UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549




FORM
10-K




x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
fiscal year ended: December 31, 2008





OR





 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
transition period from __________ to ____________




Commission
File Number: 001-34134




CHINA
TRANSINFO TECHNOLOGY CORP.


(Exact
name of registrant as specified in its charter)




Nevada
              87-0616524(State
      or other jurisdiction of
                incorporation
      or organization)
              (I.R.S.
      Employer Identification
Number)





07
Floor E-Wing Center


No.
113 Zhichunlu, Haidian District


Beijing,
China 100086


(Address
of principal executive office and zip code)




(86
10) 82671299


(Registrant’s
telephone number, including area code)







Securities
registered pursuant to Section 12(b) of the Act:





Title of Each Class
                
                Name of Each Exchange on Which
      RegisteredCommon
      Stock, Par Value $0.001
                
                NASDAQ Capital
      Market




Securities
registered pursuant to Section 12(g) of the Act:None




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes  ̈No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes  ̈   No x





Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.


Yes xNo  ̈







Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “large
accelerated filer,” “accelerated filer,” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act. (Check one):




Large
      accelerated filer  ̈
              Accelerated
      filer  ̈
              Non-accelerated
      filer  ̈
              Smaller
      reporting
                company
      x




Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act).




Yes  ̈No x




As of
June 30, 2008, the aggregate market value of the shares of the Registrant’s
common stock held by non-affiliates (based upon the closing price of such shares
as reported on the Over-the-Counter Bulletin Board) was approximately $35.9
million.  Shares of the Registrant’s common stock held by each
executive officer and director and each by each person who owns 10 percent or
more of the outstanding common stock have been excluded in that such persons may
be deemed to be affiliates of the Registrant.  This determination of
affiliate status is not necessarily a conclusive determination for other
purposes.




As of
March 23, 2009, there were 22,187,314 shares of the Registrant’s common stock
outstanding.




DOCUMENTS
INCORPORATED BY REFERENCE:




None.





CHINA
TRANSINFO TECHNOLOGY CORP.




FORM
10-K


For
the Fiscal Year Ended December 31, 2008




Number
                      
                      
                      PagePART
      IITEM
      1.
                      BUSINESS
                      
                      2ITEM
      1A.
                      RISK
      FACTORS
                      
                      22ITEM
      2.
                      PROPERTIES
                      
                      33ITEM
      3.
                      LEGAL
      PROCEEDINGS
                      
                      33ITEM
      4.
                      SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                      
                      33PART
      IIITEM
      5.
                      MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES.
                      
                      35ITEM
      6.
                      SELECTED
      FINANCIAL DATA
                      
                      36ITEM
      7.
                      MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.
                      
                      36ITEM
      8.
                      FINANCIAL
      STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA
                      
                      46ITEM
      9.
                      CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE.
                      
                      46ITEM
      9A(T).
                      CONTROLS
      AND PROCEDURES.
                      
                      47ITEM
      9B.
                      OTHER
      INFORMATION.
                      
                      47PART
      IIIITEM
      10.
                      DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
                      
                      48ITEM
      11.
                      EXECUTIVE
      COMPENSATION
                      
                      52ITEM
      12.
                      SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS.
                      
                      55ITEM
      13.
                      CERTAIN
      RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.
                      
                      57ITEM
      14.
                      PRINCIPAL
      ACCOUNTANT FEES AND SERVICES.
                      
                      58PART
      IVITEM
      15.
                      EXHIBITS,
      FINANCIAL STATEMENTS SCHEDULES.
                      
                      59







Use
of Defined Terms





Except
where the context otherwise requires and for the purposes of this report
only:




·
            “China
      TransInfo,” “the Company,” “we,” “us,” or “our” refer to China TransInfo
      Technology Corp., its subsidiaries, and, in the context of describing our
      operations and business, and consolidated financial information, include
      our consolidated variable interest entities, in
  China.;




·
            “China,”
      “Chinese” and “PRC” refer to the People’s Republic of
    China;




·
            “BVI” refers
      to the British Virgin Islands;




·
            “SEC”
      refers to the United States Securities and Exchange
      Commission;




·
            “Securities
      Act” refers to the Securities Act of 1933, as
  amended;




·
            “Exchange
      Act” refers to the Securities Exchange Act of 1934, as
      amended;




·
            “RMB”
      refers to Renminbi, the legal currency of China;
  and




·
            “U.S.
      dollar,” “$” and “US$” refer to the legal currency of the United
      States.




Forward-Looking
Statements




Statements
contained in this annual report include “forward-looking statements” within the
meaning of such term in Section 27A of the Securities Act and Section 21E of the
Exchange Act.  Forward-looking statements involve known and unknown
risks, uncertainties and other factors which could cause actual financial or
operating results, performances or achievements expressed or implied by such
forward-looking statements not to occur or be
realized.  Forward-looking statements made in this Report generally
are based on our best estimates of future results, performances or achievements,
predicated upon current conditions and the most recent results of the companies
involved and their respective industries. Forward-looking statements may be
identified by the use of forward-looking terminology such as “may,” “will,”
“could,” “should,” “project,” “expect,” “believe,” “estimate,” “anticipate,”
“intend,” “continue,” “potential,” “opportunity” or similar terms, variations of
those terms or the negative of those terms or other variations of those terms or
comparable words or expressions.  Potential risks and uncertainties
include, among other things, such factors as:




·
            we
      operate our businesses through companies with which we only have
      contractual relationships;


·
            the
      recent credit crisis and turmoil in the global financial
      system;


·
            our
      significant reliance on the sales to the Chinese government;
      and


·
            adverse
      changes in political and economic policies of the PRC
      government.





Additional
disclosures regarding factors that could cause our results and performance to
differ from results or performance anticipated by this annual report are
discussed in Item 1A. “Risk Factors.”  Readers are urged to carefully
review and consider the various disclosures made by us in this annual report and
our other filings with the SEC.  These reports attempt to advise
interested parties of the risks and factors that may affect our business,
financial condition and results of operations and prospects.  The
forward-looking statements made in this annual report speak only as of the date
hereof and we disclaim any obligation to provide updates, revisions or
amendments to any forward-looking statements to reflect changes in our
expectations or future events.









PART
I




ITEM
1.    BUSINESS





Overview





We are a
leading provider of public transportation information systems technology and
comprehensive solutions in China.  Our goal is to become the largest
transportation information product and comprehensive solutions provider, as well
as the largest integrated transportation information platform and commuter
traffic media platform builder and operator in China.  Substantially
all of our operations are conducted through our variable interest entities that
are PRC domestic companies owned principally or completely by our  PRC
affiliates.  Through our variable interest entities,  we are
involved in developing multiple applications in transportation, digital city,
land and resource filling system based on Geographic Information Systems (“GIS”)
technologies which is used to service the public sector.





Our main
focus is on providing transportation solutions.  Our products and
services include:





·
            Transportation
      Planning Information System,




·
            Pavement
      Maintenance System,




·
            Electronic
      toll collection (“ETC”),




·
            Traffic
      Information Service System,




·
            Taxi
      Security Monitoring, Commanding and Dispatching
  Platform,




·
            GIS-T
      (Transportation) Middleware,




·
            Traffic
      Flow Surveying Systems,




·
            Intelligent
      Parking System,




·
            Red
      Light Violation Snapshot System,




·
            Intelligent
      Highway Vehicle Monitoring System,




·
            Intelligent
      Public Transport System,




·
            Palmcity
      Navigation Engine,




·
            Comprehensive
      Location Based Service Platform,




·
            Digital
      City,




·
            2-D
      and 3-D GIS.




We also
offer full range solutions for transportation oriented GIS (“GIS-T”) covering
transportation planning, design, construction, maintenance and operation
..





History
and Corporate Structure





Corporate
History





We were
originally incorporated in Nevada on August 3, 1998 under the name R & R
Ranching, Inc. to breed bison.  On December 10, 2003, we executed an
agreement and plan of reorganization, or the Intra-Asia Agreement, with
Intra-Asia Entertainment Corporation, a Delaware corporation (“Intra-Asia
Delaware”),
whereby Intra-Asia Delaware became our wholly-owned subsidiary and we amended
our articles of incorporation to change our name to “Intra-Asia Entertainment
Corporation.”  From the first half of 2006 until May 14, 2007 when we
completed a reverse acquisition transaction with Cabowise International Ltd.
(“Cabowise”), a BVI company, we were a blank check company and did not engage in
active business operations other than our search for, and evaluation of,
potential business opportunities for acquisition or participation.




2


On May
14, 2007, we acquired Cabowise through a share exchange transaction pursuant to
which we issued to the shareholders of Cabowise 10,841,492 shares of our common
stock in exchange for all of the issued and outstanding capital stock of
Cabowise.  Cabowise thereby became our wholly-owned subsidiary and the
former shareholders of Cabowise became our controlling
stockholders.  On the same day, our indirect Chinese subsidiary,
Oriental Intra-Asia Entertainment (China) Limited (“Oriental”), acquired
eighty-five percent (85%) equity interest in Beijing PKU Chinafront High
Technology Co., Ltd. (“PKU”), which commenced its businesses in October
2000.  As a result, PKU became a majority-owned subsidiary of
Oriental.





VIE
Restructuring





Current
Chinese laws restrict companies with foreign ownership to operate in three
business segments that we recently entered into: online services, taxi
advertising, and security and surveillance related business.  In order
to comply with the applicable Chinese laws, we determined to restructure our
subsidiaries and enter into a series of commercial arrangements to allow the
Company to operate in these restricted business segments
(“Restructuring”).





On
February 3, 2009, as described below, through our indirect Chinese subsidiary,
Oriental and Oriental’s former subsidiary, PKU, we entered into a series of
equity transfer agreements with China TransInfo Technology Group Co., Ltd., a
company formed under Chinese law (the “Group Company”), pursuant to which we
transferred all of our indirect equity interests in PKU and PKU’s subsidiaries
to the Group Company.  Established in China on May 26, 2008, the Group
Company is wholly owned by four Chinese affiliates of the Company, Shudong Xia,
our Chairman, CEO and President and the beneficial owner of approximately 43% of
the Company’s outstanding capital stock, Zhiping Zhang, the Company’s Vice
President of Research and Development, Zhibin Lai, the Company’s Vice President
and Wei Gao, the designee of SAIF Partners III L.P., a 11% shareholder of the
Company (the “Group Company Shareholders”).





Through
Oriental and PKU, we entered into the following specific agreements to transfer
all of its equity interests in its respective Chinese subsidiaries to the Group
Company (the “Equity Transfer”):




·
            Pursuant
      to an equity transfer agreement (the “PKU Equity Transfer Agreement”),
      entered into by and between Oriental and the Group Company, Oriental
      transferred all of its 97% equity interests in PKU to the Group
      Company;





·
            Pursuant
      to an equity transfer agreement (the “Beijing Tian Hao Equity Transfer
      Agreement”), entered into by and between PKU and the Group Company, PKU
      transferred all of its 100% equity interests in Beijing Tian Hao Ding Xin
      Science and Technology Co., Ltd. to the Group
  Company;





·
            Pursuant
      to an equity transfer agreement (the “China TranWiseway Equity Transfer
      Agreement”), entered into by and between PKU and the Group Company, PKU
      transferred all of its 70% equity interests in China TranWiseway
      Information Technology Co., Ltd. to the Group
  Company;





·
            Pursuant
      to an equity transfer agreement (the “Zhangcheng Culture Equity Transfer
      Agreement”), entered into by and between PKU and the Group Company, PKU
      transferred all of its 100% equity interests in Zhangcheng Culture and
      Media Co., Ltd. to the Group
Company;





·
            Pursuant
      to an equity transfer agreement (the “Zhangcheng Science Equity Transfer
      Agreement”), entered into by and between PKU and the Group Company, PKU
      transferred all of the 100% equity interests in Beijing Zhangcheng Science
      and Technology Co., Ltd. to the Group Company;
  and





·
            Pursuant
      to an equity transfer agreement (the “Shanghai Yootu Equity Transfer
      Agreement”), entered into by and between PKU and the Group Company, PKU
      transferred all of its 100% equity interests in Shanghai Yootu Information
      Technology Co., Ltd. to the Group
Company.




3




In
connection with the Equity Transfer, on February 3, 2009, the following
contractual arrangements were also made among relevant parties, which have given
us contractual rights to control and manage the business of the Group Company
and the Group Company’s subsidiaries (the “Contractual Arrangement” and together
with the Equity Transfer, the “Restructuring”):





·
            Pursuant
      to an exclusive technical consulting and services agreement (the “Service
      Agreement”), entered into by and among Oriental, the Group Company and the
      Group Company’s subsidiaries, Oriental agreed to provide certain technical
      and consulting services to the Group Company and the Group Company’s
      subsidiaries (each a “VIE Entity” and collectively, the “VIE Entities”) in
      exchange for the payment by each VIE Entity of an annual development and
      consulting services fee that is to be determined solely by
      Oriental;





·
            Pursuant
      to an equity pledge agreement (the “Pledge Agreement”), entered into by
      and among Oriental and each of the Group Company Shareholders, the Group
      Company Shareholders agreed to pledge all of their equity interests in the
      Group Company (the “Equity Interests”), to Oriental as collateral security
      for Oriental’s collection of the fees under the Service
      Agreement;





·
            Pursuant
      to an option agreement (the “Option Agreement”), entered into by and among
      Oriental and each of the Group Company Shareholders, the Group Company
      Shareholders agreed to grant to Oriental an option to purchase, from time
      to time, all or a part of the Equity Interests, at the exercise price
      equal to the lowest possible price permitted by Chinese
    laws;





·
            Pursuant
      to separate powers of attorney (the “Powers of Attorney”), each Group
      Company Shareholder agreed to grant to Oriental a power to excise on his
      or her behalf all voting rights as a shareholder at the shareholders’
      meetings of the Group Company that have been given to him or her by law
      and by the Articles of Association of the Group Company;
    and





·
            Pursuant
      to an operating agreement, entered into by and among Oriental, the VIE
      Entities and the Group Company Shareholders, (a) Oriental agreed to act as
      the guarantor for the VIE Entities in the contracts, agreements or
      transactions in connection with the VIE Entities’ operation between the
      VIE Entities and any other third parties and to provide full guarantee for
      the VIE Entities in performing such contracts, agreements or transactions,
      subject to applicable laws, in exchange for which the VIE Entities agreed
      to mortgage the receivables of their operation and all of their assets
      which have not been mortgaged to any third parties to Oriental, and (b)
      the VIE Entities and the Group Company Shareholders agreed to accept the
      provision of the corporate policies and guidance by Oriental at any time
      in respect of the appointment and dismissal of the VIE Entities’
      employees, the VIE Entities’ daily operation and administration as well as
      financial administrative systems, including the appointment of senior
      managers recommended by Oriental (the “Operating Agreement” and together
      with the Service Agreement, Pledge Agreement, Option Agreement, Powers of
      Attorney, the PKU Equity Transfer Agreement, the Beijing Tian Hao Equity
      Transfer Agreement, the China TranWiseway Equity Transfer Agreement, the
      Zhangcheng Culture Equity Transfer Agreement, the Zhangcheng Science
      Equity Transfer Agreement, and the Shanghai Yootu Equity Transfer
      Agreement, the “Restructuring
Documents”).





The main
purpose of the Restructuring is to allow us to engage in the above three
restricted business segments in China.  As a result of the
Restructuring, we transferred all of our indirect equity interests in PKU and
PKU’s subsidiaries to the affiliated Group Company and accordingly, PKU and
PKU’s subsidiaries became direct and indirect subsidiaries of the Group Company,
which is wholly owned by the Group Company Shareholders who are all Chinese
citizens.  At the same time, through the Contractual Arrangement, we
maintain substantial control over the VIE Entities’ daily operations and
financial affairs, election of their senior executives and all matters requiring
shareholder approval.  Under FASB Interpretation No. 46R
“Consolidation of Variable Interest Entities” (“FIN 46R”), we are required to
consolidate the VIE Entities into our financial statements because the
Contractual Arrangement provides us with the risks and rewards associated with
equity ownership, even though we do not own any of the outstanding equity
interests in any of the VIE Entities.  As a result the Restructuring,
we are able to engage in these three restricted business segments through the
VIE Entities and derive the economic benefits that we would otherwise have as
the owner of VIE Entities while still complying with Chinese laws.




4


The
following chart reflects our organizational structure as of the date of this
report:







5


Our
Industry





Transportation in
China





Over the
past two decades, China has completed series of large-scale highway
infrastructure projects.  As a result, according to the Ministry of
Communication, China now has the second longest highway network in the world
with a total length of approximately 53,800 kilometers at the end of
2007.  In addition, China has approximately 70% of the world’s toll
highways according to highway management department of the Ministry of
Communication.  According to the China’s 11th 5-Year Plan, it is
estimated that the total mileage of urban rapid transit projects in China will
exceed 1,862 kilometers by 2010, with total new investment of nearly $74 billion
from 2006 to 2010.





China has
a population of about 1.33 billion, which accounts for about 20% of the world’s
population and makes it the most populous country in the world.  With
rapid economic development and urbanization, car ownership has increased
dramatically, leading to unprecedented transportation challenges in many cities
of China.  According to Traffic Management Bureau of Ministry of
Public Security, at the end of 2008 China had over 129 million private
vehicles.  The number is estimated to grow at least 5% over the next
several years. Given the current conditions, the Chinese government intends to
improve transportation management using advanced information technology
solutions. At the same time, motorists are also eager to have access to real
time traffic information.  This strong demand from the private and
public sectors is creating an unprecedented market opportunity for
transportation information products and services.





The
Ministry of Communication is the country’s highest level transportation
regulator.  In December 2004, the Ministry of Communication announced
a development plan for Chinese national highway system.  Under this
plan, China will expand its highway network to 65,000 kilometers by 2010, and to
85,000 kilometers by 2020.  After its completion, the Chinese national
highway network will connect all provincial capitals and cities with populations
of at least half-a-million.  Under the plan, the total investment in
the national highway network will be about $300 billion for the period from 2005
to 2020.  From 2005 to 2010, the annual investment in the plan is
expected to be approximately $22 billion, with an additional $14.5 billion to be
invested annually between 2010 to 2020.  Along with the new $584
billion of a new investment included in the recently announced Chinese economy
stimulus plan, the Ministry of Communication in November 2008 submitted its new
budget to the Chinese central government with the total investments in the
transportation sector at about $730 billion for the next 3 to 5
years.





Intelligent Transportation
Systems in China





Intelligent
Transportation Systems (“ITS”) provide information and data tools for different
types of transportation infrastructure by deploying solutions such as
communication, monitoring, tolling and planning.  The 14th World
Congress on ITS, defined ITS as comprehensive systems that integrate and apply
advanced information, communication, control, sensor, and computer technology to
effectively coordinate people, vehicles, and roads/rails to realize real-time
information transfer, as well as on-time, highly efficient, safe, and
energy-efficient transportation.





China’s
ITS industry is still at its early stage in terms of
developments.  Although China’s rapid economic growth over the past
decade and accelerating urbanization have led to development of its
transportation infrastructure, China has also recognized a need to use
nationwide transportation networks more efficiently and
effectively.  China began its ITS efforts in early 1990s with goals to
enhance transportation management efficiency, to improve network throughput, and
to reduce the negative effect of transportation to the economy and
environment.  In terms of highways, China has been investing heavily
in building up the ITS.  However, compared to an average proportion of
7%-10% of ITS investment to total highway investment in developed countries,
China has only reached about 1%.  Also, almost all highways are toll
highways in China, which means ITS is a necessity.  Given that China
is ranked second in total highway length and first in total toll highway mileage
in the world, a larger-scale, more advanced ITS is needed.  The
increasing urban and highway traffic density also drives continued developments
for ITS applications in communication and planning.  As increasingly
more urban and highway ITS gets deployed, the ITS market will shift towards
focusing on specialized information solutions and value-added information
services in the future.  The urban ITS market is also still at a very
initial development stage, comparable to that of the highway ITS market 10 years
ago.  On the other hand, this is a large but fragmented market with
great potential.




6


Despite
being at an early stage, the overall ITS market in China is highly attractive
due to rapidly developing transportation infrastructure and increasing demand
for ITS applications to manage it.  The unique characteristics of
China’s ITS industry mentioned above and the current low penetration level
underline the large market potential. China’s expanding transportation network,
along with its need for more effective and efficient transportation networks,
has led to the need for better ITS.  As a result of this and support
provided by recent central government policies, investment in the ITS industry
has increased significantly.  According to the Chinese government’s
11th 5-year Plan, the Chinese government is estimated to spend approximately
$7.3 billion on IT spending in the segments of transportation.  Even
though there is no current breakdown of IT spending from the new $730 billion
budget by the Ministry of Communication, we estimated that it would not go below
5% of the total spending.





Our Products and
Services





Our core
business is developing ITS in transportation sector utilizing GIS application
software and technologies.  We also develop GIS applications in
Digital City and land & resource areas.  When providing services
to customers for GIS application software, some of our customers require us to
purchase necessary hardware and provide system integration for
them.  Our major products and services are described as
follows:





Transportation
Planning Information System





Our
transportation planning information system is a software system utilized by
traffic management engineers to plan roads and water transportation, safety
monitoring and conduct strategic planning.  The system facilitates the
comprehensive management of different information and data required for traffic
planning such as national economic data, road and waterway data and digital
mapping data.  The system provides planners with information search
tools, statistical analysis and models to serve planning and organizing
needs.





Pavement
Maintenance System





Our
pavement maintenance system is a practical business application system developed
specifically for pavement data collection and operations
management.  Based on field data collected by PDA device and with the
support of backend data center, the system provides multiple functional modules,
such as data acquisition, project management, quality management, equipment
management, materials management, assessment analysis, business reports and
public travel information inquiries.  Pavement management system can
quickly identify pavement “diseases”, efficiently process related data, and
maintain information in a scientific manner for timely and accurate
supports.  It solves the problems from inefficiency of traditional
manual operations due to complexity of information.





Electronic
Toll Collection





ETC is a
technology that allows for electronic payment of tolls.  An ETC system
is able to determine if a car is registered in a toll payment program, alert
enforcers of toll payment violations, and debit the participating
account.  With ETC, these transactions can be performed without
stopping or slowing down the vehicles.  ETC is becoming a globally
accepted method of toll collection and a trend aided by the growth of
interoperable ETC technologies.  ETC is used in urban areas, bridges,
tunnels, high occupancy toll lanes, toll roads, and turnpikes.  Toll
charges are generally based on mileage, maintenance requirements, or congestion
levels.





Traffic
Information Service System





Our
Traffic Information Service System is a software system that provides the public
with real time road conditions and related information.  The system
continuously transmits transportation data gathered from sensory devices and
displays the results on an e-map interface.  The system also supports
web based search and analysis applications.





Taxi
Security Monitoring, Commanding and Dispatching Platform





Our Taxi
LED GPS Monitoring and Coordinating System is a highly integrated technological
system operated with wireless satellite communication.  It is used for
GPS, transmitting photos, alarms and information distribution, vehicle dispatch
by calls.  The system can be used for increasing safety and oversight
in the taxi industry as well as remote supervision and management of public
transportation.  The system is composed of a GPS monitoring management
center, imbedded GIS, an information transmitting center and onboard monitoring
terminal modules.  Built into the pre-existing telecommunication
network and integrated with an e-map, the system platform provides related
authorities with basic information such as the location of an accident, incident
time and images from within a taxi.  The system allows for better
coordination with emergency services.




7


GIS-T
(Transportation) Middleware





Our GIS-T
middleware is the product based on the mainstream GIS platform applied in the
traffic field.  With such middleware, the user can quickly establish
its own application systems without significant customizations.  This
product has strong applicability in traffic information management, model
analysis and visual expression and supports efficient integration of various
traffic information models and systems.





Traffic
Flow Surveying Solutions





We
provide transportation management authorities at provincial and municipal levels
with traffic flow surveying solutions, which include coil traffic flow detector,
microwave traffic flow detector and video traffic flow detector for base
stations as well as traffic flow intelligent data center.





Intelligent
Parking System





Our
Intelligent Parking Systems (“IPS”) obtain information about available parking
spaces, process it and then present it to drivers by means of variable message
signs.  Our IPS is used in two ways: to guide drivers in congested
areas to the nearest parking facility with available parking spaces and to guide
drivers within parking facilities to empty spaces.  Although the former
function is more common, guidance systems within parking lots are becoming more
common.  This growing number of guidance systems addresses drivers’ need
for more information about the position and number of the spaces that are
actually available within a parking structure.  IPS reduces time and fuel
otherwise wasted while searching for empty spaces and helps the parking facility
operate more efficiently.





Red
Light Violation Snapshot System





The red
light violation snapshot system is used to snap and record automatically red
light violations.  Our video red light violation snapshot system
consists of panorama camera, close-up camera and video trigger, license plate
identification modules, and LED directional fill light in relation to close-shot
camera.  The close-up camera captures the violating vehicles passing
through the monitoring area. It can snap one close-range picture and have
license plate identification.  Further, it interlinks with panorama
camera to continue snapping 2~3 panorama pictures to form complete evidence data
information.  In addition, it has such auxiliary functions of
automatically recording panorama, license plate feature, speed, passing time and
crossing name of vehicles in the snapshot directions.





Intelligent
Highway Vehicle Monitoring System





Our
highway vehicle monitoring system is used for image snapshot, license plate
identification, speed recording, and blacklist database verification of vehicles
passing through highway monitoring areas.  The system consists of
front-end testing unit (camera, video testing module, vehicle tester and LED
light) and main control unit (industrial control computer, system management
software and communications module).  The front-end system uploads
images and related data to the command center on real time basis.  The
central communications server, database server and PC workstation then analyze
and manage the uploaded data.  The system can be used for vehicle
speed automatic testing, which snaps speeding vehicle images and information,
and uploads to violation snapshot system for processing and
punishment.  The system also serve the purpose for traffic flow
testing, which provides data support for traffic control
authorities.




Intelligent
Traffic Management Platform





Our
intelligent traffic management platform is a comprehensive traffic management
platform specially developed for urban traffic command center and based on GIS
technologies.  It realizes data sharing and interaction among traffic
signal control, red light violation snapshot, traffic flow testing, traffic
direction, gate monitoring, GPS positioning, policy alarm system, and basic
traffic data for the purposes of surveillance, control, management, linkage,
preplan and coordination. It functions as an interface of all ITS subsystems and
is the main element for the successful integration of intelligent traffic
management system.  The intelligent traffic management platform
accomplishes such tasks as acquisition of road visual images, intersection
traffic violation evidences and records of vehicles passing through major urban
entrances and exits, analysis of traffic flow conditions, information of police
distribution situation, process of traffic accident data, and accomplishment of
system linkage and traffic management command.  It is the key integral
element of the whole intelligent traffic management system.




8


Dynamic
Traffic Information Service Platform





Our
dynamic traffic information service platform covers traffic information
collection, processing, distribution and operation.  By utilizing
arithmetic models based on the floating cars, the system provides complete
dynamic road traffic flow information and traffic event information collection,
processing and distribution. The system provides various communications channel
distribution means based on GPRS, EDGE, CDMA, 3G, RDS-TMC, DAB/DMB, CMMB,
Internet and call center. Such dynamic traffic information products can be
applicable for in-car GPS equipments, personal navigation devices (PND),
intelligent handsets (Windows Mobile/S60/KJAVA), UMPC, Internet and other
terminals.





Intelligent
Public Transport System





The bus
traffic systems in the cities of China are facing more and more severe
challenges.  With the growth of urban economy and the increase of
private vehicle ownerships, traffic congestions are worsening in cities ,
resulting in the increase of time spent on outgoing by bus, the decrease of
service level.  In addition, due to the traffic congestion and
increase of gas price, the operation costs for bus traffic rise.  Our
intelligent bus traffic system reconstructs traditional bus traffic systems with
information technology, which technically carries out the strategy of bus
traffic routes, improves the service level and management level of urban bus
traffic system.  The objective of intelligent bus system is to realize
efficiency in public transportation system in cities, to achieve efficient
utilizations of land resources and energy,  to ensure safe operation
of bus systems and increase quality of passenger transportation.





Palmcity
Navigation Engine





Our
PlamCity Explore Navigation Engine is an internet and mobile application based
open navigation system, which integrates mapping and navigation into Windows CE
(Windows Mobile) and internet applications.  By integrating map data,
point of interest data storage and management, navigation application
development and navigation application framework, PalmCity Explorer Navigation
Engine helps navigation application developers and navigation system
manufacturers develop unique products and services.





Comprehensive
Location Based Service Platform





Our
comprehensive location based service platform is a comprehensive transportation
information service platform based on GIS, GPS, ITS and communication
technologies.  By integrating the latest e-maps of China, highway and
city road information, vacant parking spaces, environment and weather
information, the system enables real time traffic information, collection,
transmission and reporting so as to provide navigation, bus transfers, real time
road conditions and location search tools.





Digital
City





We
provide full range digital services to many cities in China with the model of
“Planning-Construction-Operation”.  We analyze different requirements
of different regions or cities and designs specific information technology
systems and digital constructions based on unique requirements.  Our
typical clients in this segment are local governments, public service
departments and enterprises.


9
 2-D
and 3-D GIS





We
provide software platforms that utilize two-dimensional
GIS.  Two-dimensional GIS defines and presents special data utilizing
an “X” and “Y” axis.  Starting from the 1960s, two-dimensional GIS was
widely applied in a variety of sectors, including land management, power,
telecommunications and city planning.  We also provide software
platforms that utilize three-dimensional GIS.  Three-dimensional GIS
defines and presents special data utilizing an “X”, “Y” and “Z”
axis.  Compared with two-dimensional GIS, three-dimensional GIS
defines special data in a more accurate manner, and can present both the plane
and the vertical spatial relation.  Moreover, three-dimension GIS can
present and analyze more complicated spatial objectives than Computer Aided
Design (CAD) and other visualized software.  Three-dimensional GIS is
better suited for exploration, resource assessment, disaster warning, and
production management.  It is widely applied in many sectors such as
in natural resources (i.e. mineral resources, water resources, etc.) and
geology.




The
Markets for Our Products and Services





We have
been marketing and selling our products and services to four main submarkets
within the government and regulated sectors in China.  These segments
are Highway Information Systems; Urban Intelligent Transportation Systems;
Digital City, and Land & Resources.  Having built a customer base
over the years, our strategy is to not only deliver high quality products, but
also to provide ongoing value-added services so as to take advantage of any
maintenance requirements or technology upgrades that may become necessary in the
future.  We continue to penetrate these submarkets and believe that we
can take advantage of our experience by widening our scope of products and
services to include data collection and application service
operation.





Highway Information
Systems





Our
specially designed systems process and store national highway network data and
travelers’ information, such as highway information management systems, which
perform functions of archiving and retrieving highway data and provide
transportation analysis tools.  Decision support, predictive
information, and performance monitoring are some of ITS applications enabled by
highway ITS information management systems.  In addition, ITS
information management systems can assist in transportation planning, research,
and safety management.  Our major clients in this segment include the
Ministry of Communication, traffic management bureaus, highway management
bureaus, and municipal construction committees.





Urban Intelligent
Transportation Systems





Key ITS
applications for urban traffic management include incident management, signal
control, traveler information, and traffic surveillance, intelligent parking
indication system.  Urban ITS is a combination of basic traffic data,
electronic technology, wireless and wire communication technologies, which
relies on computer  and communication technologies to improve safety
and efficiency of urban traffic networks.  Traffic surveillance
provides monitoring functions in the urban ITS.  Most metropolitan
areas use loop detectors for traffic surveillance, and many use closed circuit
televisions.  There are also other types of surveillance tools, such
as radar, lasers, or video image processing equipments.  The use of
vehicles equipped with toll tags or global positioning systems as probes, to
determine travel times and locations, is also growing in
use.  Incident management provides real time incident reporting
functions in urban ITS, and it is commonly used by traffic management centers in
large metropolitan areas and cities.  In some large cities, such as
Los Angeles, traffic signal control is also centralized in the traffic
management center.  In many situations, traffic signal control systems
use traffic responsive signals to manage the traffic within urban
areas.  Such responsive signals can be single signals or a group of
interconnected signals.  Urban traffic management centers utilize all
traffic condition information collected from their ITS to give feedbacks and
suggestions to travelers.  Such information may be provided directly
to the public or to organizations who provide it to users through radio
broadcast, internet, or other means.  Some major types of traveler
information include pre-trip information, en-route driver information, en-route
transit information and route guidance.





Digital
City





Digital
City sector is designed to aid the Chinese government’s initiative to outfit all
major cities with broadband, wireless internet access, and information
technology infrastructure.  Many cities in China, especially in
southern China, have experienced rapid economic developments since early
90s.  However, the information infrastructures construction in these
cities does not match their economy developments.  We are one of the
pioneers to develop the “Digital City” concept in China . We provide full range
digital services to many cities in China with the model of
“Planning-Construction-Operation”.  We analyze different requirements
of different regions or cities and designs specific information technology
systems based on unique requirements.  Our typical clients in this
segment are local governments, public service departments and
enterprises.


10
 Land &
Resources





The
average IT spending in city geographical and land resources managements for each
city in China is about RMB 60 million (approximately $8.8
million).  Based on China’s 11th 5-year Plan, there are about 100
cities planning to complete GIS construction, which will lead to a RMB6 billion
(approximately $880 million) market in China.  Land resources systems
cover planning, analysis, statistics and construction management for mineral
resources.  In this business line, we have developed a city geological
information analysis system that provides tools to analyze the geological
environment based on the integration of a variety of geological information,
such as determining the underground structure for city planning and
construction.  In addition, we have created a disaster forecast system
and a mineral resources assessment system that provides a platform to assess the
reserves and then help to make decisions regarding the development of the
mineral resources by setting up assessment models of mineral
resources.





Our Intellectual
Property




The
following table illustrates the title of different copyright that we own, their
registration numbers, first publication dates and issuance dates:





Copyright Title
                      
                      Certificate
                        Number
                      
                      Registration
                        Number
                      
                      First
                        Publication
                        Date
                      
                      Issue DateComputer
      Software Copyright Registered Certificate (JTLWeb V1.0)
                      
                      028661
                      
                      2004SR10260
                      
                      09.08.2004
                      
                      10.21.2004Computer
      Software Copyright Registered Certificate ( Land & Resources and House
      Affairs Information System V1.0)
                      
                      027924
                      
                      2004SR09523
                      
                      06.15.2004
                      
                      09.29.2004Computer
      Software Copyright Registered Certificate (GeoPad V1.0)
                      
                      002827
                      
                      2002SR2827
                      
                      09.01.2002
                      
                      09.24.2002Computer
      Software Copyright Registered Certificate (Command System of Meeting
      Urgent Need for Urban Public Emergencies V1.0)
                      
                      009303
                      
                      2003SR4212
                      
                      05.10.2003
                      
                      06.9.2003Computer
      Software Copyright Registered Certificate (GeoWeb V1.0)
                      
                      006881
                      
                      2003SR1790
                      
                      09.05.2002
                      
                      03.19.2003Computer
      Software Copyright Registered Certificate (EnvMonitor 1.0)
                      
                      004358
                      
                      2002SR4358
                      
                      05.18.2002
                      
                      12.6.2002Computer
      Software Copyright Registered Certificate (TranPlan 1.0)
    V1.0
                      
                      003664
                      
                      2002SR3664
                      
                      06.18.2002
                      
                      11.11.2002Computer
      Software Copyright Registered Certificate ( (e-Gov.Suite 1.0) V
      1.0)
                      
                      000823
                      
                      2002SR0823
                      
                      05.23.2002
                      
                      07.04.2002Computer
      Software Copyright Registered Certificate (Sm@rtOA 1.0) V
    1.0
                      
                      000824
                      
                      2002SR0824
                      
                      09.28.2001
                      
                      07.04.2002




11


Computer
      Software Copyright Registered Certificate (WebMap Engine) V
      1.0
                  
                  0009123
                  
                  2001SR2190
                  
                  07.08.2001
                  
                  07.30.2001Computer
      Software Copyright Registered Certificate (Environment Geo V
      1.0)
                  
                  062877
                  
                  2006SR15211
                  
                  11.30.2005
                  
                  10.31.2006Computer
      Software Copyright Registered Certificate (Environment Protection
      Emergency Conduct System V 1.0)
                  
                  062879
                  
                  2006SR15213
                  
                  11.30.2005
                  
                  10.31.2006Computer
      Software Copyright Registered Certificate (Land and Resources Files’
      Collection System V 1.0)
                  
                  063008
                  
                  2006SR15342
                  
                  06.30.2006
                  
                  11.02.2006Computer
      Software Copyright Registered Certificate(Embed-3D-GIS
    V1.0)
                  
                  071603
                  
                  2007SR05608
                  
                  01.30.2007
                  
                  04.17.2007Computer
      Software Copyright Registered Certificate(Environment Protection Emergency
      Conduct System V 1.0)
                  
                  063509
                  
                  2006SR15843
                  
                  04.30.2006
                  
                  11.13.2006Computer
      Software Copyright Registered Certificate(Environment Information System V
      1.0)
                  
                  063510
                  
                  2006SR15844
                  
                  04.30.2006
                  
                  11.13.2006Computer
      Software Copyright Registered Certificate(Land and Resources Information
      Management System V 1.0)
                  
                  063508
                  
                  2006SR15842
                  
                  06.30.2006
                  
                  11.13.2006Computer
      Software Copyright Registered Certificate(GeoWeb For Linux)
      V1.0
                  
                  086634
                  
                  2007SR20639
                  
                  05.10.2007
                  
                  12.24.2007Computer
      Software Copyright Registered Certificate (Water Carriage Information
      System) V1.0
                  
                  BJ10658
                  
                  2008SRBJ0352
                  
                  06.25.2006
                  
                  02.03.2008Computer
      Software Copyright Registered Certificate(Intelligent Parking Guide
      System) V1.0
                  
                  BJ10662
                  
                  2008SRBJ0356
                  
                  06.30.2007
                  
                  02.03.2008Computer
      Software Copyright Registered Certificate(Urban Geological Information
      Management and Services System) V1.0
                  
                  BJ10679
                  
                  2008SRBJ0373
                  
                  10.10.2007
                  
                  02.03.2008Computer
      Software Copyright Registered Certificate(Exploiter Navigation Software
      V1.0)
                  
                  BJ10485
                  
                  2008SRBJ0179
                  
                  11.20.2007
                  
                  01.16.2008Computer
      Software Copyright Registered Certificate(Location Services Platform
      System V 1.0)
                  
                  088919
                  
                  2008SR01740
                  
                  11.15.2007
                  
                  01.24.2008Computer
      Software Copyright Registered Certificate(Taxi Security Alarm System
      Certificate (V1.0)
                  
                  BJ16618
                  
                  2008SRBJ6312
                  
                  11.22.2008
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(City One Card Solution
      Consumption Real Time Transaction System) V1.0
                  
                  BJ16638
                  
                  2008SRBJ6332
                  
                  09.12.2008
                  
                  12.13.2008




12




Computer
      Software Copyright Registered Certificate(Taxi Monitoring Management
      System v1.0)
                  
                  BJ16626
                  
                  2008SRBJ6320
                  
                  11.18.2008
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(Taxi Calling System
      V1.0)
                  
                  BJ16653
                  
                  2008SRBJ6347
                  
                  09.18.2008
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(Advertisement Contract
      Management System V1.0)
                  
                  BJ16612
                  
                  2008SRBJ6306
                  
                  10.21.2008
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(Advertisement Business
      Information Processing  System V1.0)
                  
                  BJ16639
                  
                  2008SRBJ6333
                  
                  09.26.2008
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(Media
      Call Center Business Management  System V1.0)
                  
                  BJ16620
                  
                  2008SRBJ6314
                  
                  10.27.2008
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(Real Time Information
      Broadcasting System V1.0)
                  
                  BJ16615
                  
                  2008SRBJ6309
                  
                  09.30.2008
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(Electronic Project Management
      System V1.0)
                  
                  BJ16795
                  
                  2008SRBJ6489
                  
                  10.20.2008
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(Data Collection System
      V1.0)
                  
                  BJ16796
                  
                  2008SRBJ6490
                  
                  09.18.2008
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(Employee Information Management
      System V1.0)
                  
                  BJ16809
                  
                  2008SRBJ6503
                  
                  11.20.2008
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(Digitalization Assets Management
      System V1.0)
                  
                  BJ16797
                  
                  2008SRBJ6491
                  
                  06.10.2008
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(Logistics Information System
      V1.0)
                  
                  BJ16793
                  
                  2008SRBJ6487
                  
                  01.20.2008
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(Students Archive Management
      System V1.0)
                  
                  BJ16808
                  
                  2008SRBJ6502
                  
                  12.10.2007
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(Product Selling Monitoring
      System V1.0)
                  
                  BJ16792
                  
                  2008SRBJ6486
                  
                  01.20.2007
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(E-business Shopping System
      V1.0)
                  
                  BJ16794
                  
                  2008SRBJ6488
                  
                  08.16.2007
                  
                  12.13.2008Computer
      Software Copyright Registered Certificate(Expressway
      ETC System V1.0)
                  
                  BJ16694
                  
                  2008SRBJ6388
                  
                  10.30.2008
                  
                  12.13.2008




13




Computer
      Software Copyright Registered Certificate(GIS-T Expressway Equipment
      Management System V1.0)
              
              BJ16771
              
              2008SRBJ6465
              
              10.21.2008
              
              12.13.2008Computer
      Software Copyright Registered Certificate(Highway Data Collection and
      Distribution System V1.0)
              
              BJ16770
              
              2008SRBJ6464
              
              10.29.2008
              
              12.13.2008Computer
      Software Copyright Registered Certificate(Highway Transportation
      Indication System V1.0)
              
              BJ16769
              
              2008SRBJ6463
              
              08.20.2008
              
              12.13.2008Computer
      Software Copyright Registered Certificate(Expressway Emergency Command and
      Monitoring System V1.0)
              
              BJ16699
              
              2008SRBJ6393
              
              09.10.2008
              
              12.13.2008Computer
      Software Copyright Registered Certificate(Traffic Information Service
      System V1.0)
              
              BJ16751
              
              2008SRBJ6445
              
              10.22.2008
              
              12.13.2008Computer
      Software Copyright Registered Certificate(Urban Intelligent Traffic
      Management System V1.0)
              
              BJ16906
              
              2008SRBJ6600
              
              12.20.2008
              
              12.13.2008Computer
      Software Copyright Registered Certificate(Urban
      Traffic Information Decision-making and Analysis System
    V1.0)
              
              BJ16926
              
              2008SRBJ6620
              
              11.18.2008
              
              12.13.2008Computer
      Software Copyright Registered Certificate(Appropriative GIS
      V1.0)
              
              BJ16928
              
              2008SRBJ6622
              
              12.10.2007
              
              12.13.2008Computer
      Software Copyright Registered Certificate(Highway Information Total
      Solution and Decision-analysis System V1.0)
              
              BJ16927
              
              2008SRBJ6621
              
              05.18.2007
              
              12.13.2008Computer
      Software Copyright Registered Certificate(Red Light Violation Snapshot
      System V1.0)
              
              BJ16905
              
              2008SRBJ6599
              
              09.20.2008
              
              12.13.2008Computer
      Software Copyright Registered Certificate(Highway Vehicles Intelligent
      Testing and Recording System V1.0)
              
              BJ16876
              
              2008SRBJ6570
              
              11.20.2007
              
              12.13.2008Computer
      Software Copyright Registered Certificate(Information Software
      Platform-unifying Software V1.0)
              
              BJ16468
              
              2008SRBJ6162
              
              09.25.2007
              
              12.13.2008Computer
      Software Copyright Registered Certificate(Public Sanitation Quality
      Monitoring and Alarm System V1.0)
              
              BJ16457
              
              2008SRBJ6151
              
              10.30.2008
              
              12.13.2008Computer
      Software Copyright Registered Certificate(Human Resource Management System
      V1.0)
              
              BJ16428
              
              2008SRBJ6122
              
              10.20.2008
              
              12.13.2008




14


Computer
      Software Copyright Registered Certificate(Local Sanitation Information
      Platform V1.0)
            
            BJ16450
            
            2008SRBJ6144
            
            10.10.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Management Competition Imitation
      Platform V1.0)
            
            BJ16424
            
            2008SRBJ6118
            
            10.14.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Disabled Association Job
      Information Management System V1.0)
            
            BJ16473
            
            2008SRBJ6167
            
            09.08.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Message Service Platform
      V1.0)
            
            BJ16423
            
            2008SRBJ6117
            
            09.30.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Telecom Value-added Service
      System V1.0)
            
            BJ16422
            
            2008SRBJ6116
            
            10.25.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Emergency Command and Prevention
      System V1.0)
            
            BJ16472
            
            2008SRBJ6166
            
            10.22.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Palmcity WebGIS Engine
      V1.0)
            
            BJ16589
            
            2008SRBJ6283
            
            04.10.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Mobile Map Software
      V1.0)
            
            BJ16591
            
            2008SRBJ6285
            
            05.10.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Multiple-source Traffic
      Information Integration System V1.0)
            
            BJ16629
            
            2008SRBJ6323
            
            08.26.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Palmcity Traffic information
      collection System V1.0)
            
            BJ16605
            
            2008SRBJ6299
            
            10.30.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(PalmCity Floating Car Data
      Processing System V1.0)
            
            BJ16628
            
            2008SRBJ6322
            
            05.30.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(PalmCity Information Exchange
      Platform V1.0)
            
            BJ16631
            
            2008SRBJ6325
            
            06.21.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(PalmCity In-car PND
      Comprehensive Information System V1.0)
            
            BJ16617
            
            2008SRBJ6311
            
            10.31.2007
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Super GIS Data Comprehensive
      Integration System V1.0)
            
            BJ16604
            
            2008SRBJ6298
            
            10.26.2008
            
            12.13.2008




15


Computer
      Software Copyright Registered Certificate(Water Transportation Flow
      Investigation VTS System V1.0)
            
            BJ16641
            
            2008SRBJ6335
            
            11.12.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Highway Traffic Flow
      Investigation Data Center V1.0)
            
            BJ16507
            
            2008SRBJ6201
            
            09.30.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Highway Traffic Flow GIS System
      V1.0)
            
            BJ16476
            
            2008SRBJ6170
            
            10.27.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Highway Traffic Flow
      Investigation Equipment Long-distance Monitoring Platform
      V1.0)
            
            BJ16557
            
            2008SRBJ6251
            
            09.30.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Coil Traffic Flow Data
      Collection System V1.0)
            
            BJ16621
            
            2008SRBJ6315
            
            10.28.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Video Traffic Flow Data
      Collection System V1.0)
            
            BJ16643
            
            2008SRBJ6337
            
            11.20.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Video Traffic Flow Investigation
      - Digital Image Processing System  V1.0)
            
            BJ16622
            
            2008SRBJ6316
            
            11.06.2008
            
            12.13.2008Computer
      Software Copyright Registered Certificate(Video Traffic Flow Investigation
      Watching-dog System V1.0)
            
            BJ16627
            
            2008SRBJ6321
            
            10.10.2008
            
            12.13.2008




Research
and Development





In 2008
and 2007, our research and development expenses amounted to approximately $2.60
million and $0.96 million, respectively.  These expenses were mainly
composed of staff costs and research and development equipment purchasing
expenses.





Our
Research and Development (R&D) Department consists of two departments, one
is internal and the other is external, which involves our strategic relationship
with the GeoSIS Laboratory at Peking University.





Internal
R&D Department





Our
internal R&D department consists of 140 researchers with extensive
experience in the GIS and transportation information industry.  Many
of these researchers have worked at multinational corporations.





The
primary focus of the internal R&D department is to analyze customer demands
and develop application software products, with the use of the most highly
advanced software development tools available today.




16


Our
research department is also responsible for monitoring developments in the
market for our services so that they can develop new products or improve upon
existing products by adopting new technologies and skills.





In
addition, the department is responsible for creating training and support
manuals and creating new processes for implementation of our software
products.





Strategic
R&D Partnership with Peking University





PKU was
established in connection with the Peking University’s GeoSIS Laboratory in
order to provide university researchers with real life opportunities to test and
implement the discoveries created at the University. On August 6, 2005, PKU
entered into a cooperation agreement (the “Cooperation Agreement”), with Earth
and Space College of Peking University, pursuant to which PKU obtained the
access to the university’s GeoSIS Research Lab, which houses over thirty PhDs
and researchers to support PKU’s research and development
initiatives.  Under the Cooperation Agreement, we pay for all R&D
expenses of the GeoSIS Laboratory.  The Cooperation Agreement has a
three-year term that has been automatically renewed for an additional three
year.





Our
Major Customers





The
following table provides information on our most significant clients in fiscal
year 2008.





TOP
TEN CLIENTS IN 2008


No.
                                            
                                            Name
                                            
                                            Description
      of Client
                                            
                                            Sales
                                              (in thousands of
                                              US
                                              dollars)
                                            
                                            Percentage
                                              of Total
                                              Sales1
                                            
                                            Beijing
      Zhongjiaokeruan Technology Co., Ltd.
                                            
                                            High-tech
      company  in transportation information application
      development
                                            
                                            
                                            3,045
                                            
                                            
                                            10.37
                                            %2
                                            
                                            Beijing
      Feiwu Technology Co., Ltd.
                                            
                                            High-tech
      company in telecom and electronic products
                                            
                                            
                                            1,661
                                            
                                            
                                            5.66
                                            %3
                                            
                                            China
      Construction 1st
      Division Group Construction & Development Co., Ltd.
                                            
                                            A
      state-owned construction company
                                            
                                            
                                            1,489
                                            
                                            
                                            5.07
                                            %4
                                            
                                            United
      Real Estate Development Co., Ltd.
                                            
                                            A
      real estate development company
                                            
                                            
                                            1,430
                                            
                                            
                                            4.87
                                            %5
                                            
                                            Transportation
      Planning & Research Institute
                                            
                                            An
      institute under Ministry of Communication
                                            
                                            
                                            1,372
                                            
                                            
                                            4.67
                                            %6
                                            
                                            Beijing
      Transportation Information Center
                                            
                                            City-level
      governmental transportation department
                                            
                                            
                                            991
                                            
                                            
                                            3.37
                                            %7
                                            
                                            Beijing
      Transportation Committee
                                            
                                            City-level
      governmental transportation department
                                            
                                            
                                            903
                                            
                                            
                                            3.07
                                            %8
                                            
                                            Beijing
      Municipal Bureau of Land & Resources
                                            
                                            City-level
      governmental land and resource department
                                            
                                            
                                            876
                                            
                                            
                                            2.98
                                            %9
                                            
                                            Sichuan
      Province Transportation Information Center
                                            
                                            Provincial
      governmental transportation department
                                            
                                            
                                            814
                                            
                                            
                                            2.77
                                            %10
                                            
                                            Beijing
      Traffic Management  Bureau
                                            
                                            City-level
      governmental transportation department
                                            
                                            
                                            627
                                            
                                            
                                            2.14
                                            %TOTAL
                                            
                                            
                                            
                                            
                                            13,208
                                            
                                            
                                            44.97
                                            %




17




Regulation





Because
our operating VIE entities are located in the PRC, our business are regulated by
the national and local laws of the PRC.  There are no specific rules
or regulations for a company engaged in software development other than mapping
which is highly regulated in China.





In
addition, we and our PRC subsidiaries are considered foreign persons or
foreign-invested enterprises under PRC laws, and therefore subject to foreign
ownership restrictions in connection with our online services, advertising in
taxies, and security and surveillance related businesses:





Online
Service





On
December 11, 2001, the State Council of China promulgated the Regulations on the Administration of
Foreign Invested Telecommunication Enterprises(the “FITE
Regulations”),which
became effective on January 1, 2002.  Under the FITE Regulations, a
foreign entity is prohibited from owning more than 50% of equity of a provider
of value-added telecommunications services in China, which include internet
content provision services.  In addition, the current Catalogue of Industries for Guiding
Foreign Investment (Revised 2007) prohibits a foreign
investor from investing in businesses such as news websites and web streaming
audio-visual services.  As a result, if we or our former Chinese
subsidiaries had invested directly in the value-added telecommunications
services in China, we would have had at most 50% of the ownership of the
business and thus only consolidated no more than 50% of the revenues generated
from such business.





Taxi
Advertising





For an
advertising business involving foreign investment, there have been rigid
overseas operation requirements on the foreign investors under the current
Chinese laws.  Pursuant to the Provisions on Administration of
Foreign Invested Advertising Enterprises promulgated by the State
Administration for Industry & Commerce and the Ministry of Commerce of China
on March 2, 2004, for a wholly foreign owned advertising enterprise, the foreign
investors must have at least three years of direct operations in the advertising
business outside of China.  In case of a joint venture, foreign
investors must have at least two years of direct operations in the advertising
business outside of China.  However, a domestic company without direct
foreign investment is not ubject to any of these restrictions.




Security and Surveillance
Related Business




While
there is no Chinese law or regulation specifically prohibiting foreign
investment in the security and surveillance related business in China, the
nature of this business implies that a vast majority of the customers of this
business are governmental entities.  Maintaining the confidentiality
of sensitive information about national security and other various governmental
affairs is one of the most important concerns of these government
customers.  Therefore, as a practicable matter, governmental entities
are more willing to have business relations with purely domestic companies than
a company involving foreign investment where confidential governmental
information is concerned.


18


In order
to comply with these legal restrictions, on February 3, 2009, we conducted the
Restructuring and entered into the Contractual Arrangement with the VIE
Entities.  These arrangements enable us to operate these restricted
businesses through these VIE Entities in which we do not hold a direct equity
interest.  For more information on the regulatory and other risks
associated with our contractual agreements related to our VIE Entities, please
see the discussion below Item 1A, “Risk Factors.”
 
 We are
also subject to PRC’s foreign currency regulations.  The PRC
government has controlled Renminbi reserves primarily through direct regulation
of the conversion of Renminbi into other foreign currencies. Although foreign
currencies, which are required for “current account” transactions, can be bought
freely at authorized PRC banks, the proper procedural requirements prescribed by
PRC law must be met. At the same time, PRC companies are also required to sell
their foreign exchange earnings to authorized PRC banks and the purchase of
foreign currencies for capital account transactions still requires prior
approval of the PRC government.
 
 Our
Competition
 
 Competition
in China’s transportation information industry is very fragmented and consists
of a combination of a few foreign competitors and many domestic transportation
information technology companies.  Whereas most international
competitors seek to provide component software for the industry, our focus is on
developing application software and services for the Chinese government and
regulated sectors.
 
 There are
several competitive factors in the transportation information industry in
China.  We believe customers are generally looking for a provider to
have strong research and development, a quality brand name built upon a
successful record of accomplishment and a superior management team that can
execute.  Compared to our competitors, we believe we have the
following competitive advantages over most of our competitors:
 
 Leading-Edge R&D
Team-Our research and development team has a strong and extensive technology
background and has been an early entrant into the three-dimensional GIS market.
The head of our research and development team was the lead engineering architect
of the first GIS platform software (Chinese Excellence Software Award, 1995)
platform, the first and only three-dimensional GIS platform software in
China.
 
 Award Winning Technology-Since
the inception, we have won over nine product awards, including the National
Transportation Planning System and Digital City Program award. Such award
winning technology gives the Company a great advantage and gives customers a
sense of security that they are purchasing a quality product.
 
 Application Experience- We have
successfully built a track record with a customer base in various market
segments including transportation, land resource and city geography to name a
few. We plan to leverage our experience to obtain new and recurring
business.
 
 Brand Image - Our affiliation
with Peking University has made us a more recognizable brand in the industry.
Our brand is recognized for quality products and application
experience.
  Superior Management- Members
of our executive management team are the first GIS software developers in
China.
 
 Operational and Quality
Management - We are ISO9000 certified and conduct internal performance
assessment system 3 times a year.
 
 We
experience competition from both foreign and domestic Chinese
competitors.  The following is a description of some of our major
competitors:
 
 Foreign
Competitors
 
 ·
              Image
      Sensing System, Inc. (ISS) -ISS is headquartered in St. Paul, Minnesota, a
      technology company focused in infrastructure productivity improvement
      through the development of software-based detection solutions for the
      Intelligent Transportation Systems (ITS) sector and adjacent overlapping
      markets.  ISS’s industry leading computer-enabled detection
      (CED) products combine embedded software signal processing with sensing
      technologies for use in transportation, environmental and
      safety/surveillance management.
  19
  With more
than 90,000 instances sold in over 60 countries worldwide, its products position
to the traffic, security and environmental management markets.
 
 ·
              Satellic
      Traffic Management GmbH - Satellic Traffic Management GmbH (Satellic) is a
      global technology service provider for the setup and operation of
      progressive toll and traffic management systems.  Satellic is a
      wholly-owned subsidiary of T-Systems, the business customers segment of
      Deutsche Telekom.  The company, which was founded in 2005, has
      its headquarters in Berlin. Satellic advises governments, companies and
      associations and is breaking new ground, together with industrial partners
      on site, in the implementation of traffic infrastructure projects. The
      company develops new concepts (public private partnership) for financing,
      traffic management and for emissions
protection.
 
 ·
              Vehicle
      Information and Communication System Center - Vehicle Information and
      Communication System Center, founded in 1995 in Tokyo, Japan, is involving
      of the business of systematical gathering, processing , and
      editing  road traffic information, and managing and operating
      traffic information system by using communication and broadcasting media,
      and in turn transmitting accurate traffic information to drivers via
      in-vehicle navigation devices.
 
 ·
              Organization
      for Road System Enhancement - Organization for Road System Enhancement
      (ORSE), was founded in 1999 in Japan.  ORSE’s business is about
      all hand business of ETC system in Japanese market including disclosing
      standard for data security in ETC systems, providing processed data for
      identical ETC systems and developed ETC related
    technologies.
 
 ·
              Navteq  -
      Navteq is a world leader in premium-quality digital map data. Its
      data has been widely applied in-vehicle navigation systems in North
      America and Europe.   Founded in California in 1985, this
      company has been acquired by Nokia in 2008.  Currently, NAVTEQ
      has more than 4,000 employees worldwide located in 196 offices in 36
      countries.
  The
products offered by our foreign competitors are priced higher than our
products.  In addition, their software cannot be applied in China
without significant modification due to differing industry standards and
background.  For these reasons, we do not foresee much competition
from these international competitors in the area of transportation information
application software.
 
 Domestic Chinese
Competitors
 
 ·
              Beijing
      E-Hualu Info Technology Co., Ltd. (E-Hualu) - Founded in 2001, based in
      Beijing, E-hualu is involved inlving the business of design and
      construction of intelligent traffic projects, and the urban traffic
      command center software development and system integration
      technology.  E-Hualu has developed a series of traffic
      management application software & hardware systems with independent
      intellectual property and cooperated with police departments for urban
      public security and traffic command center
  constructions.
 
 ·
              Beijing
      Rhytech Co., Ltd. (Rhytech) - Based in Beijing, Rhytech is focusing on
      intelligent traffic sector including inter-city intelligent traffic
      management system, police intelligent traffic management system, railway
      and tunnel intelligent traffic management system and other value-added
      intelligent traffic service. Currently, the company has 3 offices
      throughout China.
 
 ·
              BOCO
      Inter-Telecom Holding Co., Ltd. (BOCO Inter-Telecom) - BOCO Inter-Telecom
      has been listed in Shanghai stock market of A-Share with ticker 600289
      since 2000. Affiliated with Beijing University of Posts and
      Telecommunications, BOCO Inter-Telecom’s main business includes telecom
      operation support systems, information security systems and intelligent
      traffic systems. Its intelligent traffic systems are mainly highway
      management systems, highway maintenance systems and electronic toll
      collection systems.
  20
  ·
              Qingdao
      Hisense TransTech Co., Ltd.( QHNTC) - QHNTC was founded in October 1998.
      It is a subsidiary of Hisense Co., Ltd.  QHNTC engages itself in
      the development and service of intelligent traffic systems (ITS). Focusing
      on urban traffic, public transport, logistics and commercial service, the
      company has developed several proprietary rights in traffic light control
      systems and urban public security & traffic comprehensive information
      platforms and other public transportation
  systems.
 
 ·
              Beijing
      Stone Intelligent Transportation System Integration Co., Ltd. - This
      company focuses on intelligent transportation System, traffic engineering
      technical system, traffic information system and other serial traffic
      products.
 
 ·
              Guangzhou
      Heartly Teamgo Information System Engineering Co., Ltd. (Heartly Teamgo) -
      Based in Guanzhou, Guandong Province, founded in 1997, Heartly Teamgo is
      engaging in  intelligent traffic products development, solution
      and system integration. Mainly dedicated in Guangdong province, this
      company has developed city intelligent public transportation system,
      public media information display system, electronic bulletin boards and
      GPS in-car platform, etc. The company has completed Guangzhou parking
      systems, public transportation sensor dispatch system and related
      projects.
 
 ·
              CenNavi
      Technologies Co., Ltd (CenNavi) - Founded in 2005, CenNavi collects,
      processes, distributes and optimizes dynamic traffic information
      technologies. This company provides real-time traffic information services
      for vehicle terminals, PND terminals, mobiles phones and internets as well
      as supports traffic information display and optimal route query to above
      terminals. Acquired by China's largest navigable e-map
      manufacturer—NavInfo, this company’s products are mainly sold in vehicle
      market currently.
 
 ·
              Shenzhen
      GENVICT Technologies Co., Ltd. (GENVICT) - GENVICT is a high-tech
      corporation specialized in developing, designing, manufacturing, supplying
      and technical services of Intelligent Transportation System (ITS) devices,
      IC card readers, embedded intelligent terminals and related hardware
      products. The company is headquartered in Shenzhen, with major customers
      as expressway, public security, traffic control, finance, urban traffic
      authorities.
 
 ·
              NAVINFO
      - This company is a navigable map and dynamic content service provider in
      China with over 10-year history in navigation map production. It is the
      first map producer in China that supports dynamic traffic information
      release and navigation application.
 
 NavInfo
is a leading company in China’s vehicle navigable map market and is an all-round
big player in the fields of portable navigation, (location based services) LBS
and Internet–based location services and traffic information services.
Currently, NavInfo map data have been mainly applied in vehicle navigation
market and also applied in portable navigation market, Internet-based location
service providers and mobile phone operators in China.
 
 Raw
Materials
 
 Since we
are in the business of developing software applications and providing related
services, we do not utilize any significant amount of raw materials. All of the
raw materials needed for our business are readily available from several
different suppliers and at market driven prices. The company only purchases
computers and other software in order to provide its services and software
applications to customers.
 
 Our
Employees
 
 As of
December 31, 2008, we employed a total of 340 full-time employees. The following
table sets forth the number of our employees by function as of December 31,
2008.
  21
  Department
                            
                            Number of
                              EmployeesSoftware
      Development
                            
                            
                            140Quality
      Control
                            
                            
                            34Sales
      and Marketing
                            
                            
                            73Administration
                            
                            
                            63Human
      Resources
                            
                            
                            8Finance
                            
                            
                            22Total
                            
                            
                            340
 
 Our
employees are not represented by a labor organization or covered by a collective
bargaining agreement.  We have not experienced any work
stoppages.  We are required under PRC law to make contributions to the
employee benefit plans at specified percentages of the after-tax profit. In
addition, we are required by the PRC law to cover employees in China with
various types of social insurance.  We believe that we are in material
compliance with the relevant PRC laws.
 
 We
believe that we maintain a satisfactory working relationship with our employees
and we have not experienced any significant labor disputes or any difficulty in
recruiting staff for our operations.
 
 Seasonality
 
 Our
results of operations are not materially affected by seasonality and we do not
expect seasonality to cause any material impact on our operations in the
future.
 
 ITEM
1A.    RISK FACTORS
 
 You
should carefully consider the risks described below, together with all of the
other information included in this report.  If any of the following
risks actually occurs, our business, financial condition or results of
operations could suffer. In that case, the trading price of our common stock
could decline.  You should also refer to the other information about
us contained in this report, including our financial statements and related
notes.
 
 RISKS
RELATED TO OUR BUSINESS
 
 In order to
comply with PRC regulatory requirements, we operate our businesses through
companies with which we have contractual relationships but in which we do not
have controlling ownership.  If the PRC government determines that our
agreements with these companies are not in compliance with applicable
regulations, our business in the PRC could be materially adversely
affected.
 
 The
Chinese government restricts foreign investment in certain business segments
including online services, taxi advertising, and security and surveillance
related businesses.  Accordingly we transferred all of our indirect
equity interests in PKU and PKU’s subsidiaries to the affiliated Group Company
and as a result, PKU and PKU’s subsidiaries became direct and indirect
subsidiaries of the Group Company, which is wholly owned by the Group Company
Shareholders who are all Chinese citizens.  At the same time, we are
able to control these VIE Entities and operate these businesses through
contractual arrangements with the respective companies and their individual
owners, but we have no equity control over these companies.
 
 Although
we believe the Restructuring and our current business operations are in
compliance with the current laws in China, we cannot be sure that the PRC
government would view our operating arrangements to be in compliance with PRC
regulations that may be adopted in the future.  If we are determined
not to be in compliance, the PRC government could levy fines, 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 business, corporate structure or operations, impose additional conditions or
requirements with which we may not be able to comply, impose restrictions on our
business operations or on our customers, or take other regulatory or enforcement
actions against us that could be harmful to our business.  As a
result, our business in the PRC could be materially adversely
affected.
  22
  We rely on
contractual arrangements with our VIE Entities for our operations, which may not
be as effective in providing control over these entities as direct
ownership.
 
 Our
operations are dependent on our VIE Entities in which we have no equity
ownership interest and must rely on contractual arrangements pursuant to the
Restructuring Documents to control and operate the businesses of the VIE
Entities.  These contractual arrangements may not be as effective in
providing control over these entities as direct ownership.  For
example, the VIE Entities may be unwilling or unable to perform their
obligations under our commercial agreements with them, including payment of
annual development and consulting fees under the Service Agreement as they
become due, we will not be able to conduct our operations in the manner
currently planned.  In addition, the VIE Entities may seek to renew
their agreements on terms that are disadvantageous to us.  Although we
have entered into a series of agreements that provide us with substantial
ability to control the VIE Entities, we may not succeed in enforcing our rights
under them by relying on legal remedies under Chinese law, which may not be
adequate.  In addition, if we are unable to renew these agreements on
favorable terms when these agreements expire, or to enter into similar
agreements with other parties, our business may not be able to operate or
expand, and our operating expenses may significantly increase.
 
 The
shareholders of the Group Company may have potential conflicts of interests with
us, which may adversely affect our business.
 
 We
operate our businesses in China though the Group Company, which is wholly owned
by our four Chinese affiliates: Shudong Xia, our Chairman, CEO and President and
the beneficial owner of approximately 43% of the Company’s outstanding capital
stock, Zhiping Zhang, our Vice President of Research and Development, Zhibin
Lai, our Vice President and Wei Gao, the designee of SAIF Partners III L.P., our
11% shareholder.  Conflicts of interests between their duties to us
and to the Group Company and its subsidiaries may arise.  We cannot
assure you that when conflicts of interest arise, any or all of these persons
will act in the best interests of our company or that any conflict of interest
will be resolved in our favor.  These conflicts may result in
management decisions that could negatively affect our operations and potentially
result in the loss of opportunities.
 
 Our
arrangements with the VIE Entities and its shareholders may be subject to a
transfer pricing adjustment by the PRC tax authorities which could have an
adverse effect on our income and expenses.
 
 We could
face material and adverse tax consequences if the PRC tax authorities determine
that our contracts with the VIE Entities and its shareholders were not entered
into based on arm’s length negotiations.  Although our contractual
arrangements are similar to other companies conducting similar operations in
China, if the PRC tax authorities determine that these contracts were not
entered into on an arm’s length basis, they may adjust our income and expenses
for PRC tax purposes in the form of a transfer pricing
adjustment.  Such an adjustment may require that we pay additional PRC
taxes plus applicable penalties and interest, if any.
 
 The
exercise of our option to purchase part or all of the equity interests in the
VIE Entities under the Option Agreement might be subject to approval by the PRC
government.  Our failure to obtain this approval may impair our
ability to substantially control the VIE Entities and could result in actions by
VIE Entities that conflict with our interests.
 
 Our
Option Agreement with the VIE Entities gives our Chinese subsidiary, Oriental,
the option to purchase all or part of the equity interests in the VIE Entities,
however, the option may not be exercised by Oriental if the exercise would
violate any applicable laws and regulations in China or cause any license or
permit held by, and necessary for the operation of the VIE Entities, to be
cancelled or invalidated.  Under the laws of China, if a foreign
entity, through a foreign investment company that it invests in, acquires a
domestic related company, China’s regulations regarding mergers and acquisitions
would technically apply to the transaction.  Application of these
regulations requires an examination and approval of the transaction by China’s
Ministry of Commerce (“MOFCOM”), or its local counterparts.  Also, an
appraisal of the equity or assets to be acquired is
mandatory.  However, our local PRC counsel has advised us that Beijing
and other local counterparts of MOFCOM hold the view that such a transaction
would not require their approval.  Therefore, we do not believe at
this time that an approval and an appraisal are required for Oriental to
exercise its option to acquire the VIE Entities in Beijing.  In light
of the different views on this issue, however, it is possible that the central
MOFCOM office in Beijing will issue a standardized opinion imposing the approval
and appraisal requirement.  If we are not able to purchase the equity
of the VIE Entities, then we will lose a substantial portion of our ability to
control the VIE Entities and our ability to ensure that the VIE Entities will
act in our interests.
  23
  A
termination of our relationship with Peking University could have a negative
impact on our future operating results.
 
 PKU has
historically been able to successfully leverage the marketability and resources
offered by its strategic partner and investor, Peking
University.  PKU’s affiliation with Peking University helps to create
brand awareness for its products and services and also provides access to the
university’s GeoGIS Laboratory, which houses over thirty PhDs and researchers to
support PKU’s research and development initiatives.  A termination of
the relationship/strategic partnership with Peking University could have a
negative impact on our future operating results.
 
 The
recent global financial crisis could negatively affect our business, results of
operations, and financial condition.
 
 The
recent credit crisis and turmoil in the global financial system may have an
adverse impact on our business and our financial condition, and we may face
challenges if conditions in the financial markets do not improve.  Our
ability to access the capital markets may be restricted at a time when we would
like, or need, to raise capital, which could have an impact on our flexibility
to react to changing economic and business conditions.  In addition,
these economic conditions also impact levels of government and consumer
spending, which have recently deteriorated significantly and may remain
depressed for the foreseeable future.  It is uncertain how long the
global crisis in the financial services and credit markets will continue and how
much of an impact it will have on the global economy in general or the Chinese
economy in particular.  If demand for our products and services
fluctuates as a result of economic conditions or otherwise, our revenue and
gross margin could be harmed.
 
 We
rely heavily on sales to the Chinese government and a significant decline in
overall government expenditures or a delay in the payment of our invoices by the
government could have a negative impact on our future operating
results.
 
 Historically,
substantially all of our sales of our products have been to the Chinese
government entities at both central and local levels. Sales to the Digital City,
Transportation and Land & Resources sectors of the Chinese government
accounted for an aggregate approximately 55% and 60% of our sales for the years
ended December 31, 2008 and 2007, respectively.  We believe that the
success and growth of our business for the foreseeable future will continue to
depend on our ability to win government contracts.  Many of our
government customers are subject to budgetary constraints and our continued
performance under these contracts, or award of additional contracts from these
agencies, could be jeopardized by spending reductions or budget cutbacks at
these agencies.  Our operating results may also be negatively impacted
by other developments that affect these government programs generally, including
the following:
 
 ·
              adoption
      of new laws or regulations relating to government contracting or changes
      to existing laws or regulations;
 
 ·
              delays
      or changes in the government appropriations process;
  and
 
 ·
              delays
      in the payment of our invoices by government payment
    offices.
 
 We
rely on our management to understand and react to our rapidly evolving and
highly competitive GIS software development and application total solution
industry and our failure to react to such changes or to introduce new products
and product enhancements could adversely affect our business.
 
 The
Chinese GIS industry is nascent and rapidly evolving.  Therefore, it
is critical that our management is able to understand industry trends and make
good strategic business decisions. If our management is unable to identify
industry trends and act in response to such trends in a way that is beneficial
to us, our business will suffer.
  24
  In
addition, we expect that a significant portion of our future revenue will be
derived from sales of newly-introduced products. The market for our products is
characterized by rapidly changing technology, evolving industry standards and
changes in customer needs. If we fail to introduce new products or to modify or
improve our existing products in response to changes in technology, industry
standards or customer needs, our products could rapidly become less competitive
or obsolete. We must continue to make significant investments in research and
development in order to continue to develop new products, enhance existing
products and achieve market acceptance for such products. However, there can be
no assurance that development stage products will be successfully completed or,
if developed, will achieve significant customer acceptance.
  If we are
unable to successfully develop and introduce competitive new products and
enhance our existing products, our future results of operations would be
adversely affected.  Our pursuit of necessary technology may require
substantial time and expense. We may need to license new technologies to respond
to technological change. These licenses may not be available to us on terms that
we can accept or may materially change the gross profits that we are able to
obtain on our products. We may not succeed in adapting our products to new
technologies as they emerge. Development and manufacturing schedules for
technology products are difficult to predict and there can be no assurance that
we will achieve timely initial customer shipments of new products. The timely
availability of these products in volume and their acceptance by customers are
important to our future success. Any future delays, whether due to product
development delays, manufacturing delays, lack of market acceptance, delays in
regulatory approval, or otherwise, could have a material adverse effect on our
results of operations.
 
 We
may not be able to adequately protect our proprietary intellectual property and
technology, which may harm our competitive position and result in increased
expenses incurred to enforce our rights.
 
 We rely
on a combination of copyright, trade secret laws, non-disclosure agreements and
other confidentiality procedures and contractual provisions to establish,
protect and maintain our proprietary intellectual property and technology and
other confidential information.  Some of these technologies are
important to our business and are not protected by patents.  Despite
our efforts, the steps we have taken to protect our proprietary intellectual
property and technology and other confidential information may not be adequate
to preclude misappropriation of our proprietary information or infringement of
our intellectual property rights.  Protecting against the unauthorized
use of our products and other proprietary rights is also expensive, difficult
and, in some cases, impossible.  Litigation may be necessary in the
future to enforce or defend our intellectual property rights, to protect our
trade secrets or to determine the validity and scope of the proprietary rights
of others. Such litigation could result in substantial costs and diversion of
management resources, either of which could harm our business, operating results
and financial condition.
 
 Product
branding is important to us and if our brands are misappropriated such that our
reputation could be harmed, this could result in lower sales having a negative
impact on our financial results.
 
 We rely
upon a combination of licensing and contractual covenants to establish and
protect the brand names of our products. In many market segments, our reputation
is closely related to our brand names. Monitoring unauthorized use of our brand
names is difficult and we cannot be certain that the steps we have taken will
prevent their unauthorized use, particularly in foreign countries where the laws
may not protect our proprietary rights as fully as in the United States. Our
brand names may be misappropriated or utilized without our consent and such
actions may have a material adverse effect on our reputation and on the results
of our operations.
 
 If
we are unable to compete effectively with existing or new competitors, our
resulting loss of competitive position could result in price reductions, fewer
customer orders, reduced margins and loss of market share.
 
 The
markets for our products are highly competitive and we expect competition to
increase in the future. Some of our competitors have significantly greater
financial, technical and marketing resources than we do. These competitors may
be able to respond more rapidly to new or emerging technologies or changes in
customer requirements. They may also be able to devote greater resources to the
development, promotion and sale of their products. Increased competition could
result in price reductions, fewer customer orders, reduced margins and loss of
market share. Our failure to compete successfully against current or future
competitors could seriously harm our business, financial condition and results
of operations.
  25
  Our
products are complex and errors or defects could result in the rejection of our
products and damage to our reputation, as well as lost revenues and increased
costs.
 
 Products
as sophisticated as ours are likely to contain undetected errors or defects,
especially when first introduced or when new models or versions are
released.  Our products may not be free from errors or defects after
commercial shipments have begun, which could result in the rejection of our
products, damage to our reputation, lost revenues, diverted development
resources and increased customer service and support costs and warranty
claims.  Any of these results could harm our business.
 
 We may be exposed
to potential risks relating to our internal controls over financial reporting
and our ability to have the operating
effectiveness of our internal controls attested to by our independent
auditors.
 
 As
directed by Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX 404”), the SEC
adopted rules requiring public companies to include a report of management on
the company’s internal controls over financial reporting in their annual
reports, including Form 10-K.  In addition, the independent registered
public accounting firm auditing a company’s financial statements must also
attest to the operating effectiveness of the company’s internal
controls.  Under current law, we are subject to these requirements
beginning with our annual report for the fiscal year ended December 31, 2007,
although the auditor attestation is not required until our annual report for the
fiscal year ending December 31, 2009, assuming our filing status remains as a
smaller reporting company.  A report of our management is included
under Item 9A(T) of this Annual Report on Form 10-K.  Our management
has concluded that our internal controls over our financial reporting are
effective for the period covered by this Annual Report. However, in the future,
our management may conclude that our internal controls over our financial
reporting are not effective due to the identification of one or more material
weaknesses, or our independent registered public accounting firm may issue an
adverse opinion on our internal control over financial reporting if one or more
material weaknesses are identified.  In the event we identify
significant deficiencies or material weaknesses in our internal controls that we
cannot remediate in a timely manner or we are unable to receive a positive
attestation from our independent auditors with respect to our internal controls,
investors and others may lose confidence in the reliability of our financial
statements.
 
 We
may be exposed to liabilities under the Foreign Corrupt Practices Act, and any
determination that we violated the Foreign Corrupt Practices Act could have a
material adverse effect on our business.
 
 We are
subject to the Foreign Corrupt Practice Act (the “FCPA”), and other laws that
prohibit improper payments or offers of payments to foreign governments and
their officials and political parties by U.S. persons and issuers as defined by
the statute for the purpose of obtaining or retaining business.  We
have operations, agreements with third parties and make sales in China, which
may experience corruption.  Our activities in China create the risk of
unauthorized payments or offers of payments by one of the employees,
consultants, sales agents or distributors of our company, because these parties
are not always subject to our control.  It is our policy to implement
safeguards to discourage these practices by our employees.  Also, our
existing safeguards and any future improvements may prove to be less than
effective, and the employees, consultants, sales agents or distributors of our
Company may engage in conduct for which we might be held
responsible.  Violations of the FCPA may result in severe criminal or
civil sanctions, and we may be subject to other liabilities, which could
negatively affect our business, operating results and financial condition. In
addition, the government may seek to hold our Company liable for successor
liability FCPA violations committed by companies in which we invest or that we
acquire.
 
 Since
we depend heavily on key personnel, turnover of key employees and senior
management could harm our business.
 
 Our
future business and results of operations depend in significant part upon the
continued contributions of our key technical and senior management personnel,
including Shudong Xia, our chief executive officer and president, our chief
financial officer, Zhihai Mao and our vice presidents, Zhibin Lai, Zhiping
Zhang, and Danxia Huang. We also depend in significant part upon our ability to
attract and retain additional qualified management, technical, marketing and
sales and support personnel for our operations. If we lose a key employee, or if
a key employee fails to perform his or her current position, or if we are not
able to attract and retain skilled employees as needed, our business could
suffer.  Significant turnover in our senior management could
significantly deplete our institutional knowledge held by our existing senior
management team. We depend on the skills and abilities of these key employees in
managing the manufacturing, technical, marketing and sales aspects of our
business, any part of which could be harmed by further
turnover.
  26
  RISKS
RELATED TO DOING BUSINESS IN CHINA
 
 Adverse
changes in political and economic policies of the PRC government could impede
the overall economic growth of China, which could reduce the demand for our
products and damage our business.
 
 We
conduct substantially all of our operations and generate most of our revenue in
China.  Accordingly, our business, financial condition, results of
operations and prospects are affected significantly by economic, political and
legal developments in China.  The PRC economy differs from the
economies of most developed countries in many respects, including:
 
 ·
              a
      higher level of government
involvement;
 
 ·
              a
      early stage of development of the market-oriented sector of the
      economy;
 
 ·
              a
      rapid growth rate;
 
 ·
              a
      higher level of control over foreign exchange;
  and
 
 ·
              the
      allocation of resources.
 
 As the
PRC economy has been transitioning from a planned economy to a more
market-oriented economy, the PRC government has implemented various measures to
encourage economic growth and guide the allocation of resources. While these
measures may benefit the overall PRC economy, they may also have a negative
effect on us.
 
 Although
the PRC government has in recent years implemented measures emphasizing the
utilization of market forces for economic reform, the PRC government continues
to exercise significant control over economic growth in China through the
allocation of resources, controlling the payment of foreign currency-denominated
obligations, setting monetary policy and imposing policies that impact
particular industries or companies in different ways.
 
 Any
adverse change in economic conditions or government policies in China could have
a material adverse effect on the overall economic growth in China, which in turn
could lead to a reduction in demand for our services and consequently have a
material adverse effect on our business and prospects.
 
 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 VIE Entities in the PRC
and they are subject to laws and regulations in China.  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 enhanced the protections
afforded to various forms of foreign investments in China.  However,
since the PRC legal system continues to rapidly evolve, the interpretations of
many laws, regulations and rules are not always uniform and enforcement of these
laws, regulations and rules involve uncertainties, which may limit legal
protections available to you and us.  In addition, any litigation in
China may be protracted and result in substantial costs and diversion of
resources and management attention.  In addition, all of our executive
officers and all of our directors are residents of China and not of the United
States, and substantially all the assets of these persons are located outside
the United States.  As a result, it could be difficult for investors
to affect service of process in the United States or to enforce a judgment
obtained in the United States against our Chinese operations.
  27
  If
we are found to have failed to comply with applicable laws, we may incur
additional expenditures or be subject to significant fines and
penalties.
 
 Our
operations are subject to PRC laws and regulations applicable to
us.  However, many PRC laws and regulations are uncertain in their
scope, and the implementation of such laws and regulations in different
localities could have significant differences.  In certain instances,
local implementation rules and/or the actual implementation are not necessarily
consistent with the regulations at the national level.  Although we
strive to comply with all the applicable PRC laws and regulations, we cannot
assure you that the relevant PRC government authorities will not later determine
that we have not been in compliance with certain laws or
regulations.  Our failure to comply with applicable PRC laws and
regulations could subject us to administrative penalties and injunctive relief,
as well as civil remedies, including fines, injunctions and recalls of our
products.  It is possible that changes to such laws or more rigorous
enforcement of such laws or with respect to our current or past practices could
have a material adverse effect on our business, operating results and financial
condition.
 
 The
PRC government exerts substantial influence over the manner in which we must
conduct our business activities.
 
 The PRC
government has exercised and continues to exercise substantial control over
virtually every sector of the Chinese economy through regulation and state
ownership.  Our ability to operate in China may be harmed by changes
in its laws and regulations, including those relating to taxation, import and
export tariffs, environmental regulations, land use rights, property and other
matters.  We believe that our operations in China are in material
compliance with all applicable legal and regulatory
requirements.  However, the central or local governments of the
jurisdictions in which we operate may impose new, stricter regulations or
interpretations of existing regulations that would require additional
expenditures and efforts on our part to ensure our compliance with such
regulations or interpretations.
 
 Accordingly,
government actions in the future, including any decision not to continue to
support recent economic reforms and to return to a more centrally planned
economy or regional or local variations in the implementation of economic
policies, could have a significant effect on economic conditions in China or
particular regions thereof and could require us to divest ourselves of any
interest we then hold in Chinese properties or joint ventures.
 
 Restrictions
on currency exchange may limit our ability to receive and use our sales revenue
effectively.
 
 All our
sales revenue 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 foreign exchange transactions, but not
under the “capital account,” which includes foreign direct investment and
loans.  Currently, Oriental 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 complying 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 revenue will be denominated in RMB, any existing and future
restrictions on currency exchange may limit our ability to utilize revenue
generated in RMB to fund our business activities outside China that are
denominated in foreign currencies.
 
 Foreign
exchange transactions by our PRC VIE Entities 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, including
SAFE.  In particular, if Oriental borrows foreign currency through
loans from us or other foreign lenders, these loans must be registered with
SAFE, and if we finance the subsidiaries by means of additional capital
contributions, these capital contributions must be approved by certain
government authorities, including MOFCOM, or their respective local
counterparts.  These limitations could affect their ability to obtain
foreign exchange through debt or equity financing.
 
 Fluctuations
in exchange rates could adversely affect our business and the value of our
securities.
 
 The value
of our common stock will be indirectly affected by the foreign exchange rate
between U.S. dollars and RMB and between those currencies and other currencies
in which our sales may be denominated.  Appreciation or depreciation
in the value of the RMB relative to the U.S. dollar would affect our financial
results reported in U.S. dollar terms without giving effect to any underlying
change in our business or results of operations.  Fluctuations in the
exchange rate will also affect the relative value of any dividend we issue in
the future as well as earnings from, and the value of, any U.S.
dollar-denominated investments we make in the future.
  28
  Since
July 2005, the RMB has no longer been pegged to the U.S.
dollar.  Although the People’s Bank of China regularly intervenes in
the foreign exchange market to prevent significant short-term fluctuations in
the exchange rate, the RMB may appreciate or depreciate significantly in value
against the U.S. dollar in the medium to long term.  Moreover, it is
possible that in the future PRC authorities may lift restrictions on
fluctuations in the RMB exchange rate and lessen intervention in the foreign
exchange market.
 
 Very
limited hedging transactions are available in China to reduce our exposure to
exchange rate fluctuations.  To date, we have not entered into any
hedging transactions.  While we may enter into hedging transactions in
the future, the availability and effectiveness of these transactions may be
limited, and we may not be able to successfully hedge our exposure at
all.  In addition, our foreign currency exchange losses may be
magnified by PRC exchange control regulations that restrict our ability to
convert RMB into foreign currencies.
 
 Restrictions
under PRC law on our PRC subsidiary’s ability to make dividends and other
distributions could materially and adversely affect our ability to grow, make
investments or acquisitions that could benefit our business, pay dividends to
you, and otherwise fund and conduct our businesses.
 
 Substantially
all of our revenues are generated from our indirect PRC subsidiary, Oriental,
after it receives payments from our VIE Entities under various services and
other arrangements.  However, PRC regulations restrict the ability of
Oriental to make dividends and other payments to its offshore parent
company.  PRC legal restrictions permit payments of dividend by
Oriental only out of its accumulated after-tax profits, if any, determined in
accordance with PRC accounting standards and regulations.  Oriental is
also required under PRC laws and regulations to allocate at least 10% of our
annual after-tax profits determined in accordance with PRC GAAP to a statutory
general reserve fund until the amounts in said fund reaches 50% of our
registered capital.  Allocations to these statutory reserve funds can
only be used for specific purposes and are not transferable to us in the form of
loans, advances or cash dividends.  Any limitations on the ability of
Oriental to transfer funds to us could materially and adversely limit our
ability to grow, make investments or acquisitions that could be beneficial to
our business, pay dividends and otherwise fund and conduct our
business.
 
 Future
inflation in China may inhibit our ability to conduct business profitably in
China.
 
 In recent
years, the Chinese economy has experienced periods of rapid expansion and highly
fluctuating rates of inflation. These factors have led to the adoption by the
Chinese government, from time to time, of various corrective measures designed
to restrict the availability of credit or regulate growth and contain inflation.
High inflation may in the future cause the Chinese government to impose controls
on credit and/or prices, or to take other action, which could inhibit economic
activity in China, and thereby harm the market for our products. Likewise,
negative inflation could have an unfavorable effect on our business
profitability in China.
 
 Our
business and financial performance may be materially adversely affected if the
PRC regulatory authorities determine that our acquisition of PKU constitutes a
Round-trip Investment without MOFCOM approval.
 
 On August
8, 2006, six PRC regulatory agencies promulgated the Regulation on Mergers and
Acquisitions of Domestic Companies by Foreign Investors, which became effective
on September 8, 2006 (the “2006 M&A Rule”). According to the 2006 M&A
Rule, a “Round-trip Investment” is defined as having taken place when a PRC
business that is owned by PRC individual(s) is sold to a non-PRC entity that is
established or controlled, directly or indirectly, by those same PRC
individual(s).  Under the 2006 M&A Rules, any Round-trip
Investment must be approved by the MOFCOM, and any indirect arrangement or
series of arrangements which achieves the same end result without the approval
of MOFCOM is a violation of PRC law.
  29
  Prior to
the consummation of the transactions contemplated by the Share Exchange
Agreement on May 14, 2007, PKU was a PRC business whose majority shareholders
were PRC individuals (the “PRC Individuals”).  In addition, our BVI
subsidiary Cabowise, was originally indirectly owned by the PRC Individuals, and
Cabowise owned an option (the “Option”), to purchase the entire equity interest
owned by the PRC Individuals in PKU. The Option was assigned to our wholly owned
subsidiary, Oriental Intra-Asia by Cabowise on May 14,
2007.  Thereafter, on May 14, 2007, as a condition to the closing of
the share exchange transaction contemplated by the Share Exchange Agreement,
Oriental Intra-Asia exercised the Option assigned to it from Cabowise and, as a
result thereof, the PRC Individuals sold their equity interest in PKU for $2
million in cash to Oriental Intra-Asia (the “Acquisition”). Following the
Acquisition, pursuant to the Share Exchange Agreement, on May 14, 2007, we
issued 10,841,492 shares of common stock to the shareholders of Cabowise in
exchange for all of the issued and outstanding capital stock of Cabowise (the
“Share Exchange”). As a result of these transactions, the PRC Individuals are
now our controlling shareholders. The Acquisition has been registered with the
competent administration of industry and commerce authorities (“AIC”), in
Beijing. Thereafter, the PRC Individuals made filings with the Beijing SAFE, to
register the Company and its non-PRC subsidiaries to qualify them as SPVs,
pursuant to Circular 75 and Circular 106.
 
 The PRC
regulatory authorities may take the view that the Acquisition and the Share
Exchange are part of an overall series of arrangements which constitute a
Round-trip Investment, because at the end of these transactions, the PRC
Individuals became majority owners and effective controlling parties of a
foreign entity that acquired ownership of PKU. The PRC regulatory authorities
may also take the view that the registration of the Acquisition with the
relevant AIC in Beijing and the filings with the Beijing SAFE may not be
evidence that the Acquisition has been properly approved because the relevant
parties did not fully disclose to the AIC, SAFE or MOFCOM of the overall
restructuring arrangements, the existence of the Share Exchange and its link
with the Acquisition.  The PRC legal counsel of PKU has opined that
the Acquisition did not violate any PRC law, which would include the 2006
M&A Rules.  We, however, cannot assure you that the PRC regulatory
authorities, MOFCOM in particular, may take the same view as the PRC legal
counsel.  If the PRC regulatory authorities take the view that the
Acquisition constitutes a Round-trip Investment under the 2006 M&A Rules, we
cannot assure you we may be able to obtain the approval required from
MOFCOM.
 
 If the
PRC regulatory authorities take the view that the Acquisition constitutes a
Round-trip Investment without MOFCOM approval, they could invalidate our
acquisition and ownership of PKU.  Additionally, the PRC regulatory
authorities may take the view that the Acquisition constitutes a transaction
which requires the prior approval of the China Securities Regulatory Commission
(“CSRC”), before MOFCOM approval is obtained.  We believe that if this
takes place, we may be able to find a way to re-establish control of PKU’s
business operations through a series of contractual arrangements rather than an
outright purchase of PKU.  But we cannot assure you that such
contractual arrangements will be protected by PRC law or that the registrant can
receive as complete or effective economic benefit and overall control of PKU’s
business than if the Company had direct ownership of PKU.  In
addition, we cannot assure you that such contractual arrangements can be
successfully effected under PRC law.  If we cannot obtain MOFCOM or
CSRC approval if required by the PRC regulatory authorities to do so, and if we
cannot put in place or enforce relevant contractual arrangements as an
alternative and equivalent means of control of PKU, our business and financial
performance will be materially adversely affected.
 
 The
M&A Rule establishes more complex procedures for some acquisitions of
Chinese companies by foreign investors, which could make it more difficult for
us to pursue growth through acquisitions in China.
 
 The
M&A Rule establishes additional procedures and requirements that could make
some acquisitions of Chinese companies by foreign investors more time-consuming
and complex, including requirements in some instances that the PRC Ministry of
Commerce be notified in advance of any change-of-control transaction and in some
situations, require approval of the PRC Ministry of Commerce when a foreign
investor takes control of a Chinese domestic enterprise.  In the
future, we may grow our business in part by acquiring complementary businesses,
although we do not have any plans to do so at this time.  The M&A
Rule also requires PRC Ministry of Commerce anti-trust review of any
change-of-control transactions involving certain types of foreign
acquirers.  Complying with the requirements of the M&A Rule to
complete such transactions could be time-consuming, and any required approval
processes, including obtaining approval from the PRC Ministry of Commerce, may
delay or inhibit our ability to complete such transactions, which could affect
our ability to expand our business or maintain our market
share.
  30
  You
may have difficulty enforcing judgments against us.
 
 We are a
Nevada holding company and most of our assets are located outside of the United
States.  Most of our current operations are conducted in the
PRC.  In addition, most of our directors and officers are nationals
and residents of countries other than the United States.  A
substantial portion of the assets of these persons is located outside the United
States.  As a result, it may be difficult for you to effect service of
process within the United States upon these persons.  It may also be
difficult for you to enforce in U.S. courts judgments on the civil liability
provisions of the U.S. federal securities laws against us and our officers and
directors, most of whom are not residents in the United States and the
substantial majority of whose assets are located outside of the United
States.  In addition, there is uncertainty as to whether the courts of
the PRC would recognize or enforce judgments of U.S. courts.  Courts
in China may recognize and enforce foreign judgments in accordance with the
requirements of the PRC Civil Procedures Law based on treaties between China and
the country where the judgment is made or on reciprocity between
jurisdictions.  China does not have any treaties or other arrangements
that provide for the reciprocal recognition and enforcement of foreign judgments
with the United States.  In addition, according to the PRC Civil
Procedures Law, courts in the PRC will not enforce a foreign judgment against us
or our directors and officers if they decide that the judgment violates basic
principles of PRC law or national sovereignty, security or the public
interest.  So it is uncertain whether a PRC court would enforce a
judgment rendered by a court in the United States.
 
 RISKS
RELATED TO THE MARKET FOR OUR STOCK GENERALLY
 
 The
market price of our common stock is volatile, leading to the possibility of its
value being depressed at a time when you want to sell your
holdings.
 
 The
market price of our common stock is volatile, and this volatility may continue.
For instance, between January 1, 2008 and December 31, 2008, the closing price
of our common stock, as reported on the markets on which our securities have
traded, ranged between $3.05 and $8.30.  Numerous factors, many of
which are beyond our control, may cause the market price of our common stock to
fluctuate significantly.  These factors include:
  ·
              our
      earnings releases, actual or anticipated changes in our earnings,
      fluctuations in our operating results or our failure to meet the
      expectations of financial market analysts and
  investors;
  ·
              changes
      in financial estimates by us or by any securities analysts who might cover
      our stock;
  ·
              speculation
      about our business in the press or the investment
    community;
  ·
              significant
      developments relating to our relationships with our customers or
      suppliers;
  ·
              stock
      market price and volume fluctuations of other publicly traded companies
      and, in particular, those that are in the transportation information
      systems industries;
  ·
              customer
      demand for our products;
  ·
              investor
      perceptions of the transportation information systems industries in
      general and our company in
particular;
  ·
              the
      operating and stock performance of comparable
  companies;
  ·
              general
      economic conditions and trends;
  ·
              major
      catastrophic events;
  ·
              announcements
      by us or our competitors of new products, significant acquisitions,
      strategic partnerships or
divestitures;
  ·
              changes
      in accounting standards, policies, guidance, interpretation or
      principles;
  ·
              loss
      of external funding sources;
  31
  ·
              sales
      of our common stock, including sales by our directors, officers or
      significant stockholders; and
  ·
              additions
      or departures of key personnel.
  Securities
class action litigation is often instituted against companies following periods
of volatility in their stock price.  This type of litigation could
result in substantial costs to us and divert our management’s attention and
resources.  Moreover, securities markets may from time to time
experience significant price and volume fluctuations for reasons unrelated to
operating performance of particular companies.  For example, since
mid-2008, the securities markets in the United States have experienced a
significant decline in share prices.  These market fluctuations may
adversely affect the price of our common stock and other interests in our
company at a time when you want to sell your interest in us.
 
 Although
publicly traded, the trading market in our common stock has been substantially
less liquid than the average trading market for a stock traded on the Nasdaq
Stock Market and this low trading volume may adversely affect the price of our
common stock.
 
 Our
common stock started trading on the Nasdaq Capital Market under the symbol
“CTFO” in July 2008.  The trading market in our common stock has been
substantially less liquid than the average trading market for companies traded
on the Nasdaq stock market.  Limited trading volume will subject our
shares of common stock to greater price volatility and may make it difficult for
you to sell your shares of common stock at a price that is attractive to
you.
 
 We
may be subject to penny stock regulations and restrictions and you may have
difficulty selling shares of our common stock.
 
 The SEC
has adopted regulations which generally define so-called “penny stocks” to be an
equity security that has a market price less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exemptions.  If
our common stock becomes a “penny stock”, we may become subject to Rule 15g-9
under the Exchange Act (the “Penny Stock Rule”).  This rule imposes
additional sales practice requirements on broker-dealers that sell such
securities to persons other than established customers and “accredited
investors” (generally, individuals with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000, or $300,000 together with their
spouses).  For transactions covered by Rule 15g-9, a broker-dealer
must make a special suitability determination for the purchaser and have
received the purchaser’s written consent to the transaction prior to
sale.  As a result, this rule may affect the ability of broker-dealers
to sell our securities and may affect the ability of purchasers to sell any of
our securities in the secondary market.
 
 For any
transaction involving a penny stock, unless exempt, the rules require delivery,
prior to any transaction in penny stock, of a disclosure schedule prepared by
the SEC relating to the penny stock market.  Disclosure is also
required to be made about sales commissions payable to both the broker-dealer
and the registered representative and current quotations for the
securities.  Finally, monthly statements are required to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stock.
 
 There can
be no assurance that our common stock will qualify for exemption from the Penny
Stock Rule.  In any event, even if our common stock were exempt from
the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the
Exchange Act, which gives the SEC the authority to restrict any person from
participating in a distribution of penny stock, if the SEC finds that such a
restriction would be in the public interest.
 
 Certain
of our stockholders hold a significant percentage of our outstanding voting
securities and accordingly may make decisions regarding our daily operations,
significant corporate transactions and other matters that other stockholders may
believe are not in their best interests.
 
 Shudong
Xia, our chief executive officer and president, is the beneficial owner of
approximately 43.12% of our outstanding voting securities.  As a
result, he possesses significant influence over the election of our board of
directors and significant corporate transactions.  His ownership may
also have the effect of delaying or preventing a future change in control,
impeding a merger, consolidation, takeover or other business combination or
discourage a potential acquirer from making a tender offer.  Other
stockholders may believe that these future decisions made by Mr. Xia are not in
their best interests.
  32
  Certain
provisions of our Articles of Incorporation may make it more difficult for a
third party to effect a change-of-control.
 
 Our
Articles of Incorporation authorizes our board of directors to issue up to
10,000,000 shares of preferred stock. The preferred stock may be issued in one
or more series, the terms of which may be determined at the time of issuance by
the board of directors without further action by the
stockholders.  These terms may include preferences as to dividends and
liquidation, conversion rights, redemption rights and sinking fund
provisions.  The issuance of any preferred stock could diminish the
rights of holders of our common stock, and therefore could reduce the value of
such common stock.  In addition, specific rights granted to future
holders of preferred stock could be used to restrict our ability to merge with,
or sell assets to, a third party.  The ability of our board of
directors to issue preferred stock could make it more difficult, delay,
discourage, prevent or make it more costly to acquire or effect a
change-in-control, which in turn could prevent our stockholders from recognizing
a gain in the event that a favorable offer is extended and could materially and
negatively affect the market price of our common stock.
 
 ITEM
      2.
              PROPERTIES
 
 All land
in China is owned by the State or collectives.  Individuals and
companies are permitted to acquire land use rights for general or specific
purposes.  In the case when land is used for industrial purposes, the
land use rights are granted for a period of 50 years.  The rights may
be renewed at the expiration of the initial and any subsequent terms according
to the relevant Chinese laws.  Granted land use rights are
transferable and may be used as security for borrowings and other
obligations.
 
 We do not
have any land use rights directly from the PRC.  Instead, we lease the
space where our executive offices are located.  We have entered into a
lease agreement with Mr. Zhao Li for our rental of space at 7th floor
of the E-Wing Center. Under this lease, we have the right to use 517 square
meters of office space in the E-Wing Center.  We pay a total monthly
rental of RMB 50,000 under this lease agreement (approximately
$7,300).  This lease expires on December 31, 2010.   On
June 2, 2007, we entered into a real property purchase agreement with Zhao Li,
pursuant to which Mr. Zhao agreed to sell the facility to us for a purchase
price of RMB 9,747,000 (approximately $1,429,885).  We have paid
$1,249,745 to Mr. Zhao by December 31, 2008.
 
 We
believe that our properties have been adequately maintained, are generally in
good condition, and are suitable and adequate for our business.
 
 ITEM
      3.
              LEGAL
      PROCEEDINGS
 
 From time
to time, we may become involved in various lawsuits and legal proceedings, which
arise, in the ordinary course of business.  However, litigation is
subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may harm our business.  We
are currently not aware of any such legal proceedings or claims that we believe
will have a material adverse affect on our business, financial condition or
operating results.
 
 ITEM
      4.
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS
 
 On
December 30, 2008, the following stockholders of the Company owning the majority
of the issued and outstanding shares of our common stock, constituting the sole
class of voting securities of the Company, executed and delivered to the Company
their written consent, in lieu of shareholder meeting, approving the
Restructuring Documents and the Restructuring contemplated thereby, which would
have been the requisite vote under Nevada law if shareholder approval were
required under Nevada law to approve the Equity Transfer.  For more
information, you may refer to our Definitive Information Statement on Schedule
14C filed with the SEC on January 12, 2009.
  33
 
 Name of Consenting Shareholder
                    
                    Number of Shares Owned
                    
                    
                    PercentageKarmen
      Investment Holdings Ltd.
                    
                    
                    9,566,532
                    
                    
                    
                    43.12
                    %Leguna
      Verde Investments, Ltd.
                    
                    
                    1,274,960
                    
                    
                    
                    5.75
                    %The
      Pinnacle Fund, L.P.
                    
                    
                    1,111,111
                    
                    
                    
                    5.01
                    %Pinnacle
      China Fund, L.P.
                    
                    
                    2,722,222
                    
                    
                    
                    12.27
                    %SAIF
      Partners III L.P.
                    
                    
                    2,586,207
                    
                    
                    
                    11.66
                    %TOTAL
                    
                    
                    17,261,032
                    
                    
                    
                    77.80
                    %
 
  34
  PART
II
  ITEM
      5.
                MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY
SECURITIES.
  Market
for Our Common Stock
  Since
July 31, 2008, our common stock has been listed on the Nasdaq Capital Market
under the symbol “CTFO.”  Prior to that date, our common stock had
been quoted on the Over-the-Counter Bulletin Board under the symbol
“CTFO.OB.”
 
 The
following table sets forth, for the quarters indicated, the range of closing
high and low bid prices of our common stock as reported by the Over-the-Counter
Bulletin Board and the quarterly high and low closing sale prices as reported by
NASDAQ, as applicable.  These prices reported by the Over-the-Counter
Bulletin Board do not include retail markup, markdown or commission and may not
represent actual transactions.
 
 Closing
      Prices(1)High
                
                
                LowYear
      Ended December 31, 2008First
      Quarter
                
                $
                8.30
                
                
                $
                6.10Second
      Quarter
                
                $
                7.07
                
                
                $
                5.55Third
      Quarter
                
                $
                6.40
                
                
                $
                4.25Fourth
      Quarter
                
                $
                4.05
                
                
                $
                3.05Year
      Ended December 31, 2007First
      Quarter
                
                $
                5.60
                
                
                $
                1.05Second
      Quarter
                
                $
                5.25
                
                
                $
                3.36Third
      Quarter
                
                $
                4.55
                
                
                $
                2.80Fourth
      Quarter
                
                $
                8.50
                
                
                $
                3.20
 
 
 (1)
              The
      above tables set forth the range of high and low closing prices per share
      of our common stock as reported by www.quotemedia.com
      for the periods indicated.
 
 Approximate
Number of Holders of Our Common Stock
 
 On March
23, 2009, there were approximately 106 stockholders of record of our common
stock.  The number of record holders does not include persons who held
our common stock in nominee or “street name” accounts through
brokers.
 
 Dividend
Policy
 
 We have
never declared or paid a cash dividend.  Any future decisions
regarding dividends will be made by our board of directors.  We
currently intend to retain and use any future earnings for the development and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future.  Our board of directors has complete discretion on
whether to pay dividends, subject to the approval of our
stockholders.  Even if our board of directors decides to pay
dividends, the form, frequency and amount will depend upon our future operations
and earnings, capital requirements and surplus, general financial condition,
contractual restrictions and other factors that the board of directors may deem
relevant.
 
 Securities
Authorized for Issuance Under Equity Compensation Plans
 
 We
currently do not have any equity compensation plans.
  35
  ITEM
      6.
              SELECTED
      FINANCIAL DATA
  Not
applicable.
 
 ITEM
      7.
                MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.
  Overview
 
 This
subsection of management’s discussion and analysis is an overview of the
important factors that management focuses on in evaluating our business, our
financial condition our operating performance, our overall business strategy and
our earnings for the periods covered.
 
 We are a
holding company that only operates through our Chinese VIE Entities, through
which we primarily focused on providing transportation information services and
products in the Chinese market.  We aim to become the largest
transportation information products and comprehensive solutions provider, as
well as the largest integrated transportation information platform and commuter
traffic platform builder and operator in China.  In addition, we are
developing our transportation system to include electronic toll collection and
real time traffic reporting.
 
 Historically,
the Company has segmented its services into three specific areas:
transportation, land and resources, and digital city.  Our
transportation solutions track and store a variety of traffic information for
various government entities, private sectors clients and individual
users.  The land and resources segment enables municipal governments
to assess the efficiency of land use and the management of natural
resources.  The digital city sector is designed to aid the Chinese
government’s initiative to outfit all major cities with broadband and wireless
internet access.
 
 Due to
the substantial market demand for transportation information products in China,
we have decided to devote more energy and resources to our transportation
segment since late 2007, and expects that this segment will become a major
driver of our future development.  Our transportation products and
solutions are targeted for transportation management authorities under the
management of the Ministry of Communication and the general public.
 
 Industry Wide Factors that
are Relevant to Our Business
 
 The
transportation information industry in China is in the process of rapid and
continuous development.  We believe that the trend in China’s
transportation information industry is the continuous increase of Chinese
government’s and public demand for advanced transportation information products
and services to support more effective and efficient transportation networks in
China.  One result of this trend is the growing amount of governmental
spending in the sector of transportation.  We believe this trend will
impact favorably on the demand for our transportation information products and
services, and accordingly result in the growth in sales of our transportation
products and services.
 
 The
development of transportation information products and solutions that are “Made
in China” has grown rapidly since 2000.  As a leading company in
transportation information products and solutions in China, our sales revenues
have a high correlation to the high speed growth of the transportation
information industry in China generally.  Our sales compounded annual
growth rate has been at approximately 71% for the past four years and our
earnings compounded annual growth rate has also been at about 71% over the same
period.  Therefore, we believe that our sales over the next five years
will grow in close correlation with the rapid growth of China’s transportation
information industry.
 
 One main
factor that management considers when estimating our future growth is the
potential revenue from larger government projects in the transportation sector
of the Chinese government based on annual budget reports issued by relevant
governmental sectors at both central and local levels. We expect that these
potential new projects will create revenues from new transportation information
product sales and services. We expect to bid on large projects in the
transportation sector going forward.
  36
  The
growing use of GPS and location-based service in China also has a material
impact on our industry.  We believe that “Made in China”
transportation information products and services will have a distinct advantage
over similar products and services provided in developed countries, where
development costs are generally higher.  The Chinese economy is
developing at a rapid pace.  As a result, there is a growing consumer
market that is developing in China.  We also believe that the
worldwide perception of the quality level of Chinese products is
improving.
 
 Our
industry is also experiencing a significant increase in competition. This
increased level of competition puts pressure on the sales prices of our
products, which results in lower margins for us.
 
 Results
of Operations
 
 Fiscal Year ended December
31, 2008 Compared to Fiscal Year Ended December 31, 2007
 
 The
following tables set forth key components of our results of operations for the
periods indicated, in dollars and percentage of revenues and key components of
our revenue for the periods indicated in dollars.
  Years Ended
                            December 31,2008
                          
                          
                          2007$
                          
                          
                          
                          $Revenues
                          
                          
                          29,370,463
                          
                          
                          
                          11,864,629Cost
      of sales
                          
                          
                          12,867,258
                          
                          
                          
                          5,612,372Gross
      profit
                          
                          
                          16,503,205
                          
                          
                          
                          6,252,257Selling,
      general and administrative expenses
                          
                          
                          5,081,502
                          
                          
                          
                          1,401,169
                          )Operating
      income
                          
                          
                          11,421,703
                          
                          
                          
                          4,851,088Other
      income and (expenses)Interest
      income
                          
                          
                          68,782
                          
                          
                          
                          60,289Interest
      expenses
                          
                          
                          (135,120
                          )
                          
                          
                          (13,968
                          )Subsidy
      income
                          
                          
                          530,100
                          
                          
                          
                          146,058Decrease
      in fair value of warrant liability
                          
                          
                          -
                          
                          
                          
                          64,359Other
      income (expense)
                          
                          
                          32,170
                          
                          
                          
                          160,446Income
      before income taxes and minority interest
                          
                          
                          11,917,634
                          
                          
                          
                          5,268,272Income
      taxes
                          
                          
                          (62,955
                          )
                          
                          
                          450,606Minority
      interest
                          
                          
                          (764,201
                          )
                          
                          
                          (396,585
                          )Net
      income
                          
                          
                          11,090,477
                          
                          
                          
                          4,421,081
  37
 
 Years Ended
                            December
      31,2008
                          
                          
                          2007As
      a percentage of RevenuesRevenues
                          
                          
                          100.00
                          %
                          
                          
                          100.00
                          %Cost
      of sales
                          
                          
                          43.81
                          %
                          
                          
                          47.30
                          %Gross
      profit
                          
                          
                          56.19
                          %
                          
                          
                          52.70
                          %Selling,
      general and administrative expenses
                          
                          
                          17.30
                          %
                          
                          
                          11.81
                          %Operating
      income
                          
                          
                          38.89
                          %
                          
                          
                          40.89
                          %Other
      income and (expenses)Interest
      income
                          
                          
                          0.23
                          %
                          
                          
                          0.51
                          %Interest
      expenses
                          
                          
                          (0.46
                          )%
                          
                          
                          (0.12
                          )%Subsidy
      income
                          
                          
                          1.80
                          %
                          
                          
                          1.23
                          %Decrease
      in fair value of warrant liability
                          
                          
                          0.00
                          %
                          
                          
                          0.54
                          %Other
      income (expenses)
                          
                          
                          0.11
                          %
                          
                          
                          1.35
                          %Income
      before income taxes and minority interest
                          
                          
                          40.57
                          %
                          
                          
                          44.40
                          %Income
      taxes
                          
                          
                          0.21
                          %
                          
                          
                          3.80
                          %Minority
      interest
                          
                          
                          (2.60
                          )%
                          
                          
                          (3.34
                          )%Net
      income
                          
                          
                          37.76
                          %
                          
                          
                          37.26
                          %
 
 Revenues. Revenues increased
approximately 17.5 million, or 147.55% to approximately $29.4 million for the
year ended December 31, 2008, from approximately $11.9 million in
2007.  This increase was attributable to the increased sales of our
products and the applications of our products in the Transportation, Land &
Resources and Digital City sectors in 2008 compared to 2007.  We
believe that such sales increased as a result of the growing recognition of our
brand name and technology as well as the rapidly developing market opportunities
in the transportation information sector in China. During 2008, the Company
achieved a win rate of approximately 90 percent for project bids and also were
able to secure more contracts from recurring clients.
 
 The following table illustrates the
revenues from the Chinese government sectors and regulated industries in which
we sell our products and services for the periods indicated.  The
table also provides the percentage of total revenues represented by each listed
sector.
  38
 
 Year Ended
                        December 31,
                        2008
                      
                      
                      Percentageof
                        Total
                        Revenues
                      
                      
                      Year Ended
                        December 31,
                        2007
                      
                      
                      Percentage of
                        Total
                        RevenuesTransportation
                      
                      $
                      18,432,187
                      
                      
                      
                      62.76
                      %
                      
                      $
                      4,690,206
                      
                      
                      
                      39.53
                      %Digital
      City
                      
                      
                      8,387,422
                      
                      
                      
                      28.56
                      %
                      
                      
                      5,459,863
                      
                      
                      
                      46.02
                      %Land
      & Resources
                      
                      
                      2,475,023
                      
                      
                      
                      8.42
                      %
                      
                      
                      1,321,757
                      
                      
                      
                      11.14
                      %Other
                      
                      
                      75,831
                      
                      
                      
                      0.26
                      %
                      
                      
                      392,803
                      
                      
                      
                      3.31
                      %Total
                      
                      $
                      29,370,463
                      
                      
                      
                      100.00
                      %
                      
                      $
                      11,864,629
                      
                      
                      
                      100.00
                      %
 
 As the
table above indicates, the Transportation and Digital City sectors accounted for
an aggregate of 85.25% and 85.55% of our sales for the years ended December 31,
2008 and 2007, respectively.  Sales in Land & Resources account
for less than 12% of total sales over each of periods indicated
above.  Our success ratio when bidding on new contracts, was
approximately 90% during the year ended December 31, 2008.
 
 Cost of Goods Sold. Our cost
of goods sold increased approximately $7.26 million, or 129.27%, to
approximately $12.87 million for the year ended December 31, 2008, from
approximately $5.61 million in 2007.  This increase was mainly due to
the increase in sales generally.  As a percentage of revenues, the
cost of goods sold decreased to 43.81% during the year ended December 31, 2008
from 47.30% in 2007, a result of the execution of higher margin contracts, which
resulted in the increase in lower cost software component sales as a percentage
of total sales during 2008.
 
 The
following table illustrates in detail the items constituting our costs of goods
sold.
  Cost
      Item
                      
                      Year ended
                        December
                        31, 2008
                      
                      
                      Year Ended
                        December
                        31, 2007Salary
                      
                      $
                      978,488
                      
                      
                      $
                      771,700Hardware
                      
                      
                      5,647,874
                      
                      
                      
                      4,053,972Software
      licenses
                      
                      
                      1,494,675
                      
                      
                      
                      250,174Outsourcing
                      
                      
                      3,618,116
                      
                      
                      
                      245,743Others
                      
                      
                      332,638
                      
                      
                      
                      290,783Total
                      
                      $
                      12,867,258
                      
                      
                      $
                      5,612,372
 
 Gross Profit.Our gross
profit increased approximately $10.25 million, or 163.96%, to approximately
$16.5 million for the year ended December 31, 2008, from approximately $6.25
million in 2007.  Gross profit as a percentage of revenues was 56.19%
for the year ended December 31, 2008, an increase of 3.49% from 52.70% in
2007.  The increase was mainly due to the increase in sales of higher
margin software components as a percentage of total sales during
2008.
  39









Selling Expenses. All of our
products are sold into the domestic China market through contracts commissioned
by the Chinese government. Various government entities and agencies either
invite us to bid for a specific contract or award a contract to us on a no bid
basis. This type of procurement process accounts for more than 70% of our total
sales. We are often invited to bid on contracts through our professional
relationships and are awarded repeat business. As a result, we have not invested
heavily in establishing a substantial marketing program.  We promote
our products by developing relationships through Peking University, professional
relationships with various agencies and municipalities within the Chinese
government and in participation in industry trade exhibitions. Our marketing
expenses therefore are relatively low in comparison to those of our competitors
who do not have a record of performance and brand recognition or
well-established government contacts.





Selling
expenses, including sales representative commissions, promotion fees,
salesperson salaries and expenses increased approximately $0.92 million, or
278.79%, to $1.25 million for the year ended December 31, 2008, from $0.33
million in 2007.  As a percentage of revenues, selling expenses
increased to 4.26% for the year ended December 31, 2008, from 2.74% in 2007. The
increase of selling expenses was mainly attributable to our expanded operations
and sales volume for the year ended December 31, 2008.





Administrative
Expenses.  Our administrative expenses were approximately $3.83
million (13.04% of total sales) and approximately $1.07 million (9.07% of total
sales) for the years ended December 31, 2008 and 2007,
respectively.  The increase of administrative expenses was mainly
attributable to the increased staffing and more expenses associated with being a
public company.





Income Taxes. Income Taxes. China TransInfo
Technology Corp. is subject to the United States federal income tax at a tax
rate of 34%.  No provision for income taxes in the United States has
been made as China TransInfo Technology Corp. had no United States taxable
income in 2008 fiscal year.





Our
wholly owned subsidiary Cabowise was incorporated in the BVI and, under the
current laws of the BVI, is not subject to income taxes.  Our wholly
owned subsidiary Intra-Asia Entertainment Corporation (Delaware) was
incorporated in Delaware.  No provision for state income taxes in
Delaware has been made as Intra-Asia Entertainment Corporation (Delaware) had no
Delaware taxable income in 2008.  Our wholly owned subsidiary
Intra-Asia Entertainment (China) Limited (Hong Kong) was incorporated in Hong
Kong and, under the current laws of Hong Kong, is not subject to income
taxes.  Our wholly owned subsidiary Intra-Asia Entertainment
(Asia-Pacific) Limited (Samoa) was incorporated in Samoa and, under the current
laws of Samoa, is not subject to income taxes.





Our
former Chinese operating subsidiaries enjoy certain special or preferential tax
treatments regarding foreign enterprise income tax in accordance with the
“Income Tax Law of the PRC for Enterprises with Foreign Investment and Foreign
Enterprises” and its implementing rules.  Accordingly, our former
Chinese operating subsidiaries have been entitled to tax concessions whereby the
profit for its first two financial years beginning with the first profit-making
year (after setting off tax losses carried forward from prior years) is exempt
from income tax in the PRC and the profit for each of the subsequent three
financial years is taxed at 50% of the prevailing tax rates set by the relevant
tax authorities. However, on March 16, 2007, the National People’s Congress of
China passed the new Enterprise Income Tax Law (“EIT Law”), and on November 28,
2007, the State Council of China passed the Implementing Rules for the EIT Law
(“Implementing Rules”), which took effect on January 1, 2008.  The EIT
Law and Implementing Rules impose a unified EIT of 25.0% on all
domestic-invested enterprises and FIEs, unless they qualify under certain
limited exceptions.  Therefore, nearly all FIEs are subject to the new
tax rate alongside other domestic businesses rather than benefiting from the
FEIT, and its associated preferential tax treatments, beginning January 1,
2008.





Despite
these changes, the EIT Law gives existing FIEs a five-year grandfather period
during which they can continue to enjoy their existing preferential tax
treatments.  We are expecting that the measures to implement the
grandfather period will be enacted by the Chinese government in the coming
months and will assess what the impact of the new regulations are at that
time.  The discontinuation of any such special or preferential tax
treatment or other incentives would have an adverse affect on any organization’s
business, fiscal condition and current operations in China.


40





In
addition to the changes to the current tax structure, under the EIT Law, an
enterprise established outside of China with “de facto management bodies” within
China is considered a resident enterprise and will normally be subject to an EIT
of 25.0% on its global income.  The Implementing Rules define the term
“de facto management bodies” as “an establishment that exercises, in substance,
overall management and control over the production, business, personnel,
accounting, etc., of a Chinese enterprise.”  If the PRC tax
authorities subsequently determine that we should be classified as a resident
enterprise, then the organization’s global income will be subject to PRC income
tax of 25.0%.





Our VIE
Entity, PKU, Zhangcheng Media, Xinjiang Zhangcheng, China TranWiseway, and
Dajian Zhitong are subject to Chinese enterprises income tax (“EIT”), at a rate
of 25% of the assessable profits.  As approved by the local tax
authority in the PRC, Beijing Tian Hao and Beijing Zhangcheng  are
entitled to a two-year exemption from EIT, commencing from the first cumulative
profit-making year.  Shanghai Yootu is subject to a special EIT at
2.5% of its taxable revenue in 2008.   For the year ended
December 31, 2007, we recognized income tax expense of $0.45 million while in
2008, we recognized an income tax expense of $0.06 million.  All those
tax expenses mainly resulted from the decrease in deferred tax assets during
2008.





Net Income.Net income increased
approximately $6.67 million, or 150.85%, to $11.09 million in 2008 from
approximately $4.42 million in 2007, as a result of the factors described
above.





Liquidity
and Capital Resources





As of
December 31, 2008, we had cash and cash equivalents (excluding restricted cash)
of approximately $16.12 million and restricted cash of approximately $1.21
million.  The following table provides detailed information about our
net cash flow for all financial statements periods presented in this
report.





Cash
Flow





Fiscal Years Ended
                      December 31,2008
                    
                    
                    2007Net
      cash provided by operating activities
                    
                    $
                    2,511,917
                    
                    
                    $
                    85,543
                    $Net
      cash provided by (used in) investing activities
                    
                    
                    (10,401,836
                    )
                    
                    
                    4,252,311Net
      cash provided by financing activities
                    
                    
                    16,870,614
                    
                    
                    
                    1,049,289Net
      cash inflow
                    
                    
                    9,280,226
                    
                    
                    
                    5,521,074





Operating
Activities:





Net cash
provided by operating activities was approximately $2.51 million in fiscal year
ended December 31, 2008, which is an increase of approximately $2.42 million
from approximately $0.09 million net cash provided by operating activities in
fiscal year ended December 31, 2007.  Such increase of net cash
provided by operating activities was primarily attributable to the increase of
our sales and net profit as well as the increase in accounts and notes payable
for 2008 compared to 2007.





Investing
Activities:





Our main
uses of cash for investing activities are payments relating to the acquisition
of property, plant and equipment.




Net cash
used in investing activities was approximately $10.4 million in fiscal year
2008, a decrease of $14.65 million from the $4.25 million net cash provided by
investing activities in fiscal year 2007.  Such decrease of net cash
provided by investing activities was primarily attributable to the purchases of
GPS and LED screen equipment for our taxi media business as well as the
acquisition of China TranWiseway, Dajian Zhitong and Shanghai Yootu during
2008.


41





Financing
Activities





Net cash
provided by financing activities for the fiscal year ended December 31, 2008 was
approximately $16.87 million, while in the same period of 2007 we had
approximately $1.05 million net cash provided by financing activities. Such
change was mainly attributable to the facts that we raised $15 million in the
private placement transaction in July 2008 and borrowed approximately $2.93
million from a bank during 2008.





On June
17, 2008, we entered into a short-term loan agreement with Beijing Bank, Youyi
Branch (the “Bank”), pursuant to which the Bank has agreed to loan to us RMB
20,000,000 (approximately $2,934,000) for purchase of its raw materials. The
loan has an annual interest rate of 8.964% and the interests must be paid on a
quarterly basis commencing September 20, 2008.  The loan expires on
June 17, 2009 but can be renewed upon the written consent by the
Bank.  Under the terms of the loan agreement, we are subject to
customary affirmative and negative covenants.  The loan may be
accelerated and the Bank may demand immediate payment of the principal and
accrued interests upon the occurrence of an event of default which include,
among other things, a failure to make principal or interest payments, a failure
to comply with other covenants and certain events of bankruptcy.  As
of the date of this report, we has an outstanding loan with a principal amount
of $2.93 million borrowed from the Bank, which matures on June 17, 2009. There
are no financial covenants or ratios under this short-term loan
agreement.





On July
17, 2008, we completed a private placement pursuant to which we issued and sold
2,586,207 shares of our common stock to SAIF.  As a result of this
private placement we raised $15 million in gross proceeds, which left us with
approximately $13.21 million in net proceeds after the deduction of offering
expenses in the amount of approximately $1.79 million.





We
believe that our currently available working capital, after receiving the
aggregate proceeds of our capital raising activity in July 2008 and the bank
loans referred to above, should be adequate to sustain our operations at our
current levels through at least the next twelve months.  However,
depending on our future needs and changes and trends in the capital markets
affecting our shares and the Company, we may determine to seek additional equity
or debt financing in the private or public markets.





Obligations
Under Material Contracts





We have
entered into a lease agreement with a Chinese individual, Zhao Li, for our
rental of space at 07 Floor E-Wing Center, No. 113 Zhichunlu, Haidian District,
Beijing, China. Under this lease, we have the right to use 517 square meters of
office space in the E-Wing Center.  We pay a total monthly rental of
RMB 50,000 under this lease agreement (approximately $7,300).  This
lease expires on December 31, 2010.  On June 2, 2007, we entered into
a real property purchase agreement with Zhao Li, pursuant to which Mr. Zhao
agreed to sell the facility to us for a purchase price of RMB 9,747,000
(approximately $1,429,885). We have paid $1,249,745 to Mr. Zhao as of December
31, 2008.





We also
have two other lease agreements for our rental of spaces at the 15th and the
16th floor of E-Wing Center, No. 113 Zhichunlu, Haidian District, Beijing,
China.  Under these two leases, we have the rights to use 378 square
meters of office space at the 15th floor
and 609 square meters of office space at the 16th floor
in the E-Wing Center, respectively.  We pay monthly rentals of RMB
51,011 (approximately $7,447)and RMB 76,783 (approximately $11,209) under these
two lease agreements, respectively.  The leases expire on August 31,
2010 and March 30, 2011, respectively.





Critical
Accounting Policies





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires our management to make
assumptions, estimates and judgments that affect the amounts reported in the
financial statements, including the notes thereto, and related disclosures of
commitments and contingencies, if any. We consider our critical accounting
policies to be those that require the more significant judgments and estimates
in the preparation of financial statements, including the
following:


42





Principles of
Consolidation—The consolidated financial statements include the accounts
of the Company, it's wholly owned subsidiaries Intra-Asia Entertainment (Asia
Pacific) Limited, Intra-Asia Entertainment (China) Limited and Cabowise
International Ltd., its indirectly owned subsidiaries Oriental Intra-Asia
Entertainment (China) Limited (“Oriental Intra-Asia”), Beijing PKU Chinafront
High Technology Co., Ltd. (“PKU”), Beijing Tian Hao Ding Xing Technology Co.,
Ltd.(“Beijing Tian Hao”), Beijing Zhangcheng Science and Technology Co., Ltd.
(“Beijing Zhangcheng”), Xingjiang Zhangcheng Science and Technology Co., Ltd.
(“Xingjiang Zhangcheng”), Beijing Zhangcheng Culture and Media Co., Ltd.
(“Zhangcheng Media”), China TranWiseway Technology Co., Ltd. (“China
TranWiseway”), Dalian Dajian Zhitong Infomration Service Ltd. (“Dajian
Zhitong”), Shanghai Yootu Information Technology Co., Ltd. (“Shanghai Yootu”)
and its variable interest entity China TransInfo Technology Group Co., Ltd.
(“Group Company”). All material intercompany accounts, transactions and profits
have been eliminated in consolidation.





On
February 3, 2009, the Company, through its indirect Chinese subsidiaries,
Oriental Intra-Asia and PKU, entered into a series of equity transfer agreements
with China TransInfo Technology Group Co., Ltd., or  Group Company, a
company incorporated under Chinese law, pursuant to which the Company
transferred all of its indirect equity interests in PKU and PKU's subsidiaries
to the Group Company. The main purpose of  the restructuring is to
allow the Company to engage in three new business segments, including online
services, taxi advertising, and security and surveillance related business in
China in which companies with foreign ownership, like the Company and its
subsidiaries, are either prohibited or restricted from operating under the
current applicable Chinese laws and regulations.  Through the
contractual or variable interest entity, or VIE, arrangements, the Company
maintains substantial control over the VIE Entities' daily operations and
financial affairs, election of their senior executives and all matters requiring
shareholder approval. Furthermore, as the primary beneficiary of the VIE
Entities, the Company is entitled to consolidate the financial results of the
VIE Entities in its own consolidated financial statements under FASB
Interpretation No. 46R "Consolidation of Variable Interest Entities" ("FIN
46R"). On November 17, 2008, Group Company made a capital contribution of RMB
40,000,000 or $5,868,000 on behalf of Oriental Intra-Asia under nominee
agreement to PKU. To follow the Substance-Over-Form principle, all the
transactions and events of Group Company’s have been included into the
consolidated financial statements for the year ended December 31,
2008.





Use of
Estimates—The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period.  Significant
estimates include accrued warranty costs, as well as revenue and costs recorded
under the percentage-of-completion method.  Actual results could
differ from those estimates.





Cash
Equivalents—The Company classifies all highly liquid investments
purchased with a maturity of three months or less as cash
equivalents.





Accounts
Receivable—Accounts receivable are carried at original invoice amount
less an estimate for doubtful receivables based on a review of all outstanding
amounts at year end. Management determines the allowance for doubtful accounts
by using historical experience applied to an aging of accounts. Trade
receivables are written off when deemed uncollectible. Recoveries of trade
receivables previously written off are recorded when received. Allowance for
doubtful accounts amounted to $32,439 as of December 31, 2008.





Property and
Equipment—Property and equipment are recorded at cost, less accumulated
depreciation.  Depreciation is provided for using straight-line
methods over the estimated useful lives of the respective assets, usually three
to seven years.





Revenue
Recognition—Most of the Company’s revenues are on contracts recognized
using the percentage-of-completion method, measured by the ratio of costs
incurred to date to estimated total costs for each contract.  Contract
costs include all direct material and labor costs and those indirect costs
related to contract performance, such as supplies and
travels.  General and administrative costs are charged to expense as
incurred.  Losses on contracts are recorded in full as they are
identified.


43





During
the year ended December 31, 2008, the Company offered limited taxi media
advertising. The Company recognized deferred revenue when cash is received, but
the revenue has not yet been earned. Taxi media advertising revenue is billed to
the customer and recognized when the advertisement is published.





Research and
Development—Research and development costs represent the costs of
designing, developing and testing products and are expensed as selling, general
and administrative expenses as incurred.





Share-Based
Payments—The Company adopted Statement of Financial Accounting Standards
No 123(R), “Share-Based Payments” (“SFAS No. 123R”) effective January 1, 2006.
SFAS No. 123R amends existing accounting pronouncements for share-based payment
transactions in which an enterprise receives employee and certain non-employee
services in exchange for (a) equity instruments of the enterprise or (b)
liabilities that are based on the fair value of the enterprise’s equity
instruments or that may be settled by the issuance of such equity instruments.
SFAS No.123R generally requires such transactions be accounted for using a
fair-value-based method. The Company has never issued any stock options to any
employees.





Income
Taxes—Deferred income tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective income tax bases.  Deferred income tax assets and
liabilities are measured using enacted tax rates in effect for the year in which
those temporary differences are expected to be recovered or
settled.  A valuation allowance is established against deferred tax
assets if it is more likely than not that all, or some portion, of such assets
will not be realized.





Effective
January 1, 2007, we adopted Financial Accounting Standard Board (FASB)
Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement No. 109, Accounting for Income Taxes.
FIN 48 prescribes a comprehensive model for how companies should recognize,
measure, present, and disclose in their financial statements uncertain tax
positions taken or expected to be taken on a tax return. Under FIN 48, tax
positions are initially recognized in the financial statements when it is more
likely than not the position will be sustained upon examination by the tax
authorities. Such tax positions are initially and subsequently measured as the
largest amount of tax benefit that is greater than 50% likely of being realized
upon ultimate settlement with the tax authority assuming full knowledge of the
position and all relevant facts.





Impairment of
Long-Lived Assets—The Company adopts SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets". The Company periodically evaluates
long-lived assets for impairment whenever events or changes in circumstances
indicate that the carrying value of an asset may not be
recoverable.  If the estimated future cash flows (undiscounted and
without interest charges) from the use of an asset were less than the carrying
value, a write-down would be recorded to reduce the related asset to its
estimated fair value.





The
assumptions used by management in determining the future cash flows are
critical. In the event these expected cash flows are not realized, future
impairment losses may be recorded. Management has determined that no impairments
of long-lived assets currently exist.





Issuance of
Shares by Subsidiaries—Sales of stock by a subsidiary is accounted for in
accordance with Staff Accounting Bulletin Topic 5H, “Accounting for Sales of
Stock by a Subsidiary.” The Company has adopted the capital transaction method
to account for subsidiary stock sales. Accordingly, increases and decreases in
the Company’s share of its subsidiary’s net equity resulting from subsidiary
stock transactions are recorded on the Consolidated Balance Sheets and
Consolidated Statements of Stockholders’ Equity as increases or decreases to
Additional paid-in capital.





Concentrations of
Credit Risk—Financial instruments that subject the Company to credit risk
consist primarily of accounts receivable, which are concentrated in a small
number of customers in the Chinese governments. The Company performs ongoing
credit evaluations of its customers.  For the year ended December 31,
2008, bad debt expenses totaled RMB 219,012 or $31,571.





Statement of Cash
Flows—In accordance with SFAS No. 95, "Statement of Cash Flows", cash
flows from the Company's operations are based upon the local currencies. As a
result, amounts related to assets and liabilities reported on the statement of
cash flows will not necessarily agree with changes in the corresponding balances
on the balance sheet.


44





Translation
Adjustment—The Renminbi ("RMB"), the national currency of the PRC, is the
primary currency of the economic environment in which the operations of China
IRAE are conducted. The Company uses the United States dollar ("U.S. dollars")
for financial reporting purposes.





In
accordance with SFAS No. 52, “Foreign Currency
Translation,” the Company’s results of operations and cash flows are
translated at the average exchange rates during the period, assets and
liabilities are translated at the exchange rates at the balance sheet dates, and
equity is translated at the historical exchange rates. As a result, amounts
related to assets and liabilities reported on the consolidated statements of
cash flows will not necessarily agree with changes in the corresponding balances
on the consolidated balance sheets.





As of
December 31, 2008 and 2007, the exchange rates between the RMB (¥) and the USD ($)
were ¥1=$0.1467 and
¥1=$0.1371,
respectively.  The weighted-average rates of exchange between the RMB
and the USD as of  December 31, 2008 and 2007 were ¥1=$0.1467 and
¥1=$0.13167,
respectively.  Total translation adjustment recognized as of December
31, 2008 and 2007 is $2,499,893 and $887,184, respectively.





Comprehensive
Income—Comprehensive income includes accumulated foreign currency
translation gains and losses. The Company has reported the components of
comprehensive income on its statements of stockholders’ equity.





Fair Value of
Financial Instruments— The carrying amounts of cash and cash equivalents,
accounts receivable, deposits and accounts payable approximate their fair value
because of the short maturity of those instruments.


The
carrying amounts of the Company's long-term debt approximate their fair value
because of the short maturity and/or interest rates which are comparable to
those currently available to the Company on obligations with similar
terms.





Effects
of Inflation





Inflation
and changing prices have not had a material effect on our business and we do not
expect that inflation or changing prices will materially affect our business in
the foreseeable future.  However, our management will closely monitor
the price change and continually maintain effective cost control in
operations.





Off
Balance Sheet Arrangements





We do not
have any off balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity or capital
expenditures or capital resources that is material to an investor in our
securities.





Recent
Accounting Pronouncements





In
December 2007, the FASB issued SFAS 141R, “Business Combinations - Revised
2007,” which replaces FASB Statement No. 141, “Business Combinations.” SFAS
141Restablishes
principles and requirements intending to improve the relevance, representational
faithfulness, and comparability of information that a reporting entity provides
in its financial reports about a business combination and its effects. This is
accomplished through requiring the acquirer to recognize assets acquired and
liabilities assumed arising from contractual contingencies as of the acquisition
date, measured at their acquisition-date fair values. This includes contractual
contingencies only if it is more likely than not that they meet the definition
of an asset of a liability in FASB Concepts Statement No. 6, “Elements of Financial
Statements - a
replacement of FASB Concepts Statement No. 3.”This statement also
requires the acquirer to recognized goodwill as of the acquisition date,
measured as a residual. However, this statement improves the way in which an
acquirer’s obligations to make payments conditioned on the outcome of future
events are recognized and measured, which in turn improves the measure of
goodwill. This statement also defines a bargain purchases as a business
combination in which the total acquisition-date fair value of the consideration
transferred plus any noncontrolling interest in the acquiree, and it requires
the acquirer to recognize that excess in earnings as a gain attributable to the
acquirer. This therefore improves the representational faithfulness and
completeness of the information provided about both the acquirer’s earnings
during the period in which it makes a bargain purchase and the measures of the
assets acquired in the bargain purchase. The Company does not expect the
adoption of this pronouncement to have a material impact on its financial
statements. The adoption of SFAS No. 141(R) changes our accounting
treatment for business combinations on a prospective basis effective
January 1, 2009. The Company is currently evaluating the impact of
SFAS 141(R) on its financial statements.


45





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Stateme0147nts - an amendment of ARB No. 51,”which establishes
accounting and reporting standards to improve the relevance, comparability, and
transparency of financial information in its consolidated financial statements.
This is accomplished by requiring all entities, except not-for-profit
organizations, that prepare consolidated financial statements to (a) clearly
identify, label, and present ownership interests in subsidiaries held by parties
other than the parent in the consolidated statement of financial position within
equity, but separate from the parent’s equity, (b) clearly identify and present
both the parent’s and the noncontrolling interest’s attributable consolidated
net income on the face of the consolidated statement of income, (c) consistently
account for changes in parent’s ownership interest while the parent retains it
controlling financial interest in subsidiary and for all transactions that are
economically similar to be accounted for similarly, (d) measure of any gain,
loss or retained noncontrolling equity at fair value after a subsidiary is
deconsolidated, and (e) provide sufficient disclosures that clearly identify and
distinguish between the interests of the parent and the interests of the
noncontrolling owners. This Statement also clarifies that a noncontrolling
interest in a subsidiary is an ownership interest in the consolidated entity
that should be reported as equity in the consolidated financial statements. SFAS
No. 160 is effective for us on a prospective basis for business
combinations with an acquisition date beginning as of January 1,
2009.





In April
2008, FASB issued FASB Staff Position (FSP) FAS 142-3, “Determination of the Useful Life of
Intangible Assets,” to provide guidance for determining the useful life
of recognized intangible assets and to improve consistency between the period of
expected cash flows used to measure the fair value of a recognized intangible
asset and the useful life of the intangible asset as determined under Statement
142. The FSP requires that an entity consider its own historical experience in
renewing or extending similar arrangements. However, the entity must adjust
that experience based on entity-specific factors under FASB Statement 142,
Goodwill and Other Intangible Assets. FSP FAS 142-3 is effective January 1,
2009, and will be applied prospectively. The Company is currently evaluating the
impact of FSP FAS 142-3 on its financial statements.





In June
2008, FASB ratified a consensus opinion reached by the Emerging Issues Task
Force (EITF) on EITF Issue 08-4, “Transition Guidance for Conforming
Changes to Issue No. 98-5,” to provide transition guidance for conforming
changes made to the abstract for EITF Issue 98-5, “Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios,” relating to EITF Issue 00-27, “Application of Issue No. 98-5
to Certain Convertible Instruments,” and FASB Statement 150, Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity.





ITEM
      8.
            FINANCIAL
      STATEMENTS AND SUPPLEMENTARY FINANCIAL
DATA




The full
text of our audited consolidated financial statements as of December 31, 2008
and 2007 begins on page F-1 of this annual report.




ITEM
      9.
              CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE.




None.


46


ITEM 9A(T).
              CONTROLS
      AND PROCEDURES.





(a)
Evaluation of Disclosure Controls and Procedures





Our
management, with the participation of our chief executive officer and chief
financial officer, Mr. Shudong Xia and Mr. Zhihai Mao, respectively, evaluated
the effectiveness of our disclosure controls and procedures.  The term
“disclosure controls and procedures,” as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act, means controls and other procedures of a
company that are designed to ensure that information required to be disclosed by
a company in the reports, such as this report, that it files or submits under
the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the SEC’s rules and forms.  Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by a company in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to the company’s management, including its principal executive and
principal financial officers, as appropriate to allow timely decisions regarding
required disclosure.  Management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving their objectives and management necessarily
applies its judgment in evaluating the cost-benefit relationship of possible
controls and procedures.  Based on that evaluation, Mr. Shudong Xia
and Mr. Zhihai Mao concluded that as of December 31, 2008, and as of the date
that the evaluation of the effectiveness of our disclosure controls and
procedures was completed, our disclosure controls and procedures were effective
to satisfy the objectives for which they are intended.





(b)
Management’s annual report on internal control over financial
reporting





Management
is responsible for establishing and maintaining adequate internal control over
financial reporting for the Company.  Internal control over financial
reporting refers to the process designed by, or under the supervision of, our
chief executive officer and chief financial officer, and effected by our Board
of Directors, management and other personnel, to provide reasonable assurance
regarding the reliability of our financial reporting and the preparation of
financial statements for external purposes in accordance with U.S. GAAP, and
includes those policies and procedures that:




(1)
              pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of our
      assets;
 
 (2)
              provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with U.S. GAAP, and that
      our receipts and expenditures are being made only in accordance with the
      authorization of our management and directors;
  and
 
 (3)
              provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of our assets that could have
      a material effect on the financial
statements.





Management
assessed the effectiveness of our internal control over financial reporting as
of December 31, 2008.  In making this assessment, management used the
framework set forth in the report entitled Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission.  Based on that evaluation, our management concluded that
our internal control over financial reporting is effective, as of December 31,
2008.





This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of the SEC that
permit the Company to provide only management’s report in this annual
report.





(c)
Changes in internal control over financial reporting





There
were no changes in our internal controls over financial reporting during the
fourth quarter of our fiscal year ended December 31, 2008, that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.





ITEM
      9B.
            OTHER
      INFORMATION.




None.


47


PART
III




ITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.





Directors
and Executive Officers





The
following sets forth information about our directors and executive officers as
of the date of this report:





Name
              
              Age
              
              PositionShudong
      Xia
              
              36
              
              Chairman,
      CEO, President and SecretaryZhibin
      Lai
              
              35
              
              Vice
      PresidentZhiping
      Zhang
              
              39
              
              Vice
      President of Research and DevelopmentDanxia
      Huang
              
              35
              
              Vice
      President of Finance, Treasurer and DirectorZhihai
      Mao
              
              33
              
              Chief
      Financial OfficerJay
      Trien
              
              68
              
              DirectorZhongsu
      Chen
              
              45
              
              DirectorDan
      Liu
              
              67
              
              DirectorBrandon
      Ho-Ping Lin
              
              37
              
              DirectorDongyuan
      Yang
              
              55
              
              Director





SHUDONG XIA. Mr. Xia has been
our Chief Executive Officer, President, Secretary and Chairman since May 14,
2007. Mr. Xia founded PKU, in 2000. From 2002, Mr. Xia, while with PKU, was
involved with the “GIS-based digital city-services system study and
demonstration”, one of the key projects of China 863-Plan. Prior to his
involvement with PKU, Mr. Xia, from 1998 was involved in several research
projects at Peking University, specifically: he was a key team member of the
“Study on the key technology of information release via the super media
network”, a key technology study project of the “China 9th 5-year Plan” and was
instrumental in the compilation of “How to Digitize a City” and “Digital
City-Theory, Method and Application”. In 2003, Mr. Xia received his PhD Remote
Sensing and GIS Institute of Peking University in Cartology and Geographic
Information Systems from the Remote Sensing and GIS Institute of Peking
University and serves on several government advisory committees for the
development of GIS services for urban planning.




ZHIBIN LAI. Mr. Lai has been
our Vice President since May 14, 2007. Mr. Lai is in charge of GIS application
service for the Transportation sector. From 2000, Mr. Lai was Vice President of
PKU, where he was in charge of the GIS application service for the
transportation sector. Mr. Lai has extensive experiences in system planning,
analysis and project management and is involved in a variety of comprehensive
software development projects at PKU. From 1988, Mr. Lai was head of the
Software Department of Fangda Centry Group (Beijing) where he was in charge of
the GIS Study Center in City and Environment Department at Peking University.
From 1996, Mr. Lai was head of the China team’s software department at GEOBasic,
a Japan-based GIS company. Mr. Lai received his PhD at the Remote Sensing and
GIS Institute at Peking University.




ZHIPING ZHANG. Mr. Zhang has
been our Vice President of Research and Development since May 14, 2007. Mr.
Zhang is in charge of the R&D and GIS application service in Land &
Resources Sector. From 2001, Mr. Zhang was Vice President of PKU, where he was
in charge of the R&D and GIS application service in Land & Resources
Sector. From July 1995, Mr. Zhang was a teacher of Remote Sensing and Geography
Information Institute at Peking University. From August 1997 Mr. Zhang was the
lead expert and head of software department in Basic Engineering for GeoBasic, a
Japanese GIS company. From 1995, Mr. Zhang led the development of the first
Geo-info system software-Citystar, which was awarded the “Excellence Product
Awards” in the first “Domestic GIS Software Assessment”. During his tenure at
GeoBasic, Mr. Zhang led the development of the first GIS platform
software-GeoBasic in Japan, which has won a 20% market share in the Japanese
market. Mr. Zhang has a Masters of Remote Sensing and Geography Information
Institute from Peking University.


48




DANXIA HUANG. Ms. Huang has
been our Vice President of Finance and Treasurer since May 14, 2007 and became
our Director on May 27, 2007. Ms. Huang is in charge of Strategic Development,
Business Administration Management and Finance. From November 2006, Ms. Huang
was Vice President of PKU, where she was in charge of Strategic Development,
Business Administration Management and Finance. From April 2005, Ms. Huang was
the Vice President of First City Investment Inc. of Hong Kong. From April 2001,
Ms Huang worked at Beijing Business Travel Holiday Net-Tech Co., Ltd., an
internet company, as Chief Executive Officer. Ms. Huang has a Master’s in
Business Administration in Finance from Murdoch University of
Australia.





ZHIHAI MAO. Mr. Mao has been
our Chief Financial Officer since January 1, 2008. From August 2006 to December
2007, Mr. Mao was a senior auditor of Deloitte & Touche Tohmatsu CPA, Ltd.’s
Beijing office. Prior to that, Mr. Mao was a senior auditor of Deloitte &
Touche LLP, USA, from October 2004 through July 2006. From July 2003 to October
2004, Mr. Mao was a senior tax consultant of Deloittee Tax LLP USA. Mr. Mao also
was previously employed as a budget analyst of University of North Carolina at
Chapel Hill, Program for International Training in Health, from December 2002
through May 2003. Mr. Mao is a U.S. Certified Public Accountant with extensive
experience of corporate financial reporting and disclosure. Mr. Mao holds a
Mater’s degree in accounting from University of North Carolina at Chapel
Hill.





JAY TRIEN. Mr. Trien has been
our director since May 1, 2008.  Since April 1989, Mr. Trien has been
a senior partner at Trien Rosenberg Weinberg Ciullo & Fazzari LLP., a
certified public accounting and business consulting firm with offices in
Morristown, New Jersey and New York City. He oversees the firm’s financial and
accounting service groups and also directs its M&A and capital finance
departments. Mr. Trien has published several articles on accounting issues in
American Venture Magazine, Capital Growth’s Guide to Entrepreneurial Venture
Financing, NJBIZ and the Journal of the Family Firm Institute. Mr. Trien is the
president of the Venture Association of New Jersey as well as the New Media
Association of New Jersey and is a member of the American Institute of Certified
Public Accountants, New Jersey Bar Association, New Jersey Society of Certified
Public Accountants, New York State Society of Certified Public Accountants, the
National Litigation Support Services Association and the Alliance of Merger
& Acquisition Advisors. Mr. Trien is a Certified Public Accountant, holds a
Bachelor’s of Science in Economics from The Wharton School of the University of
Pennsylvania and a Juris Doctor degree from Rutgers Law School.





ZHONGSU CHEN.  Dr.
Chen has been our director since May 1, 2008.  Dr. Chen has more than
20 years of experience in information technology, including nine years in Wall
Street firms such as DLJ, Standard & Poor’s, New York Life and Ambac
Financial Group. Since May 2005, Dr. Chen has been the managing director of Time
Innovation Ventures, a venture capital company. He also serves as Chairman and
CEO of Beijing Global View Technology Development Corporation, a Beijing
based  IT company developing and operating e-learning
platform,  and Beijing Xiakexing Network Technologies, a Chinese
company producing animation products. From 2001 to 2005, Dr. Chen worked as the
deputy chief technology officer at the Shanghai Stock Exchange. From 2003 to
2004, he led China’s National Financial Standardization Securities Trading
Protocol Working Group, which defined China’s Securities Trading Exchange
Protocol technology standard, and served as an advisor for the Shenzhen Stock
Exchange Technology Development Strategy Committee. In 2006, Dr. Chen was
appointed by the Chinese government as a member of the Working Group for
the Foundation of China’s Futures Exchange. Dr. Chen holds a Bachelor’s degree
in mathematics/computer science from Pace University, a Master’s degree in
mathematical sciences from The Johns Hopkins University and a PhD degree in
computer science/operations research from Stevens Institute of
Technology.





DAN LIU. Mr. Liu has been our
director since May 1, 2008.  Mr. Liu has over 40 years of experience
in the electronics and information sectors. Mr. Liu held several management
positions at China Electronics Import and Export Corporation for more than ten
years and was vice president of China Electronics Corporation from 1990 to 1991.
From 1991 to 1997, Mr. Liu was chairman of the board of Intel (China), a
semiconductor manufacturer. Mr. Liu was also senior advisor to Motorola (China),
a provider of mobile devices and broad band communication and enterprise
mobility solutions, from 1994 to 1998. From 1991 to 2000, Mr. Liu was the
president of China Tongda Networking Corporation, a communication system
integration company. From 2001 to 2002, Mr. Liu was the Vice General Manager of
China Electronics Corporation. Mr. Liu is currently a councillor at Chinese
Association of Electronics, China Software Industry Association, China News
Technology Association, and China Public Relations Association. Mr. Liu holds a
Bachelor’s degree in Communication Engineering from Harbin Engineering
University.


49





BRANDON HO-PING LIN. Mr. Lin
has been our director since September 28, 2008.  Mr. Lin is a partner
at SAIF Partners, which is one of the largest and most successful growth venture
capital funds focused on China. Prior to joining SAIF Partners in 2001, Mr. Lin
was a Vice President in investment banking with Credit Suisse/Donaldson, Lufkin
& Jenrette (DLJ) in New York from 1997 to 2001 where he executed mergers
& acquisitions, high yield debt and initial public offering transactions for
leveraged buy-outs and technology companies. From 1994 to 1997, Mr. Lin worked
as an associate with Sullivan & Cromwell LLP. Mr. Lin is also a director of
several SAIF Partners’ portfolio companies, which include NVC Lighting Holding
Limited, Jiangxi Runtian Beverage LLC, Vienna Hotel Group Limited and Best Elite
International Limited. Mr. Lin holds a Bachelor’s degree in Economics from
Stanford University and a Juris Doctor degree from Harvard Law
School.





DONGYUAN YANG. Mr. Yang has
been our director since September 28, 2008.  Mr. Yang has over 26
years of experience in the research and application of urban transportation
planning, transportation modeling, intellectual transportation systems, and
logistic systems planning. Mr. Yang has been the vice chancellor of Tongji
University since 2002 and has published over 80 academic articles in domestic
and international industry journals. In recent years, Mr. Yang has spearheaded a
number of transportation and logistic planning projects, including the highway
intellectual information platform for Guangdong province, Zhengzhou's integrated
transportation systems planning, Shanghai's World Expo transportation systems
planning and Shanghai's comprehensive transportation information center
planning. Mr. Yang holds a Ph.D. in Road and Traffic Engineering from Tongji
University.





In
connection with the private placement transaction consummated on July 17, 2008,
we and our two major shareholders, Karmen Investment Holdings Limited and Leguna
Verde Investments Limited (the “Major Shareholders”), entered into a voting
agreement (the “Voting Agreement”) with SAIF Partners III L.P. (“SAIF”),
pursuant to which, among other things, SAIF and the Major Shareholders agreed,
during the term of the Voting Agreement, to vote, or cause to be voted, all
shares owned by them, to ensure that Mr. Lin will be elected as a director of
the Company.





Except as
noted above, there are no other arrangement or understanding between any of our
executive officers or directors and any other person pursuant to which such
executive officer or director was or is to be selected as an officer or a
director.





Directors
are elected until their successors are duly elected and qualified.





Board
Composition and Committees





Our board
of directors is comprised of Shudong Xia, Danxia Huang, Jay Trien, Zhongsu Chen,
Dan Liu, Brandon Ho-Ping Lin and Dongyuan Yang.  Each of Jay Trien,
Zhongsu Chen, Dan Liu and Dongyuan Yang serves on our board of directors as an
“independent director” as defined by Rule 4200(a)(15) of the Marketplace Rules
of The Nasdaq Stock Market, Inc. (the “Nasdaq Marketplace
Rules”).  The board of directors has determined that Jay Trien
possesses the accounting or related financial management experience that
qualifies him as financially sophisticated within the meaning of Rule
4350(d)(2)(A) of the Nasdaq Marketplace Rules and that he is an “audit committee
financial expert” as defined by the rules and regulations of the
SEC.





Our board
of directors currently has three standing committees which perform various
duties on behalf of and report to the board of directors: (i) audit committee,
(ii) compensation committee and (iii) governance and nominating
committee.  Each of the three standing committees is comprised
entirely of independent directors.  From time to time, the board of
directors may establish other committees.


50





Audit
Committee





Our board
of directors established an audit committee in May 2008.  Our audit
committee consists of three members: Jay Trien, Zhongsu Chen, and Dan Liu, each
of whom is “independent” as that term is defined under the Nasdaq Marketplace
Rules.  Our audit committee oversees our accounting and financial
reporting processes and the audits of the financial statements of our
company.  Mr. Trien serves as our audit committee financial expert as
that term is defined by the applicable SEC rules.





The audit
committee is responsible for, among other things:




·
            selecting
      our independent auditors and pre-approving all auditing and non-auditing
      services permitted to be performed by our independent
      auditors;




·
            reviewing
      with our independent auditors any audit problems or difficulties and
      management’s response;




·
            reviewing
      and approving all proposed related-party transactions, as defined in Item
      404 of Regulation S-K under the Securities Act of 1933, as
      amended;




·
            discussing
      the annual audited financial statements with management and our
      independent auditors;




·
            reviewing
      major issues as to the adequacy of our internal controls and any special
      audit steps adopted in light of significant internal control
      deficiencies;




·
            annually
      reviewing and reassessing the adequacy of our audit committee
      charter;




·
            such
      other matters that are specifically delegated to our audit committee by
      our Board from time to time;




·
            meeting
      separately and periodically with management and our internal and
      independent auditors; and




·
            reporting
      regularly to the full board of
directors.




Compensation
Committee





Our
compensation committee consists of our independent directors, including Messrs.
Trien, Chen and Liu.  Our compensation committee assists the board in
reviewing and approving the compensation structure of our executive officers,
including all forms of compensation to be provided to our executive
officers.  Our Chief Executive Officer may not be present at any
committee meeting during which his compensation is deliberated.  The
compensation committee is permitted to delegate its authority in accordance with
Nevada law unless prohibited by the Company’s by-laws or the Compensation
Committee charter.  The Compensation Committee is responsible for,
among other things:





·
            approving
      and overseeing the compensation package for our executive
      officers;





·
            reviewing
      and approving corporate goals and objectives relevant to the compensation
      of our chief executive officer, evaluating the performance of our chief
      executive officer in light of those goals and objectives, and setting the
      compensation level of our chief executive officer based on this
      evaluation;





·
            reviewing
      periodically and making recommendations to the Board regarding any
      long-term incentive compensation or equity plans, programs or similar
      arrangements, annual bonuses, employee pension and welfare benefit plans;
      and reviewing and making recommendations to the Board regarding succession
      plans for the chief executive officer and other senior
      officers.





Corporate Governance and
Nominating Committee





Our
corporate governance and nominating committee consists of our independent
directors, including Messrs. Trien, Chen and Liu.  The corporate
governance and nominating committee assists the board of directors in
identifying individuals qualified to become our directors and in determining the
composition of the board and its committees.  The corporate governance
and nominating committee is responsible for, among other
things:


51





·
            identifying
      and recommending to the Board nominees for election or re-election to the
      board, or for appointment to fill any
vacancy;





·
            reviewing
      annually with the board the current composition of the board in light of
      the characteristics of independence, age, skills, experience and
      availability of service to us;





·
            identifying
      and recommending to the board the directors to serve as members of the
      board’s committees; and monitoring compliance with our Corporate
      Governance Guidelines.





Family
Relationships





There is
no family relationship among any of our officers or directors.





Section
16(A) Beneficial Ownership Reporting Compliance





Under
U.S. securities laws, directors, certain executive officers and persons holding
more than 10% of our common stock must report their initial ownership of the
common stock, and any changes in that ownership, to the SEC.  The SEC
has designated specific due dates for these reports.  Based solely on
our review of copies of such reports filed with the SEC by and written
representations of our directors and executive offers, we believe that our
directors and executive offers filed the required reports on time in 2008 fiscal
year.





Code of Ethics





On April
30, 2007, our board of directors adopted a code of ethics that applies to all of
our directors, officers and employees, including our principal executive
officer, principal financial officer, and principal accounting officer. The code
of ethics addresses, among other things, honesty and ethical conduct, conflicts
of interest, compliance with laws, regulations and policies, including
disclosure requirements under the federal securities laws, confidentiality,
trading on inside information, and reporting of violations of the
code.  A copy of the code of ethics has been filed as Exhibit 14 to
our current report on Form 8-K filed on May 14, 2007.  We are in the
process of making our code of ethics available on our website, which is located
at www.ctfo.com.  Once it is available on our website, any amendments
or waivers to the code of ethics will be posted on our website within four
business days of such amendment or waiver.  Until such time, however,
any amendments or waivers to our code of ethics will be filed with the SEC in a
Current Report on Form 8-K.





ITEM
      11.
            EXECUTIVE
      COMPENSATION




Summary
Compensation Table – 2008 and 2007





The
following table sets forth information concerning all compensation awarded to,
earned by or paid to the following persons for services rendered in all
capacities during 2008 and 2007: Stanley Wu, our former Chief Executive Officer
and President; Shudong Xia, our current Chief Executive Officer, President and
Chairman, who became our Chief Executive Officer upon the resignation of Mr. Wu;
and Zhihai Mao, who became our Chief Financial Officer on January 1,
2008.  No other executive officers received total compensation in
excess of $100,000 in either fiscal year.





Name and Principal Position
                                          
                                          Year
                                          
                                          Salary
                                            ($)
                                          
                                          
                                          Bonus
                                            ($)
                                          
                                          
                                          Option
                                            Awards
                                            ($)
                                          
                                          
                                          All Other
                                            Compensations
                                            ($)
                                          
                                          
                                          Total
                                            ($)Stanley
      Wu
                                          
                                          2008
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Former
      CEO and President (1)
                                          
                                          2007
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Shudong
      Xia
                                          
                                          2008
                                          
                                          
                                          15,568
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          15,568CEO,
      President and Chairman(2)
                                          
                                          2007
                                          
                                          
                                          14,110
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,750
                                          
                                          
                                          
                                          15,860Zhihai
      Mao
                                          
                                          2008
                                          
                                          
                                          108,112
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          181,000
                                          (3)
                                          
                                          
                                          -
                                          
                                          
                                          
                                          289,112Chief
      Financial Officer
                                          
                                          2007
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -


52





(1)
            Stanley
      Wu resigned from all offices he held with our company on May 14,
      2007.  Mr. Wu did not receive any compensation for his services
      because we were not operating at that
time.





(2)
            On
      May 14, 2007, we acquired Cabowise in a reverse acquisition transaction
      that was structured as a share exchange and in connection with that
      transaction, Mr. Xia became our Chief Executive Officer.  Prior
      to the effective date of the reverse acquisition, Mr. Xia served as the
      Chairman and CEO of PKU.  The annual compensation shown in this
      table includes the amount Mr. Xia received from PKU prior to the
      consummation of our reverse acquisition of Cabowise on May 14, 2007 in
      addition to the compensation Mr. Xia received for his services for the
      reminder of 2007.





(3)
            These
      represent the amounts the Company recognized for financial statement
      reporting purposes in fiscal year 2008 for the portion of the fair value
      of equity awards granted to Mr. Mao in fiscal year 2008, in accordance
      with SFAS No. 123(R).  These amounts thus do not reflect the
      amount of compensation actually received by Mr. Mao during the fiscal year
      2008.  For a description of the assumptions used in calculating
      the fair value of equity awards under SFAS No.123(R), see Note 9 of our
      financial statements in this Annual
Report.





Additional
Narrative Disclosure





PKU has
employment agreements with the following executive officers:





Shudong Xia,our CEO,
Secretary and President’s employment agreement became effective as of January 1,
2006 and expired on December 31, 2007. On the same date, Mr. Xia's employment
agreement was renewed for a two-year term ending December 31, 2009. Mr. Xia is
receiving RMB 9,000 per month (approximately $1,297) under the
agreement.  We expect that this agreement will be automatically
renewed by the parties upon its expiration.





Zhiping Zhang,our Vice
President of Research and Development’s labor contract became effective as of
January 1, 2006 and expired on December 31, 2007. On the same date, Mr. Zhang's
employment agreement was renewed for a two-year term ending December 31, 2009.
Mr. Zhang is receiving RMB 10,000 per month (approximately $1,442) under the
agreement. We expect that this agreement will be automatically renewed by the
parties upon its expiration.





Zhibin Lai,our Vice
President’s labor contract became effective as of January 1, 2006 and expired on
December 31, 2007. On the same date, Mr. Lai's employment agreement was renewed
for a two-year term ending December 31, 2009. Mr. Lai is receiving RMB 9,000 per
month (approximately $1,297) under the agreement. We expect that this agreement
will be automatically renewed by the parties upon its expiration.





Danxia Huang,our Treasurer
and Vice President of Finance’s labor contract became effective January 1, 2006
and expired on December 31, 2007. On the same date, Ms. Huang's employment
agreement was renewed for a two-year term ending December 31, 2009. Ms. Huang is
receiving RMB 8,000 per month (approximately $1,153) under the agreement. We
expect that this agreement will be automatically renewed by the parties upon its
expiration.





In
addition, on November 27, 2007, we entered into an employment agreement, which
became effective on January 1, 2008, with our CFO, Mr. Zhihai
Mao.  The employment agreement provides, among other things, that Mr.
Mao’s annual base salary will be 750,000 RMB (approximately
$108,112).  On January 7, 2008, we entered into a stock option
agreement with Mr. Mao pursuant to which we granted to Mr. Mao a ten-year option
to acquire 200,000 shares of our common stock at an exercise price of $6.70 per
share.  The option vests in equal installments on a quarterly basis
over a three-year period beginning on January 7, 2008.  The option
will expire on January 7, 2018.





We have
not provide retirement benefits (other than a state pension scheme in which all
of our employees in China participate) or severance or change of control
benefits to our named executive officer.


53





Outstanding
Equity Awards at Fiscal Year End





The
following table sets forth information concerning the fiscal 2008 year-end value
of unexercised options for Mr. Zhihai Mao.  No other executive
officers received unexercised options, stock that has not vested or equity
incentive plan awards that remained outstanding as of the end of the fiscal year
2008.




OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END





Option AwardsName
                            
                            Number of
                              Securities
                              Underlying
                              Unexercised
                              Options
                              (#)
                              Exercisable
                            
                            
                            Number of
                              Securities
                              Underlying
                              Unexercised
                              Options
                              (#)
                              Unexercisable
                            
                            
                            Equity Incentive Plan
                              Awards: Number of
                              Securities underlying
                              Unexercised Unearned
                              Options
                              (#)
                            
                            
                            Option
                              Exercise
                              Price
                              ($)
                            
                            Option
                              Expiration
                              DateZhihai
      Mao
                            
                            
                            66,666
                            (1)
                            
                            
                            133,334
                            (1)
                            
                            
                            0
                            
                            
                            
                            6.70
                            
                            01/07/18





(1)
            Represents
      a option to purchase an aggregate of 200,000 shares of our common stock,
      par value $0.001, which was granted to Mr. Mao, pursuant to a stock option
      agreement dated January 7, 2008.  The option has an exercise
      price of $6.70 per share, vests in equal installments on a quarterly basis
      over a three-year period beginning on January 7, 2008.  The
      option will expire on January 7, 2018.  None of the vested
      options had been exercised by Mr. Mao as of the end of 2008 fiscal
      year.





Compensation
of Directors





The
following table sets forth information concerning all compensation paid to our
directors for services rendered in all capacities for the year ended December
31, 2008.




Name
                            
                            Fees Earned or
                              Paid in Cash ($)
                            
                            
                            Option Awards
                              ($)
                            
                            
                            Total($)Jay
      Trien
                            
                            
                            20,000
                            
                            
                            
                            22,733
                            (2)
                            
                            
                            42,733Zhongsu
      Chen
                            
                            
                            9,226
                            
                            
                            
                            12,573
                            (2)
                            
                            
                            21,799Dan
      Liu
                            
                            
                            13,333
                            
                            
                            
                            0
                            
                            
                            
                            13,333Brandon
      Ho-Ping Lin
                            
                            
                            4,650
                            
                            
                            
                            1,450
                            (2)
                            
                            
                            6,100Dongyuan
      Yang
                            
                            
                            4,325
                            
                            
                            
                            0
                            
                            
                            
                            4,325Danxia
      Huang
                            
                            
                            13,838
                            (1)
                            
                            
                            0
                            
                            
                            
                            13,838





(1)
            Reflects
      the compensation Ms. Huang receives as the Vice President of the
      Company.  She receives no additional compensation for her
      services as a director of the
Company.





(2)
            These
      represent the amounts the Company recognized for financial statement
      reporting purposes in fiscal year 2008 for the portion of the fair value
      of equity awards granted to the applicable directors in fiscal year 2008,
      in accordance with SFAS No. 123(R).  These amounts thus do not
      reflect the amount of compensation actually received by these directors
      during the fiscal year 2008.  For a description of the
      assumptions used in calculating the fair value of equity awards under SFAS
      No.123(R), see Note 9 of our financial statements in this Annual
      Report.


54





On May 1,
2008, we entered into separate agreements with our independent directors, Jay
Trien, Zhongsu Chen and Dan Liu.  Under the terms of the agreements,
we agreed to pay Mr. Trien an annual fee of $30,000, Dr. Chen an annual fee of
RMB 96,000 (approximately $13,838) and Mr. Liu an annual fee of $20,000, as
compensation for the services to be provided by them as independent directors,
and as chairpersons of various board committees, as applicable.  On
May 1, 2008, we also entered into separate stock option agreements with each of
Mr. Trien and Dr. Chen.  Under the terms of the stock option
agreements, we granted a stock option to each of Mr. Trien and Dr. Chen for the
purchase of 30,000 shares of common stock of the Company at an exercise price
equal to the closing price as reported on the OTC Bulletin Board on the grant
date of the option.  The options are vested in equal installments on a
quarterly basis over a three-year period.  For Mr. Trien, the first
installment of 2,500 shares vested immediately on the grant date of May 1,
2008.  Mr. Trien’s compensation is greater because he has greater
responsibilities as the Audit Committee Chairman.





On
September 28, 2008, we entered into separate agreements with each of Mr. Brandon
Ho-Ping Lin and Mr. Dongyuan Yang.  Under the terms of the agreements,
we agreed to pay Mr. Lin an annual fee of $18,000 and Mr. Mr. Yang an annual fee
of RMB120,000 (approximately $17,298), as compensation for the services to be
provided by them as directors of the Company.  On the same date, we
also entered into a stock option agreement with Mr. Lin, under which we granted
a stock option to Mr. Lin for the purchase of 30,000 shares of common stock of
the Company at an exercise price of $6.50.  The option vests in equal
installments on a quarterly basis over a three-year period.





We also
reimburse our directors for reasonable travel expenses related to attendance at
board and committee meetings.





ITEM
      12.
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS.




Security
Ownership of Certain Beneficial Owners and Management





The
following table sets forth information regarding beneficial ownership of our
voting stock as of March 23, 2009 (i) by each person who is known by us to
beneficially own more than 5% of our common stock; (ii) by each of our officers
and directors; and (iii) by all of our officers and directors as a
group.  Unless otherwise specified, the address of each of the persons
set forth below is in care of China TransInfo Technology Corp., 07 Floor E-Wing
Center, No. 113 Zhichunlu, Haidian District, Beijing, China
100086.


55





Name & Address of
                                                                                                                                                                              Beneficial Owner
                                                                                                                                                                            
                                                                                                                                                                            Office, if Any
                                                                                                                                                                            
                                                                                                                                                                            Title of Class
                                                                                                                                                                            
                                                                                                                                                                            Amount &
                                                                                                                                                                              Nature of
                                                                                                                                                                              Beneficial
                                                                                                                                                                              Ownership(1)
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            Percent of
                                                                                                                                                                              Class(2)Officers
      and DirectorsShudong
      Xia
                                                                                                                                                                            
                                                                                                                                                                            Chief
      Executive Officer, President, Secretary and Chairman
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            9,566,532
                                                                                                                                                                            (3)
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            43.12
                                                                                                                                                                            %Zhibin
      Lai
                                                                                                                                                                            
                                                                                                                                                                            Vice
      President
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            0
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            *Zhiping
      Zhang
                                                                                                                                                                            
                                                                                                                                                                            Vice
      President of Research and Development
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            0
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            *Danxia
      Huang
                                                                                                                                                                            
                                                                                                                                                                            Vice
      President of Finance, Treasurer, Director
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            0
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            *Zhihai
      Mao
                                                                                                                                                                            
                                                                                                                                                                            Chief
      Financial Officer
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            83,333
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            *Jay
      Trien
                                                                                                                                                                            
                                                                                                                                                                            Director
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            11,668
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            *Zhongsu
      Chen
                                                                                                                                                                            
                                                                                                                                                                            Director
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            10,000
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            *Dan
      Liu
                                                                                                                                                                            
                                                                                                                                                                            Director
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            0
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            *Brandon
      Ho-Ping Lin
                                                                                                                                                                            
                                                                                                                                                                            Director
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            5,000Dongyuan
      Yang
                                                                                                                                                                            
                                                                                                                                                                            Director
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            0
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            *All
      officers and directors as a group (10 persons named above)
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            9,676,533
                                                                                                                                                                            (3)
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            43.61
                                                                                                                                                                            %5%
      Securities HolderLeguna
      Verde Investments, Ltd.
                                                                                                                                                                              P.O.
      Box 3444
                                                                                                                                                                              Road
      Town, Tortola
                                                                                                                                                                              British
      Virgin Islands
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            1,274,960
                                                                                                                                                                            (4)
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            5.75
                                                                                                                                                                            %Karmen
      Investment Holdings, Ltd
                                                                                                                                                                              P.O.
      Box 3444
                                                                                                                                                                              Road
      Town, Tortola
                                                                                                                                                                              British
      Virgin Islands
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            9,566,532
                                                                                                                                                                            (3)
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            43.12
                                                                                                                                                                            %The
      Pinnacle Fund, L.P.
                                                                                                                                                                              4965
      Preston Park Blvd.
                                                                                                                                                                              Suite
      240
                                                                                                                                                                              Plano,
      Texas 75093
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            1,111,111
                                                                                                                                                                            (5)
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            5.01
                                                                                                                                                                            %Pinnacle
      China Fund, L.P.
                                                                                                                                                                              4965
      Preston Park Blvd.
                                                                                                                                                                              Suite
      240
                                                                                                                                                                              Plano,
      Texas 75093
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            2,722,222
                                                                                                                                                                            (6)
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            12.27
                                                                                                                                                                            %Barry
      M. Kitt
                                                                                                                                                                              c/o
      Pinnacle Fund, L.P.
                                                                                                                                                                              4965
      Preston Park Blvd.
                                                                                                                                                                              Suite
      240, Plano, Texas 75093
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            3,833,333
                                                                                                                                                                            (5)(6)
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            17.28
                                                                                                                                                                            %SAIF
      Partners III L.P.
                                                                                                                                                                              #2115,
      Two Pacific Place,
                                                                                                                                                                              88
      Queensway, Admiralty,
                                                                                                                                                                              Hong
      Kong
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            2,586,207
                                                                                                                                                                            (7)
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            11.66
                                                                                                                                                                            %Andrew
      Y. Yan
                                                                                                                                                                              #2115,
      Two Pacific Place,
                                                                                                                                                                              88
      Queensway, Admiralty,
                                                                                                                                                                              Hong
      Kong
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            2,586,207
                                                                                                                                                                            (7)
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            11.66
                                                                                                                                                                            %Total
      Shares Owned by Persons Named above:
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            Common
      Stock $0.001 par value
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            17,371,033
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            
                                                                                                                                                                            78.29
                                                                                                                                                                            %





* Less
than 1%.





1Beneficial
ownership is determined in accordance with the rules of the SEC and includes
voting or investment power with respect to the ordinary shares.


56





2A total
of 22,187,314 shares of Common Stock as of March 23, 2009 are considered to be
outstanding pursuant to SEC Rule 13d-3(d)(1).  For each beneficial
owner above, any options exercisable within 60 days have been included in the
denominator.





3Includes
9,566,532shares
of Common Stock owned by Karmen Investment Holdings Ltd., which is wholly-owned
by East Action Investment Holdings Ltd. of which Shudong Xia is a 68%
shareholder. Mr. Xia may be deemed to be a beneficial owner of the shares held
by Karmen Investment Holdings Ltd.





4Chuang
Yang is the owner of Leguna Verde Investments, Ltd. and exercises voting and
investment power over the shares owned by Leguna Verde Investments,
Ltd.  Mr. Yang may be deemed to be a beneficial owner of the shares
held by Leguna Verde Investments, Ltd.





5 Mr.
Barry Kitt has dispositive and voting power over the shares and may be deemed to
be the beneficial owner of the shares of Common Stock beneficially owned by The
Pinnacle Fund, L.P.  Mr. Kitt disclaims beneficial ownership of the
shares to the extent of his direct or indirect pecuniary interest.





6 Mr.
Barry Kitt has dispositive and voting power over the shares and may be deemed to
be the beneficial owner of the shares of Common Stock beneficially owned by
Pinnacle China Fund, L.P.  Mr. Kitt disclaims beneficial ownership of
the shares to the extent of his direct or indirect pecuniary
interest.





7 Andrew
Y. Yan is the sole shareholder and sole director of SAIF III GP Capital Ltd., a
limited liability entity formed under the laws of the Cayman Islands, the sole
general partner of SAIF III GP, L.P., a limited partnership formed under the
laws of the Cayman Islands, which in turn is the sole general partner of SAIF
Partners III L.P., a limited partnership formed under the laws of the Cayman
Islands. Mr. Yan is deemed to have sole voting and dispositive powers with
respect to the securities held by SAIF Partners III L.P.





Changes in
Control





There are
no arrangements known to us, including any pledge by any person of our
securities, the operation of which may at a subsequent date result in a change
in control of the Company.




ITEM
      13.
              CERTAIN
      RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS.





Transactions
with Related Persons





The
following includes a summary of transactions since the beginning of the 2008
fiscal year, or any currently proposed transaction, in which we were or are to
be a participant and the amount involved exceeded or exceeds the lesser of
$120,000 or one percent of the average of our total assets at year-end for the
last three completed fiscal years, and in which any related person had or will
have a direct or indirect material interest (other than compensation described
under “Executive Compensation”).  We believe the terms obtained or
consideration that we paid or received, as applicable, in connection with the
transactions described below were comparable to terms available or the amounts
that would be paid or received, as applicable, in arm’s-length
transactions.




·
            On
      August 6, 2005, PKU entered into the Cooperation Agreement with its 15%
      shareholder, Peking University, Earth and Space College, pursuant to which
      PKU obtained the access to the university’s GeoSIS Research Lab, which
      houses over thirty PhDs and researchers to support PKU’s research and
      development initiatives. Under the Cooperation Agreement, we pay for all
      R&D expenses of the GeoSIS Laboratory.  The Cooperation
      Agreement has a three-year term that was automatically renewed for an
      additional three year.





·
            On
      February 3, 2009, through our indirect Chinese subsidiary, Oriental, and
      PKU, we entered into a series of equity transfer agreements with the Group
      Company, pursuant to which we transferred all of our indirect equity
      interests in PKU and PKU’s subsidiaries to the Group
      Company.  The Group Company is wholly owned by four Chinese
      affiliates of the Company, Shudong Xia, our Chairman, CEO, President and
      the beneficial owner of approximately 43% of our outstanding capital
      stock, Zhiping Zhang, our Vice President of Research and Development,
      Zhibin Lai, our Vice President and Wei Gao, the designee of SAIF Partners
      III L.P., a 11% shareholder of us.  In connection with the
      equity transfer, on February 3, 2009, we also entered into a series
      commercial arrangements with the Group Company and its subsidiaries,
      pursuant to which we obtained contractual rights to control and operate
      the businesses of the VIE
Entities.


57





Except as
set forth in our discussion above, none of our directors, director nominees or
executive officers has been involved in any transactions with us or any of our
directors, executive officers, affiliates or associates which are required to be
disclosed pursuant to the rules and regulations of the SEC.




Promoters
and Certain Control Persons





We did
not have any promoters at any time during the past five fiscal
years.





Director
Independence





Jay
Trien, Zhongsu Chen, Dan Liu and Dongyuan Yang each serves on our board of
directors as an “independent director” as defined by Rule 4200(a)(15) of the
Nasdaq Marketplace Rules.  Our board of directors currently has three
standing committees which perform various duties on behalf of and report to the
board of directors: (i) audit committee, (ii) compensation committee and (iii)
governance and nominating committee.  Each of the three standing
committees is comprised entirely of Messr. Jay Trien, Zhongsu Chen and Dan
Liu.





ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES.




The
following is a summary of the fees billed to the Company by its principal
accountant for professional services rendered for the fiscal years ended
December 31, 2008 and 2007:





2008
                    
                    
                    2007Audit
      fees(1)
                    
                    $
                    140,000
                    
                    
                    $
                    85,000Audit-related
      fees(2)
                    
                    
                    30,120
                    
                    
                    
                    16,928Tax
      fees(3)
                    
                    
                    11,800
                    
                    
                    
                    5,734All
      other fees
                    
                    
                    0
                    
                    
                    
                    0Total
                    
                    
                    181,920
                    
                    
                    
                    107,662





(1)
            Consists
      of fees billed for the audit of our annual financial statements, review of
      financial statements included in our Quarterly Reports on Form 10-Q and
      services that are normally provided by the accountant in connection with
      statutory and regulatory filings or
engagements.


(2)
            Consists
      of fees billed for all out-of-pocket expenses associated with performing
      audit and review services.


(3)
            Consists
      of fees billed for professional services rendered by the principal
      accountant for tax compliance, tax advice, and tax
    planning.





Pre-Approval
Policies and Procedures




Under the
Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by our
auditors must be approved in advance by our Board to assure that such services
do not impair the auditors’ independence from us.  In accordance with
its policies and procedures, our Board pre-approved the audit service performed
by Simon & Edward, LLP for our consolidated financial statements as of and
for the year ended December 31, 2008.




58




PART
IV




ITEM
      15.
            EXHIBITS,
      FINANCIAL STATEMENTS SCHEDULES.




(a)
              The
      following documents are filed as part of this report:(1)
              Financial
      Statement are set forth beginning on page F-1 of the
Report·
              Report
      of Independent Registered Public Accounting Firm
              F-1·
              Consolidated
      Balance Sheets
              F-2
      – F-3·
              Consolidated
      Statements of Operations and Comprehensive Income
              F-4·
              Consolidated
      Statements of Changes in Stockholders’ Equity
              F-5·
              Consolidated
      Statements of Cash Flows
              F-6
      – F-7·
              Notes
      to Consolidated Statements
              F-8
      - F-26(2)
              Financial
      Statement Schedules: All Schedules are omitted because the information
      called for is not applicable, is not required, or because the financial
      information is set forth in the financial statements or notes
      thereto.(3)
              Exhibits




Exhibits
(including those incorporated by reference).




Exhibit
      No.
                  
                  Description2.1
                  
                  Share
      Exchange Agreement, dated May 14, 2007, among the registrant, Cabowise
      International Ltd., its shareholders, Weicheng International Inc. and
      Foster Growth Ltd [Incorporated by reference to Exhibit 2.1 to the
      registrant’s current report on Form 8-K filed on May 14,
      2007].3.1
                  
                  Amended
      and Restated Articles of Incorporation of the registrant as filed with the
      Secretary of State of Nevada on December 19, 2003 [Incorporated by
      reference to Exhibit 3.1 to the registrant’s current report on Form 10-KSB
      filed on March 31, 2005].3.2
                  
                  Certificate
      of Amendment to Articles of Incorporation filed with the Secretary of
      State of the State of Nevada on August 20, 2007. [Incorporated by
      reference to Exhibit 3.1 to the registrant’s current report on Form 8-K
      filed on August 23, 2007].3.3
                  
                  Amended
      and Restated Bylaws of China TransInfo Technology Corp., adopted May 1,
      2008. [Incorporated by reference to Exhibit 3.1 to the registrant’s
      current report on Form 8-K filed on May 6, 2008].4.1
                  
                  Form
      of Registration Rights Agreement, dated May 14, 2007 [Incorporated by
      reference to Exhibit 4.1 to the registrant’s current report on Form 8-K
      filed on May 14, 2007].4.2
                  
                  Form
      of Lock-up Agreement, dated May 14, 2007 [Incorporated by reference to
      Exhibit 4.2 to the registrant’s current report on Form 8-K filed on May
      14, 2007].4.3
                  
                  Cancellation
      Agreement, dated May 14, 2007, among the registrant, Weicheng
      International Inc. and Forster Growth Ltd. [Incorporated by reference to
      Exhibit 4.3 to the registrant’s current report on Form 8-K filed on May
      14, 2007]4.4
                  
                  Option
      Agreement, dated April 30, 2007, among Cabowise International Ltd., and
      certain grantors. [Incorporated by reference to Exhibit 4.4 to the
      registrant’s current report on Form 8-K filed on May 14,
      2007].


59


Exhibit No.
              
              Description4.5
              
              Registration
      Rights Agreement, by and between China TransInfo Technology Corp. and SAIF
      Partners III L.P., dated July 17, 2008. [Incorporated by reference to
      Exhibit 4.1 to the registrant’s current report on Form 8-K filed on July
      18, 2008].10.1
              
              Form
      of Securities Purchase Agreement, dated May 14, 2007 [Incorporated by
      reference to Exhibit 10.1 to the registrant’s current report on Form 8-K
      filed on May 14, 2007].10.2
              
              Form
      of Make Good Escrow Agreement, dated May 14, 2007 [Incorporated by
      reference to Exhibit 10.2 to the registrant’s current report on Form 8-K
      filed on May 14, 2007].10.3
              
              Closing
      Escrow Agreement, dated May 14, 2007 , by and among the registrant,
      certain selling stockholders, Antaeus Capital, Inc. and Thelen Reid Brown
      Raysman & Steiner LLP [Incorporated by reference to Exhibit 10.3 to
      the registrant’s current report on Form 8-K filed on May 14,
      2007].10.4
              
              Lease
      Contract of E-Wing Center, dated November 25, 2004,. between Zhao Li and
      Beijing PKU Chinafront Technology Co., Ltd. [Incorporated by reference to
      Exhibit 10.15 to the registrant’s current report on Form 8-K filed on May
      14, 2007].10.5
              
              Standard
      Contracts with Employees - Labor Contract between employees and Beijing
      Jinzhengdong Human Resources Consultant Co., Ltd. [Incorporated by
      reference to Exhibit 10.20 to the registrant’s current report on Form 8-K
      filed on May 14, 2007].10.6
              
              Labor
      Contract between Xia Shudong and Beijing PKU Chinafront Technology Co.,
      Ltd. [Incorporated by reference to Exhibit 10.21 to the registrant’s
      current report on Form 8-K filed on May 14, 2007].**10.7
              
              Labor
      Contract between Huang Danxia and Beijing PKU Chinafront Technology Co.,
      Ltd. [Incorporated by reference to Exhibit 10.22 to the registrant’s
      current report on Form 8-K filed on May 14, 2007].**10.8
              
              Labor
      Contract between Lai Zhibin and Beijing PKU Chinafront Technology Co.,
      Ltd. [Incorporated by reference to Exhibit 10.23 to the registrant’s
      current report on Form 8-K filed on May 14, 2007].**10.9
              
              Labor
      Contract between Zhang Zhiping and Beijing PKU Chinafront Technology Co.,
      Ltd. [Incorporated by reference to Exhibit 10.24 to the registrant’s
      current report on Form 8-K filed on May 14, 2007].**10.10
              
              Equity
      Transfer Agreement, dated May 14, 2007, between Xia Shudong, Zhang
      Zhiping, Lai Zhibin, Yang Chuang and Oriental Intra-Asia Entertainment
      (China) Limited. [Incorporated by reference to Exhibit 10.25 to the
      registrant’s current report on Form 8-K filed on May 14,
      2007].10.11
              
              Real
      Property Purchase Agreement, dated June 2, 2007, between Mr. Zhao Li and
      Beijing PKU Chinafront Technology Co., Ltd. [Incorporated by reference to
      Exhibit 10.1 to the registrant’s quarterly report on Form 10-QSB filed on
      August 16, 2007].10.12
              
              Entrust
      Agreement, dated July 6, 2007, among Oriental Intra-Asia Entertainment
      (China) Limited, Beijing Tiandi Zuobiao Technology Co., Ltd. and Beijing
      PKU Chinafront Technology Co., Ltd. [Incorporated by reference to Exhibit
      10.27 to the registrant’s Registration Statement on Form SB-2 on May 14,
      2007.]10.13
              
              Employment
      Agreement by and between China Trans Info Technology Corp. and Zhihai Mao,
      dated November 27, 2007. [Incorporated by reference to Exhibit 10.1 to the
      registrant’s current report on Form 8-K filed on December 3,
      2007].**10.14
              
              Stock
      Option Agreement by and between China TransInfo Technology Corp. and
      Zhihai Mao dated January 7, 2008. [Incorporated by reference to Exhibit
      10.1 to the registrant’s current report on Form 8-K filed on January 11,
      2008].**10.15
              
              China
      TransInfo Technology Corp. Independent Director’s Contract, dated as of
      May 1, 2008, by and between China TransInfo Technology Corp. and Jay
      Trien. [Incorporated by reference to Exhibit 10.1 to the registrant’s
      current report on Form 8-K filed on May 6, 2008].**10.16
              
              China
      TransInfo Technology Corp. Independent Director’s Contract, dated as of
      May 1, 2008, by and between China TransInfo Technology Corp. and Zhongsu
      Chen. [Incorporated by reference to Exhibit 10.2 to the registrant’s
      current report on Form 8-K filed on May 6, 2008].**10.17
              
              China
      TransInfo Technology Corp. Independent Director’s Contract, dated as of
      May 1, 2008, by and between China TransInfo Technology Corp. and Dan Liu.
      [Incorporated by reference to Exhibit 10.3 to the registrant’s current
      report on Form 8-K filed on May 6,
2008].**
  60
 
 Exhibit No.
              
              Description10.18
              
              Indemnification
      Agreement, dated as of May 1, 2008, by and between China TransInfo
      Technology Corp. and Jay Trien. [Incorporated by reference to Exhibit 10.4
      to the registrant’s current report on Form 8-K filed on May 6,
      2008].**10.19
              
              Indemnification
      Agreement, dated as of May 1, 2008, by and between China TransInfo
      Technology Corp. and Zhongsu Chen. [Incorporated by reference to Exhibit
      10.5 to the registrant’s current report on Form 8-K filed on May 6,
      2008].**10.20
              
              Indemnification
      Agreement, dated as of May 1, 2008, by and between China TransInfo
      Technology Corp. and Dan Liu. [Incorporated by reference to Exhibit 10.6
      to the registrant’s current report on Form 8-K filed on May 6,
      2008].**10.21
              
              China
      TransInfo Technology Corp. Stock Option Agreement, dated as of May 1,
      2008, by and between China TransInfo Technology Corp. and Jay Trien.
      [Incorporated by reference to Exhibit 10.7 to the registrant’s current
      report on Form 8-K filed on May 6, 2008].**10.22
              
              China
      TransInfo Technology Corp. Stock Option Agreement, dated as of May 1,
      2008, by and between China TransInfo Technology Corp. and Zhongsu Chen.
      [Incorporated by reference to Exhibit 10.8 to the registrant’s current
      report on Form 8-K filed on May 6, 2008].**10.23
              
              Equity
      Transfer Agreement, dated May 9, 2008, by and among Xu Wang, Tieying Zhao
      and PKU. [Incorporated by reference to Exhibit 10.1 to the registrant’s
      quarterly report on Form 10-Q filed on May 13, 2008].10.24
              
              Equity
      Transfer Agreement, dated May 22, 2008, by and among Beijing Marine
      Communication & Navigation Company, China TranWiseway Information
      Technology Co., Ltd. and Beijing PKU Chinafront High Technology Co., Ltd.
      [Incorporated by reference to Exhibit 10.1 to the registrant’s current
      report on Form 8-K filed on May 29, 2008].10.25
              
              Securities
      Purchase Agreement, by and among China TransInfo Technology Corp., Beijing
      PKU Chinafront High Technology Co., Ltd. and SAIF Partners III L.P., dated
      July 17, 2008.  [Incorporated by reference to Exhibit 10.1 to
      the registrant’s current report on Form 8-K filed on July 18,
      2008].10.26
              
              Voting
      Agreement, by among China TransInfo Technology Corp., Karmen Investment
      Holdings Limited, Leguna Verde Investments Limited and SAIF Partners III
      L.P., dated July 17, 2008. [Incorporated by reference to Exhibit 10.2 to
      the registrant’s current report on Form 8-K filed on July 18,
      2008].10.27
              
              Loan
      Agreement, dated June 17, 2008, by and between China TransInfo Technology
      Corp. and Beijing Bank, Youyi Branch. [Incorporated by reference to
      Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q filed on
      August 14, 2008].10.28
              
              Equity
      Transfer Agreement, dated September 16, 2008, by and among Beijing
      Zhangcheng Culture and Media Co., Ltd., Sun Jian, Xin Yibo and Zhu Juntao.
      [Incorporated by reference to Exhibit 10.1 to the registrant’s current
      report on Form 8-K filed on September 19, 2008].10.29
              
              China
      TransInfo Technology Corp. Director Agreement, dated as of September 28,
      2008, by and between China TransInfo Technology Corp. and Brandon Ho-Ping
      Lin. [Incorporated by reference to Exhibit 10.1 to the registrant’s
      current report on Form 8-K filed on October 2, 2008].**10.30
              
              China
      TransInfo Technology Corp. Director Agreement, dated as of September 28,
      2008, by and between China TransInfo Technology Corp. and Dongyuan Yang.
      [Incorporated by reference to Exhibit 10.2 to the registrant’s current
      report on Form 8-K filed on October 2, 2008].**10.31
              
              Indemnification
      Agreement, dated as of September 28, 2008, by and between China TransInfo
      Technology Corp. and Brandon Ho-Ping Lin. [Incorporated by reference to
      Exhibit 10.3 to the registrant’s current report on Form 8-K filed on
      October 2, 2008].**10.32
              
              Indemnification
      Agreement, dated as of September 28, 2008, by and between China TransInfo
      Technology Corp. and Dongyuan Yang. [Incorporated by reference to Exhibit
      10.4 to the registrant’s current report on Form 8-K filed on October 2,
      2008].**10.33
              
              China
      TransInfo Technology Corp. Stock Option Agreement, dated as of September
      28, 2008, by and between China TransInfo Technology Corp. and Brandon
      Ho-Ping Lin. [Incorporated by reference to Exhibit 10.5 to the
      registrant’s current report on Form 8-K filed on October 2,
      2008].**10.34
              
              Equity
      Transfer Agreement, dated October 1, 2008, by and among Beijing PKU
      Chinafront High Technology Co., Ltd. and Qing Lu, Xiaohong Chen, Hangfei
      Lin, Gang Li, Jianzhong Zhang and Jieqing Guo. [Incorporated by reference
      to Exhibit 10.1 to the registrant’s current report on Form 8-K filed on
      October 7, 2008].
  61
  Exhibit No.
                    
                    Description10.35
                    
                    Equity
      Transfer Agreement, by and between Oriental Intra-Asia Entertainment
      (China) Limited and China TransInfo Technology Group Co., Ltd., dated
      February 3, 2009. [Incorporated by reference to Exhibit 10.1 to the
      registrant’s current report on Form 8-K filed on October 7,
      2008].10.36
                    
                    Equity
      Transfer Agreement, by and between Beijing PKU Chinafront High Technology
      Co., Ltd. and China TransInfo Technology Group Co., Ltd., dated February
      3, 2009. [Incorporated by reference to Exhibit 10.2 to the registrant’s
      current report on Form 8-K filed on October 7, 2008].10.37
                    
                    Equity
      Transfer Agreement, by and between Beijing PKU Chinafront High Technology
      Co., Ltd. and China TransInfo Technology Group Co., Ltd., dated February
      3, 2009. [Incorporated by reference to Exhibit 10.3 to the registrant’s
      current report on Form 8-K filed on October 7, 2008].10.38
                    
                    Equity
      Transfer Agreement, by and between Beijing PKU Chinafront High Technology
      Co., Ltd. and China TransInfo Technology Group Co., Ltd., dated February
      3, 2009. [Incorporated by reference to Exhibit 10.4 to the registrant’s
      current report on Form 8-K filed on October 7, 2008].10.39
                    
                    Equity
      Transfer Agreement, by and between Beijing PKU Chinafront High Technology
      Co., Ltd. and China TransInfo Technology Group Co., Ltd., dated February
      3, 2009. [Incorporated by reference to Exhibit 10.5 to the registrant’s
      current report on Form 8-K filed on October 7, 2008].10.40
                    
                    Equity
      Transfer Agreement, by and between Beijing PKU Chinafront High Technology
      Co., Ltd. and China TransInfo Technology Group Co., Ltd., dated February
      3, 2009. [Incorporated by reference to Exhibit 10.6 to the registrant’s
      current report on Form 8-K filed on October 7, 2008].10.41
                    
                    Exclusive
      Technical Development and Consulting Agreement, by and among Oriental
      Intra-Asia Entertainment (China) Limited, China TransInfo Technology Group
      Co., Ltd., Beijing PKU Chinafront High Technology Co., Ltd., Beijing Tian
      Hao Ding Xin Science and Technology Co., Ltd., Beijing Zhangcheng Culture
      and Media Co., Ltd., Beijing Zhangcheng Science and Technology Co., Ltd.,
      China TranWiseway Information Technology Co., Ltd., Shanghai Yootu
      Information Technology Co., Ltd., Xinjiang Zhangcheng Science and
      Technology Co., Ltd., and Dalian Dajian Zhitong Information Service Co.,
      Ltd., dated February 3, 2009. [Incorporated by reference to Exhibit 10.7
      to the registrant’s current report on Form 8-K filed on October 7,
      2008].10.42
                    
                    Equity
      Pledge Agreement, by and among Oriental Intra-Asia Entertainment (China)
      Limited, Shudong Xia, Zhiping Zhang, Zhibin Lai and Wei Gao, dated
      February 3, 2009. [Incorporated by reference to Exhibit 10.8 to the
      registrant’s current report on Form 8-K filed on October 7,
      2008].10.43
                    
                    Option
      Agreement, by and among Oriental Intra-Asia Entertainment (China) Limited,
      Shudong Xia, Zhiping Zhang, Zhibin Lai and Wei Gao, dated February 3,
      2009. [Incorporated by reference to Exhibit 10.9 to the registrant’s
      current report on Form 8-K filed on October 7, 2008].10.44
                    
                    Power
      of Attorney, signed by Shudong Xia, dated February 3, 2009. [Incorporated
      by reference to Exhibit 10.10 to the registrant’s current report on Form
      8-K filed on October 7, 2008].10.45
                    
                    Power
      of Attorney, signed by Zhiping Zhang, dated February 3, 2009.
      [Incorporated by reference to Exhibit 10.11 to the registrant’s current
      report on Form 8-K filed on October 7, 2008].10.46
                    
                    Power
      of Attorney, signed by Zhibin Lai, dated February 3, 2009. [Incorporated
      by reference to Exhibit 10.12 to the registrant’s current report on Form
      8-K filed on October 7, 2008].10.47
                    
                    Power
      of Attorney, signed by Wei Gao, dated February 3, 2009. [Incorporated by
      reference to Exhibit 10.13 to the registrant’s current report on Form 8-K
      filed on October 7, 2008].10.48
                    
                    Operating
      Agreement, by and among Oriental Intra-Asia Entertainment (China) Limited,
      China TransInfo Technology Group Co., Ltd., Beijing PKU Chinafront High
      Technology Co., Ltd., Beijing Tian Hao Ding Xin Science and Technology
      Co., Ltd., Beijing Zhangcheng Culture and Media Co., Ltd., Beijing
      Zhangcheng Science and Technology Co., Ltd., China TranWiseway Information
      Technology Co., Ltd., Shanghai Yootu Information Technology Co., Ltd.,
      Xinjiang Zhangcheng Science and Technology Co., Ltd., and Dalian Dajian
      Zhitong Information Service Co., Ltd., Shudong Xia, Zhiping Zhang, Zhibin
      Lai and Wei Gao, dated February 3, 2009. [Incorporated by reference to
      Exhibit 10.14 to the registrant’s current report on Form 8-K filed on
      October 7, 2008].14
                    
                    Business
      Ethics Policy and Code of Conduct [Incorporated by reference to Exhibit 14
      to the registrant’s current report on Form 8-K filed on May 14,
      2007].21
                    
                    Subsidiaries
      of the Company.*23.1
                    
                    Consent
      of Simon & Edwards, LLP, Independent Registered Public Accounting
      Firm.*
  62
 
 Exhibit No.
                      
                      Description31.1
                      
                      Certification
      of Principal Executive Officer filed pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.*31.2
                      
                      Certification
      of Principal Financial Officer filed pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.*32.1
                      
                      Certifications
      of Principal Executive Officer furnished pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.*32.2
                      
                      Certifications
      of Principal Financial Officer furnished pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.*
 
 * Filed
herewith.
 **
Represents management contract or compensatory plan or
arrangement.
  63




SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.




China TransInfo Technology Corp.By:
            /s/ Shudong XiaShudong XiaChief Executive OfficerDate: March 25, 2009






Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Company in the capacities
and on the dates indicated.




Each
person whose signature appears below hereby authorizes Shudong Xia and Zhihai
Mao, and each or any of them, as attorneys-in-fact to sign on his behalf,
individually, and in each capacity stated below, and to file all amendments
and/or supplements to this annual report on Form 10-K.




Signature
                    
                    Capacity
                    
                    Date/s/ Shudong Xia
                    
                    President and Chief Executive Officer
                    
                    March 25, 2009Shudong Xia
                    
                    (Principal Executive Officer)/s/ Zhihai Mao
                    
                    Chief Financial Officer (Principal Financial
                    
                    March 25, 2009Zhihai Mao
                    
                    Officer and Principal Accounting Officer)/s/ Zhibin Lai
                    
                    Vice President
                    
                    March 25, 2009Zhibin Lai/s/ Zhiping Zhang
                    
                    Vice President of Research and Development
                    
                    March 25, 2009Zhiping Zhang/s/ Danxia Huang
                    
                    Vice President of Finance, Treasurer and
                    
                    March 25, 2009Danxia Huang
                    
                    Director/s/ Jay Trien
                    
                    Director
                    
                    March 25, 2009Jay Trien/s/ Zhongsu Chen
                    
                    Director
                    
                    March 25, 2009Zhongsu Chen/s/ Dan Liu
                    
                    Director
                    
                    March 25, 2009Dan Lius/ Brandon Ho-Ping Lin
                    
                    Director
                    
                    March 25, 2009Brandon Ho-Ping Lins/ Dongyuan Yang
                    
                    Director
                    
                    March 25, 2009Dongyuan Yang







EXHIBITS




Exhibit
      No.
                      
                      Description2.1
                      
                      Share
      Exchange Agreement, dated May 14, 2007, among the registrant, Cabowise
      International Ltd., its shareholders, Weicheng International Inc. and
      Foster Growth Ltd [Incorporated by reference to Exhibit 2.1 to the
      registrant’s current report on Form 8-K filed on May 14,
      2007].3.1
                      
                      Amended
      and Restated Articles of Incorporation of the registrant as filed with the
      Secretary of State of Nevada on December 19, 2003 [Incorporated by
      reference to Exhibit 3.1 to the registrant’s current report on Form 10-KSB
      filed on March 31, 2005].3.2
                      
                      Certificate
      of Amendment to Articles of Incorporation filed with the Secretary of
      State of the State of Nevada on August 20, 2007. [Incorporated by
      reference to Exhibit 3.1 to the registrant’s current report on Form 8-K
      filed on August 23, 2007].3.3
                      
                      Amended
      and Restated Bylaws of China TransInfo Technology Corp., adopted May 1,
      2008. [Incorporated by reference to Exhibit 3.1 to the registrant’s
      current report on Form 8-K filed on May 6, 2008].4.1
                      
                      Form
      of Registration Rights Agreement, dated May 14, 2007 [Incorporated by
      reference to Exhibit 4.1 to the registrant’s current report on Form 8-K
      filed on May 14, 2007].4.2
                      
                      Form
      of Lock-up Agreement, dated May 14, 2007 [Incorporated by reference to
      Exhibit 4.2 to the registrant’s current report on Form 8-K filed on May
      14, 2007].4.3
                      
                      Cancellation
      Agreement, dated May 14, 2007, among the registrant, Weicheng
      International Inc. and Forster Growth Ltd. [Incorporated by reference to
      Exhibit 4.3 to the registrant’s current report on Form 8-K filed on May
      14, 2007]4.4
                      
                      Option
      Agreement, dated April 30, 2007, among Cabowise International Ltd., and
      certain grantors. [Incorporated by reference to Exhibit 4.4 to the
      registrant’s current report on Form 8-K filed on May 14,
      2007].4.5
                      
                      Registration
      Rights Agreement, by and between China TransInfo Technology Corp. and SAIF
      Partners III L.P., dated July 17, 2008. [Incorporated by reference to
      Exhibit 4.1 to the registrant’s current report on Form 8-K filed on July
      18, 2008].10.1
                      
                      Form
      of Securities Purchase Agreement, dated May 14, 2007 [Incorporated by
      reference to Exhibit 10.1 to the registrant’s current report on Form 8-K
      filed on May 14, 2007].10.2
                      
                      Form
      of Make Good Escrow Agreement, dated May 14, 2007 [Incorporated by
      reference to Exhibit 10.2 to the registrant’s current report on Form 8-K
      filed on May 14, 2007].10.3
                      
                      Closing
      Escrow Agreement, dated May 14, 2007 , by and among the registrant,
      certain selling stockholders, Antaeus Capital, Inc. and Thelen Reid Brown
      Raysman & Steiner LLP [Incorporated by reference to Exhibit 10.3 to
      the registrant’s current report on Form 8-K filed on May 14,
      2007].10.4
                      
                      Lease
      Contract of E-Wing Center, dated November 25, 2004,. between Zhao Li and
      Beijing PKU Chinafront Technology Co., Ltd. [Incorporated by reference to
      Exhibit 10.15 to the registrant’s current report on Form 8-K filed on May
      14, 2007].10.5
                      
                      Standard
      Contracts with Employees - Labor Contract between employees and Beijing
      Jinzhengdong Human Resources Consultant Co., Ltd. [Incorporated by
      reference to Exhibit 10.20 to the registrant’s current report on Form 8-K
      filed on May 14, 2007].10.6
                      
                      Labor
      Contract between Xia Shudong and Beijing PKU Chinafront Technology Co.,
      Ltd. [Incorporated by reference to Exhibit 10.21 to the registrant’s
      current report on Form 8-K filed on May 14, 2007].**10.7
                      
                      Labor
      Contract between Huang Danxia and Beijing PKU Chinafront Technology Co.,
      Ltd. [Incorporated by reference to Exhibit 10.22 to the registrant’s
      current report on Form 8-K filed on May 14, 2007].**10.8
                      
                      Labor
      Contract between Lai Zhibin and Beijing PKU Chinafront Technology Co.,
      Ltd. [Incorporated by reference to Exhibit 10.23 to the registrant’s
      current report on Form 8-K filed on May 14, 2007].**10.9
                      
                      Labor
      Contract between Zhang Zhiping and Beijing PKU Chinafront Technology Co.,
      Ltd. [Incorporated by reference to Exhibit 10.24 to the registrant’s
      current report on Form 8-K filed on May 14,
  2007].**










Exhibit No.
                
                Description10.10
                
                Equity
      Transfer Agreement, dated May 14, 2007, between Xia Shudong, Zhang
      Zhiping, Lai Zhibin, Yang Chuang and Oriental Intra-Asia Entertainment
      (China) Limited. [Incorporated by reference to Exhibit 10.25 to the
      registrant’s current report on Form 8-K filed on May 14,
      2007].10.11
                
                Real
      Property Purchase Agreement, dated June 2, 2007, between Mr. Zhao Li and
      Beijing PKU Chinafront Technology Co., Ltd. [Incorporated by reference to
      Exhibit 10.1 to the registrant’s quarterly report on Form 10-QSB filed on
      August 16, 2007].10.12
                
                Entrust
      Agreement, dated July 6, 2007, among Oriental Intra-Asia Entertainment
      (China) Limited, Beijing Tiandi Zuobiao Technology Co., Ltd. and Beijing
      PKU Chinafront Technology Co., Ltd. [Incorporated by reference to Exhibit
      10.27 to the registrant’s Registration Statement on Form SB-2 on May 14,
      2007.]10.13
                
                Employment
      Agreement by and between China Trans Info Technology Corp. and Zhihai Mao,
      dated November 27, 2007. [Incorporated by reference to Exhibit 10.1 to the
      registrant’s current report on Form 8-K filed on December 3,
      2007].**10.14
                
                Stock
      Option Agreement by and between China TransInfo Technology Corp. and
      Zhihai Mao dated January 7, 2008. [Incorporated by reference to Exhibit
      10.1 to the registrant’s current report on Form 8-K filed on January 11,
      2008].**10.15
                
                China
      TransInfo Technology Corp. Independent Director’s Contract, dated as of
      May 1, 2008, by and between China TransInfo Technology Corp. and Jay
      Trien. [Incorporated by reference to Exhibit 10.1 to the registrant’s
      current report on Form 8-K filed on May 6, 2008].**10.16
                
                China
      TransInfo Technology Corp. Independent Director’s Contract, dated as of
      May 1, 2008, by and between China TransInfo Technology Corp. and Zhongsu
      Chen. [Incorporated by reference to Exhibit 10.2 to the registrant’s
      current report on Form 8-K filed on May 6, 2008].**10.17
                
                China
      TransInfo Technology Corp. Independent Director’s Contract, dated as of
      May 1, 2008, by and between China TransInfo Technology Corp. and Dan Liu.
      [Incorporated by reference to Exhibit 10.3 to the registrant’s current
      report on Form 8-K filed on May 6, 2008].**10.18
                
                Indemnification
      Agreement, dated as of May 1, 2008, by and between China TransInfo
      Technology Corp. and Jay Trien. [Incorporated by reference to Exhibit 10.4
      to the registrant’s current report on Form 8-K filed on May 6,
      2008].**10.19
                
                Indemnification
      Agreement, dated as of May 1, 2008, by and between China TransInfo
      Technology Corp. and Zhongsu Chen. [Incorporated by reference to Exhibit
      10.5 to the registrant’s current report on Form 8-K filed on May 6,
      2008].**10.20
                
                Indemnification
      Agreement, dated as of May 1, 2008, by and between China TransInfo
      Technology Corp. and Dan Liu. [Incorporated by reference to Exhibit 10.6
      to the registrant’s current report on Form 8-K filed on May 6,
      2008].**10.21
                
                China
      TransInfo Technology Corp. Stock Option Agreement, dated as of May 1,
      2008, by and between China TransInfo Technology Corp. and Jay Trien.
      [Incorporated by reference to Exhibit 10.7 to the registrant’s current
      report on Form 8-K filed on May 6, 2008].**10.22
                
                China
      TransInfo Technology Corp. Stock Option Agreement, dated as of May 1,
      2008, by and between China TransInfo Technology Corp. and Zhongsu Chen.
      [Incorporated by reference to Exhibit 10.8 to the registrant’s current
      report on Form 8-K filed on May 6, 2008].**10.23
                
                Equity
      Transfer Agreement, dated May 9, 2008, by and among Xu Wang, Tieying Zhao
      and PKU. [Incorporated by reference to Exhibit 10.1 to the registrant’s
      quarterly report on Form 10-Q filed on May 13, 2008].10.24
                
                Equity
      Transfer Agreement, dated May 22, 2008, by and among Beijing Marine
      Communication & Navigation Company, China TranWiseway Information
      Technology Co., Ltd. and Beijing PKU Chinafront High Technology Co., Ltd.
      [Incorporated by reference to Exhibit 10.1 to the registrant’s current
      report on Form 8-K filed on May 29, 2008].10.25
                
                Securities
      Purchase Agreement, by and among China TransInfo Technology Corp., Beijing
      PKU Chinafront High Technology Co., Ltd. and SAIF Partners III L.P., dated
      July 17, 2008.  [Incorporated by reference to Exhibit 10.1 to
      the registrant’s current report on Form 8-K filed on July 18,
      2008].10.26
                
                Voting
      Agreement, by among China TransInfo Technology Corp., Karmen Investment
      Holdings Limited, Leguna Verde Investments Limited and SAIF Partners III
      L.P., dated July 17, 2008. [Incorporated by reference to Exhibit 10.2 to
      the registrant’s current report on Form 8-K filed on July 18,
      2008].









Exhibit No.
              
              Description10.27
              
              Loan
      Agreement, dated June 17, 2008, by and between China TransInfo Technology
      Corp. and Beijing Bank, Youyi Branch. [Incorporated by reference to
      Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q filed on
      August 14, 2008].10.28
              
              Equity
      Transfer Agreement, dated September 16, 2008, by and among Beijing
      Zhangcheng Culture and Media Co., Ltd., Sun Jian, Xin Yibo and Zhu Juntao.
      [Incorporated by reference to Exhibit 10.1 to the registrant’s current
      report on Form 8-K filed on September 19, 2008].10.29
              
              China
      TransInfo Technology Corp. Director Agreement, dated as of September 28,
      2008, by and between China TransInfo Technology Corp. and Brandon Ho-Ping
      Lin. [Incorporated by reference to Exhibit 10.1 to the registrant’s
      current report on Form 8-K filed on October 2, 2008].**10.30
              
              China
      TransInfo Technology Corp. Director Agreement, dated as of September 28,
      2008, by and between China TransInfo Technology Corp. and Dongyuan Yang.
      [Incorporated by reference to Exhibit 10.2 to the registrant’s current
      report on Form 8-K filed on October 2, 2008].**10.31
              
              Indemnification
      Agreement, dated as of September 28, 2008, by and between China TransInfo
      Technology Corp. and Brandon Ho-Ping Lin. [Incorporated by reference to
      Exhibit 10.3 to the registrant’s current report on Form 8-K filed on
      October 2, 2008].**10.32
              
              Indemnification
      Agreement, dated as of September 28, 2008, by and between China TransInfo
      Technology Corp. and Dongyuan Yang. [Incorporated by reference to Exhibit
      10.4 to the registrant’s current report on Form 8-K filed on October 2,
      2008].**10.33
              
              China
      TransInfo Technology Corp. Stock Option Agreement, dated as of September
      28, 2008, by and between China TransInfo Technology Corp. and Brandon
      Ho-Ping Lin. [Incorporated by reference to Exhibit 10.5 to the
      registrant’s current report on Form 8-K filed on October 2,
      2008].**10.34
              
              Equity
      Transfer Agreement, dated October 1, 2008, by and among Beijing PKU
      Chinafront High Technology Co., Ltd. and Qing Lu, Xiaohong Chen, Hangfei
      Lin, Gang Li, Jianzhong Zhang and Jieqing Guo. [Incorporated by reference
      to Exhibit 10.1 to the registrant’s current report on Form 8-K filed on
      October 7, 2008].10.35
              
              Equity
      Transfer Agreement, by and between Oriental Intra-Asia Entertainment
      (China) Limited and China TransInfo Technology Group Co., Ltd., dated
      February 3, 2009. [Incorporated by reference to Exhibit 10.1 to the
      registrant’s current report on Form 8-K filed on October 7,
      2008].10.36
              
              Equity
      Transfer Agreement, by and between Beijing PKU Chinafront High Technology
      Co., Ltd. and China TransInfo Technology Group Co., Ltd., dated February
      3, 2009. [Incorporated by reference to Exhibit 10.2 to the registrant’s
      current report on Form 8-K filed on October 7, 2008].10.37
              
              Equity
      Transfer Agreement, by and between Beijing PKU Chinafront High Technology
      Co., Ltd. and China TransInfo Technology Group Co., Ltd., dated February
      3, 2009. [Incorporated by reference to Exhibit 10.3 to the registrant’s
      current report on Form 8-K filed on October 7, 2008].10.38
              
              Equity
      Transfer Agreement, by and between Beijing PKU Chinafront High Technology
      Co., Ltd. and China TransInfo Technology Group Co., Ltd., dated February
      3, 2009. [Incorporated by reference to Exhibit 10.4 to the registrant’s
      current report on Form 8-K filed on October 7, 2008].10.39
              
              Equity
      Transfer Agreement, by and between Beijing PKU Chinafront High Technology
      Co., Ltd. and China TransInfo Technology Group Co., Ltd., dated February
      3, 2009. [Incorporated by reference to Exhibit 10.5 to the registrant’s
      current report on Form 8-K filed on October 7, 2008].10.40
              
              Equity
      Transfer Agreement, by and between Beijing PKU Chinafront High Technology
      Co., Ltd. and China TransInfo Technology Group Co., Ltd., dated February
      3, 2009. [Incorporated by reference to Exhibit 10.6 to the registrant’s
      current report on Form 8-K filed on October 7, 2008].10.41
              
              Exclusive
      Technical Development and Consulting Agreement, by and among Oriental
      Intra-Asia Entertainment (China) Limited, China TransInfo Technology Group
      Co., Ltd., Beijing PKU Chinafront High Technology Co., Ltd., Beijing Tian
      Hao Ding Xin Science and Technology Co., Ltd., Beijing Zhangcheng Culture
      and Media Co., Ltd., Beijing Zhangcheng Science and Technology Co., Ltd.,
      China TranWiseway Information Technology Co., Ltd., Shanghai Yootu
      Information Technology Co., Ltd., Xinjiang Zhangcheng Science and
      Technology Co., Ltd., and Dalian Dajian Zhitong Information Service Co.,
      Ltd., dated February 3, 2009. [Incorporated by reference to Exhibit 10.7
      to the registrant’s current report on Form 8-K filed on October 7,
      2008].










Exhibit No.
                          
                          Description10.42
                          
                          Equity
      Pledge Agreement, by and among Oriental Intra-Asia Entertainment (China)
      Limited, Shudong Xia, Zhiping Zhang, Zhibin Lai and Wei Gao, dated
      February 3, 2009. [Incorporated by reference to Exhibit 10.8 to the
      registrant’s current report on Form 8-K filed on October 7,
      2008].10.43
                          
                          Option
      Agreement, by and among Oriental Intra-Asia Entertainment (China) Limited,
      Shudong Xia, Zhiping Zhang, Zhibin Lai and Wei Gao, dated February 3,
      2009. [Incorporated by reference to Exhibit 10.9 to the registrant’s
      current report on Form 8-K filed on October 7, 2008].10.44
                          
                          Power
      of Attorney, signed by Shudong Xia, dated February 3, 2009. [Incorporated
      by reference to Exhibit 10.10 to the registrant’s current report on Form
      8-K filed on October 7, 2008].10.45
                          
                          Power
      of Attorney, signed by Zhiping Zhang, dated February 3, 2009.
      [Incorporated by reference to Exhibit 10.11 to the registrant’s current
      report on Form 8-K filed on October 7, 2008].10.46
                          
                          Power
      of Attorney, signed by Zhibin Lai, dated February 3, 2009. [Incorporated
      by reference to Exhibit 10.12 to the registrant’s current report on Form
      8-K filed on October 7, 2008].10.47
                          
                          Power
      of Attorney, signed by Wei Gao, dated February 3, 2009. [Incorporated by
      reference to Exhibit 10.13 to the registrant’s current report on Form 8-K
      filed on October 7, 2008].10.48
                          
                          Operating
      Agreement, by and among Oriental Intra-Asia Entertainment (China) Limited,
      China TransInfo Technology Group Co., Ltd., Beijing PKU Chinafront High
      Technology Co., Ltd., Beijing Tian Hao Ding Xin Science and Technology
      Co., Ltd., Beijing Zhangcheng Culture and Media Co., Ltd., Beijing
      Zhangcheng Science and Technology Co., Ltd., China TranWiseway Information
      Technology Co., Ltd., Shanghai Yootu Information Technology Co., Ltd.,
      Xinjiang Zhangcheng Science and Technology Co., Ltd., and Dalian Dajian
      Zhitong Information Service Co., Ltd., Shudong Xia, Zhiping Zhang, Zhibin
      Lai and Wei Gao, dated February 3, 2009. [Incorporated by reference to
      Exhibit 10.14 to the registrant’s current report on Form 8-K filed on
      October 7, 2008].14
                          
                          Business
      Ethics Policy and Code of Conduct [Incorporated by reference to Exhibit 14
      to the registrant’s current report on Form 8-K filed on May 14,
      2007].21
                          
                          Subsidiaries
      of the Company.*23.1
                          
                          Consent
      of Simon & Edwards, LLP, Independent Registered Public Accounting
      Firm.*31.1
                          
                          Certification
      of Principal Executive Officer filed pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.*31.2
                          
                          Certification
      of Principal Financial Officer filed pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.*32.1
                          
                          Certifications
      of Principal Executive Officer furnished pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.*32.2
                          
                          Certifications
      of Principal Financial Officer furnished pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.*





*  Filed
herewith


**
Represents management contract or compensatory plan or
arrangement.







INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS





PageReport
      of Independent Registered Public Accounting Firm
              F-1Consolidated
      Balance Sheets
              F-2 – F-3Consolidated
      Statements of Operations and Comprehensive Income
              F-4Consolidated
      Statements of Changes in Stockholders’ Equity
              F-5Consolidated
      Statements of Cash Flows
              F-6-F-7Notes
      to Consolidated Statements
              F-8-F-26










REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors and


China
TransInfo Technology Corp.





Gentlemen:





We have
audited the accompanying consolidated balance sheet of China TransInfo
Technology Corp. and subsidiaries (the “Company”) as of December 31, 2008 and
2007, and the related consolidated statements of operations, stockholders’
equity, and cash flows for the years ended December 31, 2008 and December 31,
2007. These consolidated consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audit.




We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.




In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of China TransInfo
Technology Corp. and subsidiaries as of December 31, 2008 and 2007, and the
consolidated results of its operations and its cash flows for the years ended
December 31, 2008 and December 31, 2007 in conformity with accounting principles
generally accepted in the United States of America.





/s/
Simon & Edward, LLP


Simon
& Edward, LLP





City of
Industry, California


March 14,
2009


F-1


CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS





December 31,2008
                  
                  
                  2007ASSETSCurrent
      Assets:Cash
      and cash equivalents
                  
                  $
                  16,122,464
                  
                  
                  $
                  6,842,238Restricted
      cash
                  
                  
                  1,209,542
                  
                  
                  
                  243,852Accounts
      receivable, net
                  
                  
                  7,735,742
                  
                  
                  
                  4,246,805Inventory
                  
                  
                  23,775
                  
                  
                  
                  -Cost
      and estimated earnings in excess of billings onuncompleted
      contracts
                  
                  
                  11,912,285
                  
                  
                  
                  2,659,969Prepayments
                  
                  
                  3,647,731
                  
                  
                  
                  2,328,289Other
      receivable
                  
                  
                  2,940,404
                  
                  
                  
                  1,038,329Deferred
      tax assets
                  
                  
                  211,708
                  
                  
                  
                  250,668Total
      current assets
                  
                  
                  43,803,651
                  
                  
                  
                  17,610,150Long-term
      investment
                  
                  
                  278,730
                  
                  
                  
                  260,490Property
      and equipment, net
                  
                  
                  9,874,005
                  
                  
                  
                  3,574,722Intangible
      assets, net
                  
                  
                  1,490,807
                  
                  
                  
                  -Goodwill
                  
                  
                  3,095,017
                  
                  
                  
                  -Other
      non-current assets
                  
                  
                  147,607
                  
                  
                  
                  -Total
      assets
                  
                  $
                  58,689,817
                  
                  
                  $
                  21,445,362




The
accompanying notes are an integral part of the financial
statements.


F-2


CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS





December 31,2008
                              
                              
                              2007LIABILITIES
      AND SHAREHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      payable
                              
                              $
                              5,518,402
                              
                              
                              $
                              446,143Notes
      payable
                              
                              
                              2,934,000
                              
                              
                              
                              -Due
      to related parties
                              
                              
                              528,485
                              
                              
                              
                              -Billings
      in excess of costs and estimated earnings onuncompleted
      contracts
                              
                              
                              846,971
                              
                              
                              
                              258,265Deferred
      revenue
                              
                              
                              214,256
                              
                              
                              
                              -Other
      payable and accrued liabilities
                              
                              
                              1,030,766
                              
                              
                              
                              389,432Total
      current liabilities
                              
                              
                              11,072,880
                              
                              
                              
                              1,093,840Minority
      interest
                              
                              
                              1,465,743
                              
                              
                              
                              655,876Stockholders'
      equity :Preferred
      stock, par value $0.001 per share, 10,000,000 sharesauthorized
      and 0 shares issued and outstanding
                              
                              
                              -
                              
                              
                              
                              -Common
      stock, par value $0.001 per share, 150,000,000 sharesauthorized
      , 22,187,314 and 19,601,107 shares issued andoutstanding,
      respectively
                              
                              
                              22,187
                              
                              
                              
                              19,601Additional
      paid-in capital
                              
                              
                              24,654,890
                              
                              
                              
                              10,905,114Retained
      earnings
                              
                              
                              18,974,224
                              
                              
                              
                              7,883,747Accumulated
      other comprehensive gain - translation adjustments
                              
                              
                              2,499,893
                              
                              
                              
                              887,184Total
      stockholders' equity
                              
                              
                              46,151,194
                              
                              
                              
                              19,695,646Total
      liabilities and stockholders' equity
                              
                              $
                              58,689,817
                              
                              
                              $
                              21,445,362








F-3


CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF


OPERATIONS
AND COMPREHENSIVE INCOME





2008
                  
                  
                  2007Revenues
                  
                  $
                  29,370,463
                  
                  
                  $
                  11,864,629Cost
      of revenues
                  
                  
                  12,867,258
                  
                  
                  
                  5,612,372Gross
      profit
                  
                  
                  16,503,205
                  
                  
                  
                  6,252,257Operating
      Expenses:
                  
                  
                  5,081,502
                  
                  
                  
                  1,401,169Income
      from operations
                  
                  
                  11,421,703
                  
                  
                  
                  4,851,088Other
      income (expense):Interest
      income
                  
                  
                  68,782
                  
                  
                  
                  60,289Interest
      expense
                  
                  
                  (135,120
                  )
                  
                  
                  (13,968
                  )Subsidy
      income
                  
                  
                  530,100
                  
                  
                  
                  146,058Decrease
      in fair value of warrant liability
                  
                  
                  -
                  
                  
                  
                  64,359Other
      income - net
                  
                  
                  32,170
                  
                  
                  
                  160,446Total
      other income (expense)
                  
                  
                  495,931
                  
                  
                  
                  417,184Net
      income before income taxes and minority interest
                  
                  
                  11,917,634
                  
                  
                  
                  5,268,272Income
      tax expenses:Current
                  
                  
                  5,201
                  
                  
                  
                  -Deferred
                  
                  
                  57,754
                  
                  
                  
                  450,606Total
      income tax expense
                  
                  
                  62,955
                  
                  
                  
                  450,606Minority
      interest
                  
                  
                  (764,201
                  )
                  
                  
                  (396,585
                  )Net
      income
                  
                  $
                  11,090,477
                  
                  
                  $
                  4,421,080Weighted
      average shares of outstanding - basic
                  
                  
                  20,678,693
                  
                  
                  
                  15,520,661Weighted
      average shares of outstanding- diluted
                  
                  
                  20,883,951
                  
                  
                  
                  15,698,439Income
      per share -basic
                  
                  $
                  0.54
                  
                  
                  $
                  0.28diluted
                  
                  $
                  0.53
                  
                  
                  $
                  0.28Comprehensive
      incomeNet
      income
                  
                  $
                  11,090,477
                  
                  
                  $
                  4,421,080Translation
      adjustments
                  
                  
                  1,612,709
                  
                  
                  
                  672,414Comprehensive
      income
                  
                  $
                  12,703,186
                  
                  
                  $
                  5,093,494








F-4


CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CHANGES


IN
STOCKHOLDERS’ EQUITY





Common Stock
                        
                        
                        Additional Paid-In
                        
                        
                        Retained
                        
                        
                        Accumulated
                        
                        
                        TotalShares
                        
                        
                        Amount
                        
                        
                        Capital
                        
                        
                        Earnings
                        
                        
                        Gain
                        
                        
                        EquityBalance,
      January 1, 2006
                        
                        
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        2,416,000
                        
                        
                        $
                        475,776
                        
                        
                        $
                        52,484
                        
                        
                        $
                        2,944,260Translation
      adjustments
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        162,286
                        
                        
                        
                        162,286Net
      income for the year
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        2,986,890
                        
                        
                        
                        
                        
                        
                        
                        2,986,890Balance,
      January 1, 2007
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        2,416,000
                        
                        
                        
                        3,462,666
                        
                        
                        
                        214,770
                        
                        
                        
                        6,093,436Conversion
      of convertible notes
                        
                        
                        12,769
                        
                        
                        
                        13
                        
                        
                        
                        26,802
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        26,815Issuance
      of common shares for warrant converted cashlessly
                        
                        
                        239,023
                        
                        
                        
                        239
                        
                        
                        
                        (239
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        -Issuance
      of common shares to former directors
                        
                        
                        40,000
                        
                        
                        
                        40
                        
                        
                        
                        (40
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        -Cancelled
      2,043,783 shares of common stock
                        
                        
                        (2,043,784
                        )
                        
                        
                        (2,044
                        )
                        
                        
                        2,044
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        -Recapitalization
      on reverse acquisition
                        
                        
                        19,561,432
                        
                        
                        
                        19,561
                        
                        
                        
                        6,295,707
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        6,315,268Issuance
      of common shares
                        
                        
                        1,777,778
                        
                        
                        
                        1,778
                        
                        
                        
                        3,198,222
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        3,200,000Issuance
      of common shares for services in connection with reverse
      merger
                        
                        
                        13,889
                        
                        
                        
                        14
                        
                        
                        
                        (14
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        -Issuance
      of warrant for services in connection with reverse
    merger
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (1,104,166
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (1,104,166
                        )Paid
      Transaction Cost debit to APIC
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (1,492,361
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (1,492,361
                        )Effect
      of subsidiary equity transactions
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        323,247
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        323,247Warrants
      issued for services valued at $5.0 per share
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        200,105
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        200,105Reclassification
      of warrant liability
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        1,039,807
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        1,039,807Net
      income for the year
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        4,421,081
                        
                        
                        
                        
                        
                        
                        
                        4,421,081Translation
      adjustments
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        672,414
                        
                        
                        
                        672,414Balance,
      January 1, 2008
                        
                        
                        19,601,107
                        
                        
                        
                        19,601
                        
                        
                        
                        10,905,114
                        
                        
                        
                        7,883,747
                        
                        
                        
                        887,184
                        
                        
                        
                        19,695,646Issuances
      of Common Stock
                        
                        
                        2,586,207
                        
                        
                        
                        2,586
                        
                        
                        
                        14,997,414
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        15,000,000Paid
      Transaction Cost debit to APIC
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (1,794,660
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (1,794,660
                        )Stock-based
      compensation
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        217,756
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        217,756Effect
      of subsidiary equity transactions
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        329,266
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        329,266Translation
      adjustments
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        1,612,709
                        
                        
                        
                        1,612,709Net
      income for the year
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        11,090,477
                        
                        
                        
                        
                        
                        
                        
                        11,090,477Balance,
      December 31, 2008
                        
                        
                        22,187,314
                        
                        
                        $
                        22,187
                        
                        
                        $
                        24,654,890
                        
                        
                        $
                        18,974,224
                        
                        
                        $
                        2,499,893
                        
                        
                        $
                        46,151,194








F-5





CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS





2008
                              
                              
                              2007Cash
      flows from operating activities:Net
      income
                              
                              $
                              11,090,477
                              
                              
                              $
                              4,421,081Adjustments
      to reconcile net income tonet
      cash provided by (used in) operating activities:Depreciation
      and amortization expenses
                              
                              
                              200,746
                              
                              
                              
                              41,915Bad
      debt
                              
                              
                              31,571
                              
                              
                              
                              -Deferred
      income tax
                              
                              
                              55,531
                              
                              
                              
                              450,606Minority
      interest
                              
                              
                              764,201
                              
                              
                              
                              396,585Warrants
      issued for service
                              
                              
                              -
                              
                              
                              
                              200,105Stock-based
      compensation
                              
                              
                              217,756
                              
                              
                              
                              -Loss
      on disposal of fixed assets
                              
                              
                              11,747
                              
                              
                              
                              -Change
      in fair value of warrant liability
                              
                              
                              
                              
                              
                              
                              (64,359
                              )(Increase)
      Decrease in assets:Restricted
      cash
                              
                              
                              (932,126
                              )
                              
                              
                              (102,524
                              )Accounts
      receivable
                              
                              
                              (2,634,838
                              )
                              
                              
                              (1,247,452
                              )Prepayments
                              
                              
                              (1,035,964
                              )
                              
                              
                              (1,089,273
                              )Other
      receivable
                              
                              
                              (1,852,411
                              )
                              
                              
                              (577,078
                              )Cost
      and estimated earningsin
      excess of billings on uncompleted contracts
                              
                              
                              (8,088,233
                              )
                              
                              
                              (1,913,123
                              )Inventory
                              
                              
                              185,993Other
      current assets
                              
                              
                              234,892
                              
                              
                              
                              (129,788
                              )Decrease
      (Increase) in liabilities:Accounts
      (notes) payable
                              
                              
                              4,471,898
                              
                              
                              
                              261,572Billings
      in excess of costsand
      estimated earnings on uncompleted contracts
                              
                              
                              (613,988
                              )
                              
                              
                              (96,324
                              )Customer
      deposits
                              
                              
                              66,382
                              
                              
                              
                              -Other
      payable and accrued liabilities
                              
                              
                              338,283
                              
                              
                              
                              (466,400
                              )Net
      cash provided by operating activities
                              
                              
                              2,511,917
                              
                              
                              
                              85,543


F-6


CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS





2008
                                        
                                        
                                        2007Cash
      flows from investing activities:Cash
      from acquisitions
                                        
                                        $
                                        294,872
                                        
                                        
                                        $
                                        9,199,660(Increase)
      Decrease in loan to others
                                        
                                        
                                        -
                                        
                                        
                                        
                                        277,297Payment
      of cash to the shareholders of theaccounting
      acquirer
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (2,000,000
                                        )(Increase)
      Decrease in other non-current assets
                                        
                                        
                                        (147,489
                                        )
                                        
                                        
                                        12,018Proceeds
      from diposal of fixed assets
                                        
                                        
                                        26,072
                                        
                                        
                                        
                                        -Purchases
      of fixed assets
                                        
                                        
                                        (6,037,957
                                        )
                                        
                                        
                                        (3,236,664
                                        )Purchases
      of intangible assets and goodwill
                                        
                                        
                                        (4,537,334
                                        )
                                        
                                        
                                        -Net
      cash provided by (used in) investing activities
                                        
                                        
                                        (10,401,836
                                        )
                                        
                                        
                                        4,252,311Cash
      flows from financing activities:Increae
      in due to related parties
                                        
                                        
                                        441,737
                                        
                                        
                                        
                                        -Proceeds
      from (payments of) short-term borrowings
                                        
                                        
                                        2,883,000
                                        
                                        
                                        
                                        (658,350
                                        )Net
      change in minority interests
                                        
                                        
                                        300,775
                                        
                                        
                                        
                                        -Payable
      for acquiring subsidiary
                                        
                                        
                                        86,490
                                        
                                        
                                        
                                        -Payments
      to related parties
                                        
                                        
                                        (190,878
                                        )
                                        
                                        
                                        -Increase
      in customer deposit
                                        
                                        
                                        144,150
                                        
                                        
                                        
                                        -Merger
      (issuance) costs to be charged directly to equity
                                        
                                        
                                        (1,794,660
                                        )
                                        
                                        
                                        (1,492,361
                                        )Proceeds
      from issuing shares
                                        
                                        
                                        15,000,000
                                        
                                        
                                        
                                        3,200,000Net
      cash provided by financing activities
                                        
                                        
                                        16,870,614
                                        
                                        
                                        
                                        1,049,289Effect
      of foreign currency exchange translation
                                        
                                        
                                        299,531
                                        
                                        
                                        
                                        133,931Net
      increase in cash
                                        
                                        
                                        9,280,226
                                        
                                        
                                        
                                        5,521,074Cash
      - beginning
                                        
                                        
                                        6,842,238
                                        
                                        
                                        
                                        1,321,164Cash
      - ending
                                        
                                        $
                                        16,122,464
                                        
                                        
                                        $
                                        6,842,238Supplemental
      disclosures:Interest
      paid
                                        
                                        $
                                        135,120
                                        
                                        
                                        $
                                        13,986Income
      taxes paid
                                        
                                        $
                                        847
                                        
                                        
                                        $
                                        -


F-7


CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008


1.
              GENERAL
      AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES





Organization and
Description of Business—China TransInfo Technology Corp. (the “Company”)
was originally incorporated in Nevada on August 3, 1998, under the name R &
R Ranching, Inc. to breed bison. In about March 2003, R & R Ranching Inc.
sold its bison to Blue Sky Bison Ranch, Ltd.





The
Company has experienced several corporate name changes:  GloTech
Industries, Inc. in March 2003, Intra-Asia Entertainment Corporation in December
2003, China TransInfo Technology Corp. in August 2007.





On May
14, 2007, the Company entered into a share exchange agreement with Cabowise
International Ltd. (“Cabowise”), a British Virgin Islands company, the
stockholders of Cabowise, Weicheng International Inc. and Foster Growth Ltd.
Pursuant to the share exchange agreement, the Company, among other things,
agreed to issue to the stockholders of Cabowise an aggregate of 10,841,491
shares of its common stock in exchange for all of the issued and outstanding
capital stock of Cabowise. In addition, Cabowise agreed to assign its option to
purchase a majority equity interest in Beijing PKU Chinafront High Technology
Co., Ltd (“PKU”) to the Company’s indirect Chinese subsidiary Oriental
Intra-Asia Entertainment (China) Limited (“Oriental Intra-Asia”).




Cabowise
does not have any subsidiaries nor is it engaged in any business. Cabowise’s
sole asset was its option to purchase an eighty-five percent (85%) interest in
PKU (the “PKU Option”). Pursuant to the share exchange agreement, Cabowise
agreed to assign the PKU Option to Oriental Intra-Asia. On May 14, 2007,
Cabowise, the Company and Oriental Intra-Asia entered into an assignment and
assumption agreement whereby Cabowise assigned the PKU Option to Oriental
Intra-Asia. On May 14, 2007, Oriental Intra-Asia exercised the PKU Option, and
Oriental Intra-Asia became the owner of an eighty-five percent (85%) equity
interest in PKU.





The
exchange of shares has been accounted for as a reverse
acquisition  under the purchase method of accounting since the
shareholders of the PKU obtained control of the consolidated entity.
Accordingly, the merger of the two companies has been recorded as a
recapitalization of PKU, with PKU being treated as the continuing
entity.  The historical financial statements presented are those of
PKU.  The continuing company has retained December 31 as its fiscal
year end.




During
August 2007, the Company completed a 1-for-7.5 reverse split of all issued and
outstanding shares of common stock. The capital stock accounts and all share
data in this report give effect to the reverse split, applied retroactively, for
all periods presented.




PKU is in
the business of providing Geography Information System (GIS) application
services to the Chinese governments in the sectors of Transportation, Land and
Resources, and Digital City. PKU offers GIS application services that cover GIS
system planning, deployment, system construction, data testing, system audit and
optimization, user’s manual and customer training, through self-developed GIS
platform software products applicable for two-dimension and three-dimension
system models. PKU was incorporated in Beijing, China on October 30,
2000.




Beijing
Tian Hao Ding Xing Technology Co., Ltd.(“Beijing Tian Hao”) is engaged in the
business of GIS application research and development.  Beijing
Zhangcheng Science and Technology Co., Ltd. (“Beijing Zhangcheng”) was
established on October 12, 2007 with registered capital of RMB 10
million.  Beijing Zhangcheng Science is engaged in the business of GIS
application development for real time traffic information reporting. Beijing
Zhangcheng Culture and Media Co., Ltd. (“Zhangcheng Media”) was set up on June
8, 2008 with registered capital of RMB 5 million ,Beijing Zhangcheng Media is
mainly engaged in taxi media advertising business. Shanghai Yootu Information
Technology Co., Ltd. (“Shanghai Yootu”) was established on February 6, 2007 with
registered capital of RMB 2 million, Yootu is engaged in the business of real
time traffic data application research and development. Xingjiang Zhangcheng
Science and Technology Co., Ltd. (“Xingjiang Zhangcheng”) was established on
January 25, 2008 with registered capital of RMB 10 million.




F-8


CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008


1.
              GENERAL
      AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –
  continued





Xinjiang
Zhangcheng is mainly engaged in taxi media advertising business. China
TranWiseway Technology Co., Ltd. (“China TranWiseway”) was established on June
28, 2004 with registered capital of RMB 0.5 million. China TranWiseway is
engaged in the business of  traffic surveying technology applications.
Dalian Dajian Zhitong Infomration Service Ltd. (“Dajian Zhitong”) was
established on June 9, 2006 with registered capital of RMB 1 million. Dalian
Dajian is mainly engaged in taxi media advertising business.





Principles of
Consolidation—The consolidated financial statements include the accounts
of the Company, it's wholly owned subsidiaries Intra-Asia Entertainment (Asia
Pacific) Limited, Intra-Asia Entertainment (China) Limited and Cabowise
International Ltd., its indirectly owned subsidiaries Oriental Intra-Asia
Entertainment (China) Limited (“Oriental Intra-Asia”), Beijing PKU Chinafront
High Technology Co., Ltd. (“PKU”), Beijing Tian Hao Ding Xing Technology Co.,
Ltd.(“Beijing Tian Hao”), Beijing Zhangcheng Science and Technology Co., Ltd.
(“Beijing Zhangcheng”), Xingjiang Zhangcheng Science and Technology Co., Ltd.
(“Xingjiang Zhangcheng”), Beijing Zhangcheng Culture and Media Co., Ltd.
(“Zhangcheng Media”), China TranWiseway Technology Co., Ltd. (“China
TranWiseway”), Dalian Dajian Zhitong Infomration Service Ltd. (“Dajian
Zhitong”), Shanghai Yootu Information Technology Co., Ltd. (“Shanghai Yootu”)
and its variable interest entity China TransInfo Technology Group Co., Ltd.
(“Group Company”). All material intercompany accounts, transactions and profits
have been eliminated in consolidation.





On
February 3, 2009, the Company, through its indirect Chinese subsidiaries,
Oriental Intra-Asia and PKU, entered into a series of equity transfer agreements
with China TransInfo Technology Group Co., Ltd., or  Group Company, a
company incorporated under Chinese law, pursuant to which the Company
transferred all of its indirect equity interests in PKU and PKU's subsidiaries
to the Group Company. The main purpose of  the restructuring is to
allow the Company to engage in three new business segments, including online
services, taxi advertising, and security and surveillance related business in
China in which companies with foreign ownership, like the Company and its
subsidiaries, are either prohibited or restricted from operating under the
current applicable Chinese laws and regulations.  Through the
contractual or variable interest entity, or VIE, arrangements, the Company
maintains substantial control over the VIE Entities' daily operations and
financial affairs, election of their senior executives and all matters requiring
shareholder approval. Furthermore, as the primary beneficiary of the VIE
Entities, the Company is entitled to consolidate the financial results of the
VIE Entities in its own consolidated financial statements under FASB
Interpretation No. 46R "Consolidation of Variable Interest Entities" ("FIN
46R"). On November 17, 2008, Group Company made a capital contribution of RMB
40,000,000 or $5,868,000 on behalf of Oriental Intra-Asia under nominee
agreement to PKU. To follow the Substance-Over-Form principle, all the
transactions and events of Group Company’s have been consolidated to the
consolidated financial statements for the year ended December 31,
2008.





Use of
Estimates—The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period.  Significant
estimates include accrued warranty costs, as well as revenue and costs recorded
under the percentage-of-completion method.  Actual results could
differ from those estimates.





Cash
Equivalents—The Company classifies all highly liquid investments
purchased with a maturity of three months or less as cash
equivalents.





Accounts
Receivable—Accounts receivable are carried at original invoice amount
less an estimate for doubtful receivables based on a review of all outstanding
amounts at year end. Management determines the allowance for doubtful accounts
by using historical experience applied to an aging of accounts. Trade
receivables are written off when deemed uncollectible. Recoveries of trade
receivables previously written off are recorded when received. Allowance for
doubtful accounts amounted to $32,439 as of December 31, 2008.





Property and
Equipment—Property and equipment are recorded at cost, less accumulated
depreciation.  Depreciation is provided for using straight-line
methods over the estimated useful lives of the respective assets, usually three
to seven years.


F-9




CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008




1.
              GENERAL
      AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
  continued





Revenue
Recognition—Most of the Company’s revenues are on contracts recognized
using the percentage-of-completion method, measured by the ratio of costs
incurred to date to estimated total costs for each contract.  Contract
costs include all direct material and labor costs and those indirect costs
related to contract performance, such as supplies and
travels.  General and administrative costs are charged to expense as
incurred.  Losses on contracts are recorded in full as they are
identified.





During
the year ended December 31, 2008, the Company offered limited taxi media
advertising. The Company recognized deferred revenue when cash is received, but
the revenue has not yet been earned. Taxi media advertising revenue is billed to
the customer and recognized when the advertisement is published.





Research and
Development—Research and development costs represent the costs of
designing, developing and testing products and are expensed as selling, general
and administrative expenses as incurred.





Share-Based
Payments—The Company adopted Statement of Financial Accounting Standards
No 123(R), “Share-Based Payments” (“SFAS No. 123R”) effective January 1, 2006.
SFAS No. 123R amends existing accounting pronouncements for share-based payment
transactions in which an enterprise receives employee and certain non-employee
services in exchange for (a) equity instruments of the enterprise or (b)
liabilities that are based on the fair value of the enterprise’s equity
instruments or that may be settled by the issuance of such equity instruments.
SFAS No.123R generally requires such transactions be accounted for using a
fair-value-based method. The Company has never issued any stock options to any
employees.





Income
Taxes—Deferred income tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective income tax bases.  Deferred income tax assets and
liabilities are measured using enacted tax rates in effect for the year in which
those temporary differences are expected to be recovered or
settled.  A valuation allowance is established against deferred tax
assets if it is more likely than not that all, or some portion, of such assets
will not be realized.





Effective
January 1, 2007, we adopted Financial Accounting Standard Board (FASB)
Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement No. 109, Accounting for Income Taxes.
FIN 48 prescribes a comprehensive model for how companies should recognize,
measure, present, and disclose in their financial statements uncertain tax
positions taken or expected to be taken on a tax return. Under FIN 48, tax
positions are initially recognized in the financial statements when it is more
likely than not the position will be sustained upon examination by the tax
authorities. Such tax positions are initially and subsequently measured as the
largest amount of tax benefit that is greater than 50% likely of being realized
upon ultimate settlement with the tax authority assuming full knowledge of the
position and all relevant facts.





Impairment of
Long-Lived Assets—The Company adopts SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets". The Company periodically evaluates
long-lived assets for impairment whenever events or changes in circumstances
indicate that the carrying value of an asset may not be
recoverable.  If the estimated future cash flows (undiscounted and
without interest charges) from the use of an asset were less than the carrying
value, a write-down would be recorded to reduce the related asset to its
estimated fair value.





The
assumptions used by management in determining the future cash flows are
critical. In the event these expected cash flows are not realized, future
impairment losses may be recorded. Management has determined that no impairments
of long-lived assets currently exist.


F-10





CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





1.
              GENERAL
      AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –
  continued





Issuance of
Shares by Subsidiaries—Sales of stock by a subsidiary is accounted for in
accordance with Staff Accounting Bulletin Topic 5H, “Accounting for Sales of
Stock by a Subsidiary.” The Company has adopted the capital transaction method
to account for subsidiary stock sales. Accordingly, increases and decreases in
the Company’s share of its subsidiary’s net equity resulting from subsidiary
stock transactions are recorded on the Consolidated Balance Sheets and
Consolidated Statements of Stockholders’ Equity as increases or decreases to
Additional paid-in capital.





Concentrations of
Credit Risk—Financial instruments that subject the Company to credit risk
consist primarily of accounts receivable, which are concentrated in a small
number of customers in the Chinese governments. The Company performs ongoing
credit evaluations of its customers.  For the year ended December 31,
2008, bad debt expenses totaled RMB 219,012 or $31,571.





Statement of Cash
Flows—In accordance with SFAS No. 95, "Statement of Cash Flows", cash
flows from the Company's operations are based upon the local currencies. As a
result, amounts related to assets and liabilities reported on the statement of
cash flows will not necessarily agree with changes in the corresponding balances
on the balance sheet.





Translation
Adjustment—The Renminbi ("RMB"), the national currency of the PRC, is the
primary currency of the economic environment in which the operations of China
IRAE are conducted. The Company uses the United States dollar ("U.S. dollars")
for financial reporting purposes.





In
accordance with SFAS No. 52, “Foreign Currency
Translation,” the Company’s results of operations and cash flows are
translated at the average exchange rates during the period, assets and
liabilities are translated at the exchange rates at the balance sheet dates, and
equity is translated at the historical exchange rates. As a result, amounts
related to assets and liabilities reported on the consolidated statements of
cash flows will not necessarily agree with changes in the corresponding balances
on the consolidated balance sheets.





As of
December 31, 2008 and 2007, the exchange rates between the RMB (¥) and the USD ($)
were ¥1=$0.1467 and
¥1=$0.1371,
respectively. The weighted-average rates of exchange between the RMB and the USD
as of December 31, 2008 and 2007 were ¥1=$0.14415 and
¥1=$0.13167,
respectively. Total translation adjustment recognized as of December 31, 2008
and 2007 is $2,499,893 and $887,184, respectively.





Comprehensive
Income—Comprehensive income includes accumulated foreign currency
translation gains and losses. The Company has reported the components of
comprehensive income on its statements of stockholders’ equity.





Fair Value of
Financial Instruments— The carrying amounts of cash and cash equivalents,
accounts receivable, deposits and accounts payable approximate their fair value
because of the short maturity of those instruments.





The
carrying amounts of the Company's long-term debt approximate their fair value
because of the short maturity and/or interest rates which are comparable to
those currently available to the Company on obligations with similar
terms.




F-11




CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





1.
            GENERAL
      AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –
  continued





New
Accounting Pronouncements





In
December 2007, the FASB issued SFAS 141R, “Business Combinations - Revised
2007,” which replaces FASB Statement No. 141, “Business Combinations.” SFAS
141Restablishes
principles and requirements intending to improve the relevance, representational
faithfulness, and comparability of information that a reporting entity provides
in its financial reports about a business combination and its effects. This is
accomplished through requiring the acquirer to recognize assets acquired and
liabilities assumed arising from contractual contingencies as of the acquisition
date, measured at their acquisition-date fair values. This includes contractual
contingencies only if it is more likely than not that they meet the definition
of an asset of a liability in FASB Concepts Statement No. 6, “Elements of Financial
Statements - a
replacement of FASB Concepts Statement No. 3.”This statement also
requires the acquirer to recognized goodwill as of the acquisition date,
measured as a residual. However, this statement improves the way in which an
acquirer’s obligations to make payments conditioned on the outcome of future
events are recognized and measured, which in turn improves the measure of
goodwill. This statement also defines a bargain purchases as a business
combination in which the total acquisition-date fair value of the consideration
transferred plus any noncontrolling interest in the acquiree, and it requires
the acquirer to recognize that excess in earnings as a gain attributable to the
acquirer. This therefore improves the representational faithfulness and
completeness of the information provided about both the acquirer’s earnings
during the period in which it makes a bargain purchase and the measures of the
assets acquired in the bargain purchase. The Company does not expect the
adoption of this pronouncement to have a material impact on its financial
statements. The adoption of SFAS No. 141(R) changes our accounting
treatment for business combinations on a prospective basis effective
January 1, 2009.




In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Stateme0147nts - an amendment of ARB No. 51,”which establishes
accounting and reporting standards to improve the relevance, comparability, and
transparency of financial information in its consolidated financial statements.
This is accomplished by requiring all entities, except not-for-profit
organizations, that prepare consolidated financial statements to (a) clearly
identify, label, and present ownership interests in subsidiaries held by parties
other than the parent in the consolidated statement of financial position within
equity, but separate from the parent’s equity, (b) clearly identify and present
both the parent’s and the noncontrolling interest’s attributable consolidated
net income on the face of the consolidated statement of income, (c) consistently
account for changes in parent’s ownership interest while the parent retains it
controlling financial interest in subsidiary and for all transactions that are
economically similar to be accounted for similarly, (d) measure of any gain,
loss or retained noncontrolling equity at fair value after a subsidiary is
deconsolidated, and (e) provide sufficient disclosures that clearly identify and
distinguish between the interests of the parent and the interests of the
noncontrolling owners. This Statement also clarifies that a noncontrolling
interest in a subsidiary is an ownership interest in the consolidated entity
that should be reported as equity in the consolidated financial statements. SFAS
No. 160 is effective for annual and interim periods beginning on or after
December 15, 2008. The statement is to be applied prospectively. However, if
comparative statements are issued, the presentation and disclosures should be
presented retrospectively for all periods presented only after the adoption of
the standard.





In April
2008, FASB issued FASB Staff Position (FSP) FAS 142-3, “Determination of the Useful Life of
Intangible Assets,” to provide guidance for determining the useful life
of recognized intangible assets and to improve consistency between the period of
expected cash flows used to measure the fair value of a recognized intangible
asset and the useful life of the intangible asset as determined under Statement
142. The FSP requires that an entity consider its own historical experience in
renewing or extending similar arrangements. However, the entity must adjust
that experience based on entity-specific factors under FASB Statement 142,
Goodwill and Other Intangible Assets. FSP FAS 142-3 is effective January 1,
2009, and will be applied prospectively. The Company is currently evaluating the
impact of FSP FAS 142-3 on its financial statements.





In June
2008, FASB ratified a consensus opinion reached by the Emerging Issues Task
Force (EITF) on EITF Issue 08-4, “Transition Guidance for Conforming
Changes to Issue No. 98-5,” to provide transition guidance for conforming
changes made to the abstract for EITF Issue 98-5, “Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios,” relating to EITF Issue 00-27, “Application of Issue No. 98-5
to Certain Convertible Instruments,” and FASB Statement 150, Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity.




F-12





CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008




2.
            RESTRICTED
      CASH




The
Company’s restricted cash balances at December 31, 2008 and 2007 were as
follows:




ExchangeEntity
                                  
                                  RMB
                                  
                                  
                                  Rate
                                  
                                  
                                  USD
                                  
                                  RestrictionDecemer
      31, 2007:PKU
                                  
                                  ¥
                                  1,778,640
                                  
                                  
                                  
                                  0.1371
                                  
                                  
                                  $
                                  243,852
                                  
                                  To
      facilitate Fund Verfication LettersTotal
                                  
                                  ¥
                                  1,778,640
                                  
                                  
                                  
                                  
                                  
                                  
                                  $
                                  243,852December
      31, 2008:PKU
                                  
                                  ¥
                                  1,245,000
                                  
                                  
                                  
                                  0.1467
                                  
                                  
                                  $
                                  182,642
                                  
                                  To
      facilitate Banker's AcceptancesChina
      TranWiseway
                                  
                                  
                                  7,000,000
                                  
                                  
                                  
                                  0.1467
                                  
                                  
                                  
                                  1,026,900
                                  
                                  To
      facilitate Capital VerificationTotal
                                  
                                  ¥
                                  8,245,000
                                  
                                  
                                  
                                  
                                  
                                  
                                  $
                                  1,209,542





During
the fourth quarter of 2008, PKU deposited ¥1,245,000, or
$182,642  in one of its banks to facilitate bank acceptance letters
issued by the bank to the Company’s customers. Such letters are a contractual
term requested by the customers and are valid for 3 months.  During
the same quarter,  China TranWiseway deposited with ¥7,000,000, or
$1,026,900 in one its bank to facilitate its capital verification for
contributed capital increase purpose required by local authority.  The
restriction is expected to expire during the first quarter of 2009.





3.
            COSTS
      AND ESTIMATED EARNINGS ON UNCOMPLETED
CONTRACTS




The costs
and estimated earnings on uncompleted contracts were as
follows:




December 31,2008
                                  
                                  
                                  2007Costs
      incurred on uncompleted contracts
                                  
                                  $
                                  16,464,203
                                  
                                  
                                  $
                                  4,147,244Estimated
      earnings on uncompleted contracts
                                  
                                  
                                  20,749,561
                                  
                                  
                                  
                                  7,500,63637,213,764
                                  
                                  
                                  
                                  11,647,880Less:
      billings to date
                                  
                                  
                                  26,148,450
                                  
                                  
                                  
                                  9,246,176Total
                                  
                                  $
                                  11,065,314
                                  
                                  
                                  $
                                  2,401,704




The costs
and estimated earnings on uncompleted contracts are included in the accompanying
balance sheets under the following captions:




F-13




CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008




3.
            COSTS
      AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS -
  continued




December 31,2008
                                        
                                        
                                        2007Costs
      and estimated earnings in excess of billings onuncompleted
      contracts
                                        
                                        $
                                        11,912,285
                                        
                                        
                                        $
                                        2,659,969Billings
      in excess of costs and estimated earnings onuncompleted
      contracts
                                        
                                        
                                        -846,971
                                        
                                        
                                        
                                        -258,265Total
                                        
                                        $
                                        11,065,314
                                        
                                        
                                        $
                                        2,401,704




4.
            PROPERTY
      AND EQUIPMENT




The
following is a summary of the Company’s property and equipment:




December 31,2008
                                    
                                    
                                    2007Automobiles
                                    
                                    $
                                    454,659
                                    
                                    
                                    $
                                    125,929Machinery
      and equipments
                                    
                                    
                                    5,640,958
                                    
                                    
                                    
                                    422,056Furniture
      and fixtures
                                    
                                    
                                    147,957
                                    
                                    
                                    
                                    40,939Prepayment
      for building
                                    
                                    
                                    1,249,745
                                    
                                    
                                    
                                    864,285Work-in-progress
                                    
                                    
                                    2,676,864
                                    
                                    
                                    
                                    2,279,61610,170,183
                                    
                                    
                                    
                                    3,732,825Less:
      accumulated depreciation
                                    
                                    
                                    (296,178
                                    )
                                    
                                    
                                    -158,103Property
      and equipment, net
                                    
                                    $
                                    9,874,005
                                    
                                    
                                    $
                                    3,574,722




On June
2, 2007, the Company entered into an agreement to purchase an office building
for approximately $1,336,000. As of December 31, 2008 and 2007, the Company’s
prepayments totaled $1,249,745 and $864,285, respectively.





The
Company entered an agreement with Taxi Association of City of Urumqi for
installation of a global positioning system ("GPS") control system. Pursuant to
the agreement, the Company will install GPS Control Terminals on the 5,220
rental and taxi cars in the city of Urumqi in exchange for rights of interior or
exterior advertisements on each taxi’s rear window, top light (LED display)
and interior. According to the agreement, the Company began to operate the
system on October 1, 2007 for a period of 15 years. Costs incurred for installed
terminals that have been inspected and accepted were recorded as Machinery and
Equipment and depreciated over a 7-year period. Costs incurred for uninstalled
terminals and installed terminals that have not been inspected and accepted as
work-in-progress.




F-14




CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008




4.
            PROPERTY
      AND EQUIPMENT - Continued




In
addition, on March 31, 2008, the Company signed the "Agreement for Installation
of Taxi GPS Monitoring System" with the Urumqi City Transportation Bureau (the
“Transportation Bureau”), which is the higher management authority of the Taxi
Association of City of Urumqi. The agreement reconfirmed the Company’s
responsibility for providing to the Transportation Bureau's Passenger Transport
Office with equipment for LED-based GPS monitoring, network hardware, GPS
monitoring platform, and LED-based information release platform and software in
exchange for the 15 years’ taxi advertising rights. The Transportation
Bureau further guarantees that the Company will be its exclusive
cooperation partner for a period of 15 years. No changes related to this
guaranty will be made during the 15-year period.





The
Company signed a contract jointly with the Huhhot Comprehensive Traffic
Information Center and the Huhhot Department of Transportation Administration on
January 28, 2008 to exclusively invest in and construct the LED stripe screen
advertisement broadcasting system for taxis (LSABS) in the city of Huhhot. The
contract is for a period of 15 years, and the Company will provide funding for
LED strip screens and taxi rooftop light alterations to construct the city’s
Taxi Advertising and Information Release System. Costs incurred for installed
terminals that have been inspected and accepted were recorded as Machinery and
Equipment and depreciated over a 7-year period. Costs incurred for uninstalled
terminals and installed terminals that have not been inspected and accepted were
recorded as Work-in-progress.





Depreciation
and amortization expenses during fiscal 2008 and 2007 were $200,746 (of which
$22,651 was related to intangible assets), and $41,915,
respectively.





5.
            INTANGIBLE
      ASSETS




The
Company’s intangible assets as of December 31, 2008 are summarized as
follows:





Existing
      technology
                        
                        $
                        174,573Core
      technology
                        
                        
                        1,339,061Less:
      accumulated amortization
                        
                        
                        (22,827
                        )Total
                        
                        $
                        1,490,807




(1)
Existing Technology





China
TranWiseway, the Company’s indirect 70% owned subsidiary, internally developed
the Traffic Volume Long-Distance Monitoring and Data Center Platform
technology.  The useful life of the technology is estimated at 10
years.





(2)
Core Technology





In 2008,
the Company purchased software from a third party for total cash consideration
of $752,669.  This software was integrated into an Electrical Toll
collection (“ETC”) non-stop toll system. The Company plans to distribute fully
integrated ETC systems with both hardware and software
included.  Amortization of the ETC technology started during the
fourth quarter of 2008 when the ETC system was ready for commercial
applications. The useful life of the technology is estimated at 10
years.





In 2008,
Beijing Zhangcheng capitalized research and development costs of $586,392 after
establishing technical feasibilities for its real time traffic information
application software.  Amortization of the real time traffic
information technology will not start until the application is completely
developed, which is expected during the first quarter of 2009.




F-15





CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





6.
            GOODWILL





The
Company has recorded approximately ¥6,703,104, or
$983,345, ¥1,293,441, or
$189,748, and  ¥13,101,047 or
$1,921,924 in goodwill in connection with its acquisitions (see Note 9) of
equity of China TranWiseway, Dajian Zhitong, and Shanghai Yootu,
respectively.





In
accordance with the provisions of SFAS No. 142, "Goodwill and Other Intangible
Assets", the Company performed the goodwill impairment tests. The results of the
tests indicated that no impairment loss was probable because the implied fair
value of goodwill related to the equity purchased exceeded the book value of the
goodwill. The Company performs its annual impairment test as of the last day of
the fiscal year. These impairment tests must be performed more frequently if
there are triggering events.





7.
            NOTE
      PAYABLE





On June
17, 2008, the Company entered a loan agreement with a commercial bank in the
amount of RMB 20,000,000, or $2,934,000. The loan bears an interest rate of
8.964% per annum. The agreement expires on June 17, 2009. For the year ended
December 31, 2008, interest expense on the loan totaled RMB 937,359, or
$135,120.





8.
            ACQUISITIONS
      OF SUBSIDIARIES





(1)
China TranWiseway





In May
2008, PKU entered into equity transfer agreements with shareholders of China
TranWiseway, pursuant to which, PKU acquired 70% ownership of China TranWiseway
for a cash price of RMB 6,500,000 (approximately $953,550). China TranWiseway is
a high-tech company specializing in transportation information system and
application developments. On May 22, 2008, PKU entered into an agreement
supplemental to the aforementioned equity transfer agreements. Pursuant to the
supplemental agreement, PKU will make an additional capital contribution of RMB
7,000,000 (approximately $1,026,900) to China TranWiseway to increase the total
registered capital to RMB 10,000,000 (approximately $1,467,000), and PKU’s
ownership remains at 70%. The purchase price of the 70% ownership in China
TranWiseway therefore was RMB 8,600,000, or $1,261,620. As of December 31, 2008,
the RMB 7,000,000 has been remitted to China TranWiseway.





In
accordance with SFAS No. 141,Business Combinations (“SFAS No. 141”), the acquisition was accounted for
under the purchase method of accounting. Accordingly, the results of China
TranWiseway have been included in the accompanying condensed consolidated
financial statements since the date of acquisition. The purchase price has been
allocated to the assets acquired and liabilities assumed based upon their
estimated fair values and the price was allocated as follows:





In
      RMB
                                            
                                            
                                            CurrencyExchangeRate
                                            
                                            
                                            In
      USDNet
      tangible
      assets
                                            
                                            ¥
                                            706,896
                                            
                                            
                                            
                                            0.1467
                                            
                                            
                                            $
                                            103,702Existing
      technology
                                            
                                            
                                            1,190,000
                                            
                                            
                                            
                                            0.1467
                                            
                                            
                                            
                                            174,573Goodwill
                                            
                                            
                                            6,703,104
                                            
                                            
                                            
                                            0.1467
                                            
                                            
                                            
                                            983,345Total
      consideration paid
                                            
                                            ¥
                                            8,600,000
                                            
                                            
                                            
                                            
                                            
                                            
                                            $
                                            1,261,620





No
supplemental pro forma information is presented for the acquisition due to the
immaterial effect of the acquisition on the Company’s results of
operations.




F-16





CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





8.
            ACQUISITIONS
      OF SUBSIDIARIES – Continued





(2)
Dajian Zhitong




On
September 16, 2008, Zhangcheng Media, the Company’s indirectly-owned subsidiary,
entered into equity transfer agreements with shareholders of Dajian Zhitong.
Pursuant to the agreements, Zhangcheng Media  acquired 85% ownership
of Dajian Zhitong from three of the shareholders for a cash price of RMB
1,980,000 (approximately $290,000). Included in the price was assumption of
Dajian Zhitong's liabilities totaling RMB 1,639,518.





On
October 13, 2008, a supplemental agreement to the aforementioned agreements was
entered between Zhangcheng Media and the three shareholders of Dajian Zhitong.
Pursuant to the agreement, Zhangchang Media will not pay the RMB 1,980,000 to
the three shareholders nor assume Dajian Zhitong’s liabilities. Instead, it will
make a cash contribution of RMB 9,000,000 directly to Dajian Zhitong. Other
terms in the original equity transfer agreements were unaffected. Zhangcheng
Media’s ownership in Dajian Zhitong remains at 85%. As a result of the
supplemental agreement, the actual acquisition price of the 85% ownership of
Dalian Zhitong was RMB 1,350,000=RMB 9,000,000 x (1-85%), (approximately
$198,045).  As of December 31, 2008, RMB 4,000,000 has been remitted
to Dajian Zhitong.





In
accordance with SFAS No. 141, the acquisition was accounted for under the
purchase method of accounting. Accordingly, the results of Dajian Zhitong have
been included in the accompanying condensed consolidated financial statements
since the date of acquisition. The purchase price has been allocated to the
assets acquired and liabilities assumed based upon their estimated fair values
and the price was allocated as follows:





In
      RMB
                                    
                                    
                                    CurrencyExchange Rate
                                    
                                    
                                    In USDNet
      tangible assets
                                    
                                    ¥
                                    56,559
                                    
                                    
                                    
                                    0.1467
                                    
                                    
                                    $
                                    9,315Goodwill
                                    
                                    
                                    1,293,441
                                    
                                    
                                    
                                    0.1467
                                    
                                    
                                    
                                    189,748Total
      consideration paid
                                    
                                    ¥
                                    1,350,000
                                    
                                    
                                    
                                    
                                    
                                    
                                    $
                                    198,883





(3)
Shanghai Yootu





On
October 1, 2008, PKU, the Company’s indirectly-owned subsidiary, entered into an
equity transfer agreements with shareholders of Shanghai Yootu. Pursuant to the
agreement, PKU acquired 100% ownership of Shanghai Yootu  from six
individual shareholders. Under the terms of the Equity Transfer Agreement, PKU
will make the payments in three installments to the Transferors. The initial
cash payment of RMB 8.8 million (approximately $1,290,960) will be paid to the
Transferors within five (5) business days after the date of execution of the
Equity Transfer Agreement. The remaining two installments will be conditional
upon Shanghai Yootu’s results of operations in the next two years (see Note
18)





In
accordance with SFAS No. 141, the acquisition was accounted for under the
purchase method of accounting. Accordingly, the results of Shanghai Yootu have
been included in the accompanying condensed consolidated financial statements
since the date of acquisition. The purchase price has been allocated to the
assets acquired and liabilities assumed based upon their estimated fair values
and the price was allocated as follows:





In
      RMB
                                                
                                                
                                                CurrencyExchangeRate
                                                
                                                
                                                In USDNet
      tangible assets
                                                
                                                ¥
                                                (4,301,047
                                                )
                                                
                                                
                                                0.1467
                                                
                                                
                                                $
                                                (630,964
                                                )Goodwill
                                                
                                                
                                                13,101,047
                                                
                                                
                                                
                                                0.1467
                                                
                                                
                                                
                                                1,921,924Total
      consideration paid
                                                
                                                ¥
                                                8,800,000
                                                
                                                
                                                
                                                
                                                
                                                
                                                $
                                                1,290,960





No
supplemental pro forma information is presented for the acquisitions due to the
immaterial effect of the acquisition on the Company’s results of
operations.




F-17





CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008




9.
            SHARE-BASED
      PAYMENTS




“Accounting for Derivative Financial
Instruments Indexed to and Potentially Settled in, a Company’s Own Stock”(“EITF 00-19”),
provides criteria for determining whether freestanding contracts that are
settled in a company’s own stock, including common stock warrants, should be
designated as either an equity instrument, an asset or as a liability under
SFAS No. 133. Under the provisions of EITF 00-19, a contract
designated as an asset or a liability must be carried at fair value on a
company’s balance sheet, with any changes in fair value recorded in a company’s
results of operations. It was determined that the Company's warrants qualify for
accounting treatment under EITF 00-19, "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, A Company's Own
Stock".  Under the terms of the warrant agreements, if the
Company fails to deliver the required number of Warrant Shares, the Company will
be obligated to pay cash to settle the warrant claims. As a result, the Company
must assume that it could be required to settle the warrants on a net-cash
basis, thereby necessitating the treatment of the potential settlement
obligation as a liability. The fair values of the warrants are presented on the
accompanying consolidated balance sheet as “Accrued Warrant Liability” and the
changes in the values of these warrants are shown in the accompanying
consolidated statement of operations as “Decrease in fair value of warrants
liability.” Such gains and losses are non-operating and have no effect on cash
flows from operating activities.





(1)
            Warrants





Effective
January 1, 2006, the Company adopted the fair value recognition provisions of
SFAS No. 123R. The Company recognized the share-based compensation cost based on
the grant-date fair value estimated in accordance with the new provisions of
SFAS No. 123R. The Company issued warrants to Anteaus Capital, Inc., in
aggregate, to purchase 277,778 shares of the Company’s common stock in
connection with merger related services on May 14, 2007, with an exercise price
of $1.80 per share. These warrants will expire on May 13, 2014 pursuant to the
common stock purchase warrant agreement. The Company used the Black-Scholes
option pricing model to determine the fair value of the stock warrants on May
14, 2007.  On May 14, 2007, the fair value was as at $3.97 per share,
resulting in a share-based compensation totaling $1,104,166. On November 29,
2007, the Company and Anteaus Capital, Inc. entered an amendment to the
Company’s common stock purchase warrants. The amendment eliminated the clause
subject to which if the Company fails to deliver the required number of Warrant
Shares, the Company will be obligated to pay cash to settle the warrant claims.
The 277,778 warrants issued to Antaeus Capital, Inc. have been re-valued at
$1,039,807, and reclassified to Additional Paid-in Capital from Accrued Warrant
Liability. Other income of $64,359 was recorded to account for the warrants at
fair value.





The fair
value for the share-based awards was estimated using the Black-Scholes option
pricing model with the assumptions listed below:





MAY 14, 2007
                            
                            
                            NOVEMBER 29, 2007Expected
      volatility
                            
                            
                            203
                            %
                            
                            
                            148
                            %Expected
      life (years)
                            
                            
                            7
                            
                            
                            
                            6.46Risk
      free interest rate
                            
                            
                            4.6
                            %
                            
                            
                            3.72
                            %





On
November 30, 2007, the Company issued warrants to CCG Investor Relations
Partners LLC, in aggregate, to purchase 50,000 shares of the Company’s common
stock in connection with investor relations services, with an exercise price of
$5.00 per share. These warrants will expire on November 29, 2010 pursuant to the
common stock purchase warrant agreement. The fair market value of these stock
warrants was $200,105 and was estimated on the date of grant using the
Black-Scholes option-pricing model in accordance with SFAS No. 123R using the
following weighted-average assumptions: expected dividend yield 0%; risk-free
interest rate of 3.08%; volatility of 148% and an expected term of three
years.





The
expected volatilities are based on the historical volatility of the Company’s
stock. The observations were made in a 52-week period. The expected terms of
stock warrants are based on the remaining contractual life of stock warrants
outstanding as these stock warrants vested immediately.




F-18




CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





9.
            SHARE-BASED
      PAYMENTS - Continued





A summary
of stock warrants for the year ended December 31, 2008 is as
follows:





Stock Warrants
                                        
                                        Shares
                                        
                                        
                                        Weighted-AverageExercise Price
                                        
                                        
                                        Weighted-AverageRemainingContractual Term(Months)Outstanding
      at January 1, 2007
                                        
                                        
                                        436,187
                                        
                                        
                                        $
                                        2.63
                                        
                                        
                                        
                                        30.77Granted
                                        
                                        
                                        277,778
                                        
                                        
                                        
                                        1.80
                                        
                                        
                                        
                                        -50,000
                                        
                                        
                                        
                                        5.00Exercised
      or converted
                                        
                                        
                                        (239,023
                                        )
                                        
                                        
                                        2.63
                                        
                                        
                                        
                                        -Forfeited
      or expired
                                        
                                        
                                        (197,164
                                        )
                                        
                                        
                                        2.63
                                        
                                        
                                        
                                        -Outstanding
      at January 1, 2008
                                        
                                        
                                        327,778
                                        
                                        
                                        
                                        2.29
                                        
                                        
                                        
                                        70.11Granted
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Exercised
      or converted
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Forfeited
      or expired
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Outstanding
      at December 31, 2008
                                        
                                        
                                        327,778
                                        
                                        
                                        
                                        2.29
                                        
                                        
                                        
                                        58.08Exercisable
      at December 31, 2008
                                        
                                        
                                        327,778
                                        
                                        
                                        $
                                        2.29
                                        
                                        
                                        
                                        58.08





(2)
Stock Options





On
January 7, 2008, the Company and Mr. Zhihai Mao, the Chief Financial Officer of
the Company, entered into a stock option agreement. Pursuant to the terms of the
stock option agreement, Mr. Mao was granted a non-qualified option on January 7,
2008 to purchase 200,000 shares of common stock of the Company at an exercise
price of $6.70 per share, which was the closing price per share of the Company’s
common stock as reported on the OTC Bulletin Board on such date. The option has
a term of ten years and expires on January 7, 2018. The option vests in
equal installments on a quarterly basis over a three-year period beginning on
January 7, 2008. The Company recorded compensation expense of $181,000 during
the year ended December 31, 2008 in connection with the stock
options.





On May 1,
2008, the Company entered into separate Stock Option Agreements with each of Mr.
Trien and Dr. Chen. Under the terms of the Stock Option Agreements, the Company
agreed to grant a stock option to each of Mr. Trien and Dr. Chen for the
purchase of 30,000 shares of common stock of the Company at an exercise price of
$6.50 per share, which was the closing price per share of the Company’s common
stock as reported on the OTC Bulletin Board on such date. The option has a term
of five years and expires on May 1, 2013. The option vests in equal installments
on a quarterly basis over a three-year period except for 2,500 options vested
immediately on May 1 for Mr. Trien. The Company recorded compensation expense of
$35,306 during the year ended December 31, 2008 in connection with the stock
options.





On
September 28, 2008, the Company entered into separate Stock Option Agreements
with Mr. Ho-Ping Lin. Under the terms of the Stock Option Agreement, the Company
agreed to grant a stock option to Mr. Lin for the purchase of 30,000 shares of
common stock of the Company at an exercise price of $6.50 per share. The option
has a term of five years and expires on September 28, 2013. The option vests in
equal installments on a quarterly basis over a three-year period. The Company
recorded compensation expense of $1,450 during the year ended December 31, 2008
in connection with the stock options.




F-19





CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





9.
            SHARE-BASED
      PAYMENTS – Continued




The
Company estimates the fair value of stock options using a Black-Scholes option
pricing valuation model, consistent with the provisions of SFAS 123(R) and SEC
Staff Accounting Bulletin No. 107 (SAB "107").  Key inputs and
assumptions used to estimate the fair value of stock options include the grant
price of the award, the expected option term, volatility of the Company’s stock,
the risk-free rate and the Company’s dividend yield.  Estimates of
fair value are not intended to predict actual future events or the value
ultimately realized by grantees, and subsequent events are not indicative of the
reasonableness of the original estimates of fair value made by the
Company.




The fair
value of each stock option is estimated on the date of the grant using the
Black-Scholes option pricing model.  No dividends were assumed due to
the nature of the Company’s current business strategy.  The following
table presents the assumptions used for options granted:





September 30, 2008
                    
                    
                    June 30, 2008
                    
                    
                    March 31, 2008Number
      of options
                    
                    
                    30,000
                    
                    
                    
                    60,000
                    
                    
                    
                    200,000Risk
      free interest rate
                    
                    
                    2.37
                    %
                    
                    
                    2.53
                    %
                    
                    
                    3.00
                    %Expected
      life (year)
                    
                    
                    3.5
                    
                    
                    
                    3.5
                    
                    
                    
                    3.5Expected
      volatility
                    
                    
                    30
                    %
                    
                    
                    53
                    %
                    
                    
                    53
                    %Weighted
      average fair value per option
                    
                    $
                    0.56
                    
                    
                    $
                    2.64
                    
                    
                    $
                    2.76





No
options were exercised during the year ended December 31, 2008.




As of
December 31, 2008, total unrecognized compensation costs related to unvested
stock options was $508,621. Unvested stock options are expected to be recognized
over a period of 2.17 years.





A summary
of options transactions during the year ended December 31, 2008 is as
follows:




Number ofOptions
              
              
              Weighted
                Average
                Exercise PriceOutstanding
      at January 1, 2008
              
              -
              
              
              $
              -Granted
              
              
              290,000
              
              
              $
              6.6Exercised
              
              -
              
              
              $
              -Cancelled
              
              -
              
              
              $
              -Outstanding
      at December 31, 2008
              
              
              290,000
              
              
              $
              6.6Nonvested
      as of December 31, 2008
              
              
              225,000
              
              
              $
              6.6Option
      exercisable as of December 31, 2008:
              
              
              65,000
              
              
              $
              6.6




10.
            EQUITY
      TRANSACTIONS





In April
2007, per the request of the note holders, $21,000 of convertible promissory
notes and $5,815 of accrued interest totaled $26,815 were converted into 12,769
shares of the Company’s common stock at $0.28 per share.




In April
2007, 239,023 common shares converted from warrants and issued to the warrant
holders cashlessly.




Pursuant
to the agreement entered into between the Company and the former directors in
April 2007, the Company directly issued 40,000 common shares to the former
directors as compensation. The related expense $166,230 was recorded based on
the average stock price during the period from February to April
2007.








F-20





CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008


10.
            EQUITY
      TRANSACTIONS - Continued





On May
14, 2007, the Company completed the reverse acquisition transaction with
Cabowise whereby the Company issued to the shareholders of Cabowise 10,841,492
shares of the Company’s common stock in exchange for all of the issued and
outstanding capital stock of Cabowise. Cabowise thereby became the Company’s
wholly-owned subsidiary and the former shareholders of Cabowise became the
Company’s controlling stockholders.  The exchange of shares was
accounted for as a reverse acquisition under the purchase method of accounting
since the former shareholders of PKU obtained control of the consolidated
entity. Accordingly, the merger of the two companies has been recorded as a
recapitalization of PKU, with PKU being treated as the continuing
entity.





On May
14, 2007, the Company issued and sold 1,777,778 shares to certain accredited
investors for a cash price of $1.80 per share and a total amount of $3,200,000
pursuant to a private placement completed by the Company.





On May
14, 2007, the Company issued 13,889 shares of its common stock (approximately
$25,000) to Thelen Reid Brown Raysman & Steiner LLP for their legal services
in connection with the share exchange and private placement
transaction.





On May
14, 2007, the Company issued to the placement agent, Antaeus Capital, Inc., a
seven-year warrant to purchase 277,778 shares of our common stock at an exercise
price of $1.80. The Company used Black-Scholes option pricing model to determine
the fair value of the stock warrants on the grant date. The fair value was at
$3.98 per share resulting in a share-based compensation totaling
$1,104,166.





Total
transaction costs of $1,492,361, including legal, accounting and investment
banking fees, etc., were charged directly to equity as a reduction from the cash
consideration received for the newly-issued common stock.





Effect of
subsidiary equity transactions was calculated under the provisions of the
Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin Topic
5H (“SAB Topic 5H”) and relates to the issuance of securities of a
non-wholly owned subsidiary. The difference between the Company’s book value
investment in PKU immediately prior to the transaction and its book value
investment in PKU immediately following the transaction for the years ended
December 31, 2008 and 2007 amounted to $329,266 and $323,247,
respectively.





On July
17, 2008, the Company issued and sold 2,586,207 shares to certain accredited
investors for a cash price of $5.80 per share and a total amount of $15,000,000
pursuant to a private placement completed by the Company.





11.
            INCOME
      TAXES




The
Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes,on January 1, 2007. As a result of the implementation of
Interpretation 48, the Company recognized no increases or decreases in the total
amounts of previously unrecognized tax benefits.  The Company had no
unrecognized tax benefits as of December 31, 2007 or December 31,
2008.  The Company did not incur any interest and penalties related to
potential underpaid income tax expenses and also believed that the adoption of
FIN 48 does not have a significant impact on the unrecognized tax benefits
during the year ended December 31, 2008.





The
Company, through its subsidiaries, is governed by the Income Tax Laws of the
PRC. Operations in the United States of America have incurred net accumulated
operating losses of $3,300,000 as of December 31, 2008 for income tax purposes.
However, a hundred percent allowance has been created on the deferred tax asset
of $1,500,000 due to uncertainty of its realization.




F -
21





CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008




11.
            INCOME
      TAXES - Continued




For the
year ended December 31, 2008, income tax expenses were as follows:




Years Ended December 31,2008
                                                              
                                                              2007Domestic
                                                              
                                                              Foreign
                                                              
                                                              Domestic
                                                              
                                                              ForeignFederal
                                                              
                                                              State
                                                              
                                                              China
                                                              
                                                              Federal
                                                              
                                                              State
                                                              
                                                              ChinaCurrent
                                                              
                                                              
                                                              
                                                              
                                                              $
                                                              5,201
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              $
                                                              -Deferred
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              57,745
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              450,606$
                                                              62,946
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              $
                                                              450,606




PKU,
Zhangcheng Media, Xinjiang Zhangcheng, China TranWiseway, and Dajian Zhitong are
charged at the tax rate at 25% on the net income for PRC income tax purpose
under the new Enterprise Tax Law in 2008. Beijing Tian Hao and Beijing
Zhangcheng qualify as “new or high-technology enterprise” located in High-Tech
Zones in Beijing, and are entitled to tax exemptions or preferential tax rates
on the net income for PRC income tax purposes in 2008. Shanghai Yootu is subject
to a special rate at 2.5% of its taxable revenue in 2008.




The
Company recognizes deferred tax assets and liabilities for temporary differences
between the financial reporting and tax bases of its assets and liabilities.
Deferred assets are reduced by a valuation allowance when deemed
appropriate.




The tax
effects of existing temporary differences that give rise to significant portions
of deferred tax assets at December 31, 2008 and 2007 were as
follows:




Deferred Tax AssetsNet operating loss
      carryforwards
                                        
                                        
                                        Valuationallowance
                                        
                                        
                                        Net deferred taxassetsDecember 31, 2008Foreign:In
      RMB
                                        
                                        ¥
                                        1,443,132
                                        
                                        
                                        ¥
                                        -
                                        
                                        
                                        ¥
                                        1,443,132Exchange
      rate
                                        
                                        
                                        0.1467
                                        
                                        
                                        
                                        0.1467In
      USD
                                        
                                        $
                                        211,708
                                        
                                        
                                        
                                        
                                        
                                        
                                        $
                                        211,708Domestic
      :In
      USD
                                        
                                        $
                                        1,500,000
                                        
                                        
                                        $
                                        (1,500,000
                                        )
                                        
                                        $
                                        -December 31, 2007Foreign:In
      RMB
                                        
                                        ¥
                                        1,828,361
                                        
                                        
                                        ¥
                                        -
                                        
                                        
                                        ¥
                                        1,828,361Exchange
      rate
                                        
                                        
                                        0.1371
                                        
                                        
                                        
                                        0.1371In
      USD
                                        
                                        $
                                        250,668
                                        
                                        
                                        
                                        
                                        
                                        
                                        $
                                        250,668Domestic
      :In
      USD
                                        
                                        $
                                        1,300,000
                                        
                                        
                                        $
                                        (1,300,000
                                        )
                                        
                                        $
                                        -




F -
22




CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008




12.
            INCOME
      PER SHARE




The
Company calculates its basic and diluted earnings per share in accordance with
SFAS No. 128, “Earnings Per Share”. Basic earnings per share is calculated by
dividing net income by the weighted average number of common shares outstanding
for the period. Diluted earnings per share is calculated by adjusting the
weighted average outstanding shares to assume conversion of all potentially
dilutive warrants and options include nonvested stock granted to employees. The
Company uses the treasury stock method to reflect the potential dilutive effect
of the unvested stock options and unexercised warrants. In calculating the
number of dilutive shares outstanding, the shares of common stock underlying
unvested stock options are assumed to have been delivered on the grant
date.




Year ended December 31,2008
                                  
                                  
                                  2007Net
      income, as reported
                                  
                                  $
                                  11,090,477
                                  
                                  
                                  $
                                  4,421,081Basic
      earnings per share:Basic
      weighted average share outstanding
                                  
                                  
                                  20,678,693
                                  
                                  
                                  
                                  15,520,661Basic
      earnings per common share
                                  
                                  $
                                  0.54
                                  
                                  
                                  $
                                  0.28Diluted
      earnings per share:Basic
      weighted average share outstanding
                                  
                                  
                                  20,678,693
                                  
                                  
                                  
                                  15,520,661Effect
      of dilutive stock options and warrants
                                  
                                  
                                  205,258
                                  
                                  
                                  
                                  177,778Diluted
      weighted average shares outstanding
                                  
                                  
                                  20,883,951
                                  
                                  
                                  
                                  15,698,439Diluted
      earnings per common share
                                  
                                  $
                                  0.53
                                  
                                  
                                  $
                                  0.28




13.
            COMPENSATED
      ABSENCES




Employees
earn annual vacation leave at the rate of seven (7) days per year for the first
year. Upon completion of the first year of employment, employees earn one (1)
additional day for each additional year. At termination, employees are paid for
any accumulated annual vacation leave. As of December 31, 2008, vacation
liability existed in the amount of $0.




14.
            RELATED-PARTY
      TRANSACTIONS




Due
to Related Parties




During
2008, China TranWiseway had an outstanding loan in the amount of RMB 1,000,000,
or $146,700, from its shareholder Beijing Marine Communication & Navigation
Company for general working capital needs. The loan has been paid off as of
December 31, 2008.




During
2008, Shanghai Yootu borrowed from its former shareholder in the aggregated
amount of RMB 3,064,424, or $449,551 for general working capital needs. The
borrowings do not bear interest and are payable on demand.




During
2008, Dajian Zhitong borrowed from two of its individual shareholders in the
aggregated amount of RMB 538,065, or $78,934 for general working capital needs.
The borrowings do not bear interest and are payable on demand.




F -
23




CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





15.
            CONCENTRATION





a.      Cash





The
Company maintains cash in two commercial banks located in California. Up to
$250,000 of the balance in each bank was insured by the U.S. Federal Deposit
Insurance Corporation (FDIC). As of December 31, 2008, uninsured balances
totaled $1,422,809.





b.   Major
Customers





The
Company had 1 and 2 major customers that accounted for the following accounts
receivable and sales during the fiscal years ended December 31, 2008 and 2007,
respectively:





Years Ended December 31,2008
                          
                          
                          2007Revenue:-Customer
      A
                          
                          $
                          3,044,547
                          
                          
                          $
                          1,114,932-Customer
      B
                          
                          
                          
                          
                          
                          
                          1,693,276-Customer
      C
                          
                          
                          
                          
                          
                          
                          1,337,042Accounts Receivable:-Customer
      A
                          
                          $
                          -
                          
                          
                          
                          499,603-Customer
      B
                          
                          
                          
                          
                          
                          
                          --Customer
      C
                          
                          
                          
                          
                          
                          
                          428,633




16.
              OTHER
      COMPREHENSIVE INCOME




Balances
of related after-tax components comprising accumulated other comprehensive
income, included in stockholders' equity, at December 31, 2008 was as
follows:




Foreign CurrencyTranslation Adjustment
                                  
                                  
                                  Accumulated OtherComprehensive IncomeBalance
      at January 1, 2007
                                  
                                  $
                                  214,770
                                  
                                  
                                  $
                                  214,770Change
      for the year ended December 31, 2007
                                  
                                  
                                  672,414
                                  
                                  
                                  
                                  672,414Balance
      at January 1, 2008
                                  
                                  
                                  887,184
                                  
                                  
                                  
                                  887,184Change
      for the year ended December 31, 2008
                                  
                                  
                                  1,612,709
                                  
                                  
                                  
                                  1,612,709Balance
      at December 31, 2008
                                  
                                  $
                                  2,499,893
                                  
                                  
                                  $
                                  2,499,893




17.
            SEGMENT
      INFORMATION





SFAS 131,
“Disclosures about Segments of an
Enterprise and Related Information”requires companies to
report information about operating segment in interim and annual financial
statements. It also requires segment disclosures about products and services
geographic and major customers. The Company has determined that it does not have
any separately reportable operating segment.




F -
24




CHINA
TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





18. COMMITMENTS
AND CONTINGENCIES





(1)
Operating Lease





PKU and
its subsidiaries rent offices under several operating leases. Rent expenses for
these offices totaled $269,011 for the year ended December 31, 2008. The
aggregate future minimum payments under these lease agreements over one year are
as follows:





Year
      ending December 31,
                              
                              Lease Commitments2009
                              
                              $
                              346,6162010
                              
                              
                              297,1802011
                              
                              
                              28,082Total
                              
                              $
                              671,878





(2)
Acquisition of Dajian Zhitong





On
September 16, 2008, Zhangcheng Media, the Company’s indirectly-owned subsidiary,
entered into equity transfer agreements with shareholders of Dajian Zhitong.
Pursuant to the agreements,  Zhangcheng Media acquired 85% ownership
of Dajian Zhitong from three of the shareholders for a cash price of RMB
1,980,000 (approximately $290,000). Included in the price was assumption of
Dajian Zhitong's liabilities totaling RMB 1,639,518. On October 13, a
supplemental agreement to the aforementioned agreements was entered. Pursuant to
the agreement, Zhangcheng Media will not pay the RMB 1,980,000 to the three
shareholders nor assume Dajian Zhitong’s liabilities. Instead, it will make a
cash contribution of RMB 9,000,000 directly to Dajian Zhitong. Other terms in
the original equity transfer agreements were unaffected. As of December 31,
2008, RMB 4,000,000 of the RMB 9,000,000 contractual capital contribution has
been remitted to Dajian Zhitong.





(3)
Acquisition of Shanghai Yootu





On
October 1, 2008, PKU, the Company’s indirectly-owned subsidiary, entered into
equity transfer agreements with shareholders of Shanghai Yootu. Pursuant to the
agreement, PKU acquired 100% ownership of Shanghai Yootu  from six
individual shareholders. Under the terms of the Equity Transfer Agreement, PKU
will make the payments in three installments to the Transferors. The initial
cash payment of RMB 8.8 million (approximately $1,300,000) was made in 2008. The
second payment, consisting of 50% in cash and 50% in the Company’s common stock
aggregately equal to twice Shanghai Yootu’s 2009 net income, will be made by the
later of (1) January 1, 2010 or (2) the completion of the audit of financial
statements of Shanghai Yootu for the year ended December 31, 2009. The final
payment, consisting of 50% in cash and 50% in the Company’s common stock
aggregately equal to three times Shanghai Yootu’s 2010 net income, will be made
by the later of (1) January 1, 2011 or (2) the completion of the audit of
financial statements of Shanghai Yootu for the year ended December 31,
2010.





19. SUBSEQUENT
EVENTS





On
February 3, 2009, the Company, through its indirect Chinese subsidiaries,
Oriental Intra-Asia and PKU, entered into a series of equity transfer agreements
with China TransInfo Technology Group Co., Ltd., or  Group Company, a
company incorporated under Chinese law, pursuant to which the Company
transferred all of its indirect equity interests in PKU and PKU's subsidiaries
to the Group Company. The main purpose of  the restructuring is to
allow the Company to engage in three new business segments, including online
services, taxi advertising, and security and surveillance related business in
China in which companies with foreign ownership, like the Company and its
subsidiaries, are either prohibited or restricted from operating under the
current applicable Chinese laws and regulations.  Through the
contractual or variable interest entity, or VIE arrangements, the Company
maintains substantial control over the VIE Entities' daily operations and
financial affairs, election of their senior executives and all matters requiring
shareholder approval. Furthermore, as the primary beneficiary of the VIE
Entities, the Company is entitled to consolidate the financial results of the
VIE Entities in its own consolidated financial statements under FASB
Interpretation No. 46R "Consolidation of Variable Interest Entities" ("FIN
46R").


F -
25