Pursuant to the requirements of Rules 12-04(a), 5-04(c), and 4-08(e)(3) of Regulation S-X, the condensed financial information of the parent company shall be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance with such requirements and concluded that it was applicable to the Company as the restricted net assets of the Company’s PRC subsidiary and VIEs exceeded 25% of the consolidated net assets of the Company. Therefore, the condensed financial statements for the parent company are included herein.

For purposes of the above test, restricted net assets of consolidated subsidiaries and VIEs shall mean that amount of the Company’s proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries and VIEs in the form of loans, advances, or cash dividends without the consent of a third party.

The condensed financial information of the parent company has been prepared using the same accounting policies as set out in the Company’s consolidated financial statements except that the parent company used the equity method to account for investment in its subsidiaries and VIEs. Such investment is presented on the condensed balance sheets as “Investment in subsidiaries and VIEs” and the respective profit or loss as “Equity in earnings of subsidiaries and VIEs” on the condensed statements of income.

The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the consolidated financial statements of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.

The Company did not pay any dividend for the periods presented. As of June 30, 2021 and 2022, there were no material contingencies, significant provisions for long-term obligations, or guarantees of the Company, except for those which have been separately disclosed in the consolidated financial statements, if any.

* Due from subsidiaries, VIEs and VIEs’ subsidiaries are eliminated upon consolidation.

RECON TECHNOLOGY, LTD

PARENT COMPANY STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)


		For the years ended June 30,
	2020		2021		2022		2022
	RMB		RMB		RMB		U.S. Dollars
Revenues	¥	20,079,210	¥	121,197	¥	—	$	—
Cost of revenues		16,063,368		97,024		—		—

Gross profit		4,015,842		24,173		—		—

General and administrative expenses		13,337,810		29,502,464		62,918,622		9,394,033
Provision for credit losses		—		1,933,986		1,923,382		287,170
Loss from operations		(9,321,968)		(31,412,277)		(64,842,004)		(9,681,203)

Fair value changes of warrants liability		—		35,365,792		174,485,575		26,051,481
Other income (loss)		(1,298,039)		320,235		4,105,116		612,913

Equity in loss of subsidiaries, VIEs and VIEs’ subsidiaries		(8,626,694)		(27,106,484)		(18,161,892)		(2,711,652)

Net income (loss)	¥	(19,246,701)	¥	(22,832,734)	¥	95,586,795	$	14,271,539
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
Foreign currency translation adjustment		(84,205)		(850,895)		9,332,625		1,393,403
Comprehensive income (loss) attributable to the company	¥	(19,330,906)	¥	(23,683,629)	¥	104,919,420	$	15,664,942

RECON TECHNOLOGY, LTD

PARENT COMPANY STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the years ended June 30,
	2020		2021		2022		2022
	RMB		RMB		RMB		U.S. Dollars

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	¥	(19,246,701)	¥	(22,832,734)	¥	95,586,795	$	14,271,539
Adjustments to reconcile net cash flows from operating activities:
Changes in warrants liabilities		—		(35,365,792)		(174,485,575)		(26,051,481)
Amortization of offering cost of warrants		—		12,584,024		—		—
Provision for doubtful accounts		—		1,933,986		1,923,382		287,170
Restricted shares issued for management and employees		7,944,835		6,140,037		39,263,485		5,862,215
Loss (income) from investment in unconsolidated entity		—		15,411		(15,411)		(2,301)
Restricted shares issued for services		33,927		—		8,935,919		1,334,173
Equity in earnings of subsidiaries and VIEs		8,626,694		27,106,484		18,161,892		2,711,652
Other current assets		(3,370,538)		(474,891)		(111,521)		(16,651)
Other current liabilities		5,583,322		4,776,846		(5,090,698)		(760,064)

Net cash used in operating activities		(428,461)		(6,116,629)		(15,831,732)		(2,363,748)

Cash flows from investing activities:
Repayments from loans to third parties		—		1,950,000		166,405,032		24,845,019
Payments made for loans to third parties		—		(50,288,458)		(137,391,510)		(20,513,170)
Due from intercompany, VIEs and VIEs’ subsidiaries		(4,484,382)		(29,505,002)		(55,569,342)		(8,296,753)

Net cash used in investing activities		(4,484,382)		(77,843,460)		(26,555,820)		(3,964,904)

Cash flows from financing activities:
Proceeds from warrants issued with common share		—		212,051,414		—		—
Proceeds from sale of common share, net of issuance costs		26,141,051		81,091,141		—		—
Proceeds from sale of prefunded warrants, net of issuance costs		—		30,276,569		93,321		13,933
Proceeds from share issuance for warrants exercised		—		21,130,035		—		—
Proceeds from issuance of convertible notes		—		42,014,616		—		—

Net cash provided by financing activities		26,141,051		386,563,775		93,321		13,933

Effect of exchange rate fluctuation on cash		(97,823)		274,149		14,016,375		2,092,708

Net increase (decrease) in cash		21,130,385		302,877,835		(28,277,856)		(4,222,011)

CASH, beginning of year		1,108,595		22,238,980		325,116,815		48,541,402

CASH, end of year	¥	22,238,980	¥	325,116,815	¥	296,838,959	$	44,319,391

Non-cash investing and financing activities
Issuance of common share in exchange of shares of Starry, net of issuance costs	¥	—	¥	27,675,450	¥	—	$	—
Cancellation of ordinary shares issued to Starry	¥		¥		¥	(27,675,450)	$	(4,132,069)
Conversion of convertible notes to 9,225,338 shares of ordinary shares	¥	—	¥	42,435,669	¥	—	$	—
Payable for issuance cost of common share	¥	374,696	¥	—	¥	—	$	—