United States securities and exchange commission logo
November 19, 2021
Liu Jia
Chief Financial Officer
Recon Technology, Ltd
Room 601, 1 Shui an South Street
Chaoyang District, Beijing, 100012
People s Republic of China
Re: Recon Technology,
Ltd
Amendment No. 1 to
Registration Statement on Form F-3
Filed October 1,
2021
File No. 333-257806
Dear Ms. Jia:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Unless we note
otherwise, our references to prior comments are to comments in our
August 23, 2021 letter.
Amendment No. 1 to Registration Statement on Form F-3 filed October 1,
2021
Cover Page
1. We note your response
to prior comment 3 and reissue in part. You defined VIEs here
to include your PRC
variable interest entities "Nanjing Recon Technology Co., Beijing
BHD Petroleum
Technology Co., and Future Gas Station (Beijing) Technology, Ltd., or
'Nanjing Recon,' 'BHD,'
and 'FGS,' respectively." However, you also state that
"[You] mainly conduct
[y]our business through [y]our VIEs, Nanjing Recon, BHD and
their respective
subsidiaries by means of Contractual Arrangements." Please revise to
clarify your
disclosure. Also revise to refrain from using terms such as our when
describing activities
or functions of a VIE.
Liu Jia
FirstName LastNameLiu
Recon Technology, Ltd Jia
Comapany 19,
November NameRecon
2021 Technology, Ltd
November
Page 2 19, 2021 Page 2
FirstName LastName
2. We note your disclosure here and throughout your filing that you
control and receive
economic benefits of Recon Technology's business operations through
the Contractual
Arrangements. We also note the disclosure on page 5 that you are the
primary beneficiary
of the VIEs. However, you or your investors do not have an equity
ownership in, direct
foreign investment in, or control through such ownership/investment of
the VIEs. As
such, when describing the design of the VIE agreements and related
outcome, please
refrain from implying that the VIE agreement is equivalent to an
equity ownership in the
business of the VIE. Any references to control or benefits that accrue
to you because of
the VIE should be limited to and clearly describe the conditions you
met for consolidation
of the VIE under U.S. GAAP and your disclosure should clarify that,
for accounting
purposes, you will be the primary beneficiary. In addition, your
disclosure should note, if
true, that the agreements have not been tested in a court of law.
3. We note your disclosure that the VIE structure is used to replicate
foreign investment in
China-based companies. We note, however, that the structure provides
contractual
exposure to foreign investment in such companies rather than
replicating an investment.
Please revise accordingly.
Prospectus Summary, page 4
4. We note your response to prior comment 4 and reissue it in part. In
your prospectus
summary, identify clearly the entity in which investors are purchasing
their interest. Also
revise the disclosure on page 4 to clarify that you are not a Chinese
operating company
but a Cayman Islands holding company with operations conducted by your
subsidiaries
and through contractual arrangements.
5. We note your response to prior comment 5 and reissue it in part. In
your risk factor
summary, disclose the risk that the Chinese government may intervene
or influence your
operations at any time.
6. We note your response to prior comment 6. Please expand to disclose
the consequences
to you and your investors if you do not receive or maintain the
approvals, inadvertently
conclude that such approvals are not required, or applicable laws,
regulations, or
interpretations change and you are required to obtain approval in the
future.
7. We note your response to prior comment 7 and reissue it in part. In
your prospectus
summary, describe any restrictions on foreign exchange and your
ability to transfer cash
between entities, across borders, and to U.S. investors. Describe any
restrictions and
limitations on your ability to distribute earnings from your
businesses, including
subsidiaries and/or consolidated VIEs, to the parent company and U.S.
investors as well as
the ability to settle amounts owed under the VIE agreements.
8. We note that you have added various tabulations of consolidating
information on pages
7 and 8 in response to prior comment 8. However, it is unclear how you
have segregated
account balances and activity to distinctly report amounts pertaining
to the parent, non-
VIE subsidiaries, and VIE subsidiaries; and it is unclear how amounts
depicted as
Liu Jia
Recon Technology, Ltd
November 19, 2021
Page 3
eliminations would represent the consolidating adjustments. Please
revise as necessary to
limit the amounts reported in each column to the balances and activity
that pertain to the
legal entities that are grouped within each column, prior to
consolidation, and to include
line item details that are consistent with those utilized in preparing
your financial
statements. Please also reconcile or address any inconsistencies with
the VIE information
disclosed in Note 28 on page F-30 of your Form 20-F for the fiscal
year ended June 30,
2020, and expand your accompanying narratives to describe the nature
of any assets,
operations and cash flows that exist or which occur outside of the
VIEs.
9. We note your new disclosures related to your contractual arrangements.
Please revise to
include the dates of such material agreements and file or incorporate
by reference these
agreements with your registration statement.
10. We note your response to prior comment 9 and reissue in part. Revise
the disclosure on
page 7 and elsewhere to also disclose that trading in your securities
may be prohibited
under the Holding Foreign Companies Accountable Act if the PCAOB
determines that it
cannot inspect or fully investigate your auditor, and that as a result
an exchange may
determine to delist your securities.
Risks Related to Doing Business in China
Our shares may be delisted under the Holding Foreign Companies Accountable Act
if the
PCAOB is unable to inspect, page 13
11. We note from the audit opinion and your risk factor that you have a
U.S. based auditor
that is registered with the PCAOB and currently subject to PCAOB
inspection. Please
disclose any material risks to the company and investors if it is
later determined that the
PCAOB is unable to inspect or investigate completely your auditor
because of a position
taken by an authority in a foreign jurisdiction. For example, disclose
the risk that lack of
inspection could cause trading in your securities to be prohibited
under the Holding
Foreign Companies Accountable Act and as a result an exchange may
determine to delist
your securities.
12. Please expand your risk factor disclosure to discuss that the United
States Senate passed
the Accelerating Holding Foreign Companies Accountable Act, which, if
enacted, would
decrease the number of non-inspection years from three years to two,
thus reducing the
time period before your securities may be prohibited from trading or
delisted.
Information Incorporated Jia
FirstName LastNameLiu by Reference, page 20
Comapany
13. NameRecon
Please update theTechnology, Ltdthis section to include your annual
report on Form 20-F
information in
for the
November 19,fiscal
2021 year
Pageended
3 June 30, 2021 and any other subsequent filings.
FirstName LastName
Liu Jia
FirstName LastNameLiu
Recon Technology, Ltd Jia
Comapany 19,
November NameRecon
2021 Technology, Ltd
November
Page 4 19, 2021 Page 4
FirstName LastName
You may contact Liz Packebusch, Staff Attorney, at (202) 551-8749 or Loan
Lauren
Nguyen, Legal Branch Chief, at (202) 551-3642 with any questions.
Sincerely,
Division of Corporation
Finance
Office of Energy &
Transportation
cc: Anthony W. Basch