 17, 2009
Li Hongqi

                                                          Director                                                            March 17, 2009
Dennis O. Laing

*                                                         Director                                                            March 17, 2009
Nelson N.S. Wong

*                                                         Director                                                            March 17, 2009
Hu Jijun

                                                          Director                                                            March 17, 2009
Liao Xiaorong

* By :        /s/ Yin Shenping
              Yin Shenping, Attorney-in-Fact
              March 17, 2009

                                                                        II-6
                                                                                                                                    Exhi bit 1.1

                                                      RECON TECHNOLOGY, LTD
                                                  (a Cayman Islands exempted company)
                                               Mi ni mum Offering:         Ordinary Shares
                                               Maxi mum Offering:          Ordinary Shares
                                                          ($         per share)

                                                       PLACEMENT AGREEMENT

           ,

Anderson & Strudwick, Incorporated
707 East Main Street, 20 Floor
                         th



Rich mond, Virgin ia 23219

Ladies and Gentlemen :
      The undersigned, Recon Technology, Ltd, a Cay man Islands exempted (the ―Co mpany‖), hereby confirms its agreement with you as
follows:
      1. Introducti on . Th is Agreement sets forth the understandings and agreements between the Company and you whereby, subject to the
terms and conditions herein contained, you will offer to sell, on a ―best efforts, minimu m/ maximu m‖ basis on behalf of the Company as
provided in Section 4(a) (the ―Offering‖), at an offering price of U.S. $           per share, a min imu m of      ord inary shares and a
maximu m o f          ord inary shares, to be issued by the Company (the ―Shares‖). Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Prospectus prepared by the Company and dated [                   ] (the ―Prospectus‖).

     2. Representati ons and Warranties of the Company . The Co mpany makes the following representations and warranties to you:
            (a) Registration Statement and Prospectus . The Co mpany has prepared and filed with the Securit ies and Exchange Co mmission
(the ―Co mmission‖) a registration statement on Form S-1 (File No. 333-152964) (as defined below, the ―Reg istration Statement‖) conforming
to the requirements of the Securit ies Act of 1933, as amended (the ―1933 Act‖), and the applicable rules and regulations (the ―Rules and
Regulations‖) of the Co mmission. Such amend ments to such Registration Statement as may have been required prior to the date hereof have
been filed with the Co mmission, and such amendments have been similarly prepared. Copies of the Registration Statement , any and all
amend ments thereto prepared and filed with the Co mmission, and each related Preliminary Prospectus, and the exhib its, financi al statements
and schedules, as finally amended and revised, have been delivered to you for review. The term ―Registration Statement‖ as used in this
Agreement shall mean the Co mpany’s Registration Statement on Form S-1, including the Prospectus, any documents incorporated by reference
therein, and all financial schedules and exh ibits thereto, as amended on the date that the Registration Statement beco mes effective. The term
―Prospectus‖ as used in this Agreement
shall mean the prospectus relating to the Shares in the form in which it was filed with the Co mmission pursuant to Rule 424(b ) of the 1933 Act
or, if no filing pursuant to Rule 424(b) of the 1993 Act is required, shall mean the fo rm of the final prospectus included in the Registration
Statement when the Reg istration Statement becomes effective. The term ―Preliminary Prospectus‖ shall mean any prospectus included in the
Registration Statement before it beco mes effective. The terms ―effect ive date‖ and ―effective‖ refer to the date the Co mmission declares the
Registration Statement effective pursuant to Section 8 of the 1933 Act.

            (b) A reg istration statement on Form 8-A (File No.                   ) in respect of the registration of the Shares under the U.S.
Securities Exchange Act of 1934, as amended (the ―1934 Act‖), has been filed with the Co mmission. Such registration statement in the for m
heretofore delivered to you has been declared effective by the Co mmission in such form. No other document with respect to suc h registration
statement has heretofore been filed with the Co mmission. No stop order suspending the effectiveness of such regist ration statement has been
issued and no proceeding for that purpose has been initiated, or to the knowledge of the Co mpany after due inquiry threatened , by the
Co mmission (the various parts of such registration statement, including all exh ib its thereto, ea ch as amended at the time such part of the
registration statement became effect ive, being hereinafter called the ―Form 8-A Registration Statement‖). The Fo rm 8-A Reg istration Statement
when it became effective conformed, and any further amendments thereto will conform, in all material respects to the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder, and did not and will not, as of the applicable effec tive date, contain
an untrue statement of a material fact or o mit to state a material fact required to be stated therein or necessary to make the statements therein
not mislead ing.

            (c) Adequacy of Disclosure . Each Preliminary Prospectus, at the time o f filing thereof, conformed in all material respects to the
requirements of the 1933 Act and the Rules and Regulations, and did not contain any untrue statement of a material fact or o mit to sta te a
material fact required to be stated therein or necessary to make the statements therein, in light of the circu mstances under which they were
made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with informat ion furnished in writing to the Co mpany by you expressly for u se in the Registration Statement. When the
Registration Statement shall become effect ive, when the Prospectus is first filed pursuant to Rule 424(b) of the Rules and Re gulations, when
any amend ment to the Registration Statement becomes effective, when any supplement to the Prospectus is filed with the Co mmission and on
the Closing Date (as hereinafter defined), (i) the Registration Statement, the Prospectus and any amendments thereof and supplements thereto
will conform in all material respects with the applicable requirements of the 1933 Act and the Rules and Regulat ions, and (ii) n either the
Registration Statement, the Prospectus nor any amendment or supplement thereto will contain any untrue statement of a materia l fact or o mit to
state a material fact required to be stated therein or necessary in order to make the statements therein not mislead ing; provided, however, that
this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with in formation
furnished in writ ing to the Co mpany by you expressly for use in the Registration Statement.

                                                                        2
            (d) No Stop Order . The Co mmission has not issued any order preventing or suspending the use of any Preliminary Prospectus with
respect to the Shares, and no proceedings for that purpose have been instituted or threatened by the Commission or the state securities or b lue
sky authority of any jurisdiction.

            (e) Co mpany; Organization and Qualificat ion . The Co mpany has been duly incorporated and is validly existing in good standing
under the laws of the Cay man Islands with all requisite corporate power and authority to enter into this Agreement, to conduct its business as
now conducted and as proposed to be conducted, and to own and operate its properties, investments and assets, as describe d in the Registration
Statement and Prospectus. The Co mpany is not in violation of any provision of its memorandum or articles of association or ot her governing
documents and is not in default under or in breach of, and does not know of the occurrence of a ny event that with the giving of notice or the
lapse of time or both would constitute a default under or breach of, any term o r condition of any material agreement or instr ument to which it is
a party or by which any of its properties, investments or assets is bound, except as disclosed in the Registration Statement and Prospectus.
Except as noted in the Prospectus, the Company does not own or control, directly or indirectly, any other corporation, association, or other
entity. The Co mpany has furnished to you copies of its articles and memorandu m of association, as amended, and all such copies are true,
correct and complete and contain all amend ments thereto through the Closing Date.

             (f) Validity of Shares . The Shares have been duly and validly authorized by the Co mpany and upon issuance, will be valid ly is sued,
fully paid and nonassessable, with no personal liability attaching to the ownership thereof, and will conform to the descript ion thereof
contained in the Prospectus. The preferences, rights and limitations of the Shares are set forth in the Prospectus under the caption ―Description
of Share Capital.‖ No party has any preemptive rights with respect to any of the Shares or any right of participation or first refusal with resp ect
to the sale of the Shares by the Co mpany. No person or entity holds a right to require or part icipate in the registration under the 1933 Act of the
Shares pursuant to the Registration Statement; and, except as set forth in the Prospectus, no person holds a right to require regis tration under
the 1933 Act of any Shares of the Co mpany at any other time. The form o f cert ificates evidencing the Shares complies with all applicable
requirements of Cay man Islands law.

            (g) Capitalization . The authorized, issued and outstanding capital s tock of the Co mpany is as set forth in the Prospectus under the
caption ―Description of Share Capital.‖ A ll of the issued and outstanding Shares of the Co mpany have been duly authorized, valid ly issued,
fully paid and are non-assessable. Except as disclosed in the Prospectus, there is no outstanding option, warrant or other right calling for the
issuance of, and no commit ment, plan or arrangement to issue, any shares of capital stock of the Co mpany or any security convertible into or
exchangeable for capital stock of the Co mpany.

            (h) Fu ll Power . The Co mpany has full legal right, power, and authority to enter into this Agreement and the Escrow Agreement
among the Co mpany, SunTrust Bank (the ―Escrow Agent‖) and you (the ―Escrow Agreement‖), to issue and deliver the Shares as provided
herein and in the Prospectus and to consummate the transactions contemplated herein and in the

                                                                         3
Prospectus. Each of this Agreement and the Escrow Agreement has been duly authorized, executed, and delivered by the Co mpany and
constitutes a valid and binding agreement of the Co mpany, enforceable in accordance with its terms, except to the extent that enforceability
may be limited by (i) bankruptcy, insolvency, mo ratoriu m, liquidation, reorganization, or similar laws affect ing creditors’ rights generally,
regardless of whether such enforceability is considered in equity or at law, (ii) general equity princip les, and (iii) limitations imposed by
applicable laws or the public policy underly ing such laws regarding the enforceability of indemn ification or contribution provisions.

            (i) Disclosed Agreements . All agreements between or among the Co mpany and third parties expressly referenced in the Prospectus
are legal, valid, and binding obligations of the Co mpany, enforceable in accordance with their respective terms, except to the extent
enforceability may be limited by (i) bankruptcy, insolvency, moratoriu m, liquidation, reorganization, or similar laws affecting creditors ’ rights
generally, regardless of whether such enforceability is considered in equity or at law, (ii) general equity principles and (iii) limit ations imposed
by federal or state securities laws or the public policy underly ing such laws regarding the enforceability of indemn ification or contribution
provisions.

             (j) Consents . Except as disclosed in the Registration Statement and Prospectus, each consent, approval, authorization, order,
license, certificate, permit, registration, designation or filing by or with any governmental agency or body or any oth er third party necessary for
the valid authorizat ion, issuance, sale and delivery of the Shares, the execution, delivery and performance of this Agreement and the
consummation by the Co mpany of the transactions contemplated hereby and by the Registration Statement and Prospectus, except such as may
be required under the 1933 Act, 1934 Act, or under other applicable securities laws has been made or obtained and is in full force and effect.

             (k) Litigation . There is not pending or, to the knowledge of the Co mpany, threatened or contemplated, any action, suit, proceeding,
inquiry, or investigation before or by any court or any governmental authority or agency to which the Co mpany may be a party, or to wh ich any
of the properties or rights of the Co mpany may be subject, that is not described in the Registration Statement and Prospectus and (i) that may
reasonably be expected to result in any material adverse change in the condition (financial o r otherwise) or business of the Co mpany; or
(ii) that may reasonably be expected to materially adversely affect any of the material properties of the Co mpany; or (iii) that may reasonably
be expected to adversely affect the consummation of the transactions contemplated by this Agreement, nor, to the knowledge of the Co mpany,
is there any meritorious basis therefor.

           (l) Financial Statements . The financial statements of the Company together with related schedules and notes included in the
Registration Statement and Prospectus present fairly the financial position of the Co mpan y as of the dates indicated and the results of
operations and cash flows for the periods specified. Such financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis during the periods in volved. The financial information schedules included in the
Registration Statement and the amounts in the Prospectus fairly present the informat ion shown therein and have been

                                                                          4
compiled on a basis consistent with the financial statements included in the Reg istration Statement and the Prospectus. No ot her financial
statements or schedules are required by Form S-1 o r otherwise to be included in the Reg istration Statement, the Prosp ectus or any Preliminary
Prospectus. The unaudited pro forma financial in formation (including the related notes) included in the Prospectus or any Pre liminary
Prospectus complies as to form in all material respects to the applicable accounting requirements of the 1933 Act and the Rules and
Regulations, and management of the Co mpany believes that the assumptions underlying the pro forma adjustments are reasonable. Such pro
forma adjustments have been properly applied to the historical amounts in the compilat ion of the in formation and such information fairly
presents with respect to the Company the financial position, results of operations and other informat ion purported to be show n therein at the
respective dates and for the respective periods specified.

            (m) Independent Accountants . Hansen, Barnett & Maxwell, P.C., who have audited certain financial statements of the Co mpany
and its subsidiaries, are, to the Co mpany’s knowledge, independent public accountants as required by the 1933 Act and the rules and
regulations of the Co mmission promulgated thereunder.

             (n) Disclosed Liabilit ies . The Co mpany has not sustained, since June 30, 2008, any material loss or interference with its business
fro m fire, explosion, flood, hurricane, accident, or other calamity, wheth er or not covered by insurance, or fro m any labor dispute or arbitrators ’
or court or governmental act ion, order, o r decree, otherwise than as set forth or contemplated in the Registration Statement and Prospectus; and,
since the respective dates as of which information is given in the Registration Statement and Prospectus, and except as otherwise stated in the
Registration Statement and Prospectus or as set forth on the Disclosure Schedule, there has not been (i) any material change in t he capital stock,
long-term debt, obligations under capital leases, or short-term borrowings of the Co mpany, (ii) any material adverse change, or any
development that could be reasonably be seen as involving a prospective material adverse change in or affecting the business, prospects,
properties, assets, results of operations or condition (financial or other) of the Co mpany, (iii) any liability or obligation, d irect o r contingent,
incurred or undertaken by the Co mpany that is material to the business or condition (financial o r other) of the Co mpany, except for liabilit ies or
obligations incurred in the ordinary course of business, (iv) any declaration or pay ment of any dividend or distribution of any kind on or with
respect to the capital stock of the Co mpany, or (v) any transaction that is material to the Co mpany, except transactions in the ordinary course of
business or as otherwise disclosed in the Registration Statement and Prospectus.

            (o) Required Licenses and Permits . Except as disclosed in the Prospectus, the Co mpany owns, possesses, has obtained or in the
ordinary course of business will obtain, and has made available for your rev iew, all material permits, licenses, franchises, certificates, consents,
orders, approvals, and other authorizations of governmental or regulatory authorities as are necessary to own or lease, as the case may be, and
to operate its properties and to carry on its business as presently conducted, or as contemplated in the Prospectus to be conducted (the
―Permits‖), and the Co mpany has not received any notice of proceedings relating to revocation or modificat ion of any such Permits.

                                                                          5
             (p) Internal Accounting Measures . The Co mpany has established and maintains disclosure controls and procedures (as such term is
defined in Rule 13a-14 and 15d-14 under the Exchange Act), which (i) are designed to ensure that material in formation relat ing to the
Co mpany is made known to the Co mpany’s principal executive officer and its principal financial officer by others within the Company; an d
(ii) are effective in all material respects to perform the functions for which they were established. The Co mpany ’s system of int ernal accounting
controls provides reasonable assurance that: (A) transactions are executed in accordance with management’s general or specific authorizations;
(B) transactions are recorded as necessary to permit preparat ion of financial statements in conformity with generally accepted ac counting
principles in the United States (―US GAAP‖); (C) access to assets is permitted only in accordance with management’s general or specific
authorization; (D) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate actions are
taken with respect to any differences; and (E) the Co mpany has made and kept books, records and accounts which, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of assets of such entity and provide a sufficient basis for t he preparation of
financial statements in accordance with US GAAP. There (x) are not any significant deficiencies in the design or operation of internal controls
which could adversely affect the Co mpany’s ability to record, process, summarize, and report financial data or (y ) has not been any fraud,
whether or not material, that involves management or other emp loyees who have a significant role in the Co mpany ’s internal controls. Since
the date of the most recent evaluation of the Company’s disclosure controls and procedures, there have been no significant changes in internal
controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses. Upon the effectiveness of the Registration Statement, the Co mpan y will be in co mp liance in all material
respect with all provisions of the Sarbanes -Oxley Act of 2002 that are effective and applicable to the Co mpany as an ―issuer‖ as defined under
the Sarbanes-Oxley Act of 2002.

           (q) Taxes . The Co mpany has timely paid all taxes that have become due and have no tax deficiency asserted against the Comp any,
and the Company does not know of any tax deficiency that is likely to be asserted against the Company that if determined adve rsely to the
Co mpany, would, either individually or in the aggregate, have a material adverse effect on the business, prospects, propertie s, assets, results of
operations, or condition (financial or otherwise) of the Co mpany. All tax liabilities are adequately provide d for on the books of the Co mpany.

             (r) Co mpliance with Instruments . The execution, delivery and performance of this Agreement and the Escrow Agreement, the
compliance with the terms and provisions hereof and the consummat ion of the transactions contemplat ed herein, therein and in the Registration
Statement and Prospectus by the Co mpany, do not and will not violate or constitute a breach of, or default under (i) the memorandum or
articles of association of the Co mpany; (ii) any of the material terms, provis ions, or conditions of any material instrument, agreement, or
indenture to which the Co mpany is a party or by wh ich it is bound or by which its business, assets, investments or properties may be affected;
or (iii) any order, statute, rule, or regulation applicable to the Co mpany, or any of its business, investments, assets or properties, of any court or
(to the knowledge of the Co mpany) any governmental authority or agency having jurisdiction

                                                                           6
over the Co mpany, or any of its business, investments, properties or assets; and to the knowledge of the Co mpany do not and will not result in
the creation or imposition of any lien, charge, claim, or encu mbrance upon any property or asset of the Co mpany.

            (s) Insurance . The Co mpany maintains insurance (issued by insurers of recognized financial responsibility) of the types and in the
amounts generally deemed adequate for its business and, to the knowledge of the Co mpany, consistent with insurance coverage maintained by
similar co mpanies and similar businesses, all o f wh ich insurance is in full fo rce and effect.

            (t) Work Force . To the knowledge of the Co mpany, no general labor problem exists or is imminent with the employees of the
Co mpany.

           (u) Securities Matters . The Co mpany and its officers, directors, or affiliates have not taken and will not take, direct ly or indirectly,
any action designed to, or that might reasonably be expected to, cause or result in or constitute the stabilizat ion or manipu lat ion of any security
of the Co mpany or to facilitate the sale or resale of the Shares.

              (v) Pay ment of Co mmissions and Fees . Except as stated in or contemplated by the Prospectus, neither the Co mpany nor any
affiliate of the Co mpany has paid or awarded, nor will any such person pay or award, direct ly or indirect ly, any commission or other
compensation to any person engaged to render investment advice to a potential purchaser of Shares as an inducement to advise the purchase of
Shares.

             (w) Intellectual Property . Except as disclosed in the Registration Statement and Prospectus, the Company owns, possesses, licenses
or has other rights to use the patents and patent applications, copyrights, trademarks, service marks, trade names, technolog y, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary rights) and other intellectual property (or could acquire such
intellectual property upon commercially reasonable terms) necessary to conduct its business in the manner in which it is bein g conducted
(collect ively, the ―Co mpany Intellectual Property‖); except as disclosed in the Registration Statement and Prospectus, to the Company ’s
knowledge, none of the patents owned or licensed by the Company is unenforceable or invalid, and, to the Co mpany ’s knowled ge, none of the
patent applications owned or licensed by the Company would be unenforceable or invalid if issued as patents; to the Co mpany ’s knowledge,
the Co mpany is not obligated to pay a royalty, grant a license, or provide other consideration to any third party in connection with the Co mpany
Intellectual Property other than as disclosed in the Prospectus; except as disclosed in the Registration Statement and Prospe ctus, the Co mpany
has not received any notice of violation or conflict with rights of others with respect to the Company Intellectual Property; except as disclosed
in the Reg istration Statement and Prospectus, there are no pending or to the Company ’s knowledge, threatened actions, suits, proceedings or
claims by others that the Co mpany is infringing any patent, trade secret, trade mark, service mark, copyright or other intellectual property or
proprietary right; and except as disclosed in the Registration Statement and Prospectus, the products or processes of the Company referenced in
the Prospectus do not, to the knowledge of the Co mpany, vio late or conflict with any intellectual p roperty or proprietary right of any third
person.

                                                                          7
           (x) Forward Loo king Statement . No fo rward-looking statement (within the meaning of Section 27A of the Act and Section 21E o f
the Exchange Act) contained in the Registration Statement, the Preliminary Prospectus or the Prospectus has been made or reaf firmed without a
reasonable basis or has been disclosed other than in good faith.

           (y) Industry Data . The industry-related and market-related statistics obtained from independent industry publications and reports
and included in the Registration Statement and the Prospectus agree with the sources from which they are derived.

              (z) Related Party Transactions . No relationship exists between or among the Co mpany and any director, officer, stockholder or
affiliate of the Co mpany which is required by the 1933 Act and rules and regulations of the Co mmission under the 1933 Act to be described in
the Registration Statement or the Prospectus which is not so described and described as required in material co mp liance with such requireme nt.
There are no outstanding loans, advances (except advances for business expenses in the ordinary course of business) or guaran tees of
indebtedness by the Company to or for the benefit of any of the officers or d irectors of the Co mpany or any of their respective family members,
except as disclosed in the Registration Statement and the Prospectus.

      3. Representati ons and Warranties of Placement Agent . You represent and warrant to the Co mpany that:
           (a) You are a member, in good standing, of the Financial Industry Regulatory Authority (―FINRA‖), and are duly registered as a
broker-dealer under the 1934 Act, and under the laws of each state in which you propose to offer the Shares, except where such registration
would not be required by law.

            (b) This Agreement when accepted and approved will be duly authorized, executed and delivered by you and is a valid and binding
agreement of you, enforceable in accordance with its terms, except to the extent that enforceability may be limited by (i) bankruptcy,
insolvency, moratoriu m, liquidation, reorganization, or similar laws affecting creditors ’ rights generally, regardless of whether such
enforceability is considered in equity or at law, (ii) general equity princip les, and (iii) limitations imposed by federal and state securities laws or
the public policy underlying such laws regarding the enforceability of indemnificat ion or contribution provisio ns.

            (c) The consummation of the transactions contemplated by the Prospectus relating to the Offering will not violate or constitu te a
breach of, or default under, your memorandum or articles of association, or any material instrument, agreement, o r indentu re to which you are a
party, or violate any order applicable to you of any federal or state regulatory body or admin istrative agency having jurisdiction over you or
your property.

                                                                           8
      4. Sale of Shares .
            (a) Exclusive Agency . The Co mpany hereby appoints you as its exclusive agent to offer for sale, and hereby agrees to sell during
the Offering Period (as defined in Sect ion 4.(c)), a minimu m of              Shares and a maximu m of            Shares, and on the basis of the
representations and warranties herein contained but subject to the terms and conditions herein set forth, you accept such app ointment and agree
to use your best efforts as agent to offer the Shares for sale for the account of the Company, on a cash basis o nly at the offering price of
$          per Share. Du ring the Offering Period (as defined below), the Co mpany will not sell or agree to sell any debt or equity secur ities
otherwise than through you. Subject to your commit ment to the sell the Shares on a ―best efforts, minimu m/ maximu m basis ‖ as provided
herein, nothing in this Agreement shall prevent you from entering into an agency agreement, underwriting agreement, or other similar
agreement governing the offer and sale of securit ies with any other iss uer of securities, and nothing contained herein shall be construed in any
way as precluding or restrict ing your right to sell or offer for sale securities issued by any other person, including securities similar to, or
competing with, the Shares. It is understood between the parties that there is no firm co mmit ment by you to purchase any or all of the Shares.

            (b) Obligation to Offer Shares . Your obligation to offer the Shares is subject to receipt by you of written advice fro m the
Co mmission that the Registration Statement is effective, is subject to the Shares being qualified for offering under applicab le laws in the states
as may be reasonably designated by you, is subject to the absence of any prohibitory action by any governmental body, agency, or official, and
is subject to the terms and conditions contained in this Agreement and in the Registration Statement.

             (c) Offering Termination Date . The ―Offering Period‖ shall co mmence on the day that the Prospectus is first made available to
prospective investors in connection with the Offering and shall continue until the ―Offering Termination Date,‖ which shall be t he earliest of
(i) the date the maximu m nu mber of Shares (          ) offered have been sold, (ii)            ,       , or (iii) such other date mutually
agreeable to the parties hereto. The Co mpany and you agree that unless the minimu m nu mber of Shares (              ) offered are sold on or
before the Offering Termination Date, all proceeds that have been paid for the Shares will be returned to the purchasers.

            (d) Escrow Agent . Prio r to the sale of all of the Shares, all funds received fro m purchasers of the Shares shall be placed in an
escrow account (the ―Escrow Account‖) with the Escrow Agent pursuant to the Escrow Agreement, the form of which is attached as an exhib it
to the Registration Statement, and all pay ments of, fro m or on account of such funds shall be made pursuant to the Escrow Agr eement. In the
event that the Shares are not sold on or before the Offering Termination Date, all funds then held in the Escrow Account shall b e returned
promptly to the respective purchasers as provided in the Escrow Agreement.

          (e) Closing Date . As and when the closing of the Offering is effected, wh ich shall be on or befo re the Offering Te rmination Date,
and proceeds from the Shares sold are received and accepted, on such date (the ―Closing Date‖) and at such time and place as

                                                                         9
determined by you (which determination shall be subject to the satisfaction on such date of the conditions contained herein), the funds received
fro m purchasers will be delivered by the Escrow Agent to the Company, by wire transfer of immediately availab le funds.

            (f) Selling Co mmissions and Expense . In consideration for your execution of this Agreement and for the performance of your
obligations hereunder, the Company agrees to pay you as follows:
                  (i) by wire transfer of immediately available funds on the Closing Date, if any, a Selling Co mmission computed at the rate of
seven percent (7.0%) of the public offering price of the Shares sold by you;

                     (ii) at the closing of the offering, you will have the right to purchase Placement Agent Warrants for the purchase of Shares,
equal to ten percent (10%) of the nu mber of Shares sold by you in the Offering at a purchase price of $0.001 per share underlying the
Placement Agent Warrants, substantially in the form of Exhib it A attached to this Agreement. NASD Ru le 2710(g)(1) generally provides that
any securities of the Co mpany that are unregistered and acquired by you or your related persons (A) during the 180-day period prior to the
filing of the Reg istration Statement or (B) after such filing and deemed to be underwrit ing compensation by the FINRA shall not be sold during
the Offering, or sold, transferred, assigned, pledged, hypothecated, or be the subject of any hedging, short sale, derivative , put, or call
transaction that would result in the effective economic d isposition of the securities (each, a ―Transfer‖) by any person for a period of 180 days
immed iately fo llowing the date of effectiveness of the Registration Statement or co mmencement of sales in the Offering; provi ded, however,
such restriction does not apply to Transfers to your officers or partners (each, a ―Permitted Transferee‖) during such time perio d if the
securities so Transferred remain subject to the lock-up restriction noted above; and

                  (iii) by wire transfer of immediately available funds on the Closing Date, if any, an accountable expense allowance
computed at the rate of one percent (1%) o f the public offering price of the Shares sold by you; such expenses include, but are not limited to
fees and expenses of your counsel, due diligence expenses and other expenses not prohibited by NASD Ru le 2710.

             (g) Finder’s Fees . Except as set forth in the Registration Statement or Prospectus, neither you nor the Company, directly or
indirectly, shall pay or award any finder’s fee, co mmission, or other compensation to any person engaged by a potential purchaser for
investment advice as an inducement to such advisor to advise the purchase of the Shares or for any other purpose.

            (h) Delivery of Share Cert ificates . Delivery of cert ificates in defin itive fo rm representing the Shares shall be made at the offices of
Anderson & Strudwick, Incorporated or at such other place as shall be agreed upon by the Company and you, on such date as you may requ est
(the ―Date of Delivery‖). The certificates representing the Shares shall be in such denominations and registered in such names as you may
request in writ ing at least three full

                                                                           10
business days before the Date of Delivery. The certificates representing the Shares will be made available for examinat ion and packaging at the
offices of Anderson & Strudwick, Incorporated or at such other place as shall be agreed upon by the Company and you, not later than at least
two (2) full business days prior to each Date of Delivery.

     5. Covenants .
           (a) Covenants of the Co mpany . The Co mpany covenants with you as follows:
                   (i) Notices . The Co mpany immed iately will notify you, and confirm such notice in writ ing, (A) of any fact that would make
inaccurate any representation or warranty by the Company, and (B) of any change in facts on which your obligation to perform under this
Agreement is dependent.

                      (ii) Effectiveness of Registration Statement . The Co mpany will use its bes t efforts to cause the Registration Statement to
become effective (if not yet effective at the date and time this Agreement is executed and delivered by the parties hereto). If the Co mpany
elects to rely upon Rule 430A of the Rules and Regulat ions or the filing of the Prospectus is otherwise required under Rule 424(b) of the Rules
and Regulations, and subject to the provisions of Section 5.(a)(iii) of this Agreement, the Co mpany will co mply with the requirements of Ru le
430A and will file the Prospectus, properly comp leted, pursuant to the applicable provisions of Rule 424(b) within the time prescribed. The
Co mpany will notify you immed iately, and confirm the notice in writ ing, (i) when the Registration Statement, or any post-effective amendment
to the Registration Statement, shall have beco me effective, or any supplement to the Prospectus, or any amended Prospectus shall have bee n
filed, (ii) of the receipt of any comments fro m the Co mmission, (iii) of any request by the Commission to amend the Registratio n Statement or
amend or supplement the Prospectus or for additional informat ion, and (iv) of the issuance by the Co mmission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or suspending the use of any Preliminary Prospectus or the suspension of
the qualificat ion of the Shares for offering or sale in any jurisdiction, or of the institution or threatening of any proceed ing for any such
purposes. The Co mpany will use all reasonable efforts to prevent the is suance of any such stop order or of any order preventing or suspending
such use and, if any such order is issued, to obtain the withdrawal thereof at the earliest possible mo ment.

                     (iii) A mend ments to Registration Statement and Prospectus . The Co mpany will not at any time file or make any amend ment
to the Registration Statement, or any amend ment or supplement (i) to the Prospectus, if the Co mpany has not elected to rely upon Rule 430A,
or (ii) if the Co mpany has elected to rely upon Rule 430A, to either the Prospectus included in the Registration Statement at the time it beco mes
effective or to the Prospectus filed in accordance with Rule 424(b), in either case if you shall not have previously been adv ised and furnished a
copy thereof a reasonable time prior to the proposed filing, o r if you or your counsel shall reasonably object to such amendment or supplement;
provided, however, that if you shall have objected to such amendment or supplement, you shall cease your efforts to sell the Shares until an
amend ment or supplement is filed.

                                                                        11
                   (iv) Delivery of Registration Statement . The Co mpany has delivered to you or will deliver to you, without expense to you,
at such locations as you shall request, as soon as the Registration Statement or any amended Reg istration Statement is available, such number
of signed copies of the Registration Statement as originally filed and of amended Registration Statements, if any, copies of all exh ibits and
documents filed therewith, and signed copies of all consents and certificates of experts, as you may reasonably request.

                     (v) Delivery of Prospectus . The Co mpany will deliver to you at its expense, fro m time to time, as many copies of each
Preliminary Prospectus as you may reasonably request, and the Company hereby consents to the use of such copies for purposes permitted by
the 1933 Act. The Co mpany will deliver to you at its expense, as soon as the Registration Statement shall have become effectiv e and thereafter
fro m t ime to time as requested during the period when the Prospectus is required to be delivered under the 1933 Act, such num ber of copies of
the Prospectus (as supplemented or amended) as you may reasonably request. The Co mpany will co mp ly to the best of its abilit y with the 1933
Act and the Rules and Regulations so as to permit the comp letion of the distribution of the Shares as contemplated in this Ag reement and in the
prospectus. If the delivery of a prospectus is required at any time prior to the expirat ion of nine months after the time of issue of the Prospectus
in connection with the offering or sale of the Shares and if at such time any events shall have occurred as result of which t he Prospectus as then
amended or supplemented would include an untrue statement of a material fact or o mit to state any material fact necessary in order to make the
statements therein, in light of the circu mstances under which they were made when such Prospectus is delivered not misleading or, if for any
reason it shall be necessary during the same period to amend or supplement the Prospectus in order to comply with the 1933 Act, the Co mpany
will notify you and upon your request prepare and furnish without charge to you and to any dealer in securit ies as many copie s as you may
fro m t ime to time reasonably request of an amended Prospectus or a supplement to the Prospectus that will co rrect such statement or omission
or effect such compliance, and in case you are required to deliver a prospectus in connection with sales of any of the Shares, upon your request
but at your expense, the Company will prepare and deliver to you as many copies as you may request of an amended or supplemen ted
Prospectus complying with Section 10(a)(3) of the 1933 Act.

                    (vi) Blue Sky Qualification . The Co mpany, in good faith and in cooperation with you, will use its best efforts to qualify the
Shares for offering and sale under the applicable ―b lue sky‖ or securities laws of such jurisdictions as you from time to time may reasonably
designate and to maintain such qualifications in effect until the date on which the Co mpany ceases to be obligated to maintain t he effec tiveness
of the Registration Statement; provided, however, that the Co mpany shall not be obligated to qualify as a foreign entity in any jurisdiction in
which it is not so qualified or to make any undertakings in respect of doing business in any jurisdiction in which it is not otherwise so subject.
The Co mpany will file such statements and reports as may be required by the laws of eac h jurisdiction in which the Shares have been qualified
as above provided.

                                                                         12
                    (vii) Application of Net Proceeds . The Co mpany will apply the net proceeds received fro m the sale of the Shares in all
material respects as set forth in the Prospectus under the caption ―Use of Proceeds.‖ The net proceeds will be held in escrow with SunTrust
Bank, NA, pending application thereof in accordance with the purposes described in the Prospectus; provided, however, that excess funds may
be re-allocated if the Co mpany accomp lishes its stated objectives for less than the allocated cost.

                     (viii) Cooperation with Your Due Diligence . At all times prior to the Offering Terminat ion Date, the Co mpany will
cooperate with you in such investigation as you may make or cause to be made of all the business and operations of the Co mpan y in connection
with the sale of the Shares, and will make available to you in connection therewith such information in its possession as you may reasonably
request, all of which you agree to safeguard as the confidential information of the Co mpany and to refrain fro m using for any purpose adverse
to the interests of the Company.

                 (ix) Transfer Agent . The Co mpany will maintain a t ransfer agent and, if necessary under applicable jurisdictions, a registrar
(which may be the same entity as the transfer agent) for its Shares.

                   (x) NASDAQ . The Co mpany will use its reasonable best efforts to maintain the quotation of its Shares on The NASDAQ
Capital Market.

                     (xi) Actions of Co mpany, Officers, Directors, and Affiliates . The Co mpany will not and will use its best efforts to cause its
officers, directors, and affiliates not to (i) take, d irectly or ind irectly, prior to termination of the Offering contemplated by this Agreement, any
action designed to stabilize or manipulate the price of any security of the Co mpany, or that may cause or result in, or that might in the future
reasonably be expected to cause or result in, the stabilization or manipulat ion of the price of any security of the Co mpany, to facilitate the sale
or resale of any of the Shares, (ii) other than under this Agreement, sell, b id for, purchase, or pay anyone any compensation for soliciting
purchases of the Shares or (iii) pay or agree to pay to any person any compensation for solicit ing any order to purch ase any other securities of
the Co mpany.

                    (xii) Upon the earliest of such time as (A) the investors in the Offering own less than ten percent (10%) of our outstanding
voting securities or (B) the closing price of one of the Co mpany’s Shares equals or exceeds four (4) times the offering price for a period of
fifteen consecutive trading days, you will have the right, fro m t ime to t ime, to designate one person to serve as a non -voting observer to the
Co mpany’s Board of Directors. This right shall be subject to our approval, wh ich shall not be unreasonably withheld. The observer to the
Board will be entitled to receive up to $6,000 of reimbursed travel expenses per meeting attended in person, subject to a maximum of $12,000
per year, which amount is not in excess of the amount payable for the Co mpany’s independent directors.

            (b) Your Covenants . You covenant with the Co mpany as follows:
                   (i) Info rmation Provided . You have not provided and will not provide to the purchasers of Shares any written or oral
informat ion regarding the business of the Company, including any representations regarding the Company ’s financial condition or financial
prospects, other than such informat ion as is contained in the Prospectus. You further covenant that, in connection with the O ffering you will
use your best efforts to comply with such purchaser suitability requirements

                                                                          13
                  (ii) Prospectus Supplements . Until the termination of this Agreement, if any event affecting the Prospectus, the Co mpany or
you shall occur wh ich, in the opinion of counsel to the Company, should be set forth in a supplement to the Prospectus, you agree to distribute
each supplement of the Prospectus to each person who has previously received a copy of the Prospectus from you and you furthe r agree to
include such supplement in all future deliveries of the Prospectus. You agree that following notice fro m the Co mpany that a s upplement to the
Prospectus is necessary, you will cease further efforts to sell the Shares until such a supplement is prepared and delivered to you.

                   (iii) Co mp liance with Laws, Etc . In your sale of the Shares, you will co mply in all material respects with applicab le laws,
rules and regulations and the rules and regulations of applicable self-regulatory organizations (provided, however, that you shall be deemed not
to have breached this covenant if your failure to so comply is based on a breach by the Company of any of its representations , warranties or
covenants contained in this Agreement and you shall have complied with Section 5.(b)(ii) above.

      6. Pay ment of Expenses . Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is
terminated, and subject to the provisions of Section 10 of this Agreement, the Co mpany hereby agrees that it will pay all fees and expenses
incident to the performance of its obligations under this Agreement (excluding fees and expenses of counsel for you, except a s specifically set
forth below), including (a) the preparation, printing and filing of the Reg istration Statement (including financial statements and exhibits), as
originally filed and as amended, the Preliminary Prospectuses and the Prospectus and any amend ments or supplements thereto, a nd the cost of
furnishing copies thereof to you, (b) the preparation, printing, and distribution of this Agreement, any selected dealer agreement , the certificates
representing the Shares, the blue sky memo randa, and any instruments relating to any of the foregoing, (c) the issuance and delivery of the
Shares, including any transfer taxes payable thereon, (d) the fees and disbursements of the Company’s counsel and accountants, (e) the
qualification of the Shares under applicable securities laws in accordance with Sect ion 5.(a) of this Agreement and any filing fee paid in
connection with the review of the Offering by FINRA, including filing fees and fees and disbursements made in connection ther ewith and in
connection with the blue sky memoranda supplied to you by couns el for the Co mpany, (f) all costs, fees, and expenses in connection with the
application for qualifying the Shares for quotation on the NASDAQ Capital Market, (g) the transfer agent’s and registrar’s fees and all
miscellaneous expenses referred to in the Registration Statement, (h) costs related to travel and lodging incurred by the Co mpany and its
representatives relating to meet ings with and presentations to prospective purchasers of the Shares reasonably determined by you to be
necessary or desirable to effect the sale of the Shares to the public, (i) any escrow arrangements in connection with the transactions described
herein, including any compensation or reimbursement to the Escrow Agent for its services as such, and (j) all other costs and expenses incident
to the performance of the Co mpany’s obligations hereunder that are not otherwise specifically provided for in this Section.

                                                                         14
      7. Conditions of Your Obligations . Your obligations hereunder shall be subject to, in your discretion, the follo wing terms and conditions:
             (a) Effectiveness of Registration Statement . The Registration Statement shall have beco me effective not later than 5:30 p.m. on the
date of this Agreement or, at such later time or on such later date as you may ag ree to in writing; and as of the Closing Date no stop order
suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act and no proceedings for t hat purpose shall
have been instituted or shall be pending or, to your knowledge or the knowledge of the Co mpany, shall be contemplated by the Co mmission,
and any request on the part of the Commission for addit ional informat ion shall have been complied with to the satisfaction of your counsel.

             (b) Closing Date Matters . On the Closing Date, (i) the Reg istration Statement and the Prospectus, as they may then be amended or
supplemented, shall contain all statements that are required to be stated therein under the 1933 Act and the Rules and Regula tio ns and in all
material respects shall conform to the requirements of the 1933 Act and the Rules and Regulations; the Company shall have comp lied in all
material respects with Ru le 430A (if it shall have elected to rely thereon) and neither the Registration Statement nor the Prospectus, as they
may then be amended or supplemented, shall contain an untrue statement of a material fact or o mit to state a material fact re quired to be stated
therein or necessary to make the statements therein not misleading, (ii) there shall not have been, since the respective dates as of wh ich
informat ion is given in the Registration Statement, any material adverse change in the business, prospects, properties, asset s, results of
operations or condition (financial or otherwise) of the Co mpany whether or not a rising in the ordinary course of business, (iii) n o action, suit or
proceeding at law or in equity shall be pending or, to the Co mpany ’s knowledge, threatened against the Co mpany that would be required to be
set forth in the Prospectus other than as set forth therein and no proceedings shall be pending or, to the knowledge of the Co mp any, threatened
against the Co mpany before or by any applicable or other commission, board or ad min istrative agency wherein an unfavorable de cision, ruling
or finding could materially adversely affect the business, prospects, assets, results of operations or condition (financial or otherwise) of the
Co mpany other than as set forth in the Prospectus, (iv) the Co mpany shall have comp lied with all agreements and satisfied all conditions on
their part to be performed or satisfied on or prior to the Closing Date, and (v) the representations and warranties of the Co mpany set forth in
Section 2 of this Agreement shall be accurate in all material respects as though expressly made at and as of the Closing Date. On the Closing
Date, you shall have received a cert ificate executed by the Chief Executive Officer of the Co mpany, dated as of the Closing Dat e, to such effect
and with respect to the following additional matters: (A) the Registration Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement or preventing or suspending the use of the Prospectus has been iss ued, and no
proceedings for that purpose have been instituted or are pending or, to his knowledge, threatened under the 1933 Act; and (B) h e has reviewed
the Registration Statement and the Prospectus and, when the Registration Statement became effective and at all times subsequent thereto up to
the delivery of such certificate, the Reg istration Statement and the Prospectus and any amendments or supplements thereto

                                                                         15
contained all statements and informat ion required to be included therein or necessary to make the statements therein not misleading and neither
the Registration Statement nor the Prospectus nor any amendment or supplement thereto contained any untrue statement of a mat erial fact or
omitted to state any material fact required to be stated therein or necessary to make the statements therein not mislead ing, and, since the
effective date of the Registration Statement, there has occurred no event required to be set forth in an amended or supplemented Prospectus that
has not been so set forth.

           (c) Opin ion of Jingtian & Gongcheng . At the Closing Date, you shall receive the opinion of Jingtian & Gongcheng, counsel for the
Co mpany, in form and substance reasonably satisfactory to you, to the effect of Exhib it B .

           (d) Opinion of Corporate Filing Services Limited . At the Closing Date, you shall receive the opinion of Corporate Filing Services
Limited, Cay man Islands counsel to the Company, in form and substance reasonably satisfactory to you, to the effect of Exh ibit C .

           (d) Opinion of Your Counsel . At the Closing Date, you shall receive the favorable opinion of Kaufman & Canoles, P.C., your
counsel, with respect to such matters as you may reasonably require and the Co mpany shall have furnished to such counsel such documents as
they may reasonably request for the purpose of enabling them to pass on such matters.

           (e) Independent Public Accountants . At the time that this Agreement is executed by the Co mpany, you shall have received fro m
Hansen, Barnett & Maxwell, P.C. a letter, dated the date hereof, in form and substance satisfactory to you, confirming that they are indepe ndent
public accountants with respect to the Company within the meanings of the 1933 Act and the Rules and Regulat ions, and stating in effect that:
                  (i) in their opin ion, the financial statements and any supplementary financial informat ion and schedule included in the
Registration Statement and covered by their opinion therein co mp ly as to form and in all material respects with the applicable accounting
requirements of the 1933 Act and the Rules and Regulations;

                     (ii) on the basis of limited procedures (set forth in detail in such letter and made in accordance with such procedures as may
be specified by you) not constituting an audit in accordance with generally accepted auditing standards, consisting of (but n ot limited to) a
reading of the latest available internal unaudited financial statements of the Co mpany, a read ing of the minute books of the Co mpany, inquiries
of officials of the Co mpany responsible for financial and accounting matters, and such other inquiries and procedures as may be specified in
such letter, nothing came to their attention to cause them to believe that:
                         (A) the unaudited financial statements and supporting schedule and other unaudited financial data of the Co mpany
included in the Registration Statement do not comply as to form in all material respects with the applicable accounting requirements of the
1933 Act and the Rules and Regulations or are not presented in conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included in the Registration Statement;

                                                                        16
                        (B) any other unaudited income statement data and balance sheet items included in the Prospectus do not agree with
the corresponding items in the unaudited financial statements from wh ich such data and items were derived, and any such unaud ited data and
items were not determined on a basis substantially consistent with the basis for the corresponding amounts in the audited fin ancial statements
included in the Prospectus;

                         (C) any unaudited pro forma financial informat ion included in the Prospectus does not comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act and the Rules and Regulations or the pro forma adjustments have
not been properly applied to historical amounts in the compilation of that information;

                         (D) at a specified date not more than five (5) days prior to the date of such letter, there was any change in the capital
stock or long-term debt or obligations of the Co mpany or there were any decreases in net current assets or net assets, sha reholders’ equity, or
other items specified by you from that set forth in the Co mpany ’s balance sheet at June 30, 2008, except as described in such letter; and

                        (E) for the period fro m June 30, 2008 to a specified date not more than five (5) days prior to the date of such letter,
there were any decreases in revenues or operating income before interest, depreciation and amortizat ion for the Co mpany, in e ach case as
compared with the corresponding period of the preceding year, except in each case for decreases that the Prospectus discloses have occurred or
may occur or that are described in such letter; and

                   (iii) in addition to the procedures referred to in clause (ii) above and the examination referred to in their reports including in
the Registration Statement, they have carried out certain specified procedures, not constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages, and financial in formation specified by you that are derived from the general
accounting records of the Company, that appear in the Registration Statement or the exh ibits or schedules thereto and are specified by you, and
have compared such amounts, percentages, and financial information with the accounting records of the Co mp any and with mat erial derived
fro m such records and have found them to be in agreement.

           (f) Updated Co mfort Letter . At the Closing Date, you shall have received fro m Hansen, Barnett & Maxwell, P.C. a letter, in form
and substance satisfactory to you and dated as of the Closing Date, to the effect that they reaffirm the statements made in the let ter furnished
pursuant to Section 7.(e) above, except that the specified date referred to shall be a date not mo re than five (5) days prior to the Closing Date.

           (g) Post-Financial Develop ments . In the event that either of the letters to be delivered pursuant to Sections 7.(e) and 7.(f) above sets
forth any changes, decreases or increases, it shall be a further condition to your obligations that you shall have reasonably determined, after
discussions with officers of the Co mpany responsible for financial and accounting matters and with Hansen, Barnett & Maxwell, P.C., that
such changes, decreases or

                                                                         17
increases as are set forth in such letter do not reflect a material adverse change in the capital stock, long -term debt, obligations under capital
leases, total assets, net current assets, or shareholders ’ equity of the Company as compared with the amounts shown in the latest consolidated
pro forma balance sheet of the Company, or a material adverse change in the revenues or operating income before interest, depre ciation and
amort ization for the Co mpany in each case as compared with the corresponding period of the prior year.

             (h) Additional Informat ion . On the Closing Date, you shall have been furnished with all such documents, certificates and opinions
as you may reasonably request for the purpose of enabling your counsel to pass upon the issuance and sale of the Shares as contemp lated in this
Agreement and the matters referred to in Section 7.(b), and in order to evidence the accuracy and completeness of, any of the representations,
warranties or statements of the Co mpany, the performance of any of the covenants of the Co mpany, or the fulfil lment of any of the conditions
herein contained; and all proceedings taken by the Company at or prior to the Closing Date in connection with the authorization, issuance and
sale of the Shares as contemplated in this Agreement, shall be satisfactory in form and substance to you and to your counsel. The Co mpany will
furnish you with such number of conformed copies of such opinions, certificates, letters and documents as you shall reasonably request. Any
certificate signed by any officer, partner, or other off icial of the Co mpany and delivered to you or your counsel shall be deemed a
representation and warranty by the Company to you as to the statements made therein.

              (i) Adverse Events . Subsequent to the date hereof, there shall not have occurred any of the fo llowing: (i) a suspension or material
limitat ion in trading in securities generally on the New York Stock Exchange, the NASDAQ Nat ional Market or the NASDAQ Capita l Market,
(ii) a general moratoriu m on commercial banking activ ities in the People ’s Republic of China or New York, (iii) the outbreak or escalation of
hostilit ies involving the United States or the People’s Republic of Ch ina or the declarat ion by the United States or the People’s Republic o f
China of a national emergency or war if the effect of any such event specified in this clause (iii) in your reasonable judgment makes it
impracticab le or inadvisable to proceed with the public offering or the delivery o f the Shares on the terms and in the manner co ntemplated in
the Prospectus, or (iv) such a material adverse change in general economic, political, financial or international conditions affecting financial
markets in the United States or the People’s Republic of China having a material adverse impact on trading prices of securit ies in general, as, in
your reasonable judgment, makes it imp racticable or inadvisable to proceed with the public o ffering of the Shares or the delivery of the Shares
on the terms and in the manner contemplated in the Prospectus.

            (j) FINRA Review . FINRA, upon review of the terms of the Offering, shall not have objected to the Offering, the terms of the
offering or your participation in the Offering.

           (k) NASDAQ Quotation . The Shares shall be approved for quotation on The NASDAQ Capital Market.

                                                                         18
If any of the conditions specified in this Section 7 shall not have been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company at any time at or prior to the Closing Date, and suc h terminatio n shall be
without liability of any party to any other party, except as provided in Sect ions 6 and 10. Notwithstanding any such terminat ion, the provisions
of Section 8 shall remain in effect.

      8. Indemn ification and Contribution .
                (a) Indemn ification by the Co mpany . The Co mpany will indemnify and hold you harmless against any losses, claims, damages, or
liab ilit ies, joint or several, to wh ich you may beco me subject under the 1933 Act, the 1934 Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are based upon any breach of any representation, warra nty or covenant of
the Co mpany herein contained or any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the o mission or
alleged o mission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and
will reimburse you for any legal or other expenses reasonably incurred by you in connection with investigating or defending a ny such loss,
claim, damage, liability, or action; provided, however, that the Co mpany shall not be liable in any such case to the extent that any such loss,
claim, damage, o r liab ility arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made
in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any such amendment or supplement, in reliance upon and in
conformity with written in formation furnished to the Company by you expressly for use therein; provided further, that the ind emn ity agreement
contained in Section 8.(a) with respect to any Preliminary Prospectus shall not inure to your benefit if you failed to send or give a copy of the
Prospectus to such person at or prior to the written confirmation of the sale of such Shares to such person in any cas e where such delivery is
required by the 1933 Act or the Rules and Regulations and if the Prospectus would have cured any untrue statement or alleged untrue statement
or omission or alleged omission giving rise to such loss, claim, damage, or liability. In addit ion to its other obligations under this Section 8.(a),
the Co mpany agrees that, as an interim measure during the pendency of any such claim, act ion, investigation, inquiry, or othe r proceeding
arising out of or based upon any statement or omission, or any alleged statement or o mission, described in this Section 8.(a), it will reimburse
you on a monthly basis for all reasonable legal and other expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry, or other proceeding, notwithstanding the absence of a judicial determination as to the propriety and enforceability
of the Co mpany’s obligation to reimburse you for such expenses and the possibility that such payments might later be held to have been
improper by a court of co mpetent jurisdiction. Any such interim reimbursement pay ments that are not made to you within th irty (3 0) days of a
request for reimbursement shall bear interest at the prime rate (or reference rate or other co mmercial lending rate fo r borro wers of the highest
credit standing) published from t ime to time by The Wall St reet Journal (the ―Prime Rate‖) fro m the date of such request. This indemnity
agreement shall be in addition to any liabilities that the Company may otherwise have. For p urposes of this Section 8, the informat ion set forth
in the last paragraph on the front cover page (insofar as such informat ion relates to you)

                                                                         19
and under ―Placement‖ in any Preliminary Prospectus and in the Prospectus constitutes the only informat ion furnished by you to the Co mpany
for inclusion in any Preliminary Prospectus, the Prospectus, or the Registration Statement. The Co mpany will not, without you r prior written
consent, settle or compro mise or consent to the entry of any judgment in any pending or threatened action or claim or related cause of action or
portion of such cause of action in respect of which indemnification may be sought hereunder (whether or not you are a party t o such action or
claim), unless such settlement, co mpro mise, or consent includes an unconditional release of you fro m all liability arising out of such action or
claim (o r related cause of action or portion thereof). The indemn ity agreement in this Section 8.(a) shall extend upon the same t erms and
conditions to, and shall inure to the benefit of, each person, if any, who controls you within the meaning of the 1933 Act or th e 1934 Act to the
same extent as such agreement applies to you.

                (b) Indemnificat ion by You . You will indemnify and hold harmless the Co mpany against any losses, claims, damages, or liabilities
to which the Co mpany may become subject, under the 1933 Act, the 1934 Act, or otherwise, insofar as such losses, claims, dama ges, or
liab ilit ies (or actions in respect thereof) arise out of or are based upon any breach of any warranty or covenant by you herein contained or any
untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Sta tement, or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the e xtent, but only to the
extent, that (i) such untrue statement or alleged untrue statement or o mission or alleged o mission was made in any Preliminary Prospectus, the
Registration Statement, or the Prospectus or any such amend ment or supplement thereto in reliance upon and in conf ormity wit h written
informat ion furnished to the Company by you expressly for use therein, or (ii) you failed to deliver an amend ment or supplement to the
Prospectus that the Company made availab le to you prior to the Closing Date and that corrected any st atement or omission in a Preliminary
Prospectus, the Registration Statement or the Prospectus which forms the basis for a claim against the Company; and will reim burse the
Co mpany for any legal or other expenses reasonably incurred by the Co mpany in connec tion with investigating or defending any such loss,
claim, damage, liability, or action. In addition to its other obligations under this Section 8.(b), you agree that, as an interim measure during the
pendency of any such claim, action, investigation, inquiry, or other proceeding arising out of or based upon any statement or omission, or any
alleged statement or o mission, described in this Section 8.(b), you will reimbu rse the Co mpany on a monthly basis for all reasonable legal and
other expenses incurred in connection with investigating or defending any such claim, action, investigation, inquiry, or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and enforceability of your obligation to reimbu rs e the Co mpany for
such expenses and the possibility that such payments might later been held to have been improper by a court of co mpetent jurisdiction. Any
such interim reimbursement pay ments that are not made to the Co mpany within thirty (30) days of a request for reimbursement shall bear
interest at the Prime Rate fro m the date of such request. This indemn ity agreement shall be in addition to any liab ilities th at you may otherwise
have. You will not, without the Co mpany’s prior written consent, settle or compro mise or consent to the entry of any judgment in any pending
or threatened action or claim or related cause of action or portion of such cause of action in respect of which indemnification may be

                                                                         20
sought hereunder (whether or not the Co mpany is a party to such action or claim), unless such settlement, co mpro mise, or cons ent includes an
unconditional release of the Co mpany fro m all liability arising out of such action or claim (or related cause of ac tion or portion thereof). The
indemn ity agreement in this Section 8.(b ) shall extend upon the same terms and conditions to, and shall inure to the benefit of, each officer and
director of the Co mpany and each person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act to the same
extent as such agreement applies to the Company.

             (c) Notices of Claims; Employ ment of Counsel . Any party that proposes to assert the right to be indemnified under this Section 8
promptly shall notify in writ ing each party against which a claim is to be made under this Section 8 of the institution of such action but the
omission so to notify such indemnifying party of any such action shall not relieve it fro m any liability it may have to any indemnified party
except (i) to the extent that the omission to notify shall have caused or increased the indemnify ing party ’s liability, and (ii) that the
indemn ify ing party shall be relieved of its indemn ity obligation fo r expenses of the indemnified party incurred before the indemn ify ing party is
notified. Such indemnify ing party or parties shall assume the defense of such action, including the emp loy ment of counsel (sa tisfactory to the
indemn ified party) and payment of fees and expenses. An indemnified party sha ll have the right to employ its own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such indemn ified party unless the employ ment of such counsel shall have
been authorized in writing by the indemn ify ing party or parties in connection with the defense of such action or the indemn ifying party or
parties shall not have employed counsel to have charge of the defense of such action or such indemnified party or parties rea sonably shall have
concluded that there may be defenses available to it or them that are d ifferent fro m or addit ional to those available to such indemn ify ing party
or parties (in wh ich case such indemnifying party or parties shall not have the right to direct the defense of such action on behalf of the
indemn ified party or parties), in any of which events such fees and expenses shall be borne by such indemnify ing party or par ties. Anything in
this paragraph to the contrary notwithstanding, an indemn ifying party shall not be liable for any settlement o f any such claim or action effected
without its written consent.

            (d) Arbitrat ion . It is agreed that any controversy arising out of the operation of the interim reimbursement arrangements set forth in
Sections 8.(a) and 8.(b) hereof, including the amounts of any requested reimbursement payments, the method of determining such amounts and
the basis on which such amounts shall be apportioned among the indemnifying parties, shall be settled by arbitration conducte d pursuant to the
Code of Arbit ration Procedure of the FINRA. Any such arbitration must be commenced by service of a written demand for arb itration or a
written notice of intention to arbitrate, therein electing the arbit ration tribunal. In the event the party demanding arbitra tion does not make such
designation of an arbitration tribunal in such demand or notice, then the party responding to said demand or notice is authorized to do so. Any
such arbitration will be limited to the operation of the interim reimbursement provisions contained in Sections 8.(a) and 8.(b) hereof and will
not resolve the ultimate propriety or enforceability of the obligation to indemnify for expenses that is created by the provisions of Sections 8.(a)
and 8.(b).

                                                                          21
            (e) Contribution . If the indemnification provided for in Section 8.(a) or 8.(b) is unavailable to or insufficient to hold harmless an
indemn ified party in respect of any losses, claims, damages, or liabilit ies (or actions in respect thereof) referred to there in, then the Co mpany
on the one hand and you on the other shall contribute to the amount paid or payable as a result of such losses, claims, damages, or liabil ities (or
actions in respect thereof) in such proportion as is appropriate to reflect the relat ive benefits received by the Co mpany on the one hand and you
on the other fro m the Offering. If, however, the allocation provided by the immediately preced ing sentence is not permitted b y applicable law,
then the Company and you shall contribute to such amount paid or payable in such proport ion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Co mpany on the one hand and you on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, or liab ilities (or actions in respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Co mpany on the one hand and you on the other shall be deemed to be in the same proportion a s the total net
proceeds fro m the Offering (before deducting expenses) received by the Company bear to the total selling commissions received by you in each
case as set forth in the table on the cover page of the Prospectus. The relat ive fault shall be determined by reference to, a mong other things,
whether the untrue or allegedly untrue statement of a material fact or the o mission or alleged o mission to state a material fact relates to
informat ion supplied by the Company on the one hand or to information with respect to you and furnished by you respectively, in writ ing
specifically for inclusion in the Prospectus on the other and the parties ’ relative intent, knowledge, access to information, and o pportunity to
correct or prevent such statement or o mission. The Co mpany and you agree that it would not be just and equitable if contributio n pursuant to
this Section 8.(e) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable
considerations referred to above in this Section 8.(e). The amount paid or payable as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this Section 8.(e) shall be deemed to include any legal or other expenses reasonably incurred by
any such party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) with respect to the transactions giving rise to the right of contribution provided in this
Section 8.(e) shall be entitled to contribution fro m any person who was not guilty of such fraudulent misrepresentation. The obligations in this
Section 8.(e) for you to contribute are several in proportion to your respective underwriting obligations and not joint. For purposes of this
Section 8.(e), each person, if any, who controls you within the meaning of Sect ion 15 of the 1933 Act shall have the same rights to contribution
as you, and each director of the Co mpany who signed the Registration Statement, an d each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act, shall have the same rights to contribution as the Company.

     9. Representations and Agreements to Survive . Except as the context otherwise requires, all repres entations, warranties, covenants and
agreements contained in this Agreement shall remain operative and in full force and effect regardless of any investigation ma de by you, or on
your behalf, or by any controlling person, or by or on behalf of the Co mpany, and shall survive until the fifth anniversary of the Offering
Termination Date and the termination of this Agreement pursuant to Section 10 hereof.

                                                                         22
     10. Termination of Agreement .
             (a) Termination of Agreement . You shall have the right to terminate this Agreement at any time prior to the Closing Date (i) if any
representation or warranty of the Co mpany hereunder shall be found to have been incorrect or misleading in any material respect when made or
the Co mpany shall fail, refuse, or be unable to perform any of its agreements hereunder or to fulfill any condition of your oblig ations
hereunder, (ii) if there shall have been since the respective dates as of which informat ion is given in the Registration Statement , a material
adverse change, or any development which could reasonably be expected to result in a prospective material adverse change, in or affect ing the
business, prospects, management, properties, assets, results of operations, or condition (financial o r otherwise) of the Co mpany, whether or not
arising in the ordinary course of business, (iii) if trading on any national securities exchange shall have been suspended (other than for reasons
unrelated to the securities markets), or minimu m or maximu m prices for trading generally shall have been fixed or maximu m ranges for prices
for all securities shall have been required on any such exchange by such exchange or by order of the Co mmission or any other governmental
authority having jurisdiction, (iv) if there has occurred or accelerated any outbreak of hostilities or other national or internation al calamity or
crisis or change in economic or polit ical conditions the effect of which on the financial markets of the United States is suc h as to make it, in
your reasonable judgment, impract icable to market the Shares or enforce contracts for the sale of the Shares, (v) if a banking moratoriu m has
been declared by Virg inia, New York or U.S. authorities, (vi) any applicab le statute, regulation, rule, or order of any court or other
governmental authority has been enacted, published, decreed, or otherwise pro mulgated that in your sole judgment materially a dversely affects
or will materially adversely affect the business or operations of the Co mpany, or (vii) any action has been taken by any applicable government
or agency in respect of its monetary or fiscal affairs that in your reasonable opinion has a material adverse effect on the s ecurities markets in
the United States. You shall have no liab ility to the Co mpany purs uant to this Agreement or otherwise as a result of any such termination.

           (b) Result of Termination .
                    (i) If the sale of Shares provided for herein is not consummated by              ,       due to reasons beyond the control of
either party hereto or if the Co mpany abandons the Offering for reasons within its control, then in addition to its obligations wit h respect to
expenses as set forth in Section 6, the Co mpany will reimburse you on demand for all your reasonable out -of-pocket expenses (including the
fees and expenses of your counsel), including disbursements reasonably incurred by you in reviewing the Reg istration Statemen t and the
Prospectus, and in investigating and making preparations for the market ing of the Shares up to a maximu m of $75,000.

                    (ii) If the sale of the Shares provided for herein is not consummated for any other reason, the Company shall pay expenses as
required by Section 6, and the neither party shall have any additional liab ility to the other except for such liabilities, if any, as may exist o r
thereafter arise under Section 8.

                                                                        23
     11. Notices .
     (a) Method and Location of Notices . All co mmunicat ions hereunder, except as herein otherwise specifically provided, shall be in writ ing
and shall be sent by overnight courier, hand-delivered or telecopied and confirmed as follows:
           To the Co mpany:
           Recon Technology, Ltd
           Roo m 1401 Yong Feng Mansion
           123 Jiq ing Road
           Nanjing, 210006
           People’s Republic of China
           with a copy to:
           Jingtian & Gongcheng




           To you:
           Anderson & Strudwick, Incorporated
           707 East Main Street
           20 Floor
              th



           Rich mond, Virgin ia 23219
           Attention: Mr. L. McCarthy Do wns, III
           with a copy to:
           Kaufman & Canoles, P.C.
           Three James Center
           1051 East Cary Street, 12 Floor
                                      th



           Rich mond, Virgin ia 23219
           Attention: Bradley A. Haneberg, Esquire

           (b) Time of Not ices . Notice shall be deemed to be given by you to the Co mpany o r by the Co mpany to you when it is sent by
overnight courier, hand-delivered or telecopied as provided in Section 11.(a).

      12. Parties . Th is Agreement shall inure solely to the benefit of and shall be binding upon you, the Company and the controlling perso ns
referred to in Sect ion 8, and their respective

                                                                       24
successors, legal representatives and assigns, and no other person shall have or be construed to have a legal or equitable right, remedy or claim
under or in respect of or by virtue of th is Agreement or any provision herein contained.

     13. Govern ing Law, Construction, and Time . Th is Agreement shall be governed by and construed in accordance with the laws of the
Co mmonwealth of Virgin ia. Specified time of day refers to United States Eastern Time. Time shall be of the essence of this Agreement.

     14. Description Headings . The descriptive headings of the several sections and paragraphs of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.

     15. Counterparts . This Agreement may be executed in one or mo re counterparts, and if executed in mo re than one counterpart, the
executed counterparts shall together constitute a single instrument.

      If the foregoing correctly sets forth the understanding between you and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement between us.

                                                                                       Very tru ly yours,

                                                                                       RECON TECHNOLOGY, LTD

                                                                                       By:
                                                                                       Name:     Yin Shenping
                                                                                       Title:    Chief Executive Officer

Confirmed and accepted as of the date first above written:

ANDERSON & STRUDWICK, INCORPORATED

By:
Name:                      L. McCarthy Downs, III
Title:                     Senior Vice President

                                                                       25
  EXHIB IT A

Form of Warrant
      EXHIB IT B

Form of Jingtian Opi nion

           27
                   EXHIB IT C

Form of Corporate Filing Services Li mited Opini on

                        28
                                                                                                                                      Exhi bit 10.33

                                                            LOCK-UP AGREEMENT

                                                                            ,

By Facsimile (             )                                                        By Facsimile ((804) 648-3404)
Recon Technology, Ltd                                                               Anderson & Strudwick, Incorporated
Roo m 1401 Yong Feng Mansion                                                        707 East Main Street
123 Jiq ing Road                                                                    20 Floor
                                                                                      th


Nanjing, 210006                                                                     Rich mond, Virgin ia 23219
People’s Republic of China                                                          Attn:    L. McCarthy Downs, III,
Attn:           Yin Shenping,                                                                Senior Vice President
                CEO
Re: Lock-Up Agreement

Dear M r. Yin and Mr. Downs:
     The undersigned understands that Anderson & Strudwick, Incorporated (the ―Placement Agent‖), proposes to enter into a Placement
Agreement with Recon Technology, Ltd (the ―Co mpany‖), provid ing for the public offering (the ―Offering‖), by the Placement Agent of a
minimu m of 1,166,667 ord inary shares and a maximu m of 1,700,000 ordinary shares (the ―Shares‖).

      In consideration of the Placement Agent’s agreement to undertake the Offering of the Shares on a ―best efforts, minimu m/ maximu m‖
basis, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the undersigned agrees tha t the undersigned
will not register, offer, sell, contract to sell, grant any securities convertible into or exercisable or exchangeable for the Shares or any warrants
to purchase the Shares (including, without limitation, securities of the Co mpany which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations of the Securities and Exchange Co mmission and securities which may b e issued upon
the exercise of a stock option or warrant) for a period of (a) as to one-half ( / 2 ) of the Shares now or in the future beneficially owned by the
                                                                                1


undersigned, ninety(90) days after the date of the offering and (b) as to the other one -half of such Shares, one hundred ninety (190) days after
the date of this offering.

     The undersigned understands that the Co mpany, the Placement Agent and the Representatives will proceed with the Offering in reliance
upon this Lock-up Agreement.

                                                                                            Very tru ly yours,

                                                                                            By:
                                                                                            Name:
                                                                                            Its:
                                                                                                                                     Exhi bit 10.34

                                                             LABOR CONTRACT

      THIS LABOR CONTRACT (―Labor Contract‖) made as of March 17, 2009, is entered into by and between Mr. Yin Shenping (the
―Emp loyee‖) and Recon Technol ogy (Jining) Co., Ltd. , a Chinese corporation, with an address at Room 1401 Yong Feng Mansion, 123
Jiging Road, Nan jing, People’s Republic of China 210006 (the ―Co mpany‖).

     In accordance with the provisions of the Labor Law of the People’s Republic of China, the Regulations on Labor Contract of Beijing
Municipality, and other related laws and regulations, the Company and the Emp loyee (collectively, the ―Parties‖), in consideration of the
covenants contained herein and on the basis of mutual understanding and consultation, hereby agree as follows:

                                                                  Article 1
                                                           Duration of the Contract

     1.1. Th is Labor Contract is made effective as of the date hereof and shall continue until terminated in accordance herewith.

                                                                   Article 2
                                                     Job Title, Description, and Location

    2.1. Job Title . In accordance with the actual needs of the Co mpany, the Emp loyee agrees to take the position of Ch ief Executiv e Officer
(―CEO‖) of the Co mpany. As CEO, the Employee shall also be a full member of the senior management of the Co mpany.

     2.2. Job Description . The CEO shall be responsible for leading the strategic development, capital operation, marketing, and
comprehensive operation and management of the Co mpany; formulat ing and carrying out the Co mpany ’s business strategy and budget;
promoting the format ion of the Co mpany’s culture; pro moting commun ication with relevant parties; assuming the functions of the Chief
Financial Officer (―CFO‖) when the CFO is absent; executing resolutions of the Board; and assisting the Board with its work.

      2.3. Job Location . The primary job location fo r the Employee shall be in China, though frequent business trips will be necessary to assist
in the establishment of Co mpany branches in other locations.

      2.4. Co mpany Powers . Both Parties agree that having fully qualified persons functioning in their assigned positions is a key element in
the sustained development of the Co mpany. Therefore, both Parties understand and agree that the Company enjoys the right to make
adjustments to the Employee’s position and responsibilities if and when the Co mpany deems such ad justments appropriate.
                                                                    Article 3
                                                    Work Facilities and Occupati onal Safety

      3.1. The Co mpany, in co mpliance with the relevant labor laws and regulations, shall provide the Emp loyee with an appropriate job
location, facilities, equip ment, and protection items, and shall guarantee the Emp loyee ’s safety and health at work.

                                                                   Article 4
                                                               Salary and B onus

      4.1. Salary . The Co mpany shall pay a monthly gross salary of $6,000 (wh ich includes the Emp loyee ’s social security contributions,
personal inco me tax, and housing allowance) to the Employee for wo rk done in the position of CEO, as indicated in Article 2.2 of this Labor
Contract. The Co mpany shall withhold and pay income tax on the above total gross income on behalf of the Emp loyee, in accorda nce with the
relevant tax laws and regulations of Ch ina. The Co mpany is responsible for deduction of the Employee’s personal income tax.

      4.2. Bonus . Based on the performance of the Co mpany, an annual bonus shall be payable to the Emp loyee, and shall be calculated as
follows: up to ten percent (10%) pre-tax net profit shall be paid to the management team and key emp loyees as an annual bonus within sixty
days after the release of the Co mpany’s audited annual financial statements. The distribution rate to individuals shall be determined by the
management team based on each individual’s corresponding contributions.

                                                                 Article 5
                                            Work Time, Official Holi days, and Paying Vacati ons

      5.1. Work Time . The Emp loyee shall work five (5) days per week, eight (8) hours per working day, and shall work overtime as may be
required by specific circu mstances.

     5.2. Official Holidays and Paying Vacation .
          5.2.1. The Employee shall en joy the official holidays of China with pay ment. The official holidays of Ch ina are as fo llo ws: New
     Year’s Day, Spring Festival, May Day, and the National Day.
           5.2.2. The Employee shall en joy annual leave of ten (10) business days with payment.

                                                                   Article 6
                                                            Insurance and Welfare

     6.1. Both Part ies shall pay for their respective social insurance as required by relevant regulations of the State and local government.

     6.2. The Employee shall en joy paid leave and other paid vacation, as provided by relevant labor laws and regulations.

                                                                        2
      6.3. The Co mpany shall co mp ly with relevant labor laws and regulations in discharging its obligations in the case of the Emplo yee’s sick
leave or med ical t reat ment for either wo rk-related or non-work-related diseases and/or injuries.

                                                                    Article 7
                                                              Occupati onal Discipline

      7.1. In performing h is duties under this Labor Contract, the Emp loyee shall strictly obey all laws and regulations, as well as all the
internal management rules and principles as may be drawn up fro m time to time by the Co mpany. The basic management rules, princip les, and
disciplinary standards of the Company are set in the Employee Manual of the Co mpany, wh ich shall be c o mplied with by the Emp loyee as an
inseparable part of this Labor Contract.

        7.2. The Employee shall part icipate in relevant training programs, as required fro m t ime to t ime by the Co mpany, and shall ta ke the
initiat ive to pro mote his professional skills.

                                                                Article 8
                                              Amendment and Termi nation of the Labor Contract

      8.1. The Co mpany shall be entitled to terminate this Labor Contract without prior notice to the Employee if:
            8.1.1. The Employee has seriously violated the labor disciplines or management rules presc ribed by the Co mpany;
            8.1.2. The Employee has committed serious dereliction of duties or malpractice, wh ich has caused severe loss of the Company ’s
      interest;
            8.1.3. The Employee has been convicted of a crime;
            8.1.4. The Employee gives written notice of his intention to resign;
            8.1.5. The Employee is absent from three consecutive meet ings of the Board of Directors of the Co mpany, without special leave of
      absence from the other members of the Board o f Directors, and the Board of Directors passes a resolution that such employee has vacated
      his office; or
            8.1.6. The death or bankruptcy of the employee.

      8.2. The Co mpany shall be entitled to terminate this Labor Contract upon thirty (30) days’ prior written notice to the Emp loyee if:
           8.2.1. The Employee is unable to perform his originally assigned job, or any other job as may be reassigned by the Company in
      accordance with Article 2.4 of this Labor Contract, upon the completion of med ical treat ment of a disease or non -work-related injury;

                                                                           3
            8.2.2. The Employee is unqualified for the originally assigned job and is still proven unqualified after professional train in g and/or
      reassignment by the Company;
            8.2.3. The circu mstances upon which this Labor Contract was entered into have undergone material changes such that performanc e
      of this Labor Contract becomes impossible, and no agreement can be reached by the Parties as to a mod ification of this Labor Contract to
      correspond with such change in circu mstance; or
           8.2.4. After a successful init ial public offering outside of China of Recon Technology, Ltd. (―Recon-CI‖), the Co mpany’s
      shareholder, the Employee is dismissed due to a job reassignment.

       8.3. If the Co mpany terminates this Labor Contract according to Article 8.2.4, the Co mpany must pay to the Emp loyee a compensation
fee in a cash lump su m within five (5) days after the decision to dismiss the Employee is made by the Board of Directors or by any other
competent decision-making body. This co mpensation fee shall be calculated as the Employee’s monthly salary for the immed iately preceding
month, mu ltiplied by the number of years the Emp loyee actually wo rked for the Co mpany (if less than one year, the number of years worked
shall be regarded as one year).

      8.4. If, after a successful init ial public offering outside of China of Recon -CI, the Emp loyee leaves his position due to a job reassignment,
the Co mpany shall negotiate with the Emp loyee in o rder to execute a new Labor Contract. Meanwhile, the Co mpany shall pay t o the Emp loyee
a compensation fee in a cash lu mp sum within five (5) days after the decision to adjust the Employee’s job position is made by the Board of
Directors or by any other competent decision-making body. This compensation fee shall be calculated as six t imes the balance between the
Emp loyee’s salary for the immed iately preceding month and the Employee’s monthly salary for h is new position.

      8.5. The Employee shall be entit led to terminate this Labor Contract upon thirty (30) days’ prior written notice to the Co mpany. If, after a
successful init ial public offering outside of China of Recon-CI, the Emp loyee terminates this Labor Contract voluntarily, the Company shall
not be responsible for paying any compensation fees to the Employee.

      8.6. The Employee shall be entit led to terminate this Labor Contract at any time, upon notification of the Co mpany, if the Co mpany fails
to pay the Emp loyee the salary and/or provide the Employee with wo rking condit ions as prescribed by this Labor Contract.

                                                                    Article 9
                                                                  Confi dentiality

      9.1. The Employee, in accordance with his job responsibilities, may be advised of the following business secrets of the Co mpa ny
(collect ively, the ―Business Secrets‖):

                                                                          4
            9.1.1. Product techniques, software programs, know-how, and other technical secrets necessary for the Emp loyee’s accomplishing
      of objectives set by the Company;
            9.1.2. The financial position, operation s tatus and accounting data of the Co mpany, to the extent that the above information can
      assist the Emp loyee in perfo rming his job responsibilities;
             9.1.3. The Co mpany’s transaction secrets, including lists of clients and distribution channels, as well as ma nagement strategies in
      relation to its transactions, to the extent they are either acquired by the Employee or within his job responsibilit ies; and
           9.1.4. The Co mpany’s business information, docu ments and files, and/or other secrets the Employee may have a ccess to in his
      assigned position.

      9.2. The Employee shall use the Business Secrets only for the performance of th is Labor Contract and, in using the Business S ecrets, may
disclose the Business Secrets only to other emp loyees, as designated by the Company, and then only to the extent necessary for the completion
of the assigned job. The Emp loyee shall keep confidential the Business Secrets which he becomes privy to in his assigned position, either
during or after the exp irat ion or termination of this Labor Contract, and shall not, except for the afo resaid work-related disclosure, disclose the
Business Secrets to any third party unless the Company expressly consents to such disclosure.

      9.3. Upon termination of this Labor Contract, the Emp loyee shall return to the Co mpany all the materials wh ich record or in an y way
carry the Business Secrets, as well as any and all copies and/or duplicates thereof, or destroy them immediately upon such in struction by the
Co mpany.

       9.4. The Employee shall not, with in six (6) months of termination of this Labor Contract, engage in any other emp loy ment in the same
field in wh ich he worked for the Co mpany, or with similar job responsibilit ies to those undertaken during the course of his e mployment with
the Co mpany, which may g ive rise to opportunities to use the Business Secrets for the benefit of a third party in any manner; nor shall the
Emp loyee use the Business Secrets by engaging in secondary jobs, publishing papers, or engaging in any other conduct which ma y d isclose the
Business Secrets in an indirect manner.

                                                                    Article 10
                                                                  Labor Disputes

       10.1. In the case of any dispute arising out of the execution or performance of this Labor Contract, both Parties shall first make their best
effort to resolve the dispute through friendly consultation. If no settlement can be reached through consultation and if either Party wishes to
initiate labor arb itration, the dispute shall be submitted to a labor-dispute-arbitration co mmission where the Co mpany is located.

      10.2. Either Party shall be entitled to file a lawsuit with the competent local court against the arbitration award rendered by the
labor-dispute-arbitration co mmission.

                                                                          5
                                                                  Article 11
                                                                 Miscellaneous

     11.1. Th is Labor Contract is created in accordance with Chinese laws and regulations and is legally b inding as between the Pa rties hereto.

     11.2. Matters not included within this Labor Contract, but which are connected to the employ ment relat ionship between the Parties, shall
be governed by the relevant labor laws and regulations of the State and/or the local Beijing government.

     11.3. Th is Labor Contract is written in both Chinese and English, and both versions shall have the same legally b inding effec t.

      IN WITNESS WHEREOF, the Employee and the Co mpany have entered into this Labor Contract as of the date and year first above
written. This Labor Contract has been executed in two (2) originals, one for each Party respectively.

                                                                                        EMPLOYEE
                                                                                        Mr. Yin Shenping


                                                                                                         /s/    Yin Shenping


                                                                                        Recon Technol ogy (Jining) Co., Ltd.


                                                                                        By:                    /s/   Yin Shenping
                                                                                        Name:                        Yin Shenping
                                                                                        Its:                            CEO

                                                                        6
                                                                                                                                     Exhi bit 10.36

                                                             LABOR CONTRACT

      THIS LABOR CONTRACT (―Labor Contract‖) made as of March 17, 2009, is entered into by and between Mr. Chen Guangqiang (the
―Emp loyee‖) and Recon Technol ogy (Jining) Co., Ltd. , a Chinese corporation, with an address at Room 1401 Yong Feng Man sion, 123
Jiging Road, Nan jing, People’s Republic of China 210006 (the ―Co mpany‖).

     In accordance with the provisions of the Labor Law of the People’s Republic of China, the Regulations on Labor Contract of Beijing
Municipality, and other related laws and regulations, the Company and the Emp loyee (collectively, the ―Parties‖), in consideration of the
covenants contained herein and on the basis of mutual understanding and consultation, hereby agree as follows:

                                                                   Article 1
                                                            Duration of the Contract

     1.1. Th is Labor Contract is made effective as of the date hereof and shall continue until terminated in accordance herewith.

                                                                   Article 2
                                                     Job Title, Description, and Location

      2.1. Job Title . In accordance with the actual needs of the Co mpany, the Emp loyee agrees to take t he position of Ch ief Technology
Officer (―CTO‖) of the Co mpany. As CTO, the Employee shall also be a full member of the senior management of the Co mpany.

     2.2. Job Description . The CTO shall be responsible for the strategic management and technical trends of future products; daily technical
support; and the improvement, organization and management of the Co mpany ’s product development.

      2.3. Job Location . The primary job location fo r the Employee shall be in China, though frequent business trips will be nece ssary to assist
in the establishment of Co mpany branches in other locations.

      2.4. Co mpany Powers . Both Parties agree that having fully qualified persons functioning in their assigned positions is a key element in
the sustained development of the Co mpany. Therefore, both Parties understand and agree that the Company enjoys the right to make
adjustments to the Employee’s position and responsibilities if and when the Co mpany deems such adjustments appropriate.
                                                                    Article 3
                                                    Work Facilities and Occupati onal Safety

      3.1. The Co mpany, in co mpliance with the relevant labor laws and regulations, shall provide the Emp loyee with an appropriate job
location, facilities, equip ment, and protection items, and shall guarantee the Emp loyee ’s safety and health at work.

                                                                   Article 4
                                                               Salary and B onus

      4.1. Salary . The Co mpany shall pay a monthly gross salary of $5,000 (wh ich includes the Emp loyee ’s social security contributions,
personal inco me tax, and housing allowance) to the Employee for wo rk done in the position of CTO, as indicated in Article 2.2 of this Labor
Contract. The Co mpany shall withhold and pay income tax on the above total gross income on behalf of the Emp loyee, in accorda nce with the
relevant tax laws and regulations of Ch ina. The Co mpany is responsible for deduction of the Employee’s personal income tax.

      4.2. Bonus . Based on the performance of the Co mpany, an annual bonus shall be payable to the Emp loyee, and shall be calculated as
follows: up to ten percent (10%) pre-tax net profit shall be paid to the management team and key emp loyees as an annual bonus within sixty
days after the release of the Co mpany’s audited annual financial statements. The distribution rate to individuals shall be determined by the
management team based on each individual’s corresponding contributions.

                                                                 Article 5
                                            Work Time, Official Holi days, and Paying Vacati ons

      5.1. Work Time . The Emp loyee shall work five (5) days per week, eight (8) hours per working day, and shall work overtime as may be
required by specific circu mstances.

     5.2. Official Holidays and Paying Vacation .
          5.2.1. The Employee shall en joy the official holidays of China with pay ment. The official holidays of Ch ina are as fo llo ws: New
     Year’s Day, Spring Festival, May Day, and the National Day.
           5.2.2. The Employee shall en joy annual leave of ten (10) business days with payment.

                                                                   Article 6
                                                            Insurance and Welfare

     6.1. Both Part ies shall pay for their respective social insurance as required by relevant regulations of the State and local government.

     6.2. The Employee shall en joy paid leave and other paid vacation, as provided by relevant labor laws and regulations.

                                                                        2
      6.3. The Co mpany shall co mp ly with relevant labor laws and regulations in discharging its obligations in the cas e of the Emplo yee’s sick
leave or med ical t reat ment for either wo rk-related or non-work-related diseases and/or injuries.

                                                                    Article 7
                                                              Occupati onal Discipline

      7.1. In performing h is duties under this Labor Contract, the Emp loyee shall strictly obey all laws and regulations, as well a s all the
internal management rules and principles as may be drawn up fro m time to time by the Co mpany. The basic management rules, princip les, and
disciplinary standards of the Company are set in the Employee Manual of the Co mpany, wh ich shall be co mplied with by the Emp loyee as an
inseparable part of this Labor Contract.

        7.2. The Employee shall part icipate in relevant training programs, as required fro m t ime to t ime by the Co mpany, and shall take the
initiat ive to pro mote his professional skills.

                                                                Article 8
                                              Amendment and Termi nation of the Labor Contract

      8.1. The Co mpany shall be entitled to terminate this Labor Contract without prior notice to the Employee if:
            8.1.1. The Employee has seriously violated the labor disciplines or management rules prescribed by the Co mpany;
            8.1.2. The Employee has committed serious dereliction of duties or malpractice, wh ich has caused severe loss of the Company’s
      interest;
            8.1.3. The Employee has been convicted of a crime;
            8.1.4. The Employee gives written notice of his intention to resign;
            8.1.5. The Employee is absent from three consecutive meet ings of the Board of Directors of the Co mpany, without spec ial leave of
      absence from the other members of the Board o f Directors, and the Board of Directors passes a resolution that such employee h as vacated
      his office; or
            8.1.6. The death or bankruptcy of the employee.

      8.2. The Co mpany shall be entitled to terminate this Labor Contract upon thirty (30) days’ prior written notice to the Emp loyee if:
           8.2.1. The Employee is unable to perform his originally assigned job, or any other job as may be reassigned by the Company in
      accordance with Article 2.4 of this Labor Contract, upon the completion of med ical treat ment of a disease or non -work-related injury;

                                                                          3
            8.2.2. The Employee is unqualified for the originally assigned job and is still proven unqualified after professional train in g and/or
      reassignment by the Company;
            8.2.3. The circu mstances upon which this Labor Contract was entered into have undergone material changes such that performance
      of this Labor Contract becomes impossible, and no agreement can be reached by the Parties as to a mod ification of this Labor Contract to
      correspond with such change in circu mstance; or
           8.2.4. After a successful init ial public offering outside of China of Recon Technology, Ltd. (―Recon-CI‖), the Co mpany’s
      shareholder, the Employee is dismissed due to a job reassignment.

       8.3. If the Co mpany terminates this Labor Contract according to Article 8.2.4, the Co mpany must pay to the Emp loyee a compensation
fee in a cash lump su m within five (5) days after the decision to dismiss the Employee is made by the Board of Directors or by any other
competent decision-making body. This co mpensation fee shall be calculated as the Employee’s monthly salary for the immed iately preceding
month, mu ltiplied by the number of years the Emp loyee actually wo rked for the Co mpany (if less than one year, the number of y ears worked
shall be regarded as one year).

      8.4. If, after a successful init ial public offering outside of China of Recon-CI, the Emp loyee leaves his position due to a job reassignment,
the Co mpany shall negotiate with the Emp loyee in o rder to execute a new Labor Contract. Meanwhile, the Co mpany shall pay t o t he Emp loyee
a compensation fee in a cash lu mp sum within five (5) days after the decision to adjust the Employee’s job position is made by the Board of
Directors or by any other competent decision-making body. This compensation fee shall be calculated as six t imes the balance between the
Emp loyee’s salary for the immed iately preceding month and the Employee’s monthly salary for h is new position.

      8.5. The Employee shall be entit led to terminate this Labor Contract upon thirty (30) days’ prior written notice to the Co mpany. If, after a
successful init ial public offering outside of China of Recon-CI, the Emp loyee terminates this Labor Contract voluntarily, the Company shall
not be responsible for paying any compensation fees to the Employee.

      8.6. The Employee shall be entit led to terminate this Labor Contract at any time, upon notification of the Co mpany, if the Co mpany fails
to pay the Emp loyee the salary and/or provide the Employee with wo rking conditions as prescribed by this Labor Contract.

                                                                    Article 9
                                                                  Confi dentiality

      9.1. The Employee, in accordance with his job responsibilities, may be advised of the following business secrets of the Co mpany
(collect ively, the ―Business Secrets‖):

                                                                          4
            9.1.1. Product techniques, software programs, know-how, and other technical secrets necessary for the Emp loyee’s accomplishing
      of objectives set by the Company;
            9.1.2. The financial position, operation status and accounting data of the Co mpany, to the exte nt that the above information can
      assist the Emp loyee in perfo rming his job responsibilities;
             9.1.3. The Co mpany’s transaction secrets, including lists of clients and distribution channels, as well as management strategies in
      relation to its transactions, to the extent they are either acquired by the Employee or within his job responsibilit ies; and
           9.1.4. The Co mpany’s business information, docu ments and files, and/or other secrets the Employee may have access to in his
      assigned position.

      9.2. The Employee shall use the Business Secrets only for the performance of th is Labor Contract and, in using the Business Secrets, may
disclose the Business Secrets only to other emp loyees, as designated by the Company, and then only to the extent necessary fo r the completion
of the assigned job. The Emp loyee shall keep confidential the Business Secrets which he becomes privy to in his assigned position, either
during or after the exp irat ion or termination of this Labor Contract, and shall not, except for the afo resaid wor k-related disclosure, disclose the
Business Secrets to any third party unless the Company expressly consents to such disclosure.

      9.3. Upon termination of this Labor Contract, the Emp loyee shall return to the Co mpany all the materials wh ich record or in a n y way
carry the Business Secrets, as well as any and all copies and/or duplicates thereof, or destroy them immediately upon such in struction by the
Co mpany.

       9.4. The Employee shall not, with in six (6) months of termination of this Labor Contract, engage in any other emp loy ment in the same
field in wh ich he worked for the Co mpany, or with similar job responsibilit ies to those undertaken during the course of his e mployment with
the Co mpany, which may g ive rise to opportunities to use the Business Secrets for t he benefit of a third party in any manner; nor shall the
Emp loyee use the Business Secrets by engaging in secondary jobs, publishing papers, or engaging in any other conduct which ma y d isclose the
Business Secrets in an indirect manner.

                                                                     Article 10
                                                                   Labor Disputes

       10.1. In the case of any dispute arising out of the execution or performance of this Labor Contract, both Parties shall first make their best
effort to resolve the dispute through friendly consultation. If no settlement can be reached through consultation and if either Party wishes to
initiate labor arb itration, the dispute shall be submitted to a labor-dispute-arbitration co mmission where the Co mpany is located.

      10.2. Either Party shall be entitled to file a lawsuit with the competent local court against the arbitration award rendered by the
labor-dispute-arbitration co mmission.

                                                                           5
                                                                  Article 11
                                                                 Miscellaneous

     11.1. Th is Labor Contract is created in accordance with Chinese laws and regulations and is legally b inding as between the Parties hereto.

     11.2. Matters not included within this Labor Contract, but which are connected to the employ ment relat ionship between the Par ties, shall
be governed by the relevant labor laws and regulations of the State and/or the local Beijing go vernment.

     11.3. Th is Labor Contract is written in both Chinese and English, and both versions shall have the same legally b inding effec t.

      IN WITNESS WHEREOF, the Employee and the Co mpany have entered into this Labor Contract as of the date and year first a bove
written. This Labor Contract has been executed in two (2) originals, one for each Party respectively.

                                                                                        EMPLOYEE
                                                                                        Mr. Chen Guangqiang

                                                                                                          /s/ Chen Guangqiang


                                                                                        Recon Technol ogy (Jining) Co., Ltd.

                                                                                        By:        /s/ Yin Shenping
                                                                                        Name:      Yin Shenping
                                                                                        Its:       CEO

                                                                        6
                                                                                                                                     Exhi bit 10.37

                                                             LABOR CONTRACT

      THIS LABOR CONTRACT (―Labor Contract‖) made as of March 17, 2009, is entered into by and between Mr. Li Hongqi (t he
―Emp loyee‖) and Recon Technol ogy (Jining) Co., Ltd. , a Chinese corporation, with an address at Room 1401 Yong Feng Mansion, 123
Jiging Road, Nan jing, People’s Republic of China 210006 (the ―Co mpany‖).

     In accordance with the provisions of the Labor Law of the People’s Republic of China, the Regulations on Labor Contract of Beijing
Municipality, and other related laws and regulations, the Company and the Emp loyee (collectively, the ―Parties‖), in consideration of the
covenants contained herein and on the basis of mutual understanding and consultation, hereby agree as follows:

                                                                  Article 1
                                                           Duration of the Contract

     1.1. Th is Labor Contract is made effective as of the date hereof and shall continue until terminated in accordance herewith.

                                                                   Article 2
                                                     Job Title, Description, and Location

     2.1. Job Title . In accordance with the actual needs of the Co mpany, the Emp loyee agrees to take the position of Ch ief Market ing Officer
(―CM O‖) o f the Co mpany. As CM O, the Emp loyee shall also be a full member of the senior management o f the Co mpany.

     2.2. Job Description . The CM O shall be responsible for assisting the Chief Executive Officer in the strategic management and capital
operation of the Co mpany, client management, and build ing alliances with strategic partners.

      2.3. Job Location . The primary job location fo r the Employee shall be in China, though frequent business trips will be necessary to assist
in the establishment of Co mpany branches in other locations.

      2.4. Co mpany Powers . Both Parties agree that having fully qualified persons functioning in their assigned positions is a key element in
the sustained development of the Co mpany. Therefore, both Parties understand and agree that the Company enjoys the right to make
adjustments to the Employee’s position and responsibilities if and when the Co mpany deems such adjustments appropriate.
                                                                    Article 3
                                                    Work Facilities and Occupati onal Safety

      3.1. The Co mpany, in co mpliance with the relevant labor laws and regulations, shall provide the Emp loyee with an appropriate job
location, facilities, equip ment, and protection items, and shall guarantee the Emp loyee ’s safety and health at work.

                                                                   Article 4
                                                               Salary and B onus

      4.1. Salary . The Co mpany shall pay a monthly gross salary of $5,000 (wh ich includes the Emp loyee ’s social security contributions,
personal inco me tax, and housing allowance) to the Employee for wo rk done in the position of CMO, as indicat ed in Art icle 2.2 of this Labor
Contract. The Co mpany shall withhold and pay income tax on the above total gross income on behalf of the Emp loyee, in accorda nce with the
relevant tax laws and regulations of Ch ina. The Co mpany is responsible for deduction o f the Employee’s personal income tax.

      4.2. Bonus . Based on the performance of the Co mpany, an annual bonus shall be payable to the Emp loyee, and shall be calculated as
follows: up to ten percent (10%) pre-tax net profit shall be paid to the management tea m and key emp loyees as an annual bonus within sixty
days after the release of the Co mpany’s audited annual financial statements. The distribution rate to individuals shall be determined by the
management team based on each individual’s corresponding contributions.

                                                                 Article 5
                                            Work Time, Official Holi days, and Paying Vacati ons

      5.1. Work Time . The Emp loyee shall work five (5) days per week, eight (8) hours per working day, and shall work overtime as may be
required by specific circu mstances.

     5.2. Official Holidays and Paying Vacation .
          5.2.1. The Employee shall en joy the official holidays of China with pay ment. The official holidays of Ch ina are as fo llo ws: New
     Year’s Day, Spring Festival, May Day, and the National Day.
           5.2.2. The Employee shall en joy annual leave of ten (10) business days with payment.

                                                                   Article 6
                                                            Insurance and Welfare

     6.1. Both Part ies shall pay for their respective social insurance as required by relevant regulations of the State and local government.

     6.2. The Employee shall en joy paid leave and other paid vacation, as provided by relevant labor laws and regulations.

                                                                        2
      6.3. The Co mpany shall co mp ly with relevant labor laws and regulations in discharging its obligations in the case of the Emplo yee’s sick
leave or med ical t reat ment for either wo rk-related or non-work-related diseases and/or injuries.

                                                                    Article 7
                                                              Occupati onal Discipline

      7.1. In performing h is duties under this Labor Contract, the Emp loyee shall strictly obey all laws and regulations, as well as all the
internal management rules and principles as may be drawn up fro m time to time by the Co mpany. The basic management rules, princip les, and
disciplinary standards of the Company are set in the Employee Manual of the Co mpany, wh ich shall be c o mplied with by the Emp loyee as an
inseparable part of this Labor Contract.

        7.2. The Employee shall part icipate in relevant training programs, as required fro m t ime to t ime by the Co mpany, and shall ta ke the
initiat ive to pro mote his professional skills.

                                                                Article 8
                                              Amendment and Termi nation of the Labor Contract

      8.1. The Co mpany shall be entitled to terminate this Labor Contract without prior notice to the Employee if:
            8.1.1. The Employee has seriously violated the labor disciplines or management rules presc ribed by the Co mpany;
            8.1.2. The Employee has committed serious dereliction of duties or malpractice, wh ich has caused severe loss of the Company ’s
      interest;
            8.1.3. The Employee has been convicted of a crime;
            8.1.4. The Employee gives written notice of his intention to resign;
            8.1.5. The Employee is absent from three consecutive meet ings of the Board of Directors of the Co mpany, without special leave of
      absence from the other members of the Board o f Directors, and the Board of Directors passes a resolution that such employee has vacated
      his office; or
            8.1.6. The death or bankruptcy of the employee.

      8.2. The Co mpany shall be entitled to terminate this Labor Contract upon thirty (30) days’ prior written notice to the Emp loyee if:
           8.2.1. The Employee is unable to perform his originally assigned job, or any other job as may be reassigned by the Company in
      accordance with Article 2.4 of this Labor Contract, upon the completion of med ical treat ment of a disease or non -work-related injury;

                                                                           3
            8.2.2. The Employee is unqualified for the originally assigned job and is still proven unqualified after professional train in g and/or
      reassignment by the Company;
            8.2.3. The circu mstances upon which this Labor Contract was entered into have undergone material changes such that performanc e
      of this Labor Contract becomes impossible, and no agreement can be reached by the Parties as to a mod ification of this Labor Contract to
      correspond with such change in circu mstance; or
           8.2.4. After a successful init ial public offering outside of China of Recon Technology, Ltd. (―Recon-CI‖), the Co mpany’s
      shareholder, the Employee is dismissed due to a job reassignment.

       8.3. If the Co mpany terminates this Labor Contract according to Article 8.2.4, the Co mpany must pay to the Emp loyee a compensation
fee in a cash lump su m within five (5) days after the decision to dismiss the Employee is made by the Board of Directors or by any other
competent decision-making body. This co mpensation fee shall be calculated as the Employee’s monthly salary for the immed iately preceding
month, mu ltiplied by the number of years the Emp loyee actually wo rked for the Co mpany (if less than one year, the number of years worked
shall be regarded as one year).

      8.4. If, after a successful init ial public offering outside of China of Recon -CI, the Emp loyee leaves his position due to a job reassignment,
the Co mpany shall negotiate with the Emp loyee in o rder to execute a new Labor Contract. Meanwhile, the Co mpany shall pay t o the Emp loyee
a compensation fee in a cash lu mp sum within five (5) days after the decision to adjust the Employee’s job position is made by the Board of
Directors or by any other competent decision-making body. This compensation fee shall be calculated as six t imes the balance between the
Emp loyee’s salary for the immed iately preceding month and the Employee’s monthly salary for h is new position.

      8.5. The Employee shall be entit led to terminate this Labor Contract upon thirty (30) days’ prior written notice to the Co mpany. If, after a
successful init ial public offering outside of China of Recon-CI, the Emp loyee terminates this Labor Contract voluntarily, the Company shall
not be responsible for paying any compensation fees to the Employee.

      8.6. The Employee shall be entit led to terminate this Labor Contract at any time, upon notification of the Co mpany, if the Co mpany fails
to pay the Emp loyee the salary and/or provide the Employee with wo rking condit ions as prescribed by this Labor Contract.

                                                                    Article 9
                                                                  Confi dentiality

      9.1. The Employee, in accordance with his job responsibilities, may be advised of the following business secrets of the Co mpa ny
(collect ively, the ―Business Secrets‖):

                                                                          4
            9.1.1. Product techniques, software programs, know-how, and other technical secrets necessary for the Emp loyee’s accomplishing
      of objectives set by the Company;
            9.1.2. The financial position, operation status and accounting data of the Co mpany, to the extent that the above information can
      assist the Emp loyee in perfo rming his job responsibilities;
             9.1.3. The Co mpany’s transaction secrets, including lists of clients and distribution channels, as well as management strategies in
      relation to its transactions, to the extent they are either acquired by the Employee or within his job responsibilit ies; and
           9.1.4. The Co mpany’s business information, docu ments and files, and/or other secrets the Employee may have access to in his
      assigned position.

      9.2. The Employee shall use the Business Secrets only for the performance of th is Labor Contract and, in using the Business S ecrets, may
disclose the Business Secrets only to other emp loyees, as designated by the Company, and then only to the extent necessary for the completion
of the assigned job. The Emp loyee shall keep confidential the Business Secrets which he becomes privy to in his assigned position, either
during or after the exp irat ion or termination of this Labor Contract, and shall not, except for the afo resaid work-related disclosure, disclose the
Business Secrets to any third party unless the Company expressly consents to such disclosure.

      9.3. Upon termination of this Labor Contract, the Emp loyee shall return to the Co mpany all the materials wh ich record or in an y way
carry the Business Secrets, as well as any and all copies and/or duplicates thereof, or destroy them immediately upon such in struction by the
Co mpany.

       9.4. The Employee shall not, with in six (6) months of termination of this Labor Contract, engage in any other emp loy ment in the same
field in wh ich he worked for the Co mpany, or with similar job responsibilit ies to those undertaken during the course of his e mployment with
the Co mpany, which may g ive rise to opportunities to use the Business Secrets for the benefit of a third party in any manner; nor shall the
Emp loyee use the Business Secrets by engaging in secondary jobs, publishing papers, or engaging in any o ther conduct which may d isclose the
Business Secrets in an indirect manner.

                                                                    Article 10
                                                                  Labor Disputes

       10.1. In the case of any dispute arising out of the execution or performance of this Labor Contract, both Parties shall first make their best
effort to resolve the dispute through friendly consultation. If no settlement can be reached through consultation and if either Party wis hes to
initiate labor arb itration, the dispute shall be submitted to a labor-dispute-arbitration co mmission where the Co mpany is located.

      10.2. Either Party shall be entitled to file a lawsuit with the competent local court against the arbitration award rendered by the
labor-dispute-arbitration co mmission.

                                                                          5
                                                                  Article 11
                                                                 Miscellaneous

     11.1. Th is Labor Contract is created in accordance with Chinese laws and regulations and is legally b inding as between the Pa rties hereto.

     11.2. Matters not included within this Labor Contract, but which are connected to the employ ment relat ionship between the Parties, shall
be governed by the relevant labor laws and regulations of the State and/or the local Beijing government.

     11.3. Th is Labor Contract is written in both Chinese and English, and both versions shall have the same legally b inding effec t.

      IN WITNESS WHEREOF, the Employee and the Co mpany have entered into this Labor Contract as of the date and year first above
written. This Labor Contract has been executed in two (2) originals, one for each Party respectively.

                                                                                        EMPLOYEE
                                                                                        Mr. Li Hongqi

                                                                                             /s/ Li Hongqi


                                                                                        Recon Technol ogy (Jining) Co., Ltd.

                                                                                        By:          /s/ Yin Shenping
                                                                                        Name:        Yin Shenping
                                                                                        Its:         CEO

                                                                        6
                                                                                                                            Exhi bit 10.38

                                                   Summary of Translation of the
                          Technical Service Contract, by and between Natural Gas Devel opment Company of
                                       Qinghai Oilfield and Beiji ng B HD Technolog y Co., Ltd.

       On October 15, 2007, Beijing BHD Petroleu m Technology Co., Ltd. executed an agreement with Natural Gas Develop ment Co mpany o f
Qinghai Oilfield to provide service on a Mult ipurpose Fissure Shaper Technology. The project has been completed under the agr eement and
full payment is expected by November 30, 2008.
                                 Exhi bit 10.41




DATED day of December 10, 2007
Bloomsway Development Ltd.
and
Recon Technology Ltd.
and
Mr. YIN Shenping
and
Mr. LI Hongqi
and
Mr. CHEN Guangqiang
SHARES SUBSCRIPTION AGREEMENT
concerning Ordinary Shares in
RECON TECHNOLOGY LTD.
RECON TECHNOLOGY LTD.
ORDINARY SHARES SUBSCRIPTION AGREEMENT
This ORDINARY SHARES SUBSCRIPTION AGREEMENT (the ― Agreement‖) is entered into as of December 10, 2007 among the following parties:
RECON TECHNOLOGY, LTD., a company incorporated in Cayman Islands and whose registered offi ce is Corporate Filing Services Lim ited, 4th Floor, Harbour Center, P.O. Box 613,
Grand Cayman KY1 -1107, Cayman Islands, (the ―Company‖);
Bloomsway Development Ltd., a company incorporated in British Virgin Islands and whose registered offi ce is Akara Bldg., 24 De Castro Street, Wickhams Cay 1, Road Town, Tortola,
British Virgin Islands, (the ― Investor‖); and
the guarantors set fo rth as below:
Mr. YIN Shenping, a PRC citizen with ID number 320113196912054853;
Mr. LI Hongqi, a PRC citizen with ID number 370802197411182139;and
Mr. CHEN Guangqiang, a PRC citizen with ID number 132903196307299817
(each the ― Guarantor‖, collectively the ― Guarantors‖) .
WHEREAS
(A) The Company is a company incorporated under the laws of the Cayman Islands as an international business company. The Comp any has an authorized capital of US$50,000 divided into
5,000,000 ordinary shares of par value US$0.01 each, 50,000full paid ordinary shares of which have up to the date of this Agreement been issued and are registered as: 15,000 o rdinary shares
in the name of and benefici ally owned by Mr. YIN Shenping; 20,000 ordinary shares in the name of and beneficially owned by Mr. LI Hongqi; 15,000 ordinary shares in the name of and
benefici ally owned by Mr. CHEN Guangqiang. Further details of the Company are set out in Schedule 1.
(B) The Company agrees to allot and issue and the Investor agrees to subscribe for 2, 632 ordinary shares of US$0.01 each in the share capital of the Company, constitute 5% of the 52,632
ordinary shares after subscription.
(C) Aft er the subscription, the issued shares of the Company is 52,632 ordinary shares.
TERMS AGREED:
1. Definitions and Interpretation
1.1 In this Agreement where the context so admits the following words and expressions shall have the following meanings:
1
―Company‖
any company or body corporate wherever incorporated;
―Completion‖
completion of the sale and purchas e of the Issuing Shares as speci fied in Clause 5;
―Completion Date‖
April 30, 2008 (or such later date as the Parties may agree in writing);
―Conditions‖
the conditions specified in Clause 4.1;
―Consideration‖
the total consideration for the Issuing Shares being the aggregate of the sum specifi ed in Clause 2;
― Directors‖
the persons listed as directors of the Company as at the date of this Agreement;
― Encumbrances‖
any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law), hypothecation, equities, adverse claims, or other encumbrances, priority or security interest, deferred
purchas e, title retention, leasing, sale-and-purchas e, sale-and-l easeback arrangement over or in any property, assets or rights or whatsoever nature or interest or any agreement for any of same;
― Group‖
the group of companies comprising the Company and its subsidiaries. The expression ―member of the Group‖ shall be construed accordingly;
― Hong Kong‖
the Hong Kong Special Administrative Region of the People’s Republic of China;
― Ordinary Shares‖
the ordinary shares of par value US$0.01 each in the share capital of the Company;
―Parties‖
the named parties to this Agreement and their respective successors and assigns;
― Qualified IPO‖
a firm commitment public offering of Ordinary Shares on NASDAQ, the Stock Exchange of Hong Kong Limited (Main Board or Growth Enterprise Market Board) or any other recognized
stock exchange unanimously approved by the Board of the Company.
― Issuing Shares‖
the 2,632 Ordinary Shares issued by the Company;
―Tax‖
all forms of taxation, estate duties, deductions, withholdings, duties, imposts, levies, fees, charges, social security cont ributions and rates imposed, levied, collected, withheld or assessed by
any local, municipal, regional, urban, governmental, state, federal or other body in Hong Kong or elsewhere and any interest, additional taxation, penalty, surcharge or fine in connection
therewith;
2
― US$‖
United States dollars;
―Warranties‖
the agreem ents, obligations, warranties, represent ations and undertakings of the Company contained in Clause 8.1;
―Wiring Date‖
the third day after the signature day of this Agreement, or such other date as the Parties may agree in writing.
1.2 Any references, express or implied, to statutes or statutory provisions shall be construed as references to those statutes or provisions as respectively amended or re-enacted or as their
application is modified from time to time by other provisions (whether before or after the date hereof) and shall include any statutes or provisions of which they are re-enactments (whether
with or without modification) and any orders, regulations, instruments or other subordinate legislation under the relevant statute or statutory provision. References to Sections of consolidating
legislation shall, wherever necessary or appropriat e in the context, be construed as including references to the Sections of the previous legislation from which the consolidating legislation has
been prepared.
1.3 References in this Agreement to Clauses are to clauses in this Agreement (unless the context otherwise requires). The Recitals to this Agreement shall be deemed to form part of this
Agreem ent.
1.4 Headings are inserted for convenience only and shall not affect the construction of this Agreement.
1.5 The expression ― the Investor‖ and the expression ―the Company‖ includes its successors and assigns.
1.6 References to ― persons‖ shall include bodies corporate, unincorporated associations and partnerships (whether or not having separate legal personalit y).
1.7 References to writing shall include any methods of reproducing words in a legible and non-transitory form.
1.8 The masculine gender shall include the feminine and neuter and the singular number shall include the plural and vice vers a.
1.9 All warranties, representations, indemnities, covenants, agreements and obligations given or entered into by more than one person are given or entered into jointly and severally.
1.10 A document expressed to be ―in the approved terms‖ means a document the terms of which have been approved by or on behal f of the Parties and a copy of which has been signed for the
purposes of identi fication by or on behalf of those Parties.
1.11 In construing this Agreement:
1.11.1 the rule known as the ejusdem generis rule shall not apply and, accordingly,
general words introduced by the word ― other‖ shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or
things; and
1.11.2 general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular exam ples intended to be embraced by the general words.
3
2. Sale of Issuing Shares
2.1 Subject to the terms of this Agreement, the Company shall issue to the Investor, and the Investor shall, relaying on the Warranties, subscript from the Company the Issui ng Shares (2,632
Ordinary Shares issued by the Company) with effect from the Completion Date free from all Encumbrances together wi th all rights now or hereaft er attaching thereto including but not limited
to all dividends or distributions which may be paid, declared or made in respect thereof at any time on or after the date of this Agreement, in consideration to be paid by the Investor to the
Company as provided below.
2.2 The Company and the Guarantors hereby waives and agrees to procure the waiver of any restri ctions on transfer (including pre-emption rights) which may exist in relation to the Issuing
Shares, whether under the articles of associ ation of the Company or otherwise.
3. Consideration and Payment
3.1 The total consideration payable for the Issuing Shares shall be US$ 200,000.
3.2 Subject to the satisfaction of the conditions set out in Clause 4.1, on the Wiring Date, the Investor shall pay the Consideration by wire transfer of United States dollars in immediately
available funds to a designated account as indicated below:
Bank: Standard Chartered Bank (Hongkong) Ltd.
Address: Shop 16, New World Tower, 16-18 Queen’s Road, Hongkong
4. Conditions
4.1 The sale and purchase of the Issuing Shares is conditional upon:
4.1.1 The Company shall have obtained any and all consents and waivers, including all government authorizations, necessary or appropriat e for consummation of the transactions
contemplated by this Agreement.
4.1.2 The Guarantors shall have waived its pre-emptive right, with respect to the sale of the Issuing Shares.
4.1.3 The register of members of the Company shall have been duly updated to reflect the shareholding st ructure immediately prior to Completion.
4.1.4 All Ordinary Shares issued by the Company shall have been fully paid-up and amounts received by the Company for issuance of all such shares shall be shown as paid-up capital in the
consolidated group accounts of the Company.
4.1.5 The Investor being satisfied that all Warranties will remain true and correct as at the Completion Date and no event having arisen which suggests to the Investor that any of the
Warranties have been breached (or, i f capabl e of being rem edied, has not been remedied) or are misleading or untrue or incapable of performance.
4.2 The Investor may waive all or any of such conditions at any time by notice in writing to the
4
Company
4.3 The Company shall use its best endeavours to procure the ful filment of the Conditions set out in Clauses 4.1.1 to 4.1.4 o n or before April 30, 2008.
4.4 In the event that the Company fails to be listed on a recognized stock exchange or obtained Quali fi ed IPO speci fied hereunder within 18 months after the signature of this Agreement, the
Company shall repay all the Consideration paid by the Investor to the Company forthwith with immediate clear available fund and extra 5% each year of the Consideration as contract interest
upon request by the Investor
4.5 Each of the Guarantors hereby, jointly and severally, irrevocably and unconditionally guarantees, as the primary obligor, the performance and discharge by the Company of its repayment
obligation under Clause 4.4. For avoidance of doubt, if the Company fails to repay all or any of the Consideration paid by the Investor to the C ompany and the contract interest in accordance
with Clause 4.4, the Guarantors shall repay the relevant amount to the Investor in the Company’s stead.
5. Completion
5.1 Subject to the satisfaction of the Conditions set out in Clauses 4.1.1 to 4.1.4. Completion shall take place on the Compl etion Date at the offices of the Company’s Solicitors when all (but
not some only) of the acts and requirements described in this Clause 5 shall be complied with.
5.2 At Completion, the Company shall: 5.2.1 deliver to the Investor:
(i) the statutory books of the Company (which shall be written up to but not including the Completion Date), its certifi cate of incorporation and any certi ficates of incorporation on change of
name, and its common seal (if any);
(ii) certi fied true copies of the draft register of members and directors of the Company as at the date of the Completion and giving effect to the transfer of the Ordinary Shares hereunder at the
Completion, certifi ed by a director of the Company to be true and complete copies thereof (to be followed by the delivery of certifi ed true copies of the final, original register of members and
directors within 3 Business Days from the date of the Completion);
(iii) Board and members/shareholders resolutions of the Company which must be approved by the legal representative and stamped by the Company, approving this Agreement and the
transactions contemplated therein and the entry into and performance of the Agreement and such other documents as reasonably requi red by the Investor;
(iv) a certi ficate of compliance of the Conditions identified in Clauses 4.1.1 to 4.1.4 prepared by the Company as a deliverable, unless such certificat e being waived in writing by the Investor;
(v) duly signed instrument(s) of trans fer in respect of the Issuing Shares in favour of the Investor and/or its nominee(s) an d such other documents as may be required to give a good and
effective trans fer of title of the relevant Issuing Shares to the Investor and/or such nominee(s) and to enable it/them to become th e registered holder
5
thereof accompani ed by the share certi ficate(s) for the Issuing Shares in the name of the Company.
5.2.2 cause the Directors to hold a meeting of the Board at which the Directors shall
pass resolutions in the approved terms (inter alia) to approve the registration of the Investor or its nominees as members of the Company subject only to the production of duly stamped and
completed trans fers in respect of the Issuing Shares.
5.3 Without prejudice to any other remedies available to the Investor, if in any respect the provisions of Clause 5 are not complied with by the Company on the Completion Date the Investor
may:
5.3.1 defer Completion to a date not more than 30 days after the Completion Date (and so that the provisions of this Clause 5 .3 shall apply to Completion as so deferred); or
5.3.2 proceed to Completion so far as practicable (without prejudice to its rights under this Agreement); or
5.3.3 rescind this Agreement.
6. Restriction on Announcements
Each of the Parties undertakes that prior to Completion it will not (save as required by law or by any securities exchange or any supervisory or regulatory body to whose rules any of the
Parties is subject) make any announcement in connection with this Agreement unless the other Parties shall have given their respective consents to such announcement (which consents may
not be unreasonably withheld or delayed and may be given either generally or in a specifi c case or cas es and may be subject t o conditions).
7. Pre-Completion Obligations
7.1 The Company shall procure (subject to any express instruction from the Investor) that the business of the Company is operated until Completion in the same manner as it was operated
prior hereto.
7.2 The Investor hereby undertakes that it will not prior to Completion, save as required by law, and divulge any confidenti al inform ation relating to the Company obtained by it pursuant to
this Clause to any person other than its own officers, employees or professional advisers.
8. Warranties
8.1 The Company hereby represents, warrants and undertakes to the Investor the following and acknowledges that the Investor in entering into this Agreement are relying on such
representations, warranties and undert akings:
(i) All information given in this Agreement, including the Schedule, is true, complete and accurate.
(ii) Unless the context requires otherwise, the Warranties in relation to the Company shall be deemed to be repeated mutatis mutandis in relati on to each of the other members of the Group.
6
(iii) The Issuing Share will represent the 5% equity interest in the share capital of the Company.
(iv) There is no agreement or commitment outstanding which calls for the allotment or issue of or accords to any person the right to call for the allotment or issue of any further shares or
debentures or capital in the Company or any member of the Group (including any option or right of pre-emption or conversion) unless set out otherwise in this Agreement.
(v) The Guarantors are the beneficial owners of the Issuing Share free and clear of any Encumbrances whatsoever and the Guarantors have not exercised any lien over any of the Company’s
issued shares and there is outstanding no call on any of the Issuing Shares.
(vi) All written information given to the Investor, its professional advisers and the Investor’s solicitors by the Company, the Company and/or their respective officers and employees was when
given and is at the date hereof true, accurate and complet e in all material respects.
(vii) Each of the members of the Group has been duly incorporat ed and is validly existing under the laws of its place of inco rporation and has full power, authority and legal right to own its
assets and carry on the business in which it is engaged.
(viii) The business of the Group has been carri ed on in the ordinary proper and usual course and in substantially the same manner (including nature and scope) as in the past.
(ix) The Company has no, and never has had, any subsidiary or shares in any company except as stated in this Agreement.
(x) The Company has full and legal power, authority and capacity and has obtained all corporate and other actions and internal approval, to enter into and execute this Agreement and
perform ance of its obligations respectively thereunder (the ent ering into and execution and performance afores aid not being against or in breach of any undertaking, covenant or other
obligation of any kind to which it is subject or by which it may be bound). The relevant agreements once signed, constitute valid and legally binding obligations on the parties t hereto and are
enforceabl e in accordance with the terms thereof.
(xi) The execution and delivery of this Agreement and all documents referred to herein and the consummation of the transactions contemplated hereby or thereby will not result in the breach
or cancellation or termination of any of the terms or conditions of or constitute a default under any agreem ent, commitment o r other instrument to which the Company is a party or by which
the Company or its property or assets may be bound or affected or violate any law or any rule or regulation of any administrative agency or governmental body or any order, writ, injunction or
decree of any court, administrative agency or government al body affecting the Company.
(xii) No consent, approval, order, or authorization of, or registration, declaration, or filing with, any governmental authority is required in connection with the execution and delivery of this
Agreem ent by the Company, or the consummation of the transactions contemplated
7
hereby. No consent of any third party is necessary to permit the consummation of the transactions contemplated hereby.
(xiii) As at Completion, the Company shall hold all licenses, franchises, permits, and other governmental authorizations necessary and materi al to the conduct of its business. Such licenses,
franchises, permits, and other governmental authorizations are valid, and the Company has not received any notice that any governmental authority intends to cancel, terminate, or not renew
any such license, franchise, permit, or other governmental authorization.
8.2 No information relating to the Company of which the Investor has knowledge (actual or constructive) (except such inform ation as is expressly contained in this Agreement and in
documents annexed hereto for identifi cation purpose to which the Investor has actual knowledge) and no investigation by or on behalf o f the Investor shall prejudice any claim made by the
Investor in respect of the Warranties or operat e to reduce any amount recoverabl e and it shall not be a defence to any claim against the Company that the Investor knew or ought to have
known or had constructive knowledge of any information relating to the circumstances giving rise to such claim (except such information as is expressly contained in documents annexed
hereto for identi fication purpose to which the Investor has actual knowledge).
8.3 Each of the Warranties shall constitute a separate and independent warranty to the intent that the Investor shall have a separate claim and right of action in respect of every breach of any of
the Warranties and no Warranty shall limit or govern the extent or application of any other Warranty(ies ).
8.4 Each of the Warranties shall be deemed to be repeat ed as at each and every Completion as if all references therein to the date hereof were references to the Completion Date.
8.5 The Company hereby covenants with the Investor to indemnify and keep indemnifi ed the Investor against any loss or liability suffered by the Investor as a result of or in connection with
any of the Warranties being untrue or misleading or breached or a breach of any provisions of this Agreement including, but not limited to, loss of allowance, set off or deduction occasioned
or suffered or payment made or required to be made in connection with or with the rectification of any breach together with all costs, charges, interest, penalties and expenses incidental or
relating thereto.
8.6 The Company undertakes with the Investor that it will both before and aft er Completion notify the Investor in writing as soon as practicable (and in any event within two (2) Business
Days) of any event or circumstance of which the Company and/or the Company (as the case may be) becomes aware which is or may be inconsistent with any of the Warranties or which
might make any of the Warranties untrue or misleading if given at Completion.
8.7 The rights and remedies of the Investor in respect of a breach of the Warranties shall not be affect ed by Completion.
9. Confidentiality of Information Received by Each Party
9.1 Each Party undertakes with the other Parties that it shall treat as strictly confidential all inform ation received or obtained by it or its employees, agents or advisers as a result of
8
entering into or performing this Agreement including information relating to the provisions of this Agreement, the negotiatio ns leading up to this Agreement, the subject matter of this
Agreem ent or the business or affairs of the Investor and subject to the provisions of Clause 9.2 that it will not at any time hereafter make use of or disclose or divulge to any person any such
inform ation and shall use its best endeavours to prevent the publication or disclosure of any such information.
9.2 The restrictions contained in Clause 9.1 shall not apply so as to prevent any Party from making any disclosure required b y law or by any securities exchange or supervisory or regulatory or
governmental body pursuant to rules to which any Party is subject or from making any disclosure to any professional adviser for the purposes of obtaining advice (provided always that the
provisions of this Clause 9 shall apply to and any Party shall procure that they apply to and are observed in relation to, the use or disclosure by such professional adviser of the informati on
provided to him) nor shall the restrictions apply in respect of any information which comes into the public domain otherwise than by a breach of this Clause 9 by any Party.
10. Costs
10.1 Each Party shall pay its own costs of and incidental to this Agreement and the sale and purchase hereby agreed to be mad e provided that if the Investor shall lawfully exercise its right not
to proceed with the subscription of the Issuing Shares pursuant to Clause 4.4 or any right to rescind this Agreement the Company shall indemnify the Investor against all and any expenses and
costs incurred in the preparation and negotiation of this Agreement.
10.2 The Company confirms that no expense of whatever nature relating to the sale of the Issuing Shares has been or shall be borne by the Company.
11. General
11.1 This Agreement shall be binding upon and ensure for the benefit of the estates, personal represent atives or successors o f the Parties.
11.2 This Agreement (together with any documents referred to herein) constitutes the whole agreement between the Parties and supersedes any previous agreements or arrangements between
them relating to the subject matter hereof; it is expressly declared that no variations hereof shall be effective unless made in writing signed by duly authorised representati ves of the Parties.
11.3 All of the provisions of this Agreement shall remain in full force and effect notwithstanding Completion (except insofar as they set out obligations which have been fully performed at
Completion).
11.4 If any provision or part of a provision of this Agreement shall be, or be found by any authority or court of competent j urisdiction to be, invalid or unenforceable, such invalidity or
unenforceability shall not affect the other provisions or parts of such provisions of this Agreement, all of which shall remain in full force and effect.
11.5 Any right of rescission conferred upon the Investor hereby shall be in addition to and without prejudice to all other rights and remedies available to it (and, without prejudice to the
generality of the foregoing, shall not extinguish any right to damages to which the Investor may be entitled in respect of th e breach of this Agreement) and no exercis e or failure to exercise
such a right of rescission shall constitute a waiver by the Investor of any such other right or remedy.
11.6 No failure of the Investor to exercise, and no delay or forbearance in exercising, any right or remedy in respect of any provision of this Agreement shall operate as a waiver of such right
9
or remedy.
11.7 Upon and after Completion the Company shall do and execute or procure to be done and executed all such further acts, deeds, documents and things as may be necessary to give effect to
the terms of this Agreement.
11.8 This Agreement may be executed in one or more counterparts, and by the Parties on separate counterparts, but shall not b e effective until each Party has executed at least one counterpart
and each such counterpart shall constitute an original of this Agreement but all the counterparts shall together constitute one and the same instrument.
11.9 The representations, warranties, covenants and agreem ents made herein shall survive any due diligence investigation made by any Party and shall survive for two (2) years after the
Completion.
11.10 The provision of this Agreement, including this Clause 11, may be amended only with the prior written consent of all th e Parties.
12. Notices
Any notice required to be given by any Party to any other shall be deemed validly served by hand delivery or by prepaid regis tered letter sent through the post (airmail if to an overseas
address) or by telex or by facsimile transmission to its address given herein or such other address as may from time to time be notified for this purpose and any notice served by hand shall be
deemed to have been served on delivery, any notice served by telex or by facsimile transmission shall be deemed to have been served when sent and any notice served by prepaid registered
letter shall be deemed to have been served 48 hours (72 hours in the case of a letter sent by airmail to an address in another country) after the time at which it was posted and in proving service
it shall be sufficient, (i) in the case of servi ce by hand and prepaid registered letter, to prove that the notice was properly ad dress ed and delivered or posted, as the case may be, (ii) in the case
of service by telex, to prove that the correct confi rmed answerback was received and (iii) in the case of service by facsimile transmission, to prove that the transmission was confirmed as sent
by the originating machine.
Each notice, demand or other communication given or made under this Agreement shall be in writi ng and delivered or sent to the relevant party at its address or telex number or fax number set
out below (or such other address or telex number or fax number as the addressee has by five (5) days* prior written notice speci fied to the other Parties):
To the Company: RECON TECHNOLOGY LTD.
Address: 4th Floor, Harbour Center, P.O. Box 613 Grand Cayman KY1-1107
Attention: YIN Shenping
Telex Number:
Answerback:
Fax Number:
To the Investor: Bloomsway Development Ltd.
Address: Room 711, North Anhua Tower, Yinghua West Street, Chaoyang District, Beijing
Attention: ZhANG Bin
Answerback:
Fax Number: 86-10-64455617
To the Guarantors: YIN Shenping, LI hongqi, CHEN Guangqiang
Address: 18th Floor, Block C, Jinglongguoji Tower, 9th Fulin Road, Chaoyang District, Beijing
Attention: Chen Guangqiang
Telex Number:
Answerback:
Fax Number: 86-10-84945388
10
Any notice, demand or other communication so addressed to the relevant party shall be deemed to have been delivered (a) i f given or made by letter, when actually delivered to the relevant
address; (b) i f given or made by telex, when despatched with confirmed answerback and (c) if given or made by fax, when despatched.
13. Governing Law
Subject to Clause 14, this Agreement shall be governed by and construed in accordance with the laws of Hong Kong.
14. Dispute Resolution
14.1 The Parties agree to negotiate in good faith to resolve any dispute between them regarding this Agreement. If the rel evant dispute cannot be resolved to the reasonable satisfaction of both
Parties, then each Party himself or where the Party is a body corporate, the authorized senior offi cer nominated as represent ive of such Party, as the case may be, shall, within thirty (30) days
of a written request by any Party to call such a meeting, meet in person and alone (except for one assistant for each Party) and shall attempt in good faith to resolve the dispute. If the dispute
cannot be resolved by the Parties in such meeting, the Parties agree that they shall, if request ed in writing by any Party, meet within thirty (30) days after such written notifi cation for one day
with an impartial mediator and consider dispute resolution alternatives other than formal arbitration. If an alternative method of dispute resolution is not agreed upon within thirty (30) days
after the one day mediation, any Party may begin formal arbitration proceedings to be conducted in accordance with subsection 14.2 below. This procedure shall be a prerequisite before taking
any additional action hereunder.
14.2 In the event the Parties are unable to settle a dispute between them regarding this Agreement in accordance with subsect ion (a) above, such dispute shall be referred to and finally settled
by arbitration at the Hong Kong International Arbitration Centre (― HKIAC‖) in accordance with the UNCITRAL Arbitration Rules (― UNCITRAL Rules‖) in effect, which rules are deemed to
be incorporated by reference into this subsection (b), subject to the following: The arbitration tribunal shall consist of one arbitrator to be appointed according to the UNCITRAL Rules by
HKIAC. The appointing authority shall be HKIAC. The language of the arbitration shall be English. Notwithstanding anything in this Agreement or in the UNCITRAL Rules or otherwise, the
arbitration tribunal shall not have the power to award injunctive relief or any other equitable remedy of any kind against an y Party unless such award (i) is expressly appealable to and subject
to de novo review by the courts of Hong Kong, and (ii) would not, if upheld, have the effect of impairing, restricting, or imposing any conditions on the right or ability of such P arty or its
affiliates to conduct its respective business operations or to make or dispose of any other investments. The prevailing Party shall be entitled to reasonable attorney ’s fees, costs and necessary
disbursements in addition to any other relief to which such Party may be entitled.
15. Language
This Agreement is entered into in English only. Any Chinese translation of this Agreement is for reference only and shall not be a legally binding document. Accordingly, the English version
will prevail in the event of any inconsistency between the English and any Chinese translations thereof. Each Party acknowledges that it has consulted with legal counsel with respect to the
English version of this Agreement and that it fully understands its terms and its obligations thereunder.
11
[THIS SPACE IS INTENTIONALLY LEFT BLANK]
12
SCHEDULE 1
Company name: RECON TECHNOLOGY, LTD.
Place of incorporation: Cayman Islands
Date of incorporation: 21st August, 2007
Company number: CF-193686
Director(s): LI Hongqi, CHEN Guangqiang and YIN Shenping
Authorised share capital: US$50,000 divided into 5,000,000 ordinary shares of par value US$0.01 each
Issued share capital: 50,001 ordinary shares
Registered and benefi cial shareholders: LI Hongqi, CHEN Guangqiang and YIN Shenping
Financial year end: Begin on the date of incorporation of the Company and the anniversary date thereof in each year ending th e day prior to the anniversary date in each year unless the
Directors prescribe some other period therefore.
Subsidiaries and associated companies (i f any): Recon Technology, Co., Limited
13
IN WITNESS WHEREOF, the parties hereto have execut ed this Agreement as of the day and year herein above first written.
COMPANY: For and on behalf of RECON TECHNOLOGY, Ltd
RECON TECHNOLOGY LTD.
By Authorized Signature(s)
Print Name:
Title:
GUARANTORS:
By LI Hongqi
By CHEN Guangqiang
By YIN Shenping
SIGNATURE PAGE FOR
RECON TECHNOLOGY LTD.
ORDINARY SHARE SUBSCRIPTION AGREEMENT
14
INVESTOR:
For and on behalf of Bloomsway Development Ltd. BLOOMSWAY DEVELOPMENT LTD.
Authorized Signature(s)
By
Print Name: Title:
SIGNATURE PAGE FOR
RECON TECHNOLOGY LTD.
ORDINARY SHARP SUBSCRIPTION AGREEMENT
15
EXHIBIT I
PUT AGREEMENT
THIS PUT AGREEMENT (this ―Agreement‖) is made this day of December 10, 2007 between:
Mr. YIN Shenping, Mr. CHEN Guangqiang, Mr. LI Hongqi (collectively, the ―Founders‖, also known as the Guarantor of the Shares Subscription Agreement);
Bloomsway Development Ltd.(the ― Investor‖);
Beijing BHD Petroleum Technology Co., Ltd, Jining ENI Energy Technology Co., Ltd., and Nanjing Recon Technology Co., Ltd. (co llectively, the ―Domestic Companies‖); and
Ms. YANG Linyun
WHEREAS
1. the Recon Technology Co. Ltd. (the ―Company‖) and the Investor are parties to a Shares Subscription Agreement of even date herewith (the ― Subscription Agreement‖) pursuant to which
the Company has agreed to sell, and the Investor has agreed to purchase, cert ain shares (the ―Shares‖) of the Company’s common stock, without par value per share (the ―Common Stock‖), on
the terms and conditions set forth therein;
2. the Founders has agreed to purchase the Shares acquired by the Investor from the Company under the Subscription Agreement under certain terms and conditions, as set forth herein;
3. the Domestic Companies, which are materially controlled by the Founders through equity interest, has separately adopted Sh areholders’ Resolutions to guarantee the payment incurred by
the purchasing of the Shares acquired by the Investor from the Company under the Subscription Agreement;
4. the Investor has appointed Ms. YANG Linyun as the agent to receive the payment incurred by the purchasing of the Shares acquired by the Investor from the Com pany under the
Subscription Agreement; and
5. as inducement for the Founders to enter into this Agreement, the Investor has agreed to cert ain limitations on the Investor’s ability to encumber the Shares, as set forth herein.
NOW THEREFORE, in consideration of the promises and mutual covenants set forth herein, and for other good and valuable consid eration, the receipt and suffici ency of which are hereby
acknowledged, the parties agree as follows:
1. Recitals. The foregoing recitals are incorporated as though fully set forth in this Section 1.
16
2. Obligation to Purchase Shares.
(a) Nature of Obligation. The Investor agrees to sell, and the Founders agrees to purchase, the Shares the Investor acquired from the Company in the Purchase Agreement, for an aggregat e
purchas e price of $200,000 and extra 5% each year of the Consideration as contract interest upon request by the Investor, on the terms and subject to the limitations set forth in this Section 2.
The Founders shall be obligated to purchase the Shares and the Investor shall be obligated to sell the Shares on the earlier to occur of (i) September 30, 2009 or (ii) such date as the Company
shall notify the Investor in writing that the Company will not complete an initial public offering of the Company ’s Common Stock on or before September 30, 2009. Or either of the events in
the previous sentence shall automatically and immediately operate to require the Founders to purchase the Shares from the Investor, except for the Investor notice the Founders in written form
to maintain the shares. To the extent the Company completes an initial public offering of its Common Stock on or before September 30, 2009, the Founders’ obligation to purchas e, and the
Investor’s obligation to sell, the Shares shall terminate automatically and immediately. For purposes of this Agreement, ― completes an initial public offering‖ shall mean that the Company
shall have registered the initial sale of the Company’s Common Stock with the Securities and Exchange Commission and shall have listed the Company’s Common Stock for trading on a
national securities exchange.
(b) Purchase Price for Shares. The parties acknowledge and agree that the aggregate purchase pri ce for the Shares shall be $200,000 and extra 5% each year of the Consideration as contract
interest upon request by the Investor, for 5% of total equity regardless of the number of S hares purchas ed from the Investor by the Company.
(1) The Investor will deliver to the Founders be certi ficat es repres enting the Shares to be purchased, duly endorsed for tran s fer or accompanied by stock powers.
(2) The Investor will provide the Founders with certifi cation in a form acceptabl e to the Founders’s counsel that the Shares conveyed are free and clear of all liens, encumbrances, charges and
other claims.
(3) The Founders are obliged to deliver the purchase price to Ms. YANG Linyun or any other person and/or entity which the Investor appointed in the immediately available funds.
(4) The Domestic Companies are obliged to guarantee the payment mentioned in 2-(b)-(3) of this Agreement as the joint guarantor. Which means, the Investor, Ms. YANG Linyun or any
other
17
person and/or entity which the Investor appointed, separately or collectively, are entitled to claim the rights of receiving certain payments under 2-(b)-(3) of this Agreement against the
Founders and/or the Domestic Companies, separately or collectively.
3. Covenants.
During the term of this Agreement, Investor shall not sell, gift or otherwise trans fer the Shares and shall maintain the Shares (including any Shares acquired aft er the date hereof pursuant to
the Purchase Agreement) free and clear of any and all liens, charges, restrictions, claims and encumbrances.
4. Miscellaneous.
(a) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived on ly upon the prior written consent of the Founders and the
Investor.
(b) Successors and Assigns. All covenants and agreements in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective successors and
permitted assigns
(c) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under appl icable law, but if any provision of this
Agreem ent is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(d) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
(e) Des criptive Headings. The captions and descriptive headings of this Agreement are inserted for convenience only and do no t constitute a part of this Agreement.
(f) Governing Law. The PRC laws will govern all issues arising out of or concerning this Agreement.
(g) The Parties shall strive to settle any dispute arising from the interpretation or perform ance, or in connection with this Agreement through friendly consultation. In case no settlement can be
reached through consultation, each Party can submit such matter to China International Economic and Trade Arbitration Committ ee for arbitration according to the current effective arbitration
rules of its. The arbitration shall be held in Beijing. The arbitration proceedings shall be conducted in Chinese. The arbitration award shall be final and binding upon the Parties. The arbitration
award may be submitted to the applicable People’s Court for enforcement.
18
(h) Notices. Any and all notices and other communications hereunder shall be in writing addressed to the parties at the addresses speci fied below or such other addresses as either party may
direct by notice given in accordance with this section, and shall be delivered (i) by reputable delivery service (including by way of example and not limitation, mails through post offi ce, DHL
etc.), which makes a record of the date and time of delivery, in which case notice shall be deemed to have been given on the date indicated on the delivery service’s record of delivery or (ii) by
fax transmission to the fax number given below, with confirmation of good receipt and confirmed by letter to the address set forth below, in which case notice shall be deemed to have been
duly given on the date so indicated in the facsimile.
(i) Language. This PUT Agreement is written in English and Chinese, the Chinese version shall prevail.
[THIS SPACE IS INTENTIONALLY LEFT BLANK]
19
To the Founders
To the Investor: For and on behalf of
BLOOMSWAY DEVELOPMENT LTD.
Bloomsway Development Ltd.
Authorized Signature(s)
To the Domestic Companies:
Beijing BHD Petroleum Technology Co., Ltd.
Jining ENI Energy Technology Co., Ltd.
Nanjing Recon Technology Co., Ltd.
To Ms. YANG Linyun:
SIGNATURE PAGE FOR
RECON TECHNOLOGY LTD.
ORDINARY SHARE SUBSCRIPTION AGREEMENT
20
                                                                                                                                         Exhi bit 10.42

                              CONTRACT FOR THE S ALE OF INDUS TRIAL AND MINERAL PRODUCTS

                                                           Serial nu mber: QBWZ/JL-020

                                                Contract No.: Material co mpany 2008-49-17.2-10-30

Seller: Nanjing Recon Technology Co., Ltd.                                      Signing site: Ge’ermu
Buyer: Petro China Qinghai Oilfield Co., Ltd.                                   Signing date: 11/ 24/ 2008

1. Description of the goods

                                                                                  Unit Price
     Name                      Specification               Unit     Quantity       (RMB)            Total value                 Delivery date
Oil-well           1#, 2#, 3#,5#                          Per            71       38,391.10         2,725,768.10     Within one week after the
remote Unit        Gas-collection Station                 well                                                       subscription of this contract
                                                               Planned 17.2-10-10
                                                            TOTA L SUM : 2,725,768.10

2. Quality Standard: See the Technical Agreement

3. Terms of Seller’s obligations: Execute 3-guarantees (repair, replacement and refund) and the producing standards. One year quality
guarantee period.

4. Packing standard, provision and draw-back of the wrappage: Co mp ly with the General Technical Terms of Mechanical and Electric
Products. The wrappage would not drawn-back and there is no extra expenses.

5. Additional necessaries, accessories, quantity of tools and the provision-measure: Product Cert ifications and Quality Cert ifications will be
provided.

6. Reasonable standard of impairment and method of calculat ion: Make payment for the actually arriv ing and inspecting goods.

7. o wnership of subject matter will be transferred to the Buyer the goods arrive. For any reason the Buyer fail to act the right as the payer, the
ownership of the goods shall remain to the Seller.

8. Delivery manner and location: Seller shall delivery goods to the Central Material Warehouse of Qinghai Oilfield Sebei Gas -field

9. Manner of transportation, destination and carriage: Motor vehicle t ransportation; Destination: Qinghai Ge ’ermu Sebei Gas-field;
Transporation fees and other charges shall be paid by the seller.

10. Inspection standard, method, site and time limit : Exercise the contract requirement as indicated in section 2, 4 of th is agreement

11. Installat ion and Adjustment of the complete-equip ment: NA

12. Method of payment, time and location : 90% out of total payment will be paid after the installation and testing for the equipments, 10%
payment will remain for one year as quality guarantee deposit (no interest)

13. Method of Guarantee (A Guarantee Agreement can be included if for any necessary):

14. Terms of Breach of contract:

15. Liability for breach of contract: If the quality of the goods does not meet the provisions of the contract, the buyer has the rig ht to return the
goods, and all the losses caused by that shall be paid by the seller.
16. Settlement of dissension: The parties should settle any disagreement under the contract through negotiation. If the parties fail to reac h
agreement through negotiation, one of the following ways may be used:
      1)    Submit the case to arbitration commission to med iate.

      2)    Engage in legal proceedings at the buyer’s Local People’s court.

17. Th is contract will co me into effect on the signing date, thereafter.

18. Other engagements: 1) This contract is quadruplicate, the seller holds one copy and the buyer holds another three copies. 2) The seller shall
issue the Value-added tax invoice in co mpliance with the related state provisions. 3) The goods provided by the seller shall meet the request of
the department and the relevant requests of the QHSE System.

19. Both parties should follow the principle of ―equality and mutual benefit, be honesty and trustworthy ‖

SELLER                                                                       BUYER
Seller: Nanjing Recon Technology Co., Ltd                                    Buyer: Petro China Qinghai Oilfield Co., Ltd.
Location:      1402 room, 123#, Jiq ing Road, Qinhuai d istrict,             Location: Mangya, Qinghai Province
                Nan jing City
Legal representative:                                                        Legal representative:
Entrusting agent:                                                            Entrusting agent:
Deposit bank: [       ]                                                      Deposit bank: [       ]
Account number: [             ]                                              Account number: [             ]
Tax nu mber: [    ]                                                          Tax nu mber: [    ]
Postal code:                                                                 Postal code: 816000
Phone number: [           ]                                                  Phone number: [           ]
Fax nu mber: [ ]                                                             Fax nu mber: [ ]
                                                                                                                                    Exhi bit 10.43

Contract code: CAI-2007-STORE-012

                                           CONTRA CT OF MATERIA L RESERVES AND SALES

This Contract is made on April 25, 2007 at HuaTu Gou, MangYa, Qinghai, Prov ince

BETW EEN: Beijing BHD Petro leu m Technology Co., Ltd. (the ―Seller‖), a corporation organized and existing under the laws of the PRC.

Phone Number: M r. ZhiQiang Feng: 13897078018

Postcode: 710006

AND: Petro China QingHai Oilfield Co., Ltd (the ―Buyer‖), a corporation organized and existing under the laws of the PRC.

Phone Number: 0937-8912430/ 8923491

Postcode: 736202



According to the material purchases tender offer outcome on 20 05, the Buyer shall render the services of material reserves and sales to the
Seller. For the purpose of defining the obligations of both parties, we hereby conclude this contract according to The Contra ct Law of the
People’s Republic of China.

1.     Subject matter of the contract: See the accessory form

2.     Delivery term and quality guarantee period: See the accessory form

3.     Contract value and the method of payment:

3.1    Contract value: RM B1,034,182.89 (RMB One million thirty-four thousand one hundred eighty-two point eighty-nine)
3.2    Method of payment: Adopt the method of agential reserves and sales; determine the name, stipulation and model of the agential
       reserves and sales material according to the outcome of the tender; the seller shall, at the sight of the provision notice and within th e
       delivery term, provide the material to the buyer according to the plan which is submitted by the buyer. The seller shall pay the material
       expense quarterly after making use of them. The seller agrees to remain 5% out of Purchase price as quality guarantee deposit . The
       guarantee deposit will be collected when the quality guarantee period is co mplete, and without quality problems. If any quality
       problems arises during the quality guarantee period and the seller cannot complete the maintenance, there will be no return o f t his
       deposit. (The quality guarantee period will be calcu lated the first date the buyer starts to use the seller’s products.)
3.3    On the twenty-fifth date of the last month of each quarter, the seller shall co llect the payment with carrying this contract, qualit y
       inspection report which is signed by the buyer, usage of material report, investigation report of contract performance issued by the first
       oil-extract ion factory and the Value-Added Tax invoice. All the payment shall be made by the Settlement Center of Qinghai Oilfield.

3.4    The seller shall issue the official VAT Invoice according to provisions of the State Admin istration of Taxat ion, or the buyer shall refuse
       to exercise the payment.
4.     Time limit on agential reserves and sales: 04/ 25/ 2007 - 04/25/ 2008

5.     Inspecting standard:
5.1    The inspecting standard will be the ―General Principle of Material Purchase‖ (SY/T6008-94). The products by which the seller has won
       the bid shall meet the single standard and relevant technical standards.
5.2    The quality guarantee period will be calculated the first date the buyer starts to use the seller’s products.

6.     Manner of transportation and freight: The manner of transportation could be freely chosen by the seller, and the seller shall pay the
       freight to Huatugou.

7.     Site of delivery and inspection: The equipment provision station of the first oil -ext raction factory of Qinghai prov ince Mangya
       Huatugou

8.     Reasonable impairment and method of calculation

8.1    There shall be no impairment to be calculated.
8.2    The seller must guarantee that the goods which will be delivered must be in good condition.

9.     Packing standard, provision and draw-back of the wrappage:
9.1    Pack the goods with wooden crate or follow the manufacturer’s standards of packing.
9.2    The seller is responsible for the packing and there shall be no packing expenses calculated.

9.3    The wrappage is not drawn-back.

10.    Additional accessories:

10.1   The informat ion provided by the seller must contain the product instructions and examination report.
10.2   The accessories which are related to the goods must be complete.

11.    The obligations, rights and responsibilities for breach of contract
11.1   The buyer shall provide the seller in time with the schedule of material demand.
11.2   The buyer shall organize the inspection after the arrival of the goods.

11.3   The buyer shall make the payment according to this contract.
11.4   During the term of the agential reserves, the buyer shall keep the materials in good condition. If there is any damage that is mad e to any
       of the materials, the buyer shall pay the penalty according to the bid price of the damaged material.
11.5   The seller shall provide the goods within the delivery term. The seller shall pay for a penalty of RM B500.00 a day in the delay period.

11.6   The seller shall guarantee the materials that they are providing are qualified. If any quality problems arise during the quality guarantee
       period, the seller shall be responsible for the maintenance and other losses caused by this circumstance, and the buy er has the right to
       terminate this contract.
11.7   If the materials delivered by the seller fail to pass the buyer’s inspection for the first time, the seller shall rep lace them and rearrange the
       delivery; if they fail for the second time, the buyer has the right to terminate this contract and seller is responsible for all the losses of
       the buyer caused by that.

12.    Settlement of disputes: The parties should settle the disputes caused by the contract through negotiation. If the parties fai l to reach
       agreement through negotiation, both parties agree to engage in legal proceedings at the signing location ’s People’s court.
13.      Other terms:
13.1     This contract will co me into effect after signing and stamping by both parties.

13.2     The contract’s accessories and complementary agreements are part of the contract and have the same legal effectiveness.
13.3     The accessory form to this contract: The agential reserves and sales bidding schedule of burner.
13.4     There are two o rig inals and five copies of this contract. The buyer shall hold one original and four copies of contract and seller shall
         hold one original and one copy of the contract.

Buyer:                    The first oil-extraction factory of Qinghai Oilfield              Seller: Beijing BHD Petroleu m Technology Co., Ltd.
Representative:           Ma Baining                                                        Representative: Feng Zhiqiang
Signing date:             25th April, 2007
                                                                                                                                        Exhi bit 10.44

CODE: QHWZ/JL-021
CONTRA CT NUM BER: 11 DAI-2008-68

                                             CONTRA CT OF MATERIA L RESERVES AND SALES

Signing site: DunHuang, Gansu Province                                                                                   Signing date: April 24, 2008

Party A: PetroCh ina QingHai Oilfield Co., Ltd.

Party B: Beijing BHD Petroleu m Technology Co., Ltd.

To secure the normal production of Party A, on a principle of equality and mutual benefit, the two parties reach agreements a s follows:
1.       Name and specificat ion of the goods (―product‖, ―equipment‖): See the appendix

2.       Quality request and technical standard: See the appendix

3.       Quantity of the consignment stock: the quantity will be defined in line with phone notice which made by the Party B

4.       There are two types of consignment stocks which are specifically set forth in the appendix.

5.       Location of reserved stock: Material supply station of HuaTuGou warehouse of QingHai Oilfield

6.       Manner of transportation, place of delivery and the freight: Transport through highway and railway; designated operating area is
         Qinghai Mangya Huatugou; Party A is responsible for all the freight.

7.       Responsibilities of Party A:

         Party A shall provide the warehouse free of charge.

         Party A is responsible for the inspection, conservation and distribution of the oil-extraction au xiliary.

         Party A is responsible for damages of goods during the period of the consignment.

       Party A shall notify Party B to issue the value-added tax (VAT) invoice and make the pay ment after the co mpletion of inspection and
tryout of each piece of equipment.

       If there is any quality problem in the course of using the products, Party A shall notify Party B of the situation in time, so as to allo w
Party B to handle the problems properly.

8.       Responsibilities of Party B:
         The products provided by Party B must meet the standards in the appendix.

         Party B shall deliver the products to the designated operating area by Party A at a reasonable time.

       Name of manufacturer, p roduction date, product name and specification on the package are all required for those goods the Seller
supplies. In addition, the quality certificates shall be attached.
      If there is any quality problem in the course of using the products or any damages to the oil-layer, at that time, Party B shall be
responsible for all the losses.

       Ownership of the consignment stocks belongs to Party B. Party B shall manage the leftovers of the consignme nt stocks after the expiry
date of this contract, unless there is a extending agreement or contract indicated.
9.     Payment:
9.1    All the unit price of the products shall be HuaTu Gou’s prices.

9.2    The total sum shall be RM B600,750.
9.3    There is a 17% V.A.T contained in the total sum.

10.    Method of Pay ment:
10.1   The payment shall be transferred through the bank in terms of the VAT invoice issued by Party B.
10.2   Party B shall provide the informat ion on the invoice, and issue the VAT invoice in strict conformance with the rules of the N at ional Tax
       Bureau.

11.    Responsibilities for b reach of contract: Pursuant to ―Contract Law of the People ’s Republic of China‖

12.    Settlement of disputes: The parties should settle the disputes caused by the contract through negotiation. If the parties fai l to reach
       agreement through negotiation, both parties agree to engage in legal proceedings at the signing location ’s People’s court.

13.    Other terms:

13.1   The two parties shall deal with the issues which are not mentioned in this contract through negotiation.
13.2   The contract is in 5 copies, Party A holds 3 copies and Party B holds 2 copies of the contract.
13.3   The contract shall co me into effect after the signature and seal of the two parties.

13.4   The period of validity of the contract is fro m March 17 , 2008 to March 17 , 2009.
                                                                 th                    th




13.5   Renewing of the contract depends on further negotiations of both parties after the expiry date of this contract.
13.6   The products provided by Party B shall not only meet the requirements of our depart ment, but also meet the requirements of QH SE
       system of Party A.

Party A: Petro China Qinghai Oilfield Co., Ltd.                               Party B : Beijing BHD Petro leu m Technology Co., Ltd.
Location: Mangya, Qinghai Province                                            Location: Changping district, Beijing
Legal representative:                                                         Legal representative: Cheng Guangqiang
Entrusting agent:                                                             Entrusting agent: Li Donglin
Deposit bank: [       ]                                                       Deposit bank: [       ]
Account number: [             ]                                               Account number: [             ]
Tax nu mber: [    ]                                                           Tax nu mber: [    ]
Postal code: 736202                                                           Postal code: 102208
Phone number: [           ]                                                   Phone number: [           ]
Fax nu mber: [ ]                                                              Fax nu mber: [ ]
                                                                 APPENDIX

Co mpany: Beijing BHD Pet roleu m Technology Co., Ltd. Agreement No.: 11 Material l2008-68

Series                                                                                    Technical             Unit    Rmar
No.               Name                 Specification         Packing                      standard     Unit     price    k
1        Burnt sand                PR/SC/ LH-1         25kg per woven      Q/SYLH0109-200             Ton     RM B
                                                       bag                 1 year of QGP                      6750
2        Sand-fixing resin         PR-SCS/ LH-1        200kg per iron      Q/SYLH0109-200             Ton     RM B
                                                       barrel              1 year of QGP                      29500
         The product prices above are all Huatugou price, contain a VAT of 17% and all the freight.

Note: QGP = Quality Guarantee Period
                                                                                                                                       Exhi bit 10.45

Contract Nu mber: HBYT -CY2-2008-MM-1

                                                    CONTRA CT OF THE SA LE OF GOODS

                                                      (Mechanical & Electrical Equip ments)

                                   CONTRACT FOR PURCHAS ING VACUUM-HEATING-FURNACE

This Contract for the Sale of Goods (the ―Sales Contract‖) is made on 19    th
                                                                                 May, 2008

BETW EEN: Beijing BHD Petro leu m Technology Co., Ltd (the ―Seller‖), a corporation organized and existing under the laws of the PRC.

Deposit Bank: [   ]

Account Number: [         ]

Phone Number: [       ]

Legal Location: Changping District, Beijing

Legal Representative (principal): Chen Guangqiang

Contact Person: Wang Youhong

AND: Petro China Huabei Oilfield Co,Ltd (the ―Buyer‖), a corporation organized and existing under the laws of the PRC.

Deposit Bank: [   ]

Account Number: [         ]

Phone Number: [       ]

Legal Location: RenQiu City, Hebei Province

Legal Representative (principal): Sunjun

Contacting Person: Pan Hongsheng

1.     SALE OF GOODS
Seller shall sell, transfer and deliver to Buyer on the date which will be designated by the Buyer after this contract taking effect, the follo wing
items:
1.1   SUBJECT-MATTER: See the appendix

1.2   Quantity
      Quantity: See the appendix
      Supplying Content: See the appendix

1.3   Quality Request and Technique Standard
      Quality Request: SY0031-95
      Technique and Manufacturing Standard: See the Technical Agreement

1.4   Manufacturer: Huanghua Bright Xiangtong Mechanism Manufacture Co., Ltd.
2.     PURCHA SE PRICE
       The purchase price payable for this contract agreed to be:
       RM B: 663,000

       Total of the amounts computed and allocated: 17%VAT + Cost + Packing Fee + Transport Fee

        Payment: 95% of the price will be paid after the installation and testing of the equipments, 5% quality guarantee deposit will be
collected when the quality guarantee period is co mplete, without quality problems (no interest)

3.     Delivery
       Manner of Delivery : Seller Delivering

       Time and Content of Delivery: All goods should be delivered on the date which will be designated by the Buyer after this contract
taking effect

       Site of Delivery: A location designated by the Buyer

     Documents and Files should be provided by the Seller: Products Certification, Products Testing Reports, Instructions and other relevant
documents.

4.     Packing
       Packing Standard: Packing in accordance with the Provisions of Packing and Mark

       Request on Packing Object and Mark: Execute the Industrial Standard

       The Seller should pay for the packing expenses, unless there is further more contract defined ext ra clause.

       If the Packing dose not meet the provisions, the Seller will be responsible for the problems caused.

5.     Transportation
       Manner of Transportation: By Truck

       Sending Fro m: Huanghua City, Hebei Province

       Arriv ing at: The second oil-ext raction factory

       Consignee: Liang Jun

       Transport and relevant Fees: Included in the contract value

       The Seller is responsible for the damage or destruction of the goods in transit.

      If a change of reach ing location or consignee is made by the Buyer after the delivery of goods, the Buyer should be responsib le for the
expenses caused.

6.     Acceptance and Installation & Adjustment
       Acceptance

        The Buyer should confirm the inspection date within 15 days after the arrival of goods and inform the Seller 8 days before confirmat ion
of the date. The Seller should dispatch an employee to participate the inspection. If the Seller fails to join this procedure , the Se ller will be
deemed to have agreed on the results of inspection. If the Buyer does not exercise the procedure of inspection on the inspect ing date, the
inspection of goods will be deemed to have been completed.

       The inspection should comply with the requests and criterion. If it’s not prescribed in the contract, the inspection will be exercised under
the provisions of this Contract. Written report of this inspection should be signed by both parties.

       If the report of inspection does not meet the provisions of this contract, the Seller shall be responsible for related adjustment,
maintenance or change of the equipment so as to meet the provisions, and the Seller would be responsible for the expenses cau sed in this
circu mstance .

       Installation and Adjustment
        The Seller should complete the installation and adjustment within 20 days after the inspection of the goods and meet the requ ests and
criteria of the contract. In addition, the Seller will assist during the process.
      When the equipment is running normally and meets the technical criteria, both parties will sign to acknowledge final receipt of the
equipment.

                 If the equip ments or materials are damaged due to the Seller’s mistake, in which case an extra losses will occur.

      If the parties disagree over the process of inspection, installation or adjustment, both parties should submit the case to a testing agency
approved by the Technology Supervisory Bureau of Hebei Prov ince , and follow their testing results.

7.        Quality Guarantee
          The qualities guarantee period shall begin with and continue for 12 months after the comp letion of term 6.2.2.

          The quality guarantee period will be recalculated fro m the machine termination date, if equip ment termination were caused by the
Seller.

      The Seller agrees to withhold 5% out of Purchase price as (equal to RMB: 33,150) as a quality guarantee deposit. If any quality
problems arise during the quality guarantee period and the Seller cannot complete the maintenance, this deposit shall be forf eited to the Buyer.

       Supervision or equip ment manufacturing outsourced of the Buyer can not offset the responsibility for product quality which is assumed
by the Seller.

8.        Confidentiality
Both Parties agree to protect business secrets that are indicated in this co ntract fro m th ird parties.

9.        Technical Services and Train ing

10.       Modification and Cancellat ion of the Contract
          This contract may be terminated or modified by the parties ’ mutual written consent.

          The contract can be cancelled by each of the parties, if any of the fo llo wing events happens:
          Target incomp letion caused by force majeure.

          Buyer provides 5 days’ accelerat ion notice to Seller and Seller fails to deliver products.

       If the quality of goods does not meet the provisions, besides, the Seller does not take the necessary redemption, then the Buyer may
terminate this contract.

          If the Buyer rejects the goods with no reason, then the Seller has the right to terminate this contract.

           The changing or cancellation of the contract does not release the defaulter’s liability for breach of contract; moreover, co mpensation
should pay to the counter party for any losses.

11.       Events of Default

11.1      If the Seller fails to deliver the goods on time or fails to provide the documents under 3.4, the Seller should pay 1% penalt y to the
          Buyer.

11.2      If the Buyer fails to make the payment, then the Buyer should pay 0.05% out of the remain ing installments for penalty every past due
          day.

11.3      If the event under 10.2.3 happens, the Buyer has the right to claim a 10% penalty out of purchase price and consequent losses caused
          thereby.

11.4      The Seller guarantees that the delivered goods do not violate any t hird party’s rights; otherwise, Seller assumes full responsibility for
          resulting losses.

11.5      If the Seller does not complete the installation and adjustment on time, the Seller shall co mpensate the Buyer’s resulting losses.

11.6      Any party violates the provisions of Section 8 shall bear responsibility fo r damages caused thereby.
11.7   If there are other default situations, the defaulter should take the resp onsibility for making compensation to the other party. If th e
       defaults comes fro m both parties, then both parties should take the corresponding responsibilities, respectively.

12.    Force majeure
       For any force majeure, such as fire, earthquake, typhoon and other unforeseeable events that caused the incompletion or part ly
complet ion of the obligations, one party or both parties do not have to take the default responsibility , but a notice should be given within 48
hours , and present the relevant proof documents to the other party within 5 days.

       The party or parties affected by force majeure have the responsibility to take appropriate actions to mit igate damages.

13.    Settlement of disagreements
       The parties should settle any disagreement caused by the contract through negotiation.

       If the parties fail to reach agreement through negotiation, one of the follo wing ways may be used:

       1)      Submit the case to arbitration commission to med iate.
       2)      Engage in legal proceedings at the Buyer’s Local People ’s court.

14.    Effectiveness and Others
       This contract will co me into effect after signing and stamping by both parties.

       A complementary agreement maybe provided if necessary.

       The contract’s accessories and complementary agreements are part of the contract and have the same legal effectiveness. If there are any
differences between the accessories or complementary agreements or the contract, the contract will take p riority.

       The contract is in 2 copies. Each party takes 1 of the copies.

IN WITNESS WHEREOF, each party to this agreement has caused it to be executed at the Second Oil-Ext raction Factory on the date indicated
above.

If there are differences between the English version and the Chines e version of this agreement, the Ch inese version will take priority.
Appendix:

                                                                                      Contract Information
                                                                                Application No. : 2008-782
              Name                        Contract for purchasing Vacuum-Heating-Furnace                                             System No.                       2008-51687
           Contract No.                       HBYT-CY2-2008-MM-1                                        Local enterprise contract No.
          Contract type                    Sales Contract             Secondary classi fi cation                  Product material                      Third classification
         Direction of fund                    Payout                        Fund source                        Company investment                       Manner of business                      EDI
         Contract grounds                                        Name                                                                             Serial Number
                                    The production and construction plan of March
          Subject matter                ZK2100-S/2.5-Q VHF            Total sum                          663,000.00                                            Unit                             RMB
         Internal contract                      No                  Related deal                               No                                        Foreign contract                       No
          Applicable law                                                                Language
                                    Seller                                                   Registered capital                       Location                           Legal representative
                  Beijing BHD Petroleum Technology Co, Ltd                                    RMB 5,080,000                    Changping, Beijing                         Chen Guangqiang
Site of perform ance                The second oil-extraction factory                     Time limit         Final receipt of the goods                 Disputes settlement                 Litigation
Amount performed per year                      2008                         RMB629,850                            Current year amount performed                             RMB 629,850
Amount performed per year                      2009                         RMB33,150                             Current year amount performed                             RMB 629,850
Operating department                                  Material managem ent center                        Director        Li Guibin           Operator         Pan Hongsheng
Signing department                                    Second oil-extraction factory                      Signer          Yao Hongxing        Seal name        SOF contract seal
Examination and approval departments                                                                      Comments                                                      Time
Material managem ent center: Li Guibin                                                                       Consent                                              04/30/2008 14:16
Financial section: Gong Hongbin                                                                              Consent                                              05/04/2008 07:31
Law and regulation section: Han Deqiang                                                                      Consent                                              05/07/2008 10:46
Law and regulation section: Cheng Jun                                                                        Consent                                              05/07/2008 13:51
SOF: Que Zhongwei                                                                                            Consent                                              05/12/2008 11:09
SOF: Yao Hongxing                                                                                            Consent                                              05/12/2008 16:48
Law and regulation department: Dong Shaohua                                                                  Consent                                              05/13/2008 16:48
                  EDI department: Zhang Jiang                                        Consent                             05/ 15/ 2008 17:10
                EDI department: Zhang Shuyun                                         Consent                             05/ 16/ 2008 10:22
           Law and regulation depart ment: Wang Jun                                  Consent                             05/ 16/ 2008 16:49
               Huabei Oilfield Co mpany: Su Jun                                      Consent                             05/ 19/ 2008 11:14
      Level of the examination and approval                Local Co mpany                  Examiner                           Sun Jun
                   Signing site                            Bazhou, Hebei             Time o f taking effect                  05/ 19/ 2008
                       Remark
                                                                                                                                        Exhi bit 10.46

Contract Nu mber: HBYT -CY2-2008-MM-530

                                                CONTRACT OF THE SALE OF GOODS
                                                   (Mechanical & Electrical Equip ments)
                                           CONTRA CT FOR PURCHASING HEATING-FURNA CES

This Contract for the Sale of Goods (the ―Sales Contract‖) is made on September 5, 2008

BETW EEN: Beijing BHD Petro leu m Technology Co., Ltd. (the ―Seller‖), a corporation organized and existing under the laws of the PRC.

Deposit Bank: [    ]

Account Number: [          ]

Phone Number: [        ]

Legal Location: Changping District, Beijing

Legal Representative (principal): Chen Guangqiang

Contact Person: Wang Youhong

AND: Petro China Huabei Oilfield Co., Ltd ( the ― Buyer‖), a corporation organized and existing under the laws of the PRC.

Deposit Bank: [    ]

Account Number: [          ]

Phone Number: [        ]

Legal Location: RenQiu City, Hebei Province

Legal Representative (principal): Sunjun

Contacting Person: Zhang Shijun

SALE OF GOODS
Seller shall sell, transfer and deliver to Buyer on the date which will be designated by the Buyer after this contract taking effect, the follo wing
items:

1        SUBJECT-MATTER: Heat ing furnaces
1.1      Description: See the Contract appendix
1.2      Producing area: HuangHua city, HeBei Prov ince

1.3      Producer: HuangHua BaiHengDa

2        QUA NTITY

2.1      Quantity: See Contract appendix
2.2      Supplyment description: See the Contract appendix
3      QUA LITY REQUEST AND TECHNIQUE STA NDA RD
3.1    Quality Request: Act in co mpliance with the technical contract between two parties

3.2    Technique and Manufacturing Standard: See the Technical Agreement

4      PURCHA SE PRICE

4.1    The purchase price payable for this contract agreed to be:
      RM B: 3,050,000

      RM B: Three million fifty thousand

4.2    Total amounts computed and allocated: 17%V.A.T + Maintenance fees + Training fees + installation and test cost + freight and charge

4.3    Payment: 95% of the price will be paid after the installation and testing of the equipments, 5% quality guarantee deposit will be
       collected when the quality guarantee period is co mplete, without quality problems (no interest)

5.     Delivery
      Manner of Delivery : Seller Delivering

      Delivering date and subjects: Before October 10, 2008

      Delivery place: A location designated by the Buyer

     Documents and Files should be provided by the Seller: Products Certification, Products Testing Reports, Instructions and other relevant
documents.

6.     Packing

       a)     Packing Standard: Packing in accordance with the Provisions of Packing and Mark
       b)     Request on Packing Object and Mark: Execute the Industrial Standard
       c)     The Seller should pay for the packing expenses, unless further more contract clauses are defined.

       d)     If the Packing is not satisfied, according to those provisions, the Seller will be responsible for the problems caused.

7.     Transportation

       a)     Manner of Transportation: By Truck

      Sending Fro m: Huanghua City, Hebei Province

      Arriv ing at: See appendix

      Consignee: Lin WenHua

       b)     Transport and relevant Fees: Included in the contract value

       c)     The Seller is responsible for the damage or destruction of the goods in transit.
       d)     If a change of reach ing location or consignee is made by the Buyer after the delivery of goods, the Buyer should be responsib le
              for the expenses caused.

8.     Acceptance and Installation & Adjustment
       a)     Acceptance
              i.        The Buyer should confirm the inspecting date within 15 days after the arrival of goods and inform the Seller 8 days
                        before confirmation of the date. The Seller should dispatch
                        an emp loyee to participate the inspection. If the Seller fails to join this procedure, the Seller will be deemed to have
                        agreed on the results of inspection. If the Buyer does not exercise the procedure of inspection on the inspecting date, the
                        inspection of goods will be deemed to have been completed.
              ii.       The inspection should comply with the requests and criterion. If it’s not prescribed in the contract, the inspection will be
                        exercised under the provisions of this Contract. Written report of this inspection should be signed by both parties.

              iii.      If the report of inspection does not meet the provisions of this contract, the Seller will be responsible for related
                        adjustment, maintenance or change of the equipments so as to meet the provisions, and the Seller will be responsible for
                        the expenses caused in this circu mstance .
      b)      Installation and Adjustment
              i.        The Seller should complete the installation and adjustment within 20 days after the inspection of the goods and meet the
                        requests and criteria of the contract. In addition, the Seller will assist during the process.

              ii.       When the equipment is running normally and meets the technical criteria, both parties will sign to acknowledge final
                        receipt of the equip ment.
      c)      If the equip ment or materials are damaged due to the Seller ’s mistake, in which case extra losses will occur.
      d)      If the parties disagree over the process of inspection, installation or adjustment, both parties should submit the case to a testing
              agency approved by the Technology Supervisory Bureau of Hebei Province , and fo llo w their testing results.

9.    Quality Guarantee
      a)      The quality guarantee period shall begin with and continue for 12 months after the complet ion of term 8.(b).ii.

      b)      The quality guarantee period will be recalculated fro m the machine termination date, if equip ment termination were caused by
              the Seller.
      c)      The Seller agrees to withhold 5% of Purchase price (equal to RMB: 152,500) as a quality guarantee deposit. If any quality
              problems arise during the quality guarantee period and the Seller cannot complete the maintenance, this deposit shall be
              forfeited to the Buyer.
      d)      Supervision or equip ment manufacturing outsourced of the Buyer can not offset the responsibility for product quality which is
              assumed by the Seller.

10.   Confidentiality
      Both Parties agree to protect business secrets that are indicated in this contract fro m th ird parties.

11.   Technical Services and Train ing

12.   Modification and Cancellat ion of the Contract

      a)      This contract may be terminated or modified by the parties’ mutual written consent.
      b)      The contract can be cancelled by each of parties, if any of the following events happens:
              i.        Target incomp letion caused by force majeure.

              ii.       Buyer provides 5 days’ accelerat ion notice to Seller and Seller fails to deliver products.
              iii.      If the quality of goods does not meet the provisions and the Seller does not take the necessary redemption, then the
                        Buyer may terminate this contract.
              iv.      If the Buyer rejects the goods with no reason, then the Seller has the right to terminate this contract.
       c)     The changing or cancellation of the contract does not release the defaulter’s liability for breach of contract; moreover,
              compensation should pay to the counter party for any losses.

13.    Events of Default
13.1   If the Seller fails to deliver the goods on time or fails to provide the documents under 5.4, the Seller shall pay 0.05% pena lty to the
       Buyer.

13.2   If the Buyer fails to make the payment, then the Buyer shall pay 0.05% out of remain ing installments for penalty every past due day.

13.3   If the event under 12.(b).iii happens, the Buyer has the right to claim a 10% penalty out of purchase price and consequent losses caused
       thereby.

13.4   The Seller guarantees that the delivered goods do not violate any third party’s rights; otherwise, Seller assumes full responsibility for
       resulting losses.

13.5   If the Seller does not complete the installation and adjustment on time, the Seller shall co mpensate the Buyer’s resulting losses.

13.6   Any party that violates the provisions of Section 10 shall bear responsibility fo r damages caused thereby.

13.7   If there are other default situations, the defaulter should take the responsibility for making compensation to the other part y. If th e
       default comes fro m both parties, then both parties should take the corresponding responsibilities, respectively.

14.    Force majeure
       a)     For any force majeure, such as fire, earthquake, typhoon and other unforeseeable events that caused the incompletion or part ial
              complet ion of the obligations, one party or both parties do not have to take the default responsibility, but a notice should be
              given within 48 hours , and present the relevant proof documents to the other party within 5 days.

       b)     The party or parties affected by force majeure have the responsibility to take appropriate actions to mit igate damages.

15.    Settlement of disagreements

       a)     The parties should settle any disagreement caused by the contract through negotiation.
       b)     If the parties fail to reach agreement through negotiation, one of the follo wing ways may be used:
       1)     Submit the case to arbitration commission to med iate.

       2)     Engage in legal proceedings at the Buyer’s Local People ’s court.

16.    Effectiveness and Others

       a)     This contract will co me into effect after signing and stamping by both parties.
       b)     A complementary agreement may be provided if necessary.
       c)     The contract’s accessories and complementary agreements are part of the contract and have the same legal effectiveness. If there
              are any differences between the accessories or complementary agreements or the contract, the contract will take prio rity.
         d)      The contract is in 2 copies. Each party takes 1 of the copies. Another 4 duplicate copies will be made for the Buyer. If there are
                 any differences between original and duplicated version, the original version will take priority.

If there are differences between the English version and the Chinese version of this agreement, the Ch inese version will take priority.


                                                                 Contract appendi x

Serial
No.                   Description            Quantity       Price with V.A.T(RMB)         Total                          Deliver place
1             Heati ng Furnaces                     1                    670,000       670,000          Yan 1 united 2# heating furnace
                                                                                                                  st


2             Heati ng Furnaces                     1                    800,000       800,000          Cha-inter-station 2# oil furnace
3             Heati ng Furnaces                     2                    790,000     1,580,000          Ba 1 station 3#, 4# water furnace
                                                                                                             st


              Total                                                                  3,050,000
                                                        Total wi th V.A.T: RMB3,050,000
                                                                                                                                Exhi bit 10.47


                                           Summary Translation of Chuan East to Chuan West
                                        Transferring Gas Pi pe Project Product Collecti ve Contract

Contract number: G11CQ-08-MM-0011
Signing date: November 2008
Buyer: Southwest Oil Gas Co mpany of SINOPEC
Supplier: Jin ing ENI Energy Technology Co., Ltd.
Signing place: Chengdu city of Sichuan province
Total sum: RMB1,940,000
Product: One unit of analyzer of gas phase chromatography, one unit of water analyzer and one unit of sulfurated hydrogen analyzer, one unit
of analyzer house of chromatogram

ENI has not yet collected full pay ment or issued an invoice but has recognized this amount as income for 2008.
                                                                                                                  Exhi bit 10.48


                                   Summary Translation of Indus trial Product Purchasing Agreement

Buyer: Southwest Oil Gas Co mpany of SINOPEC
Supplier: Jin ing ENI Energy Technology Co., Ltd.
Contract number: GX2008-690
Signing date: 18 of December, 2008
                th



Total sum: RMB1,872,000 (tax not included), with tax: RM B2,190,240
Signing place: Uru mchi
Product: Content gauge, fire system informat ion modeling. PT Pressure transmitter
Delivery date: Before 18 of February, 2009
                         th




ENI has not yet collected full pay ment or issued an invoice but has recognized this amount as income for 2008.
                                                                                                                  Exhi bit 10.49


                                               Summary Translation of Purchase Agreement

Buyer: Southwest Oil Gas Co mpany of SINOPEC
Supplier: Jin ing ENI Energy Technology Co., Ltd.
Contract Nu mber: GX2008-710
Signing place: Uru mchi
Signing date: 17 December, 2008
                th



Total sum: RMB1,880,000 (tax not included), with tax: RM B2,199,600
Product: Rotate acid-rock testing system , one second hand IBM R400laptop, laser printer HP1215

ENI has not yet collected full pay ment or issued an invoice but has recognized this amount as income for 2008.
                                                                                                                  Exhi bit 10.50


                                           Summary Translation of Chuan East to Chuan West
                                        Transferring Gas Pi pe Project Product Collecti ve Contract

Contract number: G11CQ-08-MM-0010
Signing date: November 2008
Buyer: Southwest Oil Gas Co mpany of SINOPEC
Supplier: Jin ing ENI Energy Technology Co., Ltd.
Signing place: Chengdu city of Sichuan province
Total sum: RMB969,500
Product: Temperature transmission, pressure transmission and Annubar

ENI has not yet collected full pay ment or issued an invoice but has recognized this amount as income for 2008.
                                                                                                                                   Exhi bit 23.1


H ANSEN , B ARNETT & M AXWELL , P.C.
                                                                                              Registered with the Public Company
                    A Professional Corporation                                                   Accounting Oversight Board
               CERTIFIED PUBLIC ACCOUNTANTS

                      5 Triad Center, Suite 750
                   Salt Lake City, UT 84180-1128
                       Phone: (801) 532-2200
                         Fax: (801) 532-7944
                         www.hbmcpas.com




                                                                                                A Member of the Forum of Firms



                              CONS ENT OF INDEPENDENT REGIS TERED PUB LIC ACCOUNTING FIRM

To the Board of Directors
Recon Technology, Ltd.

As an independent registered public accounting firm, we hereby consent to the use of our report on the financial statements o f Recon
Technology, Ltd., dated November 11, 2008, except for Note 14, as to wh ich the date is March 10, 2009, with respect to the consolidated and
combined balance sheets of Recon Technology, Ltd. as of June 30, 2008 and 2007, and the related consolidated and combined statements of
operations, shareholders’ equity (deficit) and cash flows fo r the years then ended in the Registration Statement of Recon Technology, Ltd. on
Form S-1. We also consent to the use of our name and the reference to us in the Experts section of the Registration Statement.

                                                                           /s/ HANSEN, BARNETT & MAXWELL, P.C.
                                                                           HANS EN, B ARNETT & MAXWELL, P.C.

Salt Lake City, Utah
March 10, 2009
                                                                                                                                 Exhi bit 23.3




                                                                                                  Mailing Address :
                                                                                                  P.O. Bo x 27828
                                                                                                  Rich mond, VA 23261

                                                                                                  Three James Center, 12 Floor
                                                                                                                        th


                                                                 804 / 771-5700                   1051 East Cary Street
                                                                fax : 804 / 771-5777              Rich mond, VA 23219

March 16, 2009
Recon Technology Ltd.
Roo m 1401 Yong Feng Mansion
123 Jiq ing Road
Nanjing, People’s Republic o f China 210006
Ladies and Gentlemen :
      We hereby consent to the use of our name under the caption ―Legal Matters‖ in the prospectus included in the registration statement on
Form S-1, o rig inally filed by Recon Technology Ltd. on August 12, 2008 and as amended fro m t ime to time with the Securities and Exchange
Co mmission under the Securities Act of 1933, as amended. In g iving such consent, we do not thereby admit that we co me within the category
of persons whose consent is required under Section 7 of the Securit ies Act of 1933, as amended, or the regulat ions promulgated thereunder.

                                                                                       Sincerely yours,

                                                                                       /s/ Kaufman & Canoles
                                                                                       Kaufman & Canoles

Chesapeake               Hampton                Newport News            Norfo lk                  Virgin ia Beach        Williamsburg

                                                       www.kaufmanandcanoles.com

								
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