On June 21, 2012, Tianlong Optoelectronic Ltd’s subsidiary Jiangsu Huasheng Tianlong Photoelectric Co.,Ltd. became authorized to Jiangsu province’s 2012 special funding for transformation of technological innovation and achievement for its project of research and development of domestic LED MOCVD (metalorganic chemical vapor deposition) reactors. The announcement was on public review during June 21 to June 28, 2012.

On October 15, 2012, Jiangsu Huasheng was informed of the right to special funding for transformation of technological innovation and achievement. Jiangsu Provincial Department of Science and Technology will grant subsidies of 15 million yuan in total, consisting of funding of 12 million yuan and interest subsidy of 3 million yuan. This year’s appropriation is 8 million yuan.

Jiangsu Huasheng received 8 million yuan on October, 2012. Related department will examine the implementation of this project in 2013. In compliance with Accounting Standards for Business Enterprises, this incentive will be considered as deferred income, which is expected not to have much impact the company’s profit of 2012.

In addition, Tianlong Optoelectronic released result forecast for the first three quarters of 2012:

Item	Jan 1, 2012 to Sep 30, 2012	Jan 1, 2011 to Sep 30, 2011	Up or down
Net profit for shareholders	Deficit: 83 million to 88 million yuan	Profit: 84.8757 million yuan	Down 190% to 210%
Item	July 1, 2012 to Sep 30, 2012	July 1, 2011 to Sep 30, 2011	Up or down
Net profit for shareholders	Deficit: 30 million to 35 million yuan	Profit: 23.554 million yuan	Down 220% -250%

The company saw deficit in result for the period of Jan to Sep, 2012, and projects that extraordinary gains and losses within Jan to Sep will deduct 1.3303 million yuan from the net profit, relative to -34.63 for the same period of last year. The reason is that since the second half of last year, photovoltaic industry have been impacted by overseas policies and near-term industry oversupply, resulting in plunge of orders on the company. This depressed the company’s sales of main business greatly compared with the same period of last year, hence a loss.