China TransInfo Technology Corp.

On July 13, 2012, these three class action complaints were consolidated into one amended class action complaint, In Re China TransInfo Technology Corp. Shareholders’ Litigation, Consolidated Case No. A-12-657022-B, filed in the Eighth Judicial District Court and against the members of the board of directors of the Company and certain other parties to the Proposed Transaction. Nevertheless, at this stage of the proceedings, management cannot opine that a favorable outcome for the Company is probable or that an unfavorable outcome to the Company is remote. There is no reasonable estimate of any impact of the outcome of the litigation or related legal fees on the financial statements can be made as of the date of this statement.

Net cash used in operating activities was approximately $14.64 million for the six-month period ended June 30, 2012, while for the same period of 2011, we had approximately $12.99 million net cash used in operating activities. The increase in cash used in operating activities was mainly attributable to the reduction in net income of $0.98 million, the increase in restricted cash of $2.56 million due to increased new contracts that require the establishment of contracts performance bonds, the change in cash flow from accounts receivable due to relatively slower collections of $0.25 million, the increase in prepaid expenses and other current assets of $4.72 million, the increase in other receivables of $4.80 million related to increased activities in bidding for new contracts, the decrease in net billings of $8.4 million, that is, the difference between costs and estimated earnings in excess of billings on uncompleted contracts (when our work was performed ahead of customer payments in some of our contracts per the contract payment terms) and billings in excess of costs and estimated earnings on uncompleted contracts (when we receive payments from clients ahead of cost and earnings realization), the decrease in accrued liabilities and other current liabilities of $0.06 million, offset by the decrease of gain on equity investments in affiliates of $0.62 million due to less net income from these affiliates, the decrease of inventories of $2.84 million and the increase of accounts payable of $16.76 million.

Net cash used in investing activities for the six-month period ended June 30, 2012 was approximately $3.22 million, which is a decrease of approximately $2.79 million from net cash used in investing activities of approximately $6.01 million for the same period of 2011. The decrease of the cash used in investing activities was mainly due to the fact that for the six months ended June 30, 2011, we made a one-time payment of $3.59 million as down payment to acquire a land use right while in the same period of 2012, we did not have such investing activity. In addition, compared with the same period of 2011, we had an increase in intangible assets related to the software development of $1.09 million in the first half of 2012.

As previously disclosed, on June 8, 2012, we entered into an Agreement and Plan of Merger (the "Merger Agreement") with TransCloud Company Limited, a Cayman Islands exempted company with limited liability and indirectly wholly owned by Mr. Shudong Xia ("Parent"), TransCloud Acquisition, Inc., a Nevada corporation and a wholly owned, direct subsidiary of Parent ("Merger Sub"). Under the Merger Agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent.

According to the Merger Agreement, at the effective time of the Merger, each outstanding share of the Company’s common stock will be converted automatically into the right to receive $5.80 in cash, without interest, excluding certain shares as provided in the Merger Agreement. The Merger remains subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, including obtaining approval of the existing stockholders of the Company.

On July 13, 2012, the above three class action complaints were consolidated into one amended class action complaint, In Re China TransInfo Technology Corp. Shareholders’ Litigation, Consolidated Case No. A-12-657022-B, filed in the Eighth Judicial District Court and against our directors and some other parties to the Proposed Transaction.