SHENZHEN, China , April 3, 2008 /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 (''GIS'') software services, today announced that its variable interest entity, iASPEC Software Company Limited (''iASPEC''), has closed the acquisition of 57% of the total equity interest in Wuda Geoinformatics Co., Ltd. (''Geo''), a leading provider of GIS software products and integrated solutions in China .
iASPEC acquired its 57% controlling interest in Geo, for an aggregate purchase price of RMB49.5 million (approximately US$6.8 million) in cash, of which RMB20.0 million (approximately US$2.7 million) is to be used to supplement Geo's working capital. As a result of the purchase, iASPEC is now Geo's controlling shareholder, and Wuhan University, Geo's founder, is now the second largest Geo shareholder, through direct and indirect investments. Geo's financial results will be consolidated into the financial statements of the Company, beginning April 1, 2008 , with 57% of projected net income of US$1.2 million and US$1.56 million for 2008 and 2009, respectively.
Geo was founded in 1999 by Wuhan University, a leading university in Asia for GIS-related studies. Geo develops and sells GIS software, contracts surveying and mapping projects, produces space measurement data and provides technical consulting and supervision services for GIS projects. Geo's affiliation with Wuhan University has enabled it to develop impressive research and development capabilities and has resulted in the development of the copyrighted, award winning GeoStar(R) system. The GeoStar(R) system consists of a large-scale GIS and software series, covering the whole GIS product family, from data acquisition through data processing and huge database management, GIS customization, and the publication of geographic data on the internet. In 2005, Geo was granted a Level A Certificate for Surveying & Mapping, the highest qualification for providing the widest range of GIS services in China .
Management believes that the acquisition of Geo will positively impact the future business of the Company in the following respects:
First, the Company expects that the acquisition of Geo will enable the Company to provide its Civil-use GIS and Police-use GIS customers with complete, integrated solutions through innovative technology, covering the entire life cycle of spatial information. The Company also believes that Geo will enable it to immediately access the fast growing Civil-use GIS market through Geo's existing customer base and well-known brand and through the combined efforts of China Public Security's and Geo's research and development teams.
Second, the Company believes that the acqusition of Geo will enhance the competitiveness of the Company's existing Police-GIS product, primarily due to the acquisition of Geo's mapping data. Having direct access to and ownership of mapping data through Geo will eliminate the need for third party providers of mapping data and will enable the Company to price its public security products and services more competitively.
Third, through its acquisition of Geo, the Company has gained access to Geo's valuable mapping permits. Management believes that access to these mapping permits will provide the Company with numerous commercial licensing and recurring revenue opportunities both in China and in foreign markets. ''We are pleased to now have Geo as part of our product portfolio and we look forward to in depth cooperation with Wuhan University in the future,'' said Mr. Jiang Huai Lin , CEO of China Public Security. ''We expect that our acquisition of Geo will enhance our competitiveness through our offering of more integrated products and services.''