SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

¨	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)

(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 Registered
Common 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.

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).

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:

CHINA TRANSINFO TECHNOLOGY CORP.

For the Fiscal Year Ended December 31, 2008

Number		Page

PART I

ITEM 1.	BUSINESS	2

ITEM 1A.	RISK FACTORS	22

ITEM 2.	PROPERTIES	33

ITEM 3.	LEGAL PROCEEDINGS	33

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	33

PART II

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.	35

ITEM 6.	SELECTED FINANCIAL DATA	36

ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	36

ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA	46

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.	46

ITEM 9A(T).	CONTROLS AND PROCEDURES.	47

ITEM 9B.	OTHER INFORMATION.	47

PART III

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.	48

ITEM 11.	EXECUTIVE COMPENSATION	52

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.	55

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.	57

ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES.	58

PART IV

ITEM 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.

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,

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

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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 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.

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 Date

Computer Software Copyright Registered Certificate (JTLWeb V1.0)	028661	2004SR10260	09.08.2004	10.21.2004

Computer Software Copyright Registered Certificate ( Land & Resources and House Affairs Information System V1.0)	027924	2004SR09523	06.15.2004	09.29.2004

Computer Software Copyright Registered Certificate (GeoPad V1.0)	002827	2002SR2827	09.01.2002	09.24.2002

Computer Software Copyright Registered Certificate (Command System of Meeting Urgent Need for Urban Public Emergencies V1.0)	009303	2003SR4212	05.10.2003	06.9.2003

Computer Software Copyright Registered Certificate (GeoWeb V1.0)	006881	2003SR1790	09.05.2002	03.19.2003

Computer Software Copyright Registered Certificate (EnvMonitor 1.0)	004358	2002SR4358	05.18.2002	12.6.2002

Computer Software Copyright Registered Certificate (TranPlan 1.0) V1.0	003664	2002SR3664	06.18.2002	11.11.2002

Computer Software Copyright Registered Certificate ( (e-Gov.Suite 1.0) V 1.0)	000823	2002SR0823	05.23.2002	07.04.2002

Computer Software Copyright Registered Certificate (Sm@rtOA 1.0) V 1.0	000824	2002SR0824	09.28.2001	07.04.2002

Computer Software Copyright Registered Certificate (WebMap Engine) V 1.0	0009123	2001SR2190	07.08.2001	07.30.2001

Computer Software Copyright Registered Certificate (Environment Geo V 1.0)	062877	2006SR15211	11.30.2005	10.31.2006

Computer Software Copyright Registered Certificate (Environment Protection Emergency Conduct System V 1.0)	062879	2006SR15213	11.30.2005	10.31.2006

Computer Software Copyright Registered Certificate (Land and Resources Files’ Collection System V 1.0)	063008	2006SR15342	06.30.2006	11.02.2006

Computer Software Copyright Registered Certificate(Embed-3D-GIS V1.0)	071603	2007SR05608	01.30.2007	04.17.2007

Computer Software Copyright Registered Certificate(Environment Protection Emergency Conduct System V 1.0)	063509	2006SR15843	04.30.2006	11.13.2006

Computer Software Copyright Registered Certificate(Environment Information System V 1.0)	063510	2006SR15844	04.30.2006	11.13.2006

Computer Software Copyright Registered Certificate(Land and Resources Information Management System V 1.0)	063508	2006SR15842	06.30.2006	11.13.2006

Computer Software Copyright Registered Certificate(GeoWeb For Linux) V1.0	086634	2007SR20639	05.10.2007	12.24.2007

Computer Software Copyright Registered Certificate (Water Carriage Information System) V1.0	BJ10658	2008SRBJ0352	06.25.2006	02.03.2008

Computer Software Copyright Registered Certificate(Intelligent Parking Guide System) V1.0	BJ10662	2008SRBJ0356	06.30.2007	02.03.2008

Computer Software Copyright Registered Certificate(Urban Geological Information Management and Services System) V1.0	BJ10679	2008SRBJ0373	10.10.2007	02.03.2008

Computer Software Copyright Registered Certificate(Exploiter Navigation Software V1.0)	BJ10485	2008SRBJ0179	11.20.2007	01.16.2008

Computer Software Copyright Registered Certificate(Location Services Platform System V 1.0)	088919	2008SR01740	11.15.2007	01.24.2008

Computer Software Copyright Registered Certificate(Taxi Security Alarm System Certificate (V1.0)	BJ16618	2008SRBJ6312	11.22.2008	12.13.2008

Computer Software Copyright Registered Certificate(City One Card Solution Consumption Real Time Transaction System) V1.0	BJ16638	2008SRBJ6332	09.12.2008	12.13.2008

Computer Software Copyright Registered Certificate(Taxi Monitoring Management System v1.0)	BJ16626	2008SRBJ6320	11.18.2008	12.13.2008

Computer Software Copyright Registered Certificate(Taxi Calling System V1.0)	BJ16653	2008SRBJ6347	09.18.2008	12.13.2008

Computer Software Copyright Registered Certificate(Advertisement Contract Management System V1.0)	BJ16612	2008SRBJ6306	10.21.2008	12.13.2008

Computer Software Copyright Registered Certificate(Advertisement Business Information Processing System V1.0)	BJ16639	2008SRBJ6333	09.26.2008	12.13.2008

Computer Software Copyright Registered Certificate(Media Call Center Business Management System V1.0)	BJ16620	2008SRBJ6314	10.27.2008	12.13.2008

Computer Software Copyright Registered Certificate(Real Time Information Broadcasting System V1.0)	BJ16615	2008SRBJ6309	09.30.2008	12.13.2008

Computer Software Copyright Registered Certificate(Electronic Project Management System V1.0)	BJ16795	2008SRBJ6489	10.20.2008	12.13.2008

Computer Software Copyright Registered Certificate(Data Collection System V1.0)	BJ16796	2008SRBJ6490	09.18.2008	12.13.2008

Computer Software Copyright Registered Certificate(Employee Information Management System V1.0)	BJ16809	2008SRBJ6503	11.20.2008	12.13.2008

Computer Software Copyright Registered Certificate(Digitalization Assets Management System V1.0)	BJ16797	2008SRBJ6491	06.10.2008	12.13.2008

Computer Software Copyright Registered Certificate(Logistics Information System V1.0)	BJ16793	2008SRBJ6487	01.20.2008	12.13.2008

Computer Software Copyright Registered Certificate(Students Archive Management System V1.0)	BJ16808	2008SRBJ6502	12.10.2007	12.13.2008

Computer Software Copyright Registered Certificate(Product Selling Monitoring System V1.0)	BJ16792	2008SRBJ6486	01.20.2007	12.13.2008

Computer Software Copyright Registered Certificate(E-business Shopping System V1.0)	BJ16794	2008SRBJ6488	08.16.2007	12.13.2008

Computer Software Copyright Registered Certificate(Expressway ETC System V1.0)	BJ16694	2008SRBJ6388	10.30.2008	12.13.2008

Computer Software Copyright Registered Certificate(GIS-T Expressway Equipment Management System V1.0)	BJ16771	2008SRBJ6465	10.21.2008	12.13.2008

Computer Software Copyright Registered Certificate(Highway Data Collection and Distribution System V1.0)	BJ16770	2008SRBJ6464	10.29.2008	12.13.2008

Computer Software Copyright Registered Certificate(Highway Transportation Indication System V1.0)	BJ16769	2008SRBJ6463	08.20.2008	12.13.2008

Computer Software Copyright Registered Certificate(Expressway Emergency Command and Monitoring System V1.0)	BJ16699	2008SRBJ6393	09.10.2008	12.13.2008

Computer Software Copyright Registered Certificate(Traffic Information Service System V1.0)	BJ16751	2008SRBJ6445	10.22.2008	12.13.2008

Computer Software Copyright Registered Certificate(Urban Intelligent Traffic Management System V1.0)	BJ16906	2008SRBJ6600	12.20.2008	12.13.2008

Computer Software Copyright Registered Certificate(Urban Traffic Information Decision-making and Analysis System V1.0)	BJ16926	2008SRBJ6620	11.18.2008	12.13.2008

Computer Software Copyright Registered Certificate(Appropriative GIS V1.0)	BJ16928	2008SRBJ6622	12.10.2007	12.13.2008

Computer Software Copyright Registered Certificate(Highway Information Total Solution and Decision-analysis System V1.0)	BJ16927	2008SRBJ6621	05.18.2007	12.13.2008

Computer Software Copyright Registered Certificate(Red Light Violation Snapshot System V1.0)	BJ16905	2008SRBJ6599	09.20.2008	12.13.2008

Computer Software Copyright Registered Certificate(Highway Vehicles Intelligent Testing and Recording System V1.0)	BJ16876	2008SRBJ6570	11.20.2007	12.13.2008

Computer Software Copyright Registered Certificate(Information Software Platform-unifying Software V1.0)	BJ16468	2008SRBJ6162	09.25.2007	12.13.2008

Computer Software Copyright Registered Certificate(Public Sanitation Quality Monitoring and Alarm System V1.0)	BJ16457	2008SRBJ6151	10.30.2008	12.13.2008

Computer Software Copyright Registered Certificate(Human Resource Management System V1.0)	BJ16428	2008SRBJ6122	10.20.2008	12.13.2008

Computer Software Copyright Registered Certificate(Local Sanitation Information Platform V1.0)	BJ16450	2008SRBJ6144	10.10.2008	12.13.2008

Computer Software Copyright Registered Certificate(Management Competition Imitation Platform V1.0)	BJ16424	2008SRBJ6118	10.14.2008	12.13.2008

Computer Software Copyright Registered Certificate(Disabled Association Job Information Management System V1.0)	BJ16473	2008SRBJ6167	09.08.2008	12.13.2008

Computer Software Copyright Registered Certificate(Message Service Platform V1.0)	BJ16423	2008SRBJ6117	09.30.2008	12.13.2008

Computer Software Copyright Registered Certificate(Telecom Value-added Service System V1.0)	BJ16422	2008SRBJ6116	10.25.2008	12.13.2008

Computer Software Copyright Registered Certificate(Emergency Command and Prevention System V1.0)	BJ16472	2008SRBJ6166	10.22.2008	12.13.2008

Computer Software Copyright Registered Certificate(Palmcity WebGIS Engine V1.0)	BJ16589	2008SRBJ6283	04.10.2008	12.13.2008

Computer Software Copyright Registered Certificate(Mobile Map Software V1.0)	BJ16591	2008SRBJ6285	05.10.2008	12.13.2008

Computer Software Copyright Registered Certificate(Multiple-source Traffic Information Integration System V1.0)	BJ16629	2008SRBJ6323	08.26.2008	12.13.2008

Computer Software Copyright Registered Certificate(Palmcity Traffic information collection System V1.0)	BJ16605	2008SRBJ6299	10.30.2008	12.13.2008

Computer Software Copyright Registered Certificate(PalmCity Floating Car Data Processing System V1.0)	BJ16628	2008SRBJ6322	05.30.2008	12.13.2008

Computer Software Copyright Registered Certificate(PalmCity Information Exchange Platform V1.0)	BJ16631	2008SRBJ6325	06.21.2008	12.13.2008

Computer Software Copyright Registered Certificate(PalmCity In-car PND Comprehensive Information System V1.0)	BJ16617	2008SRBJ6311	10.31.2007	12.13.2008

Computer Software Copyright Registered Certificate(Super GIS Data Comprehensive Integration System V1.0)	BJ16604	2008SRBJ6298	10.26.2008	12.13.2008

Computer Software Copyright Registered Certificate(Water Transportation Flow Investigation VTS System V1.0)	BJ16641	2008SRBJ6335	11.12.2008	12.13.2008

Computer Software Copyright Registered Certificate(Highway Traffic Flow Investigation Data Center V1.0)	BJ16507	2008SRBJ6201	09.30.2008	12.13.2008

Computer Software Copyright Registered Certificate(Highway Traffic Flow GIS System V1.0)	BJ16476	2008SRBJ6170	10.27.2008	12.13.2008

Computer Software Copyright Registered Certificate(Highway Traffic Flow Investigation Equipment Long-distance Monitoring Platform V1.0)	BJ16557	2008SRBJ6251	09.30.2008	12.13.2008

Computer Software Copyright Registered Certificate(Coil Traffic Flow Data Collection System V1.0)	BJ16621	2008SRBJ6315	10.28.2008	12.13.2008

Computer Software Copyright Registered Certificate(Video Traffic Flow Data Collection System V1.0)	BJ16643	2008SRBJ6337	11.20.2008	12.13.2008

Computer Software Copyright Registered Certificate(Video Traffic Flow Investigation - Digital Image Processing System V1.0)	BJ16622	2008SRBJ6316	11.06.2008	12.13.2008

Computer 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.

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.

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 Sales

1	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	%

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:

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.

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.

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.

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.

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.

Department	Number of Employees
Software Development		140
Quality Control		34
Sales and Marketing		73
Administration		63
Human Resources		8
Finance		22
Total		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.

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.

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.

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.

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.

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.

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.

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.

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.

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;

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.

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.

Name of Consenting Shareholder	Number of Shares Owned		Percentage
Karmen 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	%

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		Low

Year Ended December 31, 2008
First Quarter	$	8.30	$	6.10
Second Quarter	$	7.07	$	5.55
Third Quarter	$	6.40	$	4.25
Fourth Quarter	$	4.05	$	3.05

Year Ended December 31, 2007
First Quarter	$	5.60	$	1.05
Second Quarter	$	5.25	$	3.36
Third Quarter	$	4.55	$	2.80
Fourth 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.

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.

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			11,864,629
Cost of sales		12,867,258			5,612,372

Gross profit		16,503,205			6,252,257

Selling, general and administrative expenses		5,081,502			1,401,169	)

Operating income		11,421,703			4,851,088

Other income and (expenses)
Interest income		68,782			60,289
Interest expenses		(135,120	)		(13,968	)
Subsidy income		530,100			146,058
Decrease in fair value of warrant liability		-			64,359
Other income (expense)		32,170			160,446

Income before income taxes and minority interest		11,917,634			5,268,272

Income taxes		(62,955	)		450,606
Minority interest		(764,201	)		(396,585	)

Net income		11,090,477			4,421,081

	Years Ended December 31,
	2008			2007

As a percentage of Revenues

Revenues		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.

	Year Ended December 31, 2008		Percentage of Total Revenues			Year Ended December 31, 2007		Percentage of Total Revenues
Transportation	$	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, 2007

Salary	$	978,488	$	771,700

Hardware		5,647,874		4,053,972

Software licenses		1,494,675		250,174

Outsourcing		3,618,116		245,743

Others		332,638		290,783

Total	$	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.

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.

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.

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

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:

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.

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.

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		-		-			-		15,568
CEO, President and Chairman(2)	2007		14,110		-		-			1,750		15,860

Zhihai Mao	2008		108,112		-		181,000	(3)		-		289,112
Chief Financial Officer	2007		-		-		-			-		-

	Option Awards
Name	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 Date
Zhihai Mao		66,666	(1)		133,334	(1)		0		6.70	01/07/18

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

Name & Address of Beneficial Owner	Office, if Any	Title of Class	Amount & Nature of Beneficial Ownership(1)			Percent of Class(2)
Officers and Directors
Shudong 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		5,000
Dongyuan 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 Holder
Leguna 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	%

	2008		2007

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

Name	Age	Position

Shudong Xia	36	Chairman, CEO, President and Secretary

Zhibin Lai	35	Vice President

Zhiping Zhang	39	Vice President of Research and Development

Danxia Huang	35	Vice President of Finance, Treasurer and Director

Zhihai Mao	33	Chief Financial Officer

Jay Trien	68	Director

Zhongsu Chen	45	Director

Dan Liu	67	Director

Brandon Ho-Ping Lin	37	Director

Dongyuan Yang	55	Director

(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

Exhibit No.		Description
2.1		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].

Exhibit No.		Description
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].**
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].**

Exhibit No.		Description
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].
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].

Exhibit No.		Description
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].
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.*

Exhibit No.		Description
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.*

	China TransInfo Technology Corp.

	By:	/s/ Shudong Xia
		Shudong Xia
		Chief Executive Officer

	Date: March 25, 2009

Signature	Capacity	Date

/s/ Shudong Xia	President and Chief Executive Officer	March 25, 2009
Shudong Xia	(Principal Executive Officer)

/s/ Zhihai Mao	Chief Financial Officer (Principal Financial	March 25, 2009
Zhihai Mao	Officer and Principal Accounting Officer)

/s/ Zhibin Lai	Vice President	March 25, 2009
Zhibin Lai

/s/ Zhiping Zhang	Vice President of Research and Development	March 25, 2009
Zhiping Zhang

/s/ Danxia Huang	Vice President of Finance, Treasurer and	March 25, 2009
Danxia Huang	Director

/s/ Jay Trien	Director	March 25, 2009
Jay Trien

/s/ Zhongsu Chen	Director	March 25, 2009
Zhongsu Chen

/s/ Dan Liu	Director	March 25, 2009
Dan Liu

s/ Brandon Ho-Ping Lin	Director	March 25, 2009
Brandon Ho-Ping Lin

s/ Dongyuan Yang	Director	March 25, 2009
Dongyuan Yang

	December 31,
	2008		2007

ASSETS
Current Assets:
Cash and cash equivalents	$	16,122,464	$	6,842,238
Restricted cash		1,209,542		243,852
Accounts receivable, net		7,735,742		4,246,805
Inventory		23,775		-
Cost and estimated earnings in excess of billings on
uncompleted contracts		11,912,285		2,659,969
Prepayments		3,647,731		2,328,289
Other receivable		2,940,404		1,038,329
Deferred tax assets		211,708		250,668
Total current assets		43,803,651		17,610,150

Long-term investment		278,730		260,490

Property and equipment, net		9,874,005		3,574,722

Intangible assets, net		1,490,807		-

Goodwill		3,095,017		-

Other non-current assets		147,607		-

Total assets	$	58,689,817	$	21,445,362

	Common Stock						Additional Paid-In			Retained		Accumulated		Total
	Shares			Amount			Capital			Earnings		Gain		Equity

Balance, January 1, 2006		-		$	-		$	2,416,000		$	475,776	$	52,484	$	2,944,260
Translation adjustments													162,286		162,286
Net income for the year											2,986,890				2,986,890
Balance, January 1, 2007		-			-			2,416,000			3,462,666		214,770		6,093,436
Conversion of convertible notes		12,769			13			26,802							26,815
Issuance 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							6,315,268
Issuance of common shares		1,777,778			1,778			3,198,222							3,200,000
Issuance 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							323,247
Warrants issued for services valued at $5.0 per share								200,105							200,105
Reclassification of warrant liability								1,039,807							1,039,807
Net income for the year											4,421,081				4,421,081
Translation adjustments													672,414		672,414
Balance, January 1, 2008		19,601,107			19,601			10,905,114			7,883,747		887,184		19,695,646
Issuances of Common Stock		2,586,207			2,586			14,997,414							15,000,000
Paid Transaction Cost debit to APIC								(1,794,660	)						(1,794,660	)
Stock-based compensation								217,756							217,756
Effect of subsidiary equity transactions								329,266							329,266
Translation adjustments													1,612,709		1,612,709
Net income for the year											11,090,477				11,090,477
Balance, December 31, 2008		22,187,314		$	22,187		$	24,654,890		$	18,974,224	$	2,499,893	$	46,151,194

	2008			2007
Cash flows from operating activities:
Net income	$	11,090,477		$	4,421,081
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation and amortization expenses		200,746			41,915
Bad debt		31,571			-
Deferred income tax		55,531			450,606
Minority interest		764,201			396,585
Warrants issued for service		-			200,105
Stock-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 earnings
in excess of billings on uncompleted contracts		(8,088,233	)		(1,913,123	)
Inventory		185,993
Other current assets		234,892			(129,788	)
Decrease (Increase) in liabilities:
Accounts (notes) payable		4,471,898			261,572
Billings in excess of costs
and 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

	2008			2007
Cash flows from investing activities:
Cash from acquisitions	$	294,872		$	9,199,660
(Increase) Decrease in loan to others		-			277,297
Payment of cash to the shareholders of the
accounting acquirer		-			(2,000,000	)
(Increase) Decrease in other non-current assets		(147,489	)		12,018
Proceeds 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	)		4,252,311

Cash 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			3,200,000
Net cash provided by financing activities		16,870,614			1,049,289

Effect of foreign currency exchange translation		299,531			133,931

Net increase in cash		9,280,226			5,521,074

Cash - beginning		6,842,238			1,321,164
Cash - ending	$	16,122,464		$	6,842,238

Supplemental disclosures:
Interest paid	$	135,120		$	13,986
Income taxes paid	$	847		$	-

			Exchange
Entity	RMB		Rate		USD		Restriction
Decemer 31, 2007:
PKU	¥	1,778,640		0.1371	$	243,852	To facilitate Fund Verfication Letters
Total	¥	1,778,640			$	243,852

December 31, 2008:
PKU	¥	1,245,000		0.1467	$	182,642	To facilitate Banker's Acceptances
China TranWiseway		7,000,000		0.1467		1,026,900	To facilitate Capital Verification
Total	¥	8,245,000			$	1,209,542

Existing technology	$	174,573

Core technology		1,339,061

Less: accumulated amortization		(22,827	)

Total	$	1,490,807

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

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

	MAY 14, 2007			NOVEMBER 29, 2007

Expected volatility		203	%		148	%

Expected life (years)		7			6.46

Risk free interest rate		4.6	%		3.72	%

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

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

	Number of Options		Weighted Average Exercise Price
Outstanding at January 1, 2008	-		$	-
Granted		290,000	$	6.6
Exercised	-		$	-
Cancelled	-		$	-
Outstanding at December 31, 2008		290,000	$	6.6

Nonvested as of December 31, 2008		225,000	$	6.6
Option exercisable as of December 31, 2008:		65,000	$	6.6

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

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

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

	Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income

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

Year ending December 31,	Lease Commitments

2009	$	346,616
2010		297,180
2011		28,082
Total	$	671,878