China Public Security Implements New Management Services Agreement with iASPEC

SHENZHEN, China , Aug. 6 /Xinhua-PRNewswire-FirstCall/ -- China Public Security Technology, Inc., (OTC Bulletin Board: CPBY) (" China Public Security" or "the Company"), a leading provider of public security information technology and Geographic Information Systems or GIS software services, today announced the Company's restructuring of the exclusive commercial arrangement between the Company's Chinese operating subsidiary, Public Security Technology (PRC) Co. Ltd. ("PST"), and its strategic partner, iASPEC Software Engineering Company Limited ("iASPEC"), effective as of July 1, 2007 .

The restructuring was effected through a new Management Services Agreement ("MSA") among PST, iASPEC and iASPEC's shareholders, which replaces the prior Business Turnkey Agreement, effective as of July 1, 2007 . The MSA includes the following key provisions:

The restructuring also involves the parties' entry into the Purchase Option Agreement, effective as of July 1, 2007 , which grants PST an exclusive option to acquire, subject to the laws of China , up to 100% of iASPEC's shares from the iASPEC shareholders, or all of the assets held by iASPEC. As a result of the restructuring, iASPEC is now considered to be the Companys's Variable Interest Entity and ASPEC's results of operations will be consolidated with the Company's financial data, pursuant to FASB Interpretation No.46(R).

The Company believes that the modifications to its corporate structure and accounting treatment will result in greater transparency for investors and will improve China Public Security's ability to exert greater control over the business and affairs of iASPEC, thus improving confidence in the outlook for the Company's business. At the same time, the new structure preserves the independence of iASPEC under Chinese law to comply with the requirements of licenses and contracts to perform sensitive work in the Public Security sector and puts in place strict provisions to insure that all sensitive information is safeguarded.

"We believe the restructuring of our commercial arrangement with iASPEC will provide investors with increased transparency and will make our business model easier for analysts to understand," said Mr. Jiang Huai Lin , China Public Security's Chairman and CEO. "We believe that the revised structure will enhance our corporate governance and inspire investor confidence, while enabling the Company to continue to grow our share in the market for providing IT solutions for public security and GIS related projects in the China ."

About China Public Security Technology, Inc.

Through its wholly-owned Chinese subsidiary, CPST is focused on the development and implementation of large scale, high-tech public security and Geographic Information System (GIS) related projects. The Company provides a broad portfolio of fully-integrated solutions and services, including public security information technology (First Responder Coordination Platform, Intelligent Border Control and Intelligent Security Surveillance), Geographic Information System (Police-use GIS and Civil-use GIS), and e-Government Platform services, software sales and maintenance as well. CPST currently has the licenses to 16 registered and copyrighted software applications in China , through its exclusive business turnkey agreement with Shenzhen iASPEC Software Engineering Company Limited (iASPEC). Under this agreement the Company acts as iASPEC's exclusive subcontractor to all its customers. To learn more about the Company, please visit the corporate website at http://www.chinacpby.com .

Safe Harbor Statement

This press release may contain certain "forward-looking statements" relating to the business of China Public Security Technology, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements," including statements regarding the ability of the Company to exert greater control over the business and affairs of iASPEC, the effect of the restructuring on analysts, and the ability of the Company to expand its market share or otherwise achieve its commercial objectives, the business strategy, plans and objectives of the Company and its subsidiaries and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" 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. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company'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'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.

SOURCE China Public Security Technology, Inc.



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