UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10−Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2011

[  ] 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)

9th Floor, Vision Building,
No. 39 Xueyuanlu, Haidian District,
Beijing, China 100191
(Address of principal executive offices, Zip Code)

(86) 10-51691999
(Registrant’s telephone number, including area code)

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

Yes [X]     No [  ] 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [  ]     No [  ] 

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

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

Yes [  ]     No [X]

The number of shares outstanding of each of the issuer’s classes of common equity, as of May 11, 2011 is as follows:

TABLE OF CONTENTS

PART I.
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets

See notes to unaudited condensed consolidated financial statements.

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CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)

See notes to unaudited condensed consolidated financial statements.

2

CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)

See notes to unaudited condensed consolidated financial statements. 

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CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

The Company’s primary focus is on providing end-to-end ITS solutions and related services to the transportation industry. Our major products and services include:

Intelligent Transportation System

• Transportation Planning Information System
• Electronic Toll Collection(ETC)
• Passenger Flow Statistic, Detecting and Analysis System (TransPLE)
• Traffic Information Integration and Exchange Platform
• Traffic Emergency Command Center
• Transportation Hub Comprehensive Management Information System
• Intelligent Traffic Management Platform
• Intelligent Parking System
• Traffic Flow Surveying Solutions
• GIS-T (Transportation) Middleware
• Highway Electronics & Machinery (E&M) System Solution
• UNISITS Highway Lighting and Energy Saving Product (UNIS-LCS)
• UNISITS Weigh-in-Motion System

Commercial Vehicle ITS plus LBS

• Commercial Vehicles Monitoring and Public Service Platform
• Commercial Vehicles Comprehensive Information Service Operation Platform
• Commercial Vehicles Terminal Products
• Taxi LED Advertisement Dynamic Display System
• Taxi LED GPS Monitoring and Coordinating System

Other Vehicle and Consumer ITS Applications

• Palmcity Telematics Service Platform
• Palmcity Real-time Traffic Information Terminal Software
• Plamcity Smart Phone Public Transport Information Service System
• Palmcity Website (http://www.palmcity.cn)
• Auto Energy-saving Analysis Service System
• D-TIPS Dynamic Transportation Information Processing and Prediction Service System

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

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CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

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CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

Revenue Recognition

The Company recognizes revenue in accordance with ASC 605, Revenue Recognition, when persuasive evidence of an arrangement exists, the price is fixed or determinable, collection is reasonably assured and delivery of products has occurred or services have been rendered.

The Company’s revenue of service fees are primarily fixed price contracts. Revenue on eligible fixed price contracts is recognized on the basis of the estimated percentage-of-completion within the scope of ASC 605 and is consistently applied for all fixed price contracts. Such contracts include services provided for software development projects, IT outsourcing and solutions, system integration, and network integration services at fixed price arrangements with its customers. Progress towards completion is typically measured based on achievement of specified contract milestones, or other measures of progress when available, or based on costs incurred as a proportion of estimated total costs. Profits in a given period is reported at the expected profit margin to be achieved on the overall contract. This method can result in the recognition of unbilled receivables or the deferral of costs or profits on these contracts. The company did not incur any deferred costs for the three months ended March 31, 2011. Management regularly reviews project profitability and underlying estimates. Revisions to the estimates at completion are reflected in results of operations as a change in accounting estimate in the period in which the facts that give rise to the revision become known by management. Provisions for estimated losses, if any, are recognized in the period in which the loss becomes evident. The provision includes estimated costs in excess of estimated revenue and any profit margin previously recognized. Any advance payments received from its customers prior to recognition of revenue is classified as a current liability as billings in excess of costs and estimated earnings on uncompleted contracts.

For taxi media advertising revenue, the Company recognizes deferred revenue when cash is received, but the revenue has not yet been earned. The Company recognizes taxi media advertising revenue ratably over the period in which the advertisement is to be published.

The Company has very limited system maintenance and technology upgrade services for the systems/platforms that we have built for clients. In most cases, such service revenue was secured on separate contracts basis. Such service revenues are recognized ratably over the service periods.

Fair Value Measurements

The carrying value of cash, accounts receivable, other current liabilities, accounts payable, accrued expenses and other current liabilities approximate the fair value of these instruments due to their short-term nature.

Income Taxes

The Company adopted ASC 740-10-25 on January 1, 2007, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company did not recognize any additional liabilities for uncertain tax positions as a result of the implementation of ASC 740-10-25.

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CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

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CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

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

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CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

On October 19, 2010, the Group Company entered into a registered capital contribution agreement with Beijing Shiji Yingli Science and Technology Co., Ltd. (“Shiji Yingli”) whereby Shiji Yingli agreed to contribute RMB 9.6 million (approximately $1.4 million) in cash and RMB 44.6 million (approximately $6.6 million) in intangible assets (mostly technology and intellectual property owned by Shiji Yingli) into the Group Company’s wholly owned subsidiary, Beijing Zhangcheng in exchange for a 49% equity interest in Beijing Zhangcheng. Following this transaction, the Group Company will retain a 51% majority ownership of Beijing Zhangcheng while Shiji Yingli will own the remaining 49% equity interest. The capital increase was completed by the end of March 2011.

On October 21, 2010, the Group Company entered into a registered capital contribution agreement with Beijing Marine Communication & Information Co., Ltd. (“Beijing Marine”) and Zhongyuan Credit Guarantee Co., Ltd.(“Zhongyuan Credit”) whereby Zhongyuan Credit agreed to contribute RMB 30 million (approximately $4.38 million) in cash into the Group Company’s majority-owned subsidiary, China TranWiseway in exchange for a 30% equity interest in China TranWiseway. Following this transaction, the Group Company acquired a 55% majority ownership of China TranWiseway while Beijing Marine and Zhongyuan Credit own 15% and 30% equity interest in China TranWiseway, respectively. The capital increase was completed by the end of March 2011.

Effect of subsidiary equity transaction was calculated under the provision of the ASC 810-10-45 that relates to the issuance of securities of a non-wholly owned subsidiary. Therefore, the Company recognized $2,632,894 and $4,511,974, respectively, increase in non-controlling interest in Subsidiaries China TranWiseway and Beijing Zhangcheng and corresponding increase in additional paid-in capital for the three months ended March 31, 2011.

On March 22, 2010, the Company and the Group Company entered into equity transfer agreements (“Equity Transfer Agreements”) with several individual shareholders (“Transferors”) of UNISITS, pursuant to which the Group Company acquired 30.85% equity interest in UNISITS from the Transferors. Pursuant to the Equity Transfer Agreements, the Group Company purchased approximately 16.23 million shares of UNISITS from the Transferors in exchange for RMB 4.41 million (approximately US$0.65 million) in cash (“Cash Consideration”), 40% of which is payable within seven days after the effective date of the Equity Transfer Agreements, and approximately 1.16 million shares of the Company common stock, which were issued within 30 days of the effective date of the Equity Transfer Agreements. The Equity Transfer Agreements contain “make good” provisions, under which the Transferors agreed to deposit 697,162 shares (60% of total common stock consideration) of the Company’s common stock with an escrow agent designated by the Group Company that the Transferors will receive as partial consideration for the acquisition. Specifically, if UNISITS’s 2010 after-tax net income under Chinese GAAP is less than RMB 37.50 million (approximately US$5.50 million) or its 2011 after-tax net income under Chinese GAAP is less than RMB 46.88 million (approximately US$6.86 million), 50% of the shares of the Company’s common stock deposited by the Transferors in escrow will be returned to the Company for cancellation for each applicable year. In addition, for each applicable year as described above, the Group Company will not be required to pay the remainder of the Cash Consideration, which represents RMB 1.323 million (approximately US$0.19 million), or 30% of the total Cash Consideration, per year if UNISITS fails to meet the respective performance targets. On January 16, 2011, a PRC statutory audit report for UNISITS for the years ended December 31, 2010 and 2009 was issued by UNISITS’s local accounting firm with an unqualified opinion, in which the net income of UNISITS for the year ended December 31, 2010 exceeded the RMB 37.5 million performance target set forth in the Equity Transfer Agreements. A cash balance of RMB 1.323 million was paid on March 29, 2011 and 348,519 shares of the Company’s common stock were released.

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CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

Equity and cost investments in affiliates as of March 31, 2011 consisted of the following:

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CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

The increase of intangible assets was mainly due to the registered capital contribution of RMB 44.6 million (approximately $6.6 million) in Beijing Zhangcheng at the end of March of 2011.

Estimated future intangible amortization as of December 31, 2010 for each of the next five years is as follows:

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CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

Stock Options

The Company granted the following stock options during the three-month ended March 31, 2011:

On January 3, 2011, the Company entered into a stock option agreement with the CFO, Mr. Rong Zhang. Under the terms of the stock option agreement, the Company granted the options to Mr. Zhang to purchase 504,901 shares of common stock of the Company at an exercise price of $4.85 per share, which was the closing price per share of the Company’s common stock as reported on the NASDAQ on such date. The option has a term of five years and expires on January 3, 2016. The options vest in equal installments on a quarterly basis over a four-year period beginning on January 3, 2011.

On January 26, 2011, the Company entered into a stock option agreement with Mr. Shan Qu. Under the terms of the stock option agreement, the Company agreed to grant a stock option to Mr. Qu for the purchase of 300,000 shares of common stock of the Company at an exercise price of $4.82 per share, which was the closing price per share of the Company’s common stock as reported on the NASDAQ on such date. The option has a term of five years and expires on January 26, 2016. The option will vest in four equal installments on each anniversary of the vesting commencement date and will only vest if Mr. Qu achieves above 80% performance goals determined by the Company at the beginning of each fiscal year.

The Company recorded compensation expense of $310,538 and $420,845 during the three months ended March 31, 2011 and 2010, respectively, in connection with the stock options disclosed above.

The Company estimated fair value of the stock options using a Black-Scholes option pricing valuation model, consistent with the provisions of ASC 718, Compensation- Stock Compensation. Key inputs and assumptions used to estimate the fair value of stock options include the grant price of the award, the expected option term, volatility of the Company’s stock, the risk-free rate and the Company’s dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by grantees, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company.

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

A summary of stock options transactions during the three months ended March 31, 2011 is as follows:

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CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $4.62 and $4.74 as of March 31, 2011 and December 31, 2010, respectively. No options were exercised during the three months ended March 31, 2011.

Unvested share awards

The following table sets forth the details of the Company’s unvested share awards activity for the three months ended March 31, 2011:

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CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

Hebei TranWiseway, Hunan TranWiseway, Guizhou TranWiseway, PKU Chinafront Chengdu Branch, PKU Chinafront Shanxi Branch, Chongqing PKU Chinafront, Shanghai PKU Chinafront, Chongqing Jiaokai, Qianfang Hongxin, Xinjiang Zhangcheng, and Dajian Zhitong are subject to a tax rate of 25% on the taxable income for PRC income tax purposes under the new EIT Law in 2011. Each of PKU Chinafront, China TranWiseway, UNISITS, Beijing UNISITS, and Hangzhou UNISITS is qualify as a “new or high-technology enterprise” and is subject to a tax rate of 15% on the taxable income for PRC income tax purposes in 2011. Each of Beijing Tian Hao, Beijing Zhangcheng and Shanghai Yootu, Beijing Zhangcheng Media and the Group Company qualifies as a “software enterprise” located in Beijing and Shanghai, and is entitled to tax exemptions or preferential tax rates on the taxable income for PRC income tax purposes in 2011. Henan UNISITS is subject to a special rate of 2.5% for its taxable revenue in 2011.

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

The tax effects of existing temporary differences that give rise to significant portions of deferred tax assets at March 31, 2011 and December 31, 2010 were as follows:

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CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Special Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q, including the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that are based on the beliefs of our management, and involve risks and uncertainties, as well as assumptions, that, if they ever materialize or prove incorrect, could cause actual results to differ materially from those expressed or implied by such forward-looking statements. The words “believe,” “expect,” “anticipate,” “project,” “targets,” “optimistic,” “intend,” “aim,” “will” or similar expressions are intended to identify forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements regarding new and existing products, technologies and opportunities; statements regarding market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; uncertainties related to conducting business in China; and any statements of belief or intention. As such, they are subject to risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward looking statements. Such risks and uncertainties include any of the factors and risks mentioned in the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2010 and subsequent SEC filings, and any statements of assumptions underlying any of the foregoing. All forward-looking statements included in this report are based on information available to us on the date of this report. We assume no obligation and do not intend to update these forward-looking statements, except as required by law.

Certain Terms

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

• “BVI” refers to the British Virgin Islands;
• “China,” “Chinese” and “PRC” refer to the People’s Republic of China and do not include Taiwan and special administrative regions of Hong Kong and Macao;
• “China TransInfo,” “the Company,” “we,” “us,” and “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 VIE;
• “Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
• “RMB” refers to Renminbi, the legal currency of China;
• “SEC” refers to the United States Securities and Exchange Commission;
• “Securities Act” refers to the Securities Act of 1933, as amended;
• “U.S. dollar,” “$” and “US$” refer to the legal currency of the United States; and
• “VIE” means our consolidated variable interest entities, including China TransInfo Technology Group Co., Ltd. and its subsidiaries as depicted in our organization chart included in our Annual Report on Form 10-K for the year ended December 31, 2010.

The following discussion and analysis of our financial condition and results of operations includes information with respect to our plans and strategies for our business and should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes included herein and our consolidated financial statements and related notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Form 10-K for the year ended December 31, 2010.

Overview of Our Business

We are a leading provider of end-to-end intelligent transportation systems (“ITS”) and related comprehensive technology solutions servicing the transportation industry in China. Our goal is to become the largest provider of intelligent transportation system products and related comprehensive technology solutions in China, as well as a major operator and provider of value-added ITS and location based services (“LBS”) to commercial clients and consumers in China. Substantially all of our operations are conducted through our VIE that are PRC domestic companies owned principally or entirely by our PRC affiliates. Through our VIE, we are involved in developing multiple applications in highway ITS, urban ITS, commercial vehicles ITS plus LBS, and to a lesser degree, in digital city, and land and resource filling systems based on Geographic Information Systems, technologies which are used to service both the public and private sector.

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Our primary focus is on providing end-to-end ITS solutions and related services to the transportation industry. We also offer comprehensive solutions for transportation oriented GIS, encompassing transportation planning, design, construction, maintenance and operation.

First Quarter Financial Performance Highlights

We continued to experience strong demand for our products and services during the first quarter of 2011, which resulted in sustained growth in our revenues. The transportation information industry in China is experiencing a rapid and continued development along with a sustained increase in the Chinese government and public demand for advanced transportation information products and services to support more effective and efficient transportation networks within China. This trend is supported by the growing amount of governmental spending in the transportation sector. We believe this trend will continue to result in the growth in sales of our transportation products and services.

The following are some financial highlights for the first quarter of 2011:

• Net sales – Our net sales were approximately $36.50 million for the first quarter of 2011, an increase of 46.66% for the same quarter of the previous year.
• Gross Margin – Gross margin was 28.47% for the first quarter of 2011, as compared to 34.29% for the same period in 2010.
• Operating Profit – Operating profit was approximately $4.07 million for the first quarter of 2011, an increase of 11.08% from $3.67 million for the same quarter of the previous year.
• Net Income – Net income was approximately $2.97 million for the first quarter of 2011, an increase of 68.69% from $1.76 million for the same quarter of the previous year.

Critical Accounting Estimates

As discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2010, we consider our estimates on revenue recognition, vendor allowances, amortization of intangibles, and inventory valuation to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements. There have been no significant changes to these estimates in the three months ended March 31, 2011.

Recently Issued Accounting Guidance

See Note 2 to condensed consolidated financial statements included in Item 1, Financial Information, of this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010

The following table sets forth selected items from our unaudited condensed consolidated statements of income by dollar and as a percentage of our net sales for the periods indicated:

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Net Sales – Net sales increased by $11.61 million, or 46.66%, to $36.50 million for the three months ended March 31, 2011, from $24.89 million during the same period of 2010. Approximately 91.90% of this increase is attributable to the increase of our Transportation business in the first quarter of 2011, which increased approximately 43.61% as compared to the same period of 2010. Such an increase predominantly resulted from the successful execution of the Company’s major businesses following its shift into the transportation business in late 2007, and aided by the rapidly developing market opportunities in the transportation information sector in China.

The following table illustrates the revenues from the major 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.

Gross Profit – Our gross profit increased approximately $1.86 million, or 21.80%, to approximately $10.39 million for the three months ended March 31, 2011, from approximately $8.53 million during the same period of 2010. Our gross profit increase was mainly attributable to the increase of sales during the three months ended March 31, 2011. However, our gross profit increase underperformed our revenue increase from the same period of 2010 to 2011 and our gross profit as a percentage of net sales decreased 5.82% from 34.29% during the same period of 2010 to 28.47% for the three months ended March 31, 2011. This decrease was mainly due to our continuous expansion into ITS market since the acquisition of UNISITS, which resulted in a relatively lower gross margin on average than that of the Company in the same period of 2010.

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Total Operating Expenses – Majority of our services and products are sold to the domestic Chinese 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 non-bid basis. We are often invited to bid on contracts through our professional relationships and are awarded recurring businesses. Historically, we did not incur high cost in our sales and marketing activities. We promoted our products through developments of professional contacts with various agencies and municipalities and through participation in industry trade exhibitions.

Our marketing expenses therefore were relatively low in comparison to our competitors who do not have performance record and brand recognition or well-established government contacts. Since 2010, we have enhanced our marketing efforts by organizing various industry trade exhibitions and conferences in order to further promote our corporate image and brand recognition within the transportation information industry in China.

Total operating expenses increased by $1.45 million, or 29.86%, to $6.32 million for the three months ended March 31, 2011, from $4.87 million during the same period of 2010. The increase is due to the following:

• Our selling expenses including sales representative commissions, promotion fees and marketing expenses, increased approximately $0.06 million, or 8.28%, to $0.82 million for the three months ended March 31, 2011, from $0.76 million during the same period of 2010. As a percentage of revenues, selling expenses decreased to 2.25% for the three months ended March 31, 2011, from 3.05% during the same period of 2010. The increase of selling expenses was mainly attributable to our expanded operations and increased sales volume as well as the enhanced marketing activities for the three months ended March 31, 2011. The decrease in selling expenses as a percentage of revenue for the three months ended March 31, 2011 is mainly attributed to the improvement in efficiency of our sales and marketing function.
• Our general and administrative expenses were approximately $5.50 million (15.07% of total sales) and approximately $4.11 million (16.51% of total sales) for the three months ended March 31, 2011 and 2010, respectively. The increase of administrative expenses was mainly attributable to the increase of staffing and related labor costs, as well as the increase of business taxes along with our expanded operations and increased sales volume.

Income Taxes – For the three months ended March 31, 2011, we recognized income tax expenses of $0.50 million and an effective tax rate of 12.13% while in the same period of 2010, we recognized income tax expenses of $0.38 million and an effective tax rate of 10.53% . The increase in the income tax expenses mainly resulted from the increased taxable income due to the increase of sales volume as well as more profits generated from UNISITS (which has a relatively higher effective tax rate) for the three months ended March 31, 2011.

Liquidity and Capital Resources

Our principal liquidity requirements are for working capital, capital expenditures and cash dividends. We fund our liquidity requirements primarily through cash on hand, cash flow from operations and borrowings from our revolving credit facility. We believe our cash on hand, future funds from operations and borrowings from our revolving credit facility will be sufficient to fund our cash requirements for at least the next twelve months. There is no assurance, however, that we will be able to generate sufficient cash flow or that we will be able to maintain our ability to borrow under our revolving credit facility.

As of March 31, 2011, we had cash and cash equivalents (excluding restricted cash) of approximately $25.05 million and restricted cash of approximately $10.40 million. The following table provides detailed information about our net cash flow for all financial statements periods presented in this report.

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Cash Flow

Operating Activities

Net cash used in operating activities was approximately $16.31 million for the three-month period ended March 31, 2011, while for the same period of 2010, we had approximately $10.22 million net cash used in operating activities. Such a change in net cash used in operating activities was primarily attributable to the increase of the cash used in operating activities due to our increased sales volume, the decrease in net billings, that is, the difference between the billings in excess of costs and estimated earnings on uncompleted projects (when we receive payments from clients ahead of cost and earnings realization) and costs and estimated earnings in excess of billings of uncompleted projects (when our work was performed ahead of customer payments in some of our contracts per the contract payment terms), offset by an increase in net profit for the three months ended March 31, 2011 compared to the same period of 2010 .

Investing Activities

Our primary uses of cash for investing activities are payments for the acquisition of property, plant and equipment, as well as intangible assets. Net cash used in investing activities for the three-month period ended March 31, 2011 was approximately $1.37 million, which is an increase of approximately $0.69 million from net cash used in investing activities of approximately $0.68 million for the same period of 2010. The increase of the cash used in investing activities was mainly attributable to the cash used for hardware procurement related to the preparation of launching the commercial vehicle LBS business as well as an installment payment for the acquisition of 30.85% equity interest in UNISITS made during the three months ended March 31, 2011.

Financing Activities

Net cash used in financing activities for the three-month period ended March 31, 2011 was approximately $1.41 million, while for the same period of 2010 we had approximately $9.32 million net cash provided by financing activities. Such change was mainly attributable to the fact that we paid off a bank loan with the amount of $4.64 million, offset by obtaining a new bank loan in an amount of $3.04 million for the three months ended March 31, 2011. While in the same period of 2010, the cash provided by financing activities was mainly from the gross proceeds of $10 million raised in a private placement transaction.

Financing Agreements – On September 29, 2009, PKU Chinafront entered into a one-year short-term loan agreement with Huaxia Bank, Zhichunlu Branch (“Huaxia Bank”), pursuant to which Huaxia Bank agreed to loan to PKU Chinafront RMB 30 million (approximately $4.55 million) for working capital purposes. The loan had an initial annual interest rate of 5.31%, which was floating based on interest rates determined by the People’s Bank of China. Interest is to be paid on a monthly basis commencing October 20, 2009. The term of the loan was extended on September 15, 2010 for six more months. Under the terms of the loan agreement, we are subject to customary affirmative and negative covenants. The repayment of the loan may be accelerated and Huaxia Bank may demand immediate repayment of the principal and accrued interest upon the occurrence of an event of default that includes, among other things, a failure to make principal or interest payments, a failure to comply with other covenants and certain events of bankruptcy. On March 28, 2011, the total amount of the loan was repaid in full.

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On June 21, 2010, PKU Chinafront, entered into a short-term loan agreement with Bank of Beijing, Zhongguancun Branch (“Zhongguancun Branch”), pursuant to which Zhongguancun Branch agreed to loan PKU Chinafront the sum of RMB 30 million (approximately $4.58 million) as working capital. The loan has an annual interest rate based on the benchmark interest rate as of the date of the first withdrawal of the principal, with interest to be paid on a quarterly basis. The loan expires within 12 months of the date of the first withdrawal but may be renewed upon receipt of written consent from Zhongguancun Branch. Under the terms of the loan agreement, PKU Chinafront is subject to customary affirmative and negative covenants. The repayment of the loan may be accelerated and Zhongguancun Branch may demand immediate payment of the principal and accrued interests upon the occurrence of an event of default that includes, among other things, a failure to make principal or interest payments, a failure to comply with other covenants and certain events of liquidation or bankruptcy. As of March 31, 2011, a principal amount of approximately $4.58 million was outstanding.

On November 29, 2010, China TranWiseway entered into a short-term loan agreement with Zhongguancun Haidianyuan Branch of Bank of Beijing Co., Ltd. ("Haidianyuan Branch"), pursuant to which Haidianyuan Branch agreed to loan China TranWiseway the sum of RMB 30 million (approximately $4.58 million). The loan has an annual interest rate equal to 10% above the benchmark interest rate as of the date of the first withdrawal of the principal, with interest to be paid on a quarterly basis. The loan expires within 12 months after the date of the first withdrawal but may be renewed upon the written consent by Haidianyuan Branch. Under the terms of the loan agreement, China TranWiseway is subject to customary affirmative and negative covenants. The repayment of the loan may be accelerated and Haidianyuan Branch may demand immediate payment of the principal and accrued interests upon the occurrence of an event of default which includes, among other things, a failure to make principal or interest payments timely, material breach of representations and warranties by China TranWiseway, and certain events of liquidation or bankruptcy. As of March 31, 2011, a principal amount of approximately $4.58 million was outstanding.

On January 19, 2011, PKU Chinafront entered into a short-term loan agreement with Bank of Communications, Jiuxianqiao Branch, pursuant to which Bank of Communications agreed to loan PKU Chinafront the sum of RMB 20 million (approximately $3.05 million) for working capital purposes. The loan has an annual interest rate equal to 10% above the benchmark interest rate as of the actual launch day, with interests to be paid on a quarterly basis. The loan expires within 12 months after the date of the first withdrawal. As of March 31, 2011, a principal amount of approximately $3.05 million was outstanding.

Future Capital Requirements – We believe that our current cash and cash equivalents and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures for at least the next 12 months. We may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. In addition, because substantially all of our revenues are generated from our indirect PRC subsidiary, Oriental Intra-Asia Entertainment (China) Limited, or Oriental Intra-Asia, after it receives payments from our VIE under various services and other arrangements, the ability of Oriental Intra-Asia to make dividends and other payments to us is subject to the PRC dividend restrictions. Current PRC law permits payments of dividend by Oriental Intra-Asia only out of its accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Oriental Intra-Asia is also required under PRC laws and regulations to allocate at least 10% of its 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 Oriental Intra-Asia’s registered capital. Allocations to the statutory reserve fund can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. As a result, if our existing cash and amount available under existing bank loans are insufficient to meet our requirements, we may seek to sell additional equity securities, debt securities or borrow additional funds from lending institutions. We can make no assurances that financing will be available in the amounts we need or on terms acceptable to us, if at all. The sale of additional equity securities, including convertible debt securities, would dilute the interests of our current shareholders. The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial covenants that restrict our operations and our ability to pay dividends to our shareholders. If we are unable to obtain additional equity or debt financing as required, our business operations and prospects may suffer.

Off-Balance Sheet Arrangements and Contractual Obligations – Our material off-balance sheet arrangements are operating lease obligations. We excluded these items from the balance sheet in accordance with generally accepted accounting principles in the United States of America. Operating lease commitments consist principally of leases for our headquarter offices. These leases frequently include options which permit us to extend the terms beyond the initial fixed lease term. With respect to most of those leases, we intend to renegotiate those leases as they expire.

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Seasonality –Our results of operations are affected by seasonality and we typically see lower sales during the first half than the second half of a year. Such seasonality is mainly caused by governmental seasonal budgeting activities and behaviors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

Pursuant to Item 305(e) of Regulation S-K, the Company is not required to provide the information required by this Item as it is a “smaller reporting company.”

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

Our management, with the participation of our chief executive officer and chief financial officer, Mr. Shudong Xia and Mr. Rong Zhang, respectively, evaluated the effectiveness of our disclosure controls and procedures. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports, such as this report, that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, Mr. Shudong Xia and Mr. Rong Zhang concluded that as of March 31, 2011, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting.

During the fiscal quarter ended March 31, 2011, there were no changes in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. We are currently not aware of any legal proceedings or claims that would require disclosure under Item 103 of Regulation S-K. 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.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

We have not sold any unregistered equity securities during the fiscal quarter ended March 31, 2011 that were not previously disclosed in a current report on Form 8-K that was filed during that period.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. [REMOVED AND RESERVED.]

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

EXHIBITS.

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DATED: May 12, 2011

CHINA TRANSINFO TECHNOLOGY CORP.

By: /s/ Shudong Xia                                            
Shudong Xia
Chief Executive Officer
(Principal Executive Officer)

By: /s/ Rong Zhang                                             
Rong Zhang
Chief Financial Officer
(Principal Financial Officer)

EXHIBIT INDEX

* Filed herewith.