China Public Security Announces Strong Fourth Quarter and Fiscal Year 2007 Results and Revises its Guidance for 2008

SHENZHEN, China , April 1, 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...


The Company plans to leverage its strength and brand recognition in Guangdong Province in order to win business across China . The Company intends to manage its national operations from six centers located in Guangzhou, Beijing , Shanghai , Wuhan , Chongqing and Xi'an. To date it has set up offices in Guangzhou and Beijing .

Management expects that the acquisitions of ISDT, Bocom Technology, and Geo will also accelerate the Company's geographic expansion, enhance its technological capabilities or competitive advantages, provide licensing and recurring revenue opportunities, and serve to fulfill its planned expansion into civil-use GIS markets. Furthermore, the Company expects to capitalize on its strong R&D capability and outstanding contract win ratio, to seize contract opportunities during Phase II of China's '' Golden Shield Project'' nationwide.

''The market for security information technology continues to increase at a very rapid rate,'' said Mr. Lin . ''With our technological capabilities, diverse and growing range of products, high barriers to entry and dedicated employees, we believe that we are well positioned to execute on our business plan and to create long term value for our stockholders.''

Fiscal Year 2008 Guidance

With the acquisitions of ISDT, Bocom Technology and Geo, and its increased visibility from the first quarter, the Company has raised its 2008 financial guidance for pro forma revenues, from $63 million, to $85 million, and for pro forma net income, from $24 million to $27 million, an increase of $22 million and $3 million, respectively, from its previous forecast. The estimated pro forma net income for 2008 excludes charges related to any non-cash charges as a result of employee stock option grants in 2007 and 2008 and amortization of intangible assets associated to the recent acquisitions of ISDT and Bocom Technology and the planned closing of Geo.

2007 Reconciliation of Operating, Net Income and EPS to Exclude Stock Based

Non-GAAP Financial Measures

The Company uses non-GAAP financial measures in this press release due to the inclusion of financial information of iASPEC which is considered to be the Company's ''Predecessor'' for these purposes. Although CPSH (the ''Successor''), was formed on January 17, 2006 , it had no significant operations in the period from January 17, 2006 through December 31, 2006 . Accordingly, the accompanying financial statements for the period from January 1, 2006 through October 8, 2006 (the ''Predecessor Period'') reflect the results of operations of iASPEC. The accompanying financial data for the period from January 1, 2007 through December 31, 2007 , the Successor Period, reflect the results of operations of CPSH for the period from January 1, 2007 through December 31, 2007 and the results of operations of iASPEC from July 1, 2007 through December 31, 2007 . Accordingly, the results of operations of the Predecessor and the Successor are not comparable in all respects. We have provided non-GAAP financial measures through the reallocation of net related party revenues from iASPEC, which is not in accordance with US GAAP. The reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure is provided in the following section. The Company's management believes that these non-GAAP financial measures are necessary because the abnormally high financial ratios calculated using GAAP would be misleading to investors and would not reflect the substance of the Company's performance.

About China Public Security Technology, Inc.

Through its wholly-owned Chinese subsidiaries, China Public Security 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. Through its exclusive contractual arrangement with Shenzhen iASPEC Software Engineering Company Limited (iASPEC), China Public Security has the licenses to 16 registered and copyrighted software applications in China . In addition, since July 1, 2007 , iASPEC is considered to be the Company's variable interest entity, and its financial data and information is consolidated into the Company's accounts. To learn more about the Company, please visit the corporate website at http://www.chinacpby.com .