<SEC-DOCUMENT>0001062993-14-005103.txt : 20140820
<SEC-HEADER>0001062993-14-005103.hdr.sgml : 20140820
<ACCEPTANCE-DATETIME>20140820105333
ACCESSION NUMBER:		0001062993-14-005103
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20140820
FILED AS OF DATE:		20140820
DATE AS OF CHANGE:		20140820

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			China Information Technology, Inc.
		CENTRAL INDEX KEY:			0001552670
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-PREPACKAGED SOFTWARE [7372]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			D8
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-35722
		FILM NUMBER:		141054054

	BUSINESS ADDRESS:	
		STREET 1:		21ST FLOOR, EVERBRIGHT BANK BUILDING
		STREET 2:		ZHUZILIN, FUTIAN DISTRICT
		CITY:			SHENZHEN, GUANGDONG
		STATE:			F4
		ZIP:			518040
		BUSINESS PHONE:		(86) 755-8370-8333

	MAIL ADDRESS:	
		STREET 1:		21ST FLOOR, EVERBRIGHT BANK BUILDING
		STREET 2:		ZHUZILIN, FUTIAN DISTRICT
		CITY:			SHENZHEN, GUANGDONG
		STATE:			F4
		ZIP:			518040
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>form6k.htm
<DESCRIPTION>FORM 6-K
<TEXT>



<HTML>
<HEAD>
   <TITLE> China Information Technology, Inc.: Form 6-K- Filed by newsfilecorp.com</TITLE>

</HEAD>

<BODY style="font-size:10pt;">

<HR noshade align="center" width=100% size=3 color="black">
<A name=page_1></A>
<P align=center><B><FONT size=5>UNITED STATES</FONT></B><BR><B><FONT
size=5>SECURITIES AND EXCHANGE COMMISSION </FONT></B><BR><B>WASHINGTON, D.C.
20549<BR></B><BR><B><FONT size=5>FORM 6-K </FONT></B><BR><BR><B><FONT
size=2>REPORT OF FOREIGN PRIVATE ISSUER</FONT></B><BR><B><FONT size=2>PURSUANT
TO RULE 13a-16 OR 15d-16 OF THE</FONT></B><BR><B><FONT size=2>SECURITIES
EXCHANGE ACT OF 1934 </FONT></B><BR><BR><B><FONT size=2>For the month of August,
2014 </FONT></B><BR><BR><B><FONT size=2>Commission File Number 001-35722
</FONT></B></P>
<P align=center><B><FONT size=5>CHINA INFORMATION TECHNOLOGY, INC.
</FONT></B><BR><FONT size=2>(Translation of registrant&#146;s name into English)
</FONT><BR><BR><B><FONT size=2>21<SUP>st</SUP>Floor, Everbright Bank
Building</FONT></B><B> </B><BR><B><FONT size=2>Zhuzilin, Futian District
</FONT></B><BR><B><FONT size=2>Shenzhen, Guangdong, 518040
</FONT></B><BR><B><FONT size=2>People&#146;s Republic of China </FONT></B><BR><FONT
size=2>(Address of principal executive offices) </FONT><BR></P>
<P align=justify>Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F: </P>
<P align=center>Form 20-F
[X]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Form 40-F [&nbsp;&nbsp; ] </P>
<P align=justify>Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [&nbsp;&nbsp; ] </P>
<P align=justify><B>Note</B>: Regulation S-T Rule 101(b)(1) only permits the
submission in paper of a Form 6-K if submitted solely to provide an attached
annual report to security holders. </P>
<P align=justify>Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [&nbsp;&nbsp; ] </P>
<P align=justify><B>Note: </B>Regulation S-T Rule 101(b)(7) only permits the
submission in paper of a Form 6-K if submitted to furnish a report or other
document that the registrant foreign private issuer must furnish and make public
under the laws of the jurisdiction in which the registrant is incorporated,
domiciled or legally organized (the registrant&#146;s &#147;home country&#148;), or under the
rules of the home country exchange on which the registrant&#146;s securities are
traded, as long as the report or other document is not a press release, is not
required to be and has not been distributed to the registrant&#146;s security
holders, and, if discussing a material event, has already been the subject of a
Form 6-K submission or other Commission filing on EDGAR. </P>
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noShade SIZE=5>
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<P align=justify>On August 20, 2014, China Information Technology, Inc. issued a
press release announcing its financial results for the six months ended June 30,
2014. A copy of this press release is furnished as Exhibit 99.1 hereto. </P>
<P align=justify><B>Exhibit</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left ><U>Exhibit</U> </TD>
    <TD align=left width="92%"><U>Description</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee ><a href="exhibit99-1.htm">99.1 </a> </TD>
    <TD align=left width="92%" bgColor=#eeeeee><a href="exhibit99-1.htm">Press Release dated August 20,
      2014 </a> </TD></TR></TABLE><BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_3></A>
<P align=center><B>SIGNATURES </B></P>
<P align=justify>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. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >Date: August 20, 2014 </TD>
    <TD align=left width="50%" colSpan=2><B>CHINA INFORMATION TECHNOLOGY, INC.
      </B></TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="5%" >&nbsp; </TD>
    <TD width="45%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="5%" >By: </TD>
    <TD align=left width="45%"><U>/s/ Jiang Huai
      Lin&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      </U></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="5%" >&nbsp; </TD>
    <TD align=left width="45%">Jiang Huai Lin </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="5%" >&nbsp; </TD>
    <TD align=left width="45%">Chief Executive Officer
</TD></TR></TABLE><BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_4></A>
<P align=center><B>EXHIBIT INDEX</B> </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <tr>
    <TD align=left ><U>Exhibit</U> </TD>
    <TD align=left width="92%"><U>Description</U> </TD>
  </tr>
  <tr>
    <TD align=left bgColor=#eeeeee ><a href="exhibit99-1.htm">99.1 </a> </TD>
    <TD align=left width="92%" bgColor=#eeeeee><a href="exhibit99-1.htm">Press Release dated August 20,
      2014 </a> </TD>
  </tr>
</TABLE><BR>
<HR align=center width="100%" color=black noShade SIZE=5>

</BODY>

</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>exhibit99-1.htm
<DESCRIPTION>EXHIBIT 99.1
<TEXT>

<HTML>
<HEAD>
   <TITLE>China Information Technology, Inc. - Exhibit 99.1 - Filed by newsfilecorp.com</TITLE>
</HEAD>

<BODY style="font-size:10pt;">

<HR noshade align="center" width=100% size=3 color="black">
<A name=page_1></A>
<P align=center><B>CHINA INFORMATION TECHNOLOGY, INC. <br>
ANNOUNCES FIRST HALF-YEAR 2014 RESULTS </B></P>
<P align=justify>SHENZHEN, China, August 20, 2014 - China Information
Technology, Inc. (the "Company") (Nasdaq: CNIT), a leading provider of
internet-based platforms, products and services in China, today announced its
financial results for the six month period ended June 30, 2014. </P>
<P align=justify><B>First Half-Year 201</B>4<B> Financial Highlights </B></P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P style="margin-bottom: 12">Revenue decreased 19.6% to $30.0 million compared to the first six months
  of 2013 </P>
  <LI>
  <P style="margin-bottom: 12">Gross margin increased significantly to 39.3%, up from 20.6% a year ago
</P>
  <LI>
  <P style="margin-bottom: 12">Net income attributable to the Company was $31,000, compared with a net
  loss of $50.5 million for the first six months of 2013 </P>
  <LI>
  <P style="margin-bottom: 12">Excluding non-cash items, adjusted net income increased to $1.6 million,
  from an adjusted net loss of $5.2 million for the first six months of 2013
</P>
  <LI>
  <P style="margin-bottom: 12">Fully diluted net income attributable to the Company per share was
  break-even, an increase from fully diluted net loss attributable to the
  Company per share of $1.87 for the six months ended June 30, 2013 </P>
  <LI>
  <P style="margin-bottom: 12">Excluding non-cash items, adjusted net income per share was $0.06, compared
  to an adjusted net loss per share of $0.19 for the prior year&#146;s period
  </P></LI></UL>
<P align=justify>Mr. Jiang Huai Lin, Chairman and Chief Executive Officer of the
Company, commented, &#147;Our transition to a cloud-based business model driven by
our proprietary Cloud-App-Terminal (CAT) technology is progressing well. We are
already experiencing improved margins and the revenue from our internet-based
software business which grew significantly during the period. Our Cloud Platform
is comprised of robust sector-specific applications and we will continue to
innovate and introduce new cloud-based applications to meet the growing market
demand for mobile internet and Internet-of-Things.&#148; </P>
<P align=justify>&#147;Our early-mover advantage in the vertically integrated CAT
model has paved the way for us to penetrate many sectors. This cloud-based
platform and its variety of applications enable end-users in education,
healthcare, consumer goods, property management, and community services sectors
to improve efficiencies and save costs with a one-stop online platform. Users
can manage all of their services through a single interface with one log-in,
centralized storage, one-click payment and a standardized e-Commerce shopping
cart. Our goal is to create a cross-platform, cloud-based eco-system where
users, products and services are fully integrated.&#148; </P>
<P align=justify>&#147;As we move forward with our transition and continue to
restructure our business units, we are focused on increasing market share,
posting faster growth in new business segments, producing stronger margins and
generating stronger cash-flow. We look forward to a further improved 2014.&#148; </P>
<P align=justify><B>First Half-Year 2014 Results</B> </P>
<P align=justify>The Company reported financial and operating information in the
following two segments: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(1) </TD>
    <TD>
      <P align=justify>Information Technology, or IT, segment &#151; The IT segment
      includes revenues from products and services surrounding a variety of our
      software core competencies, primarily including Geographic Information
      Systems (GIS), Digital Public Security Technology (DPST) and
      Digital Hospital Information Systems (DHIS). IT segment revenues are
      generated from the sales of software and system integration services, as
      well as hardware other than display products.</P></TD></TR></TABLE><BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_2></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(2) </TD>
    <TD>
      <P align=justify>Internet-based Technology, or IBT, segment &#151; The IBT
      segment includes revenues from products and services surrounding our
      internet-based cloud platform and applications primarily comprising of
      Cloud-based Education Platform (CEP), Information Distribution Platform
      (IDP), Online Ad Exchange Platform (OAEP), and display terminals. IBT
      segment revenues are generated from sales of hardware and total solutions
      of hardware integrated with proprietary software and content, as well as
      services.</P></TD></TR></TABLE>
<P align=justify><B><I>Revenue </I></B></P>
<P align=justify>A breakdown of revenue, percentage of revenue and percentage of
gross margin by segment is as follow: </P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD colspan="7" align=center style="BORDER-BOTTOM: #000000 1px solid" nowrap><B>Six Months Ended June 30, 2014</B>  </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="2%" nowrap>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%" nowrap>&nbsp;</TD>
    <TD colspan="7" align=center style="BORDER-BOTTOM: #000000 1px solid" nowrap><B>Six Months Ended June 30, 2013</B>  </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%" nowrap valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" nowrap valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" nowrap valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" nowrap valign="bottom"><B>% of</B> </TD>
    <TD align=left width="2%" nowrap valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" nowrap valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" nowrap valign="bottom"><B>Gross</B> </TD>
    <TD align=left width="2%" nowrap valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" nowrap valign="bottom">&nbsp;</TD>
    <TD align=left width="10%" nowrap valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" nowrap valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" nowrap valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" nowrap valign="bottom"><B>% of</B> </TD>
    <TD align=left width="2%" nowrap valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" nowrap valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" nowrap valign="bottom"><B>Gross</B> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=right
      width="10%" nowrap valign="bottom"><B>Revenue</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="2%" nowrap valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="1%" nowrap valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=right
      width="10%" nowrap valign="bottom"><B>Revenue</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="2%" nowrap valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="1%" nowrap valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=right
      width="10%" nowrap valign="bottom"><B>Margin</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="2%" nowrap valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="1%" nowrap valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=right
      width="10%" nowrap valign="bottom"><B>Revenue</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="2%" nowrap valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="1%" nowrap valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=right
      width="10%" nowrap valign="bottom"><B>Revenue</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="2%" nowrap valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="1%" nowrap valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=right
      width="10%" nowrap valign="bottom"><B>Margin</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -15pt; margin-left: 15pt">IT Business </TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">17,366,980 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">57.9% </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">44.6% </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">12,205,206 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">32.7% </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">27.4% </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15pt; margin-left: 15pt">Internet-based Business </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%" valign="bottom">12,609,188 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%" valign="bottom">42.1%    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%" valign="bottom">32.0%    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" valign="bottom">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%" valign="bottom">25,077,866 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%" valign="bottom">67.3%    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%" valign="bottom">17.3%    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -15pt; margin-left: 15pt">Total </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><B>29,976,168</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><B>100%</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><B>39.3%</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff valign="bottom"><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><B>37,283,072</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><B>100%</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><B>20.6%</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
</DIV>
<P align=justify>For the six months ended June 30, 2014, revenue was $30.0
million, compared with $37.3 million for the six months ended June 30, 2013, a
decrease of $7.3 million, or 19.6% . The change in total revenue was primarily
due to the effective optimization within the Company&#146;s internet-based business
unit by shifting from hardware sales to cloud-based software and platform
services, which resulted in significant revenue reduction but substantial gross
margin expansion. The revenue from IT business also grew from $12.2 million a
year ago to $17.4 million in the first six months of 2014, as a few large IT
infrastructure projects completed and, subsequently, the related revenue was
recognized in the period. </P>
<P align=justify>The following table shows revenue, percentage of revenue and
gross margin by category: </P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD colspan="7" align=center style="BORDER-BOTTOM: #000000 1px solid" nowrap><B>Six Months Ended June 30, 2014</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="2%" nowrap>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%" nowrap>&nbsp;</TD>
    <TD colspan="7" align=center style="BORDER-BOTTOM: #000000 1px solid" nowrap><B>Six Months Ended June 30, 2013</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%" nowrap>&nbsp; </TD>
    <TD align=left width="2%" nowrap>&nbsp;</TD>
    <TD align=left width="1%" nowrap>&nbsp;</TD>
    <TD align=right width="10%" nowrap><B>% of</B> </TD>
    <TD align=left width="2%" nowrap>&nbsp;</TD>
    <TD align=left width="1%" nowrap>&nbsp;</TD>
    <TD align=right width="10%" nowrap><B>Gross</B> </TD>
    <TD align=left width="2%" nowrap>&nbsp;</TD>
    <TD align=left width="1%" nowrap>&nbsp;</TD>
    <TD align=left width="10%" nowrap>&nbsp; </TD>
    <TD align=left width="2%" nowrap>&nbsp;</TD>
    <TD align=left width="1%" nowrap>&nbsp;</TD>
    <TD align=right width="10%" nowrap>% of </TD>
    <TD align=left width="2%" nowrap>&nbsp;</TD>
    <TD align=left width="1%" nowrap>&nbsp;</TD>
    <TD align=right width="10%" nowrap><B>Gross</B> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=right
      width="10%" nowrap><B>Revenue</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="2%" nowrap>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="1%" nowrap>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=right
      width="10%" nowrap><B>Revenue</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="2%" nowrap>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="1%" nowrap>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=right
      width="10%" nowrap><B>Margin</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="2%" nowrap>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="1%" nowrap>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=right
      width="10%" nowrap><B>Revenue</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="2%" nowrap>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="1%" nowrap>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=right
      width="10%" nowrap><B>Revenue</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="2%" nowrap>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="1%" nowrap>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=right
      width="10%" nowrap><B>Margin</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; " align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -15pt; margin-left: 15pt">Products </TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">10,916,881 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">36.4% </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">21.5% </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">25,210,925 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">67.6% </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">18.3% </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15pt; margin-left: 15pt">Software </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%" valign="bottom">11,414,618 </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" valign="bottom">38.1% </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" valign="bottom">65.5% </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" valign="bottom">7,225,853 </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" valign="bottom">19.4% </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" valign="bottom">27.7% </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -15pt; margin-left: 15pt">System integration </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">6,885,972 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">23.0% </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">29.2% </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">3,988,882 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">10.7% </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff valign="bottom">24.8% </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15pt; margin-left: 15pt">Others </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%" valign="bottom">758,697 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%" valign="bottom">2.5%    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%" valign="bottom">-6.4%    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%" valign="bottom">857,412 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%" valign="bottom">2.3%    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%" valign="bottom">10.0%    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -15pt; margin-left: 15pt"><B>Total</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><B>29,976,168</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><B>100%</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><B>39.3%</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff valign="bottom"><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><B>37,283,072</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><B>100%</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><B>20.6%</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
</DIV>
<P align=justify>The Company&#146;s product sales decreased by $14.3 million, or
56.7%, to $10.9 million for the six months ended June 30, 2014, compared with
$25.2 million in the same period of 2013. Hardware product sales constituted
36.4% of total revenue during the six month period ended June 30, 2014, compared
with 67.6% during the same period in 2013. The decrease in product sales was
attributable to the Company&#146;s new strategy on shifting from hardware sales to
cloud-based software and platform services, As a result of the transition, the
overall gross margin also increased from 20.6% a year ago to 39.3% in the first
six months of 2014. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>



<A name="page_3"></A>

<P align="justify">
Software sales increased by &#36;4.2 million, or 58.0%, to &#36;11.4 million for the six months ended June 30, 2014, from &#36;7.2 million for the same period in 2013. Software sales increased to 38.1% of total revenue, from 19.4% during the same
period in the prior year. The change was primarily due to the increased sales of new cloud-based platform products and information systems.  </P>
<P align="justify">
Sales of system integration services increased by &#36;2.9 million, or 72.6%, to &#36;6.9 million for the six months ended June 30, 2014, from &#36;4.0 million for the same period in 2013. This increase was primarily due to the sales of new large
system integration solutions engagements in connection with some large IT infrastructure projects. As a percentage of revenue, system integration sales increased from 10.7% during the six months ended June 30, 2013 to 23.0% during the six months
ended June 30, 2014.  </P>
<P align="justify">
Other revenue decreased by &#36;99,000, or 11.5%, from &#36;0.9 million in the six months ended June 30, 2013 to &#36;0.8 million in the same period of 2014. This decrease was mainly due to a decrease in maintenance services during the current
period.  </P>
<P align="justify">
<B><I>Cost of Revenue and Gross Profit</I></B> </P>
<P align="justify">
Cost of revenue decreased by &#36;11.4 million, or 38.5%, to &#36;18.2 million for the six months ended June 30, 2014, as compared with &#36;29.6 million for the six months ended June 30, 2013. As a percentage of revenue, cost of revenue decreased
to 60.7% during the six months ended June 30, 2014, from 79.4% in the same period of 2013. As a result, gross margin was 39.3% for the six months ended June 30, 2014, a significant increase from 20.6% in the same period of 2013. </P>
<P align="justify">
The increase in the overall gross margin primarily resulted from the Company's strategic shift from a traditional IT business to an internet-based technology business, which commands higher margins.  </P>
<P align="justify">
<B><I>Administrative Expenses</I></B> </P>
<P align="justify">
Administrative expenses decreased by &#36;37.4 million, or 83.9%, to &#36;7.2 million for the six months ended June 30, 2014, from &#36;44.6 million for the same period of 2013. The significant decrease in administrative expenses was primarily due
to a &#36;34.7 million decrease in provision for doubtful accounts receivables.  </P>
<P align="justify">
<B><I>Research and Development Expenses</I></B> </P>
<P align="justify">
Research and development expenses decreased by &#36;0.5 million, or 33.2%, to &#36;1.0 million for the six months ended June 30, 2014, from &#36;1.5 million for the same period of 2013. As a percentage of revenue, research and development expenses
accounted for approximately 3.2% of total revenue for the six months ended June 30, 2014, compared with 3.9% for the same period in 2013.  </P>
<P align="justify">
<B><I>Selling Expenses</I></B> </P>
<P align="justify">
Selling expenses decreased by &#36;61,000, or 1.5%, to &#36;4.0 million for the six months ended June 30, 2014, from &#36;4.1 million for the same period of 2013. As a percentage of revenue, selling expenses accounted for approximately 13.4% of
total revenue for the six months ended June 30, 2014, compared with 11.0% for the same period in 2013. The increase in percentage of revenue was due to the decrease in revenue outpaced the decrease in selling expenses. </P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">




<A name="page_4"></A>

<P align="justify">
<B><I>Impairment of property, plant and equipment  </I></B></P>
<P align="justify">
Impairment of property, plant and equipment was &#36;9.1 million for the six months ended June 30, 2013 as compared with nil for the six months ended June 30, 2014, reflecting the declining market value of certain purchased GIS-related software in
light of the protracted challenging environment in the software contracting segment for Chinese government projects.  </P>
<P align="justify">
<B><I>Net Income and Adjusted Net Income </I></B> </P>
<P align="justify">
Net income was &#36;31,000 for the six months ended June 30, 2014, compared to a net loss of &#36;50.5 million for the same period in 2013. Fully diluted net income per share was break-even, compared with a fully diluted net loss per share of
&#36;1.87, in the six months ended June 30, 2013. Excluding non-cash items mainly in the categories of provision for losses on accounts receivables, impairment of property, plant, equipment, and stock-based compensation, adjusted net income for the
period was &#36;1.6 million, compared with an adjusted net loss of &#36;5.2 million in the first six months of 2013. Adjusted net income per share was &#36;0.06 for the six months ended June 30, 2014, compared with adjusted net loss per share of
&#36;0.19 for the six months ended June 30, 2013. </P>
<P align="justify">
<B><I>Cash and Cash Equivalents</I></B> </P>
<P align="justify">
As of June 30, 2014, the Company had &#36;5.4 million in cash and cash equivalents and &#36;11.0 million in restricted cash. For the six month period ended June 30, 2014, net cash used in operating activities was &#36;4.7 million, as compared with
net cash used in operating activities of &#36;13.5 million in the same period of last year. </P>
<P align="justify">
<B>About Non-GAAP Financial Measures</B> </P>
<P align="justify">
This press release contains non-GAAP financial measures for earnings that exclude non-cash charges. The Company believes that these non-GAAP financial measures are useful to investors because they exclude non-cash charges that management excludes
when it internally evaluates the performance of the Company&rsquo;s business and makes operating decisions, including internal budgeting, and performance measurement, as these measures provide a consistent method of comparison to historical periods.
Moreover, management believes these non-GAAP measures reflect the essential operating activities of the Company. Accordingly, management excludes the expense arising from certain non-cash charges when making operational decisions. The Company also
believes that providing the non-GAAP measures that management uses to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand the Company&rsquo;s financial
performance in comparison to historical periods. In addition, it allows investors to evaluate the Company&rsquo;s performance using the same methodology and information as that used by the Company&rsquo;s management. Non-GAAP measures are subject to
inherent limitations because they do not include all of the expenses included under GAAP and because they involve the exercise of judgment of which charges are excluded from the non-GAAP financial measure. However, the Company&rsquo;s management
compensates for these limitations by providing the relevant disclosure of the items excluded.  </P>
<P align="justify">
The following table presents the non-GAAP financial measures contained in this press release and the most directly comparable GAAP measures and provides a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures.  </P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">

<A name=page_5></A>
<P align=center><B>Six Months Ended June 30, 2014 Reconciliation of Net Income
Attributable to the Company and EPS </B><BR><B>to Exclude Amortization of
Intangible Assets, Stock-based Expenses, Provision for Losses on Accounts
</B><BR><B>Receivable and Other Asset Write-downs (unaudited) </B><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="17%" nowrap><B>Six Months </B></TD>
    <TD align=center width="2%" nowrap>&nbsp;</TD>
    <TD align=center width="1%" nowrap>&nbsp;</TD>
    <TD align=center width="17%" nowrap><B>Six Months </B></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="17%" nowrap><B>Ended </B></TD>
    <TD align=center width="2%" nowrap>&nbsp;</TD>
    <TD align=center width="1%" nowrap>&nbsp;</TD>
    <TD align=center width="17%" nowrap><B>Ended </B></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="17%" nowrap><B><U>June, 30 2014 </U></B></TD>
    <TD align=center width="2%" nowrap>&nbsp;</TD>
    <TD align=center width="1%" nowrap>&nbsp;</TD>
    <TD align=center width="17%" nowrap><B><U>June, 30 2013 </U></B></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Net Income (Loss) Attributable to the
      Company </TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="17%" bgColor=#e6efff valign="bottom">&nbsp;30,649 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="17%" bgColor=#e6efff valign="bottom">&nbsp;(50,516,426</TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">) </TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Amortization of intangible assets </TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="17%" valign="bottom">466,220 </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="17%" valign="bottom">489,228 </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Provision for losses on accounts receivable
    </TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="17%" bgColor=#e6efff valign="bottom">1,014,262 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="17%" bgColor=#e6efff valign="bottom">35,680,106 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Impairment of property, plant, equipment and </TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=left width="17%" valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=left width="17%" valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="17%" bgColor=#e6efff valign="bottom">37,615 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="17%" bgColor=#e6efff valign="bottom">9,122,945 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Other long lived assets </TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=left width="17%" valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=left width="17%" valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Stock-based expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="17%"
    bgColor=#e6efff valign="bottom">98,782 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="17%"
    bgColor=#e6efff valign="bottom">- </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Adjusted Net Income (Loss) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="17%" valign="bottom">&nbsp;1,647,528 </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="17%" valign="bottom">&nbsp;(5,224,147</TD>
    <TD align=left width="2%" valign="bottom">) </TD></TR>
  <TR>
    <TD bgColor=#e6efff valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="17%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="17%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Weighted Average Number of Shares </TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=left width="17%" valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=left width="17%" valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Outstanding </TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="17%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="17%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Basic </TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="17%" valign="bottom">27,865,021 </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="17%" valign="bottom">27,007,608 </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Diluted </TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="17%" bgColor=#e6efff valign="bottom">27,865,021 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="17%" bgColor=#e6efff valign="bottom">27,007,608 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR>
    <TD valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD width="1%" valign="bottom">&nbsp;</TD>
    <TD width="17%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom">&nbsp;</TD>
    <TD width="1%" valign="bottom">&nbsp;</TD>
    <TD width="17%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Adjusted Earnings (Loss) per share </TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="17%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="17%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Basic </TD>
    <TD align=left width="1%" valign="bottom">$</TD>
    <TD align=right width="17%" valign="bottom">&nbsp;0.06 </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">$</TD>
    <TD align=right width="17%" valign="bottom">&nbsp;(0.19</TD>
    <TD align=left width="2%" valign="bottom">) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Diluted </TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="17%" bgColor=#e6efff valign="bottom">&nbsp;0.06 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="17%" bgColor=#e6efff valign="bottom">&nbsp;(0.19</TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">) </TD></TR></TABLE>
<P align=justify><B>About China Information Technology, Inc. </B></P>
<P align=justify>Headquartered in Shenzhen, China, China Information Technology,
Inc., through its subsidiaries and other consolidated entities, provides the
CNIT Cloud Platform based on its proprietary Cloud-App-Terminal (CAT) model. The
Company's cloud-based products include Cloud-based Education Platform (CEP),
Information Distribution Platform (IDP), Online Ad Exchange Platform (OAEP),
etc. The Company's integrated hardware, software, and cloud-based services serve
a variety of customers in the fields of government, education, healthcare,
financial, commercial, communication and individual consumers. To learn more
about the Company, please visit its corporate website at <U><FONT
color=#0000ff>http://www.chinacnit.com. </FONT></U></P>
<P align=justify><B>Safe Harbor Statement </B></P>
<P align=justify>This press release may contain certain &#147;forward-looking
statements&#148; relating to the business of China Information Technology, Inc., and
its subsidiary companies. All statements, other than statements of historical
fact included herein, are &#147;forward-looking statements&#148;in nature within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements, often identified by the use of forward-looking
terminology such as &#147;believes,&#148; &#147;expects&#148; or similar expressions, involve known
and unknown risks and uncertainties. Although the Company believes that the
expectations reflected in these forward-looking statements are reasonable, they
do involve assumptions, risks and uncertainties, and these expectations may
prove to be incorrect. Investors should not place undue reliance on these
forward-looking statements, which speak only as of the date of this press
release. The Company&#146;s actual results could differ materially from those
anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in
the Company&#146;s periodic reports that are filed with the Securities and Exchange
Commission and available on its website (http://www.sec.gov). All
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by these factors. Other than as
required under the securities laws, the Company does not assume a duty to update
these forward-looking statements. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_6></A>
<P align=justify><B>For further information, please contact: </B></P>
<P align=justify>China Information Technology, Inc.<B> </B><BR>Tiffany Pan
<BR>Tel: +86 755 8370 4767 <BR>Email: <U><FONT color=#0000ff>IR@chinacnit.com
</FONT></U><BR><U><FONT color=#0000ff>http://www.chinacnit.com
</FONT></U><BR></P>
<P align=justify>Grayling <BR>Investor Relations <BR>Tel: +1.646.284.9474
<BR>Email: <U><FONT color=#0000ff>cnit@grayling.com</FONT></U><B> </B><BR></P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_7></A>
<P align=center><B>CHINA INFORMATION TECHNOLOGY, INC. </B><BR><B>CONSOLIDATED
BALANCE SHEETS </B><BR><B>JUNE 30, 2014 (UNAUDITED) AND DECEMBER 31, 2013
</B><BR><B>Expressed in U.S. dollars (Except for share amounts) </B><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>June 30</B> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>December 31</B> </TD>
  <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>2014</B> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>2013</B> </TD>
  <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="15%" nowrap><B>(unaudited)</B> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%" nowrap
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="15%" nowrap>&nbsp; </TD>
  <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>ASSETS</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%" bgColor=#e6efff>&nbsp; </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
  <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>CURRENT ASSETS</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%" bgColor=#e6efff>&nbsp; </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Cash and cash equivalents </TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="15%">&nbsp;5,406,699 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >$</TD>
    <TD vAlign=bottom align=right width="15%">&nbsp;11,083,592 </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Restricted cash </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>11,047,912 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>10,345,825 </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Accounts receivable, net of allowance for
      doubtful accounts of $60,673,000 and $60,699,000, respectively </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">32,919,812 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">22,716,298 </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Bills receivable </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>406,638 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>1,097,025 </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Advances to suppliers </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">6,546,553 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">8,331,149 </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Amounts due from related
      parties </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>488,391 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>508,355 </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Inventories </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">14,543,458 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">15,655,723 </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Other receivables and prepaid
      expenses </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>14,927,587 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>10,975,335 </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Deferred tax assets </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">542,842 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">498,459 </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>TOTAL CURRENT ASSETS</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%" bgColor=#e6efff><B>86,829,892</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%" bgColor=#e6efff><B>81,211,761</B> </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD >
    <p style="text-indent: -15pt; margin-left: 15pt"></TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%"></TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%"></TD>
  <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Deposit for purchase of land
      use rights </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>18,141,482 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>18,237,303 </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Long-term investments </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">2,641,875 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">2,661,385 </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Property, plant and
      equipment, net </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>30,415,128 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>31,531,027 </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Land use rights, net </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">12,969,987 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">13,222,442 </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Intangible assets, net </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>14,491,762 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>14,307,939 </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Goodwill </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">27,487,936 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">27,719,869 </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Deferred tax assets </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%" bgColor=#e6efff>1,077,608 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%" bgColor=#e6efff>347,264 </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>TOTAL ASSETS</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="15%"><B>&nbsp;194,055,670</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="15%"><B>&nbsp;189,238,990</B> </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="15%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="15%" bgColor=#e6efff>&nbsp; </TD>
  <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>LIABILITIES AND EQUITY</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%">&nbsp; </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="15%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="15%" bgColor=#e6efff>&nbsp; </TD>
  <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>CURRENT LIABILITIES</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%">&nbsp; </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Short-term bank loans </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>&nbsp;56,737,622    </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>&nbsp;58,948,332    </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Accounts payable </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">18,418,513 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">17,857,866 </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Bills payable </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>33,278,899 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>26,549,982 </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Advances from customers </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">2,745,035 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">4,623,283 </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Accrued payroll and benefits
    </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>2,325,728 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>2,845,977 </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Amounts due to related parties </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">862,643 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">900,350 </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Other payables and accrued
      expenses </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>12,955,955 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>12,544,571 </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Income tax payable </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">3,837,694 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">3,720,807 </TD>
  <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>TOTAL CURRENT
      LIABILITIES</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%"
      bgColor=#e6efff><B>131,162,089</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%"
      bgColor=#e6efff><B>127,991,168</B> </TD>
  <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Long-term bank loans </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>264,106 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>312,547 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Amounts due to related parties, long-term
      portion </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">13,129 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Deferred tax liabilities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%" bgColor=#e6efff>578,178 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%" bgColor=#e6efff>742,696 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>TOTAL LIABILITIES</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%"><B>&nbsp;132,004,373</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%"><B>&nbsp;129,059,540</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </tr>
  <tr>
    <TD bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="15%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="15%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>COMMITMENTS AND CONTINGENCIES</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Common stock, par $0.01;
      shares issued and outstanding: 725,000 shares </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>&nbsp;2,175,000
    </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>&nbsp;2,175,000
    </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>EQUITY</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%">&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Common stock, par $0.01;
      authorized capital 100,000,000 shares; shares issued and outstanding,
      2014:29,975,420 shares; 2013:28,641,528 shares </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>&nbsp;317,336
</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>&nbsp;309,076
</TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Treasury stock,2014:717,448;2013: 1,225,311
      shares </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">(4,290,000</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">(4,814,775</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
  </tr>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Additional paid-in capital
</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>120,377,948 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>115,668,644 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Reserve </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">14,629,369 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">14,629,369 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Accumulated deficit Retained
    </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>(113,521,900</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>)
</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>(113,513,766</TD>
    <TD vAlign=bottom align=left width="2%"  bgColor=#e6efff>)
  </TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Accumulated other comprehensive income </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">24,750,115 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">25,070,226 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>Total equity of the
      Company</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%" bgColor=#e6efff><B>42,262,868</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%" bgColor=#e6efff><B>37,348,774</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>Non-controlling interest</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%"><B>17,613,429</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%"><B>20,655,676</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>Total equity</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%" bgColor=#e6efff><B>59,876,297</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%" bgColor=#e6efff><B>58,004,450</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </tr>
  <tr>
    <TD >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>TOTAL LIABILITIES AND
      EQUITY</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="15%" bgColor=#e6efff><B>&nbsp;194,055,670</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="15%" bgColor=#e6efff><B>&nbsp;189,238,990</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </tr>
</TABLE><BR>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_9></A>
<P align=center><B>CHINA INFORMATION TECHNOLOGY, INC. </B><BR><B>CONSOLIDATED
STATEMENTS OF INCOME (LOSS) </B><BR><B>FOR THE SIX MONTHS ENDED JUNE 30, 2014
AND 2013 </B><BR><B>Expressed in U.S. dollars (Except for share amounts)
</B><BR><B>(Unaudited) </B><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>Six Months</B> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>Six Months</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B><U>Ended June 30,</U></B> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B><U>Ended June 30,</U></B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>2014</B> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>2013</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%" nowrap>&nbsp; </TD>
    <TD vAlign=bottom width="2%" nowrap >&nbsp;</TD>
    <TD vAlign=bottom width="1%" nowrap >&nbsp;</TD>
    <TD vAlign=bottom width="15%" nowrap>&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Revenue &#150; Products </TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>&nbsp;10,916,881
    </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>&nbsp;25,210,925
    </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Revenue &#150; Software </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">11,414,618 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">7,225,853 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Revenue - System integration
    </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>6,885,972 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>3,988,882 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Revenue &#150; Others </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">758,697 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">857,412 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>TOTAL REVENUE</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%"
      bgColor=#e6efff><B>29,976,168</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%"
      bgColor=#e6efff><B>37,283,072</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Cost - Products sold </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>8,575,669 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>20,604,248 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Cost - Software sold </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">3,941,523 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">5,222,113 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Cost - System integration </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>4,872,634 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>2,999,223 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Cost &#150; Others </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">806,930 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">771,986 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>TOTAL COST</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%"
      bgColor=#e6efff><B>18,196,756</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%"
      bgColor=#e6efff><B>29,597,570</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>GROSS PROFIT</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%"
      bgColor=#e6efff><B>11,779,412</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff><B>7,685,502</B>
    </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Administrative expenses </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>7,209,614 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>44,647,394 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Research and development expenses </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">973,596 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">1,458,136 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Selling expenses </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>4,031,732 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>4,092,764 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Impairment of property, plant and equipment
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">- </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">9,122,945 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>LOSS FROM OPERATIONS</B>
    </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%"
    bgColor=#e6efff><B>(435,530</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%"
      bgColor=#e6efff><B>(51,635,737</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD></TR>
  <TR>
    <TD >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Subsidy income </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>1,281,608 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>866,798 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Other income, net </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">435,817 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">657,381 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Interest income </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>245,994 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff>173,037 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Interest expense </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">(2,536,690</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%">(2,642,502</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>LOSS BEFORE INCOME
      TAXES</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%"
    bgColor=#e6efff><B>(1,008,801</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%"
      bgColor=#e6efff><B>(52,581,023</B></TD>
    <TD vAlign=bottom align=left width="2%"
      bgColor=#e6efff><B>)</B> </TD></TR>
  <TR>
    <TD >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD>
    <TD vAlign=bottom width="1%" >&nbsp;</TD>
    <TD vAlign=bottom width="15%">&nbsp; </TD>
    <TD vAlign=bottom width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="15%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="15%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Income tax benefit (expense) </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">511,208 </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%">(411,550</TD>
    <TD vAlign=bottom align=left width="2%" >) </TD></TR>
  <TR>
    <TD bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="15%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="15%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>NET LOSS</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%"><B>(497,593</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%"><B>(52,992,573</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>Less: Net loss
      attributable to the non-controlling interest</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff><B>528,242</B>
    </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%" bgColor=#e6efff><B>2,476,147</B>
    </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>NET INCOME (LOSS) ATTRIBUTABLE TO THE</B>
      <B>COMPANY</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%"><B>&nbsp;30,649</B> </TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="15%"><B>&nbsp;(50,516,426</B></TD>
    <TD vAlign=bottom align=left width="2%" ><B>)</B> </TD></TR>
  <TR>
    <TD bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="15%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom width="15%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>WEIGHTED AVERAGE NUMBER OF SHARES</B>
      <B>OUTSTANDING</B> </TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%"></TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=left width="15%"></TD>
    <TD vAlign=bottom align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>Basic</B> </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%"
      bgColor=#e6efff><B>27,865,021</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="15%"
      bgColor=#e6efff><B>27,007,608</B> </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD></TR>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>Diluted</B> </TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" valign="bottom"><B>27,865,021</B> </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" valign="bottom"><B>27,007,608</B> </TD>
  <TD align=left width="2%" valign="bottom">&nbsp;</TD>
  </tr>
  <tr>
    <TD bgcolor="#E6EFFF" >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD width="1%" bgcolor="#E6EFFF" valign="bottom">&nbsp;</TD>
    <TD width="15%" bgcolor="#E6EFFF" valign="bottom">&nbsp; </TD>
    <TD width="2%" bgcolor="#E6EFFF" valign="bottom">&nbsp;</TD>
    <TD width="1%" bgcolor="#E6EFFF" valign="bottom">&nbsp;</TD>
    <TD width="15%" bgcolor="#E6EFFF" valign="bottom">&nbsp; </TD>
  <TD width="2%" bgcolor="#E6EFFF" valign="bottom">&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>EARNINGS (LOSS) PER
      SHARE-BASIC AND DILUTED</B> </TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=left width="15%" valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=left width="15%" valign="bottom">&nbsp; </TD>
  <TD align=left width="2%" valign="bottom">&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left bgcolor="#E6EFFF" >
    <p style="text-indent: -15pt; margin-left: 15pt">Basic </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" valign="bottom">$</TD>
    <TD align=right width="15%" bgcolor="#E6EFFF" valign="bottom">&nbsp;* </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" valign="bottom">$</TD>
    <TD align=right width="15%" bgcolor="#E6EFFF" valign="bottom">&nbsp;(1.87</TD>
  <TD align=left width="2%" bgcolor="#E6EFFF" valign="bottom">) </TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Diluted </TD>
    <TD align=left width="1%">$</TD>
    <TD align=right width="15%">&nbsp;* </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">$</TD>
    <TD align=right width="15%">&nbsp;(1.87</TD>
  <TD align=left width="2%">) </TD>
  </tr>
</TABLE>
<A name=page_10></A><BR>
<P align=justify>* Amount is less than $0.01 per share </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_11></A>
<P align=center><B>CHINA INFORMATION TECHNOLOGY, INC. </B><BR><B>CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS </B><BR><B>FOR THE SIX MONTHS ENDED JUNE 30,
2014 AND 2013 </B><BR><B>Expressed in U.S. dollars </B><BR><B>(Unaudited)
</B><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>Six Months Ended</B> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>Six Months Ended</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>June 30,</B> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>June 30,</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B><U>2014</U></B> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B><U>2013</U></B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="15%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="15%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Net loss </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">&nbsp;(497,593</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">&nbsp;(52,992,573</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Other comprehensive income: </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="15%" valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="15%" valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Foreign currency translation
      (loss) gain </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="15%"
    bgColor=#e6efff valign="bottom">(403,224</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="15%"
    bgColor=#e6efff valign="bottom">2,794,303 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Comprehensive loss </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">(900,817</TD>
    <TD align=left width="2%" valign="bottom" >) </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">(50,198,270</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Comprehensive loss
      attributable to the non-controlling interest </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="15%"
    bgColor=#e6efff valign="bottom">611,355 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="15%"
    bgColor=#e6efff valign="bottom">2,269,106 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Comprehensive loss attributable to the
      Company </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="15%" valign="bottom"><B>&nbsp;(289,462</B></TD>
    <TD align=left width="2%" valign="bottom" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="15%" valign="bottom"><B>&nbsp;(47,929,164</B></TD>
    <TD align=left width="2%" ><B>)</B> </TD></TR></TABLE><BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_12></A>
<P align=center><B>CHINA INFORMATION TECHNOLOGY, INC. </B><BR><B>CONSOLIDATED
STATEMENTS OF CASH FLOWS </B><BR><B>SIX MONTHS ENDED JUNE 30, 2014 AND 2013
</B><BR><B>Expressed in U.S. dollars </B><BR><B>(Unaudited) </B><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>Six Months</B> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>Six Months</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>Ended</B> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B>Ended</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B><U>June 30, 2014</U></B> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="15%" nowrap><B><U>June 30, 2013</U></B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>OPERATING ACTIVITIES</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="15%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="15%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Net loss </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">&nbsp;(497,593</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">&nbsp;(52,992,573</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>Adjustments to reconcile net loss to net
      cash used in operating</B> <B>activities:</B> </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="15%" valign="bottom"></TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="15%" valign="bottom"></TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Impairment of intangible
      assets </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">37,615 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">- </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Provision for losses on accounts receivable
    </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">1,014,262 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">35,680,106 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Depreciation </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">1,141,391 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">4,929,656 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Amortization of intangible assets and land
      use rights </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">1,020,474 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">1,211,730 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Stock-based expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">98,782 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">- </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Gain on disposal of property and equipment,
      net </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">(20,401</TD>
    <TD align=left width="2%" valign="bottom" >) </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">- </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Impairment of property, plant
      and equipment, net </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">- </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">9,122,945 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Provision (recovery) for inventory allowance
    </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">12,794 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">(1,433,684</TD>
    <TD align=left width="2%" valign="bottom" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Change in deferred income tax
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">(942,313</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">351,802 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>Changes in operating assets and
      liabilities</B> </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="15%" valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="15%" valign="bottom">&nbsp; </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Increase in restricted cash
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">(1,290,868</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">(6,325,755</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">(Increase)decrease in accounts receivable </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">(10,293,759</TD>
    <TD align=left width="2%" valign="bottom" >) </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">377,404 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Decrease in advances to
      suppliers </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">1,773,433 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">724,276 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Increase in other receivables and prepaid
      expenses </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">(4,346,491</TD>
    <TD align=left width="2%" valign="bottom" >) </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">(2,774,225</TD>
    <TD align=left width="2%" valign="bottom" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Decrease(increase) in
      inventories </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">984,636 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">(1,514,168</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Increase (decrease) in accounts payable and
      bills payable </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">7,633,826 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">(6,559,336</TD>
    <TD align=left width="2%" valign="bottom" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">(Decrease)increase in
      advances from customers </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">(1,848,899</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">1,122,859 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">(Decrease)increase in amounts due to/from
      related parties </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">(72,954</TD>
    <TD align=left width="2%" valign="bottom" >) </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">841,430 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Increase in accrued expenses
      and other liabilities </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">800,104 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">4,061,813 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Increase (decrease) in income tax payable </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="15%" valign="bottom">143,794 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="15%" valign="bottom">(342,935</TD>
    <TD align=left width="2%" valign="bottom" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>Net cash used in operating
      activities</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom"><B>(4,652,167</B></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom"><B>)</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom"><B>(13,518,655</B></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom"><B>)</B> </TD></TR>
  <TR>
    <TD >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD width="1%" valign="bottom" >&nbsp;</TD>
    <TD width="15%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom" >&nbsp;</TD>
    <TD width="1%" valign="bottom" >&nbsp;</TD>
    <TD width="15%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>INVESTING ACTIVITIES</B>
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="15%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="15%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Proceeds from sales of property and equipment
    </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">20,411 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">16,992 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Purchases of property, plant
      and equipment </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">(285,572</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">(138,228</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Capitalized and purchased software
      development costs </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">(1,187,378</TD>
    <TD align=left width="2%" valign="bottom" >) </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">(1,355,726</TD>
    <TD align=left width="2%" valign="bottom" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Deposit refunded for
      land-use-rights </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">- </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">1,458,730 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Investment in Zhongtian and GEO </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="15%" valign="bottom">(698,152</TD>
    <TD align=left width="2%" valign="bottom" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="15%" valign="bottom">- </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>Net cash used in investing
      activities</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="15%"
    bgColor=#e6efff valign="bottom"><B>(2,150,691</B></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom"><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="15%"
    bgColor=#e6efff valign="bottom"><B>(18,232</B></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom"><B>)</B> </TD></TR>
  <TR>
    <TD >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD width="1%" valign="bottom" >&nbsp;</TD>
    <TD width="15%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom" >&nbsp;</TD>
    <TD width="1%" valign="bottom" >&nbsp;</TD>
    <TD width="15%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>FINANCING ACTIVITIES</B>
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="15%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="15%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Borrowings under short-term loans </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">53,370,861 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">67,900,348 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Repayment of short-term loans
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">(55,160,129</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">(55,817,665</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">)
</TD></TR>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Repayment of long-term loans
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">(46,670</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">(17,788</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Purchase of treasury stock </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">(1,290,000</TD>
    <TD align=left width="2%" valign="bottom" >) </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="15%" valign="bottom">- </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Decrease (increase)in
      restricted cash in relation to bank borrowings </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">511,026 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">(1,261,026</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt">Common stock issued for cash </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="15%" valign="bottom">3,683,028 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="15%" valign="bottom">&nbsp;
    </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>Net cash provided by
      financing activities</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom"><B>1,068,116</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom"><B>10,803,869</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
  </tr>
  <tr>
    <TD >
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD width="1%" valign="bottom" >&nbsp;</TD>
    <TD width="15%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom" >&nbsp;</TD>
    <TD width="1%" valign="bottom" >&nbsp;</TD>
    <TD width="15%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom" >&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt">Effect of exchange rate
      changes on cash and cash equivalents </TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="15%" bgColor=#e6efff valign="bottom">57,849 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="15%"
    bgColor=#e6efff valign="bottom">42,406 </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>NET DECREASE IN CASH AND CASH
      EQUIVALENTS</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="15%" valign="bottom"><B>(5,676,893</B></TD>
    <TD align=left width="2%" valign="bottom" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="15%" valign="bottom"><B>(2,690,612</B></TD>
    <TD align=left width="2%" valign="bottom" ><B>)</B> </TD>
  </tr>
  <tr>
    <TD align=left bgColor=#e6efff >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>CASH AND CASH EQUIVALENTS,
      BEGINNING</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="15%"
    bgColor=#e6efff valign="bottom"><B>11,083,592</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="15%"
    bgColor=#e6efff valign="bottom"><B>10,747,998</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
  </tr>
  <tr>
    <TD align=left >
    <p style="text-indent: -15pt; margin-left: 15pt"><B>CASH AND CASH EQUIVALENTS, ENDING</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="15%" valign="bottom"><B>&nbsp;5,406,699</B> </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="15%" valign="bottom"><B>&nbsp;8,057,386</B> </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
  </tr>
</TABLE><BR>
<B>Supplemental disclosure of significant non-cash
transactions: </B>
<P align=justify>In 2014, the Company issued 439,503 shares of its common stock
with a market value of $1,784,382 to minority shareholders of Zhongtian and Geo
in exchange for 4.53% and 16.27%, respectively, of Zhongtian and Geo. </P>
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