Approximate date of commencement of proposed sale to public: From time to time after the effective date of this registration statement, as determined by market conditions and other factors.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X]

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering.

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.

PROSPECTUS

Subject to completion, dated November 21, 2007

This prospectus relates to 5,400,000 shares of common stock of China Public Security Technology, Inc., that may be sold from time to time by the selling stockholders named in this prospectus, which includes:

We will not receive any proceeds from the sales by the selling stockholders, but we will receive funds from the exercise of warrants held by the selling stockholders, if exercised for cash.

Our common stock is quoted on the OTC Bulletin Board maintained by the National Association of Securities Dealers, Inc. under the symbol "CPBY.OB" The closing bid price for our common stock on November 14, 2007 was $10.00 per share, as reported on the OTC Bulletin Board.

Any participating broker-dealers and any selling stockholders who are affiliates of broker-dealers are "underwriters" within the meaning of the Securities Act of 1933, as amended, or the Securities Act, and any commissions or discounts given to any such broker-dealer or affiliate of a broker-dealer may be regarded as underwriting commissions or discounts under the Securities Act. The selling stockholders have informed us that they do not have any agreement or understanding, directly or indirectly, with any person to distribute their common stock.

The date of this Prospectus is________, 2007.

The shares of our common stock being offered for resale by the selling stockholders are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating to our business and prospects. If any of the following risks actually occurs, our business, financial condition or operating results will suffer, the trading price of our common stock could decline, and you may lose all or part of your investment.

Our future revenue stream depends to a large degree on our ability to utilize our technology in a way that will allow us to offer new types of software applications and services to a broader client base. We will be required to make investments in research and development in order to continue to develop new software applications and related service offerings, enhance our existing software applications and related service offerings and achieve market acceptance of our software applications and service offerings. We may incur problems in the future in innovating and introducing new software applications and service offerings. Our development-stage software applications may not be successfully completed or, if developed, may not achieve significant customer acceptance. If we are unable to successfully define, develop and introduce competitive new software applications, and enhance existing software applications, our future results of operations would be adversely affected. Development schedules for software applications are difficult to predict. The timely availability of new applications and their acceptance by customers are important to our future success. A delay in new the development of new applications could have a significant impact on its results of operations.

Our future business and results of operations depend in significant part upon the continued contributions of our key technical and senior management personnel, including Jiang Huai Lin, our Chairman and Chief Executive Officer, and Zhi Xiong Huang , one of our directors. They also depend in significant part upon our ability to attract and retain additional qualified management, technical, marketing and sales and support personnel for our operations. If we lose a key employee or if a key employee fails to perform in his or her current position, or if we are not able to attract and retain skilled employees as needed, our business could suffer. Significant turnover in our senior management could significantly deplete our institutional knowledge held by our existing senior management team. We depend on the skills and abilities of these key employees in managing the technical, marketing and sales aspects of our business, any part of which could be harmed by further turnover.

During the second quarter of 2007, in connection with its review of our condensed, consolidated financial statements for the quarter ended March 31, 2007, our independent registered public accounting firm reported a material weakness in our internal controls over our ability to produce financial statements free from material misstatements. Our independent registered public accounting firm reported a material weakness resulting from the combination of the following significant deficiencies: (a) lack of timely identification, research and resolution of accounting issues and lack of documentation of consideration of recent accounting pronouncements; (b) lack of documentation and review of financial information by our accounting personnel with direct oversight responsibility, and lack of analysis and reconciliation of certain accounts on a periodic basis, and the failure of the accounting system to provide information related to expenditures on a project-by-project basis; (c) absence of documented controls over our related party transactions; and (d) lack of technical accounting expertise among senior financial staff regarding US GAAP and the requirements of the PCAOB, and regarding the preparation of draft financial statements. We have taken steps to address these deficiencies by restructuring our relationship with iASPEC to address our controls over related party transactions with iASPEC, and by hiring additional accounting personnel to assist us in the timely identification, research and resolution of accounting issues and with our documentation processes. We are also seeking to engage a third-party accounting firm to assist management in evaluating complex accounting issues on an as-needed basis. We believe that these steps will correct the material weaknesses described above, however, if our independent registered public accountants are not satisfied with our internal control structure and procedures, they may decline to attest to our management’s assessment of these procedures or may issue a report that is qualified. Any of these possible outcomes could result in an adverse reaction in the financial marketplace, which could negatively impact the market price of our shares.

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Investor confidence and the market price of our shares may be adversely impacted if we or our independent registered public accountants are unable to attest to the adequacy of the internal controls over our financial reporting as of December 31, 2008, as required by Section 404 of the U.S. Sarbanes-Oxley Act of 2002.

We will be subject to the reporting requirements of the U.S. Securities and Exchange Commission, or SEC. The SEC, as directed by Section 404 of the U.S. Sarbanes-Oxley Act of 2002, adopted rules requiring public companies to include a report of management of their internal control structure and procedures for financial reporting in their annual reports on Form 10-KSB that contains an assessment by management of the effectiveness of their internal controls over financial reporting. In addition, independent registered public accountants of these public companies must attest to and report on management’s assessment of the effectiveness of their internal controls over financial reporting. These requirements will first apply to our annual report on Form 10-KSB for the fiscal year ended on December 31, 2007, although the auditor attestation will not be required until our annual report on Form 10-KSB for the fiscal year ended on December 31, 2008. Our management may conclude that our internal controls over financial reporting are not effective as of December 31, 2007. Moreover, even if our management concludes otherwise, if our independent registered public accountants are not satisfied with our internal control structure and procedures, the level at which our internal controls are documented, designed, operated or reviewed, or if the independent registered public accountants interpret the requirements, rules or regulations differently from us, they may decline to attest to our management’s assessment or may issue a report that is qualified. Any of these possible outcomes could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements, which could negatively impact the market price of our shares.

We have no direct business operations, other than our ownership of our subsidiaries. While we have no current intention of paying dividends, should we decide in the future to do so, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries and other holdings and investments. In addition, our operating subsidiaries, from time to time, may be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions as discussed below. If future dividends are paid in Renminbi, fluctuations in the exchange rate for the conversion of Renminbi into U.S. dollars may reduce the amount received by U.S. stockholders upon conversion of the dividend payment into U.S. dollars.

Chinese regulations currently permit the payment of dividends only out of accumulated profits as determined in accordance with Chinese accounting standards and regulations. Our subsidiaries in China are also required to set aside a portion of their after tax profits according to Chinese accounting standards and regulations to fund certain reserve funds. Currently, our subsidiaries in China are the only sources of revenues or investment holdings for the payment of dividends. If they do not accumulate sufficient profits under Chinese accounting standards and regulations to first fund certain reserve funds as required by Chinese accounting standards, we will be unable to pay any dividends.

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Our industry is characterized by extremely rapid technological change, evolving industry standards and changing customer demands. These conditions require continuous expenditures on product research and development to enhance existing products, create new products and avoid product obsolescence. We believe that the timely development of new products and continuing enhancements to existing products is essential to maintain our competitive position in the marketplace. Our future success depends in part upon customer and market acceptance of our products and initiatives, which is uncertain. Any failure to achieve increased acceptance of these and other new product offerings could have a material adverse effect on our business and results of operations.

The revenue growth and profitability of our business depend on the overall demand for software products and related services, particularly within the private sector. Our strategy involves a sale of our products and services primarily to customers in the private sector, so our business depends on the overall economy and the economic and business conditions within this market. Any future stock market decline or broad economic slowdown will affect the demand for our software products and related services and decrease technology spending of many of our customers and potential customers. These events could have a material effect on us in the future, including, without limitation, on our future revenue and earnings.

The software products that we develop are complex and must meet the stringent technical requirements of our customers. In addition, to keep pace with the rapid technological change in our industry and to avoid the obsolescence of our software products, we must quickly develop new products and enhancements to existing products. Because of this complexity and rapid development cycle, we cannot assure you that our software products are free of errors, especially in newly released software products and new versions of existing software products. If our software is not free of errors, this could result in litigation, fewer sales, increased product returns, damage to our reputation and an increase in service and warranty costs, which would adversely affect our business.

If our technology, products and services become obsolete, our business operations would be materially adversely affected. The market in which we compete is characterized by rapid technological change, evolving industry standards, introductions of new products, and changes in customer demands that can render existing products obsolete and unmarketable. Our current products will require continuous upgrading or our technology will become obsolete. Our future success will depend upon our ability to address the increasingly sophisticated needs of our customers by supporting existing and emerging hardware, software, database, and networking platforms and by developing and introducing enhancements to our existing products and new products on a timely basis that keep pace with technological developments, evolving industry standards, and changing customer requirements. We had no research and development expenses during the year ended December 31, 2005 and the period from January 1, 2006 through October 8, 2006. There were no Research and development expenses in the Successor Period. Instead, costs that are incurred to produce the finished product after technological feasibility is established are capitalized. Software development costs of $331,491 and $102,953 were capitalized during the year ended December 31, 2005 and the period from January 1, 2006 through October 8, 2006 respectively.

The satisfactory performance, reliability and availability of our network infrastructure are critical to our reputation and our ability to attract and retain customers and to maintain adequate customer service levels. We may experience temporary service interruptions for a variety of reasons, including telecommunications or power failures, fire, water damage, vandalism, computer bugs or viruses or hardware failures. We may not be able to correct a problem in a timely manner. Any service interruption that results in the unavailability of our system or reduces its capacity could result in real or perceived public safety issues that may affect customer confidence in our services and result in negative publicity that could cause us to lose customer accounts or fail to obtain new accounts. Any inability to scale our systems may cause unanticipated system disruptions, slower response times, degradation in levels of customer service, or impaired quality and speed of transaction processing. We are not certain that we will be able to project the rate or timing of increases, if any, in the use of our services to permit us to upgrade and expand our systems effectively or to integrate smoothly any newly developed or purchased modules with our existing systems.

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If we are not able to adequately secure and protect our patent, trademark and other proprietary rights our business may be materially and negatively affected.

Third parties may claim that our products or services infringe their proprietary rights. Any infringement claim, with or without merit, would be time-consuming and expensive to litigate or settle and could divert our management's attention from our core business. In the event of a successful infringement claim against us, we may have to pay significant damages, incur substantial legal fees, develop costly non-infringing technology, or enter into license agreements that require us to pay substantial royalties and that may not be available on terms acceptable to us, if at all.

Jiang Huai Lin, our president and chief executive officer and the beneficial owner of 54.4% of our common stock also beneficially owns 60% of iASPEC, from whom we derived 55% of our revenues in the fiscal year ended December 31, 2006, and 72% of our income for the nine months ended September 30, 2007, pursuant to existing commercial arrangements. As a result, conflicts of interest may arise from time to time and these conflicts may result in management decisions that could negatively affect our operations and potentially result in the loss of opportunities.

If iASPEC or its shareholders violate their contractual arrangements with us, our business could be disrupted and we may have to resort to litigation to enforce our rights which may be time consuming and expensive.

Our operations are currently dependent upon our commercial relationship with iASPEC. During the fiscal year ended December 31, 2006 and for the nine months ended September 30, 2007 we derived 55% and 72% of our revenues, respectively, from the provision of services to iASPEC customers.  A significant portion of these revenues have not yet been collected.  As of September 30, 2007, iASPEC owes the Company a balance of $3.09 million under the terminated Turnkey Agreement.  In addition, at September 30, 2007, iASPEC owes the Company $3.16 million under the Management Services Agreement and $6.28 for advances made by the Company to iASPEC.  Therefore, the total amount owed by iASPEC at September 30, 2007, both under the Turnkey Agreement and under the Management Service Agreement is $12.53 million.  iASPEC is obligated to repay the amounts due under the Turnkey Agreement on or before December 31, 2007.  Amounts owed by iASPEC under the Management Service Agreement for each quarter will be due and payable no later than the last day of the month following the end of each such quarter.  If iASPEC or its shareholders are unwilling or unable to perform their obligations under our commercial arrangements with it, including payment of revenues under the Management Service Agreement as they become due each quarter, we will not be able to conduct our operations in the manner currently planned.  In addition, iASPEC may seek to renew these agreements on terms that are disadvantageous to us.  Although we have entered into a series of agreements that provide us with substantial ability to control iASPEC, we may not succeed in enforcing our rights under them.  If we are unable to renew these agreements on favorable terms, or to enter into similar agreements with other parties, our business may not be able to operate or expand, and our operating expenses may significantly increase.

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Uncertainties in the PRC legal system may impede our ability to enforce the commercial agreements that we have entered into with iASPEC or any arbitral award thereunder and any inability to enforce these agreements could materially and adversely affect our business and operation.

While disputes under the Management Service Agreement and the Option Agreement with iASPEC are subject to binding arbitration before the Shenzhen Branch of the China International Economic and Trade Arbitration Commission, or CIETAC, in accordance with CIETAC Arbitration Rules, the agreements are governed by PRC law and an arbitration award may be challenged in accordance with PRC law. For example, a claim that the enforcement of an award in our favor will be detrimental to the public interest, or that an issue does not fall within the scope of the arbitration would require us to engage in administrative and judicial proceedings to defend an award. China’s legal system is a civil law system based on written statutes and unlike common law systems, it is a system in which decided legal cases have little value as precedent. As a result, China’s administrative and judicial authorities have significant discretion in interpreting and implementing statutory and contractual terms, and it may be more difficult to evaluate the outcome of administrative and judicial proceedings and the level of legal protection available than in more developed legal systems. These uncertainties may impede our ability to enforce the terms of the Management Service Agreement, the Option Agreement and the other contracts that we may enter into with iASPEC. Any inability to enforce the Management Service Agreement and Option Agreement or an award thereunder could materially and adversely affect our business and operation.

The business and operations of iASPEC, the owner and licensor to us of the copyrighted software applications and other intellectual property that are essential to the operation of our business, is subject to Chinese contractual obligations and laws and regulations that restrict its use of security information and other information that it obtains from its customers in the public security sector. For some of its contracts with government agencies, iASPEC has agreed to keep confidential all technical and commercial secrets obtained during the performance of services under the contract. iASPEC or its shareholders could violate these contractual obligations and laws and regulations by inadvertently or intentionally disclosing confidential information or by otherwise failing to operate its business in a manner that complies with these contractual and legal obligations. A violation of these agreements could result in the significant disruption or termination of our business or adversely affect our reputation in the market. If iASPEC or its shareholders violate these contractual and legal obligations, we may have to resort to litigation to enforce our rights under our contractual obligations with iASPEC. This litigation could result in the disruption of our business, diversion of our resources and the incurrence of substantial costs.

Our major shareholder, Jiang Huai Lin, controls iASPEC. As a result, Mr. Lin may be able to cause our commercial arrangements with iASPEC to be amended in a manner that is adverse to our company, or may be able to cause these agreements not to be renewed, even if their renewal would be beneficial for us. Although we have entered into an agreement that prevents the amendment of these agreements without the approval of the members of our Board other than Mr. Lin, we can provide no assurances that these agreements will not be amended in the future to contain terms that might differ from the terms that are currently in place. These differences may be adverse to our interests.

We could face material and adverse tax consequences if the PRC tax authorities determine that our contracts with iASPEC and its shareholders were not entered into based on arm’s length negotiations. Although our contractual arrangements are similar to other companies conducting similar operations in China, if the PRC tax authorities determine that these contracts were not entered into on an arm’s length basis, they may adjust our income and expenses for PRC tax purposes in the form of a transfer pricing adjustment. Such an adjustment may require that we pay additional PRC taxes plus applicable penalties and interest, if any.

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The shares purchased by the investors in our recent private placement transaction are subject to redemption in the event that the PRC government takes action that unwinds our restructuring transaction. Any such redemption would materially and adversely affect our liquidity and capital resources since we would have to return the funds raised in the private placement.

If any PRC governmental agency takes action that materially and adversely affects the transactions contemplated by the restructuring agreement and we are unable to reverse the adverse governmental action or otherwise address the material adverse effect to the reasonable satisfaction of the investors in the private placement transaction that closed on January 31, 2006 and February 5, 2006, within 60 days of the occurrence of such governmental action, then if asked, we are obligated, as liquidated damages, to redeem the shares purchased by such investors, within 30 days of their demand, for an amount equal to the investor’s entire investment amount without interest. If the PRC government takes action that triggers this redemption right, then our liquidity and capital resources would be materially adversely affected as we would be required to return the funds raised in the private placements. If we are required to return such funds we may required to sell assets or seek financing on terms that are not favorable, if available at all, and our financial condition could be thereby materially and adversely affected.

The exercise of our option to purchase part or all of the equity interests in or assets of iASPEC under the Option Agreement might be subject to approval by the PRC government. Our failure to obtain this approval may impair our ability to substantially control iASPEC and could result in actions by iASPEC that conflict with our interests.

Our Option Agreement with iASPEC gives our Chinese operating subsidiary, Public Security, the option to purchase all or part of the equity interests in or assets of iASPEC, however, the option may not be exercised by Public Security if the exercise would violate any applicable laws and regulations in China or cause any license or permit held by, and necessary for the operation of iASPEC, to be cancelled or invalidated. Under the laws of China, if a foreign entity, through a foreign investment company that it invests in, acquires a domestic related company, China’s regulations regarding Mergers and Acquisitions would technically apply to the transaction. Application of these regulations require an examination and approval of the transaction by China’s Ministry of Commerce, or MOFCOM, or its local counterparts. Also, an appraisal of the equity or assets to be acquired is mandatory. However, our local PRC counsel has advised us that Shenzhen and other local counterparts of MOFCOM hold the view that such a transaction would not require their approval. Therefore, we do not believe at this time that an approval and an appraisal are required for Public Security to exercise its option to acquire iASPEC in Shenzhen. In light of the different views on this issue, however, it is possible that the central MOFCOM office in Beijing will issue a standardized opinion imposing the approval and appraisal requirement. If we are not able to purchase the equity or assets of iASPEC, then we will lose a substantial portion of our ability to control iASPEC and our ability to ensure that iASPEC will act in our interests.

Our new commercial arrangement with iASPEC gives us the right to designate two Chinese citizens to serve as senior managers of iASPEC, serve on iASPEC’s board of directors and assist in managing the business and operations of iASPEC. In addition, iASPEC will require the affirmative vote of the majority of the our board of directors, as well as at least one non-insider director, for completing certain material actions with respect to iASPEC, including, but not limited to: (a) the nomination, appointment, election or replacement of any board members; (b) the distribution of any dividend or profits; (c) any merger, division, change of corporate form, dissolution or liquidation; (d) any reimbursement of net losses or other payments or transfers of funds from Public Security to iASPEC; (e) the formation or disposition of a subsidiary or the acquisition or disposition of any interest in any other entity; and (f) the encumbrance of any assets under any lien not in the ordinary course of business. However, fulfillment of certain PGIS contracts with PRC Government customers is restricted to entities, such as iASPEC, that possess the necessary PRC government licenses and approvals, and any change in control may be viewed under PRC law as creating a new entity. If iASPEC’s government customers view these Management Service Agreement provisions as a change in control of iASPEC or as evidence of iASPEC’s failure to operate its business in a manner that complies with its contractual obligations or with related laws and regulations. Such a perception could result in the cancellation or invalidation of iASPEC’s licenses and permits. A loss by iASPEC of its licenses and permits could result in the significant disruption or possible termination of our business or adversely affect our reputation in the market.

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Economic reforms adopted by the Chinese government have had a positive effect on the economic development of the country, but the government could change these economic reforms or any of the legal systems at any time. This could either benefit or damage our operations and profitability. Some of the things that could have this effect are:

• Level of government involvement in the economy;

• Control of foreign exchange;

• Methods of allocating resources;

• Balance of payments position;

• International trade restrictions; and

• International conflict.

The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, or OECD, in many ways. As a result of these differences, we may not develop in the same way or at the same rate as might be expected if the Chinese economy were similar to those of the OECD member countries.

The Chinese legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which precedents set in earlier legal cases are not generally used. The overall effect of legislation enacted over the past 20 years has been to enhance the protections afforded to foreign invested enterprises in China. However, these laws, regulations and legal requirements are relatively recent and are evolving rapidly, and their interpretation and enforcement involve uncertainties. These uncertainties could limit the legal protections available to foreign investors, such as the right of foreign invested enterprises to hold licenses and permits such as requisite business licenses. In addition, all of our executive officers and our directors are residents of China and not of the U.S., and substantially all the assets of these persons are located outside the U.S. As a result, it could be difficult for investors to effect service of process in the U.S., or to enforce a judgment obtained in the U.S. against us or any of these persons.

China only recently has permitted provincial and local economic autonomy and private economic activities. The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures.

In recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation. During the past ten years, the rate of inflation in China has been as high as 20.7% and as low as -2.2%. These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products.

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Any recurrence of severe acute respiratory syndrome, or SARS, or another widespread public health problem, could harm our operations.

A renewed outbreak of SARS or another widespread public health problem in China, where our operations are conducted, could have a negative effect on our operations.

Our operations may be impacted by a number of health-related factors, including the following:

Any of the foregoing events or other unforeseen consequences of public health problems could damage our operations.

The majority of our revenues will be settled in RMB, and any future restrictions on currency exchanges may limit our ability to use revenue generated in RMB to fund any future business activities outside China or to make dividend or other payments in U.S. dollars. Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the RMB for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies after providing valid commercial documents, at those banks in China authorized to conduct foreign exchange business. In addition, conversion of RMB for capital account items, including direct investment and loans, is subject to governmental approval in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items. We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB.

Failure to comply with PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident stockholders to personal liability, limit our ability to acquire PRC companies or to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute profits to us or otherwise materially adversely affect us.

In October 2005, the PRC State Administration of Foreign Exchange, or SAFE, issued the Notice on Relevant Issues in the Foreign Exchange Control over Financing and Return Investment Through Special Purpose Companies by Residents Inside China, generally referred to as Circular 75, which required PRC residents to register with the competent local SAFE branch before establishing or acquiring control over an offshore special purpose company, or SPV, for the purpose of engaging in an equity financing outside of China on the strength of domestic PRC assets originally held by those residents. Internal implementing guidelines issued by SAFE, which became public in June 2007 (known as Notice 106), expanded the reach of Circular 75 by (1) purporting to cover the establishment or acquisition of control by PRC residents of offshore entities which merely acquire "control" over domestic companies or assets, even in the absence of legal ownership; (2) adding requirements relating to the source of the PRC resident’s funds used to establish or acquire the offshore entity; (3) covering the use of existing offshore entities for offshore financings; (4) purporting to cover situations in which an offshore SPV establishes a new subsidiary in China or acquires an unrelated company or unrelated assets in China; and (5) making the domestic affiliate of the SPV responsible for the accuracy of certain documents which must be filed in connection with any such registration, notably, the business plan which describes the overseas financing and the use of proceeds. Amendments to registrations made under Circular 75 are required in connection with any increase or decrease of capital, transfer of shares, mergers and acquisitions, equity investment or creation of any security interest in any assets located in China to guarantee offshore obligations, and Notice 106 makes the offshore SPV jointly responsible for these filings. In the case of an SPV which was established, and which acquired a related domestic company or assets, before the implementation date of Circular 75, a retroactive SAFE registration was required to have been completed before March 31, 2006; this date was subsequently extended indefinitely by Notice 106, which also required that the registrant establish that all foreign exchange transactions undertaken by the SPV and its affiliates were in compliance with applicable laws and regulations. Failure to comply with the requirements of Circular 75, as applied by SAFE in accordance with Notice 106, may result in fines and other penalties under PRC laws for evasion of applicable foreign exchange restrictions. Any such failure could also result in the SPV’s affiliates being impeded or prevented from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the SPV, or from engaging in other transfers of funds into or out of China.

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We believe that our stockholders, who are PRC residents as defined in Circular 75, have registered with the relevant branch of SAFE, as currently required, in connection with their equity interests in us and our acquisitions of equity interests in our PRC subsidiaries. However, we cannot provide any assurances that their existing registrations have fully complied with, and they have made all necessary amendments to their registration to fully comply with, all applicable registrations or approvals required by Circular 75. Moreover, because of uncertainty over how Circular 75 will be interpreted and implemented, and how or whether SAFE will apply it to us, we cannot predict how it will affect our business operations or future strategies. For example, our present and prospective PRC subsidiaries’ ability to conduct foreign exchange activities, such as the remittance of dividends and foreign currency-denominated borrowings, may be subject to compliance with Circular 75 by our PRC resident beneficial holders. In addition, such PRC residents may not always be able to complete the necessary registration procedures required by Circular 75. We also have little control over either our present or prospective direct or indirect stockholders or the outcome of such registration procedures. A failure by our PRC resident beneficial holders or future PRC resident stockholders to comply with Circular 75, if SAFE requires it, could subject these PRC resident beneficial holders to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiaries’ ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.

On August 8, 2006, six PRC regulatory agencies, including the CSRC, promulgated the Regulation on Mergers and Acquisitions of Domestic Companies by Foreign Investors, which became effective on September 8, 2006. This new regulation, among other things, has certain provisions that require SPVs formed for the purpose of acquiring PRC domestic companies and controlled by PRC individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock market. However, the new regulation does not expressly provide that approval from the CSRC is required for the offshore listing of an SPV which acquires, directly or indirectly, an equity interest or shares of domestic PRC entities held by domestic companies or individuals by cash payment, nor does it expressly provide that approval from CSRC is not required for the offshore listing of an SPV which has fully completed its acquisition of an equity interest in domestic PRC equity prior to September 8, 2006. On September 21, 2006, the CSRC published on its official website a notice specifying the documents and materials that are required to be submitted for obtaining CSRC approval. It is not clear whether the provisions in the new regulation regarding the offshore listing and trading of the securities of an SPV applies to an offshore company such as us which has acquired equity interests in of PRC domestic entities for cash and has completed the acquisition of the equity interest of PRC domestic entities prior to the effective date of the new regulation. Since the new regulation has only recently been adopted, there remains some uncertainty as to how this regulation will be interpreted or implemented. If the CSRC or another PRC regulatory agency subsequently determines that the CSRC’s approval is required for this offering, we may face sanctions by the CSRC or another PRC regulatory agency. If this happens, these regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from this offering into the PRC, restrict or prohibit payment or remittance of dividends to us or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our shares. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to delay or cancel this offering before settlement and delivery of the shares being offered by us.

We may be unable to complete a business combination transaction efficiently or on favorable terms due to complicated merger and acquisition regulations which became effective on September 8, 2006.

On August 9, 2006, six PRC regulatory agencies, including the CSRC, promulgated the Regulation on Mergers and Acquisitions of Domestic Companies by Foreign Investors, which became effective on September 8, 2006. This new regulation, among other things, governs the approval process by which a PRC company may participate in an acquisition of assets or equity interests. Depending on the structure of the transaction, the new regulation will require the PRC parties to make a series of applications and supplemental applications to the government agencies. In some instances, the application process may require the presentation of economic data concerning a transaction, including appraisals of the target business and evaluations of the acquirer, which are designed to allow the government to assess the transaction. Government approvals will have expiration dates by which a transaction must be completed and reported to the government agencies. Compliance with the new regulations is likely to be more time consuming and expensive than in the past and the government can now exert more control over the combination of two businesses. Accordingly, due to the new regulation, our ability to engage in business combination transactions has become significantly more complicated, time consuming and expensive, and we may not be able to negotiate a transaction that is acceptable to our stockholders or sufficiently protect their interests in a transaction.

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The new regulation allows PRC government agencies to assess the economic terms of a business combination transaction. Parties to a business combination transaction may have to submit to the Ministry of Commerce and other relevant government agencies an appraisal report, an evaluation report and the acquisition agreement, all of which form part of the application for approval, depending on the structure of the transaction. The regulations also prohibit a transaction at an acquisition price obviously lower than the appraised value of the PRC business or assets and in certain transaction structures, require that consideration must be paid within defined periods, generally not in excess of a year. The regulation also limits our ability to negotiate various terms of the acquisition, including aspects of the initial consideration, contingent consideration, holdback provisions, indemnification provisions and provisions relating to the assumption and allocation of assets and liabilities. Transaction structures involving trusts, nominees and similar entities are prohibited. Therefore, such regulation may impede our ability to negotiate and complete a business combination transaction on financial terms that satisfy our investors and protect our stockholders’ economic interests.

The value of our common stock will be affected by the foreign exchange rate between U.S. dollars and RMB, and between those currencies and other currencies in which our sales may be denominated. For example, to the extent that we need to convert U.S. dollars into RMB for our operational needs and should the RMB appreciate against the U.S. dollar at that time, our financial position, our business, and the price of our common stock may be harmed. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of declaring dividends on our common stock or for other business purposes and the U.S. dollar appreciates against the RMB, the U.S. dollar equivalent of our earnings from our subsidiaries in China would be reduced.

Our subsidiary Public Security is a sino-foreign joint venture enterprise and has enjoyed certain special or preferential tax treatments regarding foreign enterprise income tax in accordance with the "Income Tax Law of the PRC for Enterprises with Foreign Investment and Foreign Enterprises" and its implementing rules. Accordingly, Public Security expects to receive a full exemption from the foreign enterprise income tax or EIT for 2007 and 2008, and a further 12.5%% tax exemption for 2009, 2010 and 2011. However, on March 16, 2007, the PRC’s National People’s Congress passed a new corporate income tax law, which will be effective on January 1, 2008. This new corporate income tax unifies the corporate income tax rate, cost deduction and tax incentive policies for both domestic and foreign-invested enterprises. According to the new corporate income tax law, the applicable corporate income tax rate of our operating subsidiary will be moved up to a rate of 25% over a five-year grandfather period. We expect the measures to implement this grandfather period to be enacted by the PRC government in the coming months and we will make an assessment of what the impact of the new unified tax law is expected to be in the grandfather period. The discontinuation of any such special or preferential tax treatment or other incentives could have an adverse affect our business, financial condition and results of operations.

We are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute, for the purpose of obtaining or retaining business. We have operations, agreements with third parties and we make sales in China. Our activities in China create the risk of unauthorized payments or offers of payments by the employees, consultants, sales agents or distributors of our Company, even though they may not always be subject to our control. It is our policy to implement safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents or distributors of our Company may engage in conduct for which we might be held responsible.

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Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the U.S. government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

Our common stock is quoted on the OTC Bulletin Board Electronic maintained by the National Association of Securities Dealers, Inc.. The OTC Bulletin Board is a significantly more limited market than the New York Stock Exchange or Nasdaq system. The quotation of our shares on the OTC Bulletin Board may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future.

There has been, and will likely continue to be, significant volatility in the market price of securities of technology companies, including ours. These fluctuations can be unrelated to the operating performance of these companies. Factors such as the following could cause the market price of our common stock to fluctuate substantially:

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A decline in the market price of our common stock may adversely impact our ability to attract and retain employees. In addition, stockholders may initiate securities class action lawsuits if the market price of our stock drops significantly, which may cause us to incur substantial costs and could divert the time and attention of our management.

All of the shares registered for sale on behalf of the selling stockholders are "restricted securities" as that term is defined in Rule 144 under the Securities Act. We have filed this registration statement to register these restricted shares for sale into the public market by the selling stockholders. These restricted securities, if sold in the market all at once or at about the same time, could depress the market price during the period the registration statement remains effective and also could affect our ability to raise equity capital. Any outstanding shares not sold by the selling stockholders pursuant to this prospectus will remain as "restricted shares" in the hands of the holders, except for those held by non-affiliates for a period of two years, calculated pursuant to Rule 144.

Mr. Jiang Huai Lin, our Chairman, President and Chief Executive Officer, beneficially owns 54.4% of our outstanding voting securities. As a result, he possesses significant influence, giving him the ability, among other things, to elect a majority of our board of directors and to authorize or prevent proposed significant corporate transactions. His ownership and control may also have the effect of delaying or preventing a future change in control, impeding a merger, consolidation, takeover or other business combination or discourage a potential acquirer from making a tender offer.

This prospectus contains forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this prospectus, the words "anticipate", "believe", "estimate", "expect", "intend", "plan" and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management's current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: our potential inability to raise additional capital, the possibility that third parties hold proprietary rights that preclude us from marketing our products, the emergence of additional competing technologies, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, uncertainties related to China's legal system and economic, political and social events in China, a general economic downturn, a downturn in the securities markets, Securities and Exchange Commission regulations which affect trading in the securities of "penny stocks," and other risks and uncertainties. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this prospectus as anticipated, estimated or expected.

We will not receive any proceeds from the sales by the selling stockholders, but we will receive funds from the exercise of warrants held by the selling stockholders, if exercised for cash.

We have never declared or paid cash dividends. Any future decisions regarding dividends will be made by our board of directors. We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

Our common stock is quoted under the symbol "CPBY.OB" on the Electronic Bulletin Board maintained by the National Association of Securities Dealers, Inc. Our CUSIP number is 16942F103.

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(1) The above tables set forth the range of high and low closing bid prices per share of our common stock as reported by Yahoo Finance for the periods indicated.

We plan to furnish our stockholders with an annual report for each fiscal year ending December 31 containing financial statements audited by our independent registered public accounting firm. Additionally, we may, in our sole discretion, issue unaudited quarterly or other interim reports to our stockholders when we deem appropriate. We intend to maintain compliance with the periodic reporting requirements of the Securities Exchange Act of 1934.

On November 14, 2007, there were approximately 89 stockholders of record of our common stock.

Our net tangible book value per share as of September 30, 2007 was $0.65 per share of common stock. Net tangible book value is determined by dividing our tangible book value (total assets less intangible assets including know-how, trademarks and copyrights and less total liabilities) by the number of outstanding shares of our capital stock. Since this offering is being made solely by the selling stockholders and none of the proceeds will be paid to us, our net tangible book value will be unaffected by this offering.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This subsection of MD&A is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance, our overall business strategy and our earnings for the periods covered.

We are a holding company that only operates through our Chinese subsidiary, Public Security Technology (PRC) Co., Ltd. (formerly, Bo Hai Wen Technology (Shenzhen) Company Limited). Through the subcontracting services provided for in our turnkey agreement with iASPEC, we are a provider of integrated solutions for the public security sector in China, specializing in providing public security Informatization and GIS software services. Our customers are mostly public sector entities that use our products and services to improve the service quality and management level of civil and medical emergencies, traffic control, fire control, medical rescue and border control. Our typical customers include some of the most important public security departments in Guangdong Province and Hainan Province, including the Ministry of Public Security’s Shenzhen City Immigration Border Check Station, the Shantou City Public Security Bureau, the Dongfang City Public Security Bureau of Hainan Province, the Shenzhen City Traffic Police Bureau, the Shenzhen City Public Security Bureau, the Fo Shan City Police Bureau, the Shenzhen Fire Department, the Guangdong Province Department of Public Security and the Zhuhai Public Security Bureau. In the future we expect to expand the application of our products and services in the public security sector and to other sectors in China as well.

Our VIE, iASPEC serves customers in over 6 cities in Guangdong Province and Hainan Province in China. Two customers accounted for 28% and 15% of our revenues in the third quarter of 2007.

We generate revenues through the sale of our integrated hardware and software products and through the provision of related support services. During the 2006 fiscal year and during the nine months ended September 30, 2007, we generated 55% and 72% of our revenues, respectively, through our commercial arrangements with iASPEC. The business turnkey agreement, or Turnkey Agreement, dated as of October 9, 2006, among iASPEC and Public Security, provided for an exclusive subcontracting arrangement under which iASPEC, as master contractor and systems integrator with various licenses and permits, exclusively engaged Public Security as its subcontractor to provide iASPEC with outsourcing services (to the extent that those services did not violate any special governmental permits held by iASPEC and did not involve the improper transfer of any sensitive confidential governmental or other data). Furthermore, under the terms of the Turnkey Agreement, iASPEC granted to Public Security an exclusive license to use and install iASPEC’s proprietary software, and iASPEC licensed back from Public Security the use of the same technology on a limited basis to be used solely in connection with the performance by iASPEC of its existing customer contracts. The Turnkey Agreement also provided for a revenue-sharing arrangement between iASPEC and Public Security where Public Security was entitled to receive between 90% and 100% of the revenues actually received by iASPEC from servicing contracts involving any iASPEC business. We were also obligated under the terms of the Turnkey Agreement to pay for our own costs in providing these services and to pay iASPEC $180,000 per year throughout the term of the agreement.

Fulfillment of certain PGIS contracts with PRC Government customers is restricted to entities possessing the necessary government licenses and approvals that Public Security does not have. Because Public Security does not have either the PRC required licenses or the workforce necessary to perform its obligations under the Turnkey Agreement in connection with such PGIS contracts, we have relied upon iASPEC’s licenses and workforce to fulfill our obligations thereunder. Accordingly many of our costs and expenses under the Turnkey Agreement were incurred and paid by iASPEC and amounts reported by Public Security thereunder reflected contract amounts net of costs incurred by iASPEC. Since iASPEC fulfilled all our obligations for PGIS contracts under the Turnkey Agreement, substantially all costs incurred and paid for by iASPEC since our entry into the Turnkey Agreement have been allocated to Public Security and Public Security was required to continue relying exclusively on iASPEC to execute Public Security’s obligations under the Turnkey Agreement in connection with the PGIS contracts.

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On August 1, 2007, Public Security, iASPEC and iASPEC’s shareholders, Mr. Lin and Mr. Jin Zhu Cai agreed to terminate the Turnkey Agreement, effective as of July 1, 2007, and replaced it on the same day with the Management Service Agreement, effective as of July 1, 2007. Pursuant to the terms of the Management Service Agreement, iASPEC granted Public Security an exclusive, royalty-free, transferable, worldwide, license to use and install for a ten-year term, certain iASPEC software, along with copies of source and object code relating to such software, in any manner permitted by applicable laws, and Public Security licensed back to iASPEC a royalty-free, limited, non-exclusive license to the Software, without right of sub-license, for the sole purpose of permitting iASPEC to carry out its business as presently conducted. Public Security will also have the right to designate two Chinese citizens to serve as senior managers of iASPEC, to serve on iASPEC’s board of directors and assist in managing the business and operations of iASPEC. In addition, both iASPEC and Public Security will require the affirmative vote of the majority of our board of directors, as well as at least one non-insider director, for certain material actions with respect to iASPEC, including, but not limited to: (a) the nomination, appointment, election or replacement of any board members; (b) the distribution of any dividend or profits; (c) any merger, division, change of corporate form, dissolution or liquidation; (d) any reimbursement of net losses or other payments or transfers of funds from Public Security to iASPEC; (e) the formation or disposition of a subsidiary or the acquisition or disposition of any interest in any other entity; and (f) the encumbrance of any assets under any lien not in the ordinary course of business. Furthermore, under the Management Service Agreement, Public Security will receive 100% of the net received profit of iASPEC and will reimburse iASPEC for all net losses incurred by iASPEC. The net profit of iASPEC will be paid to Public Security, and the net losses of iASPEC will be reimbursed by Public Security, no later than the last day of the month following the end of each calendar quarter, commencing on July 1, 2007. Public Security is also obligated to pay iASPEC $180,000 per year, no later than the last day of the month following the end of each calendar year, commencing on July 1, 2007, and this amount may be retained by iASPEC out of any net received profit due and payable to Public Security as of such payment date. Public Security may also advance to iASPEC, at its sole discretion, amounts to be credited against Public Security’s future obligations to iASPEC, but any such advances will be treated as prepayments and not as loans. iASPEC will have no obligation to repay any such advances except by crediting the amount of such advances against Public Security’s obligation to reimburse net losses, or by adding the amount thereof to net profit when and as requested by Public Security. As of September 30, 2007, iASPEC has repaid $3.91of the true-up and is obligated to pay the remaining amounts of $3.09 before December 31, 2007. In addition, at September 30, 2007, iASPEC also owes the Company $3.16 million under the Management Services Agreement and $6.28 for advances made by the Company to iASPEC. If iASPEC or any of the iASPEC shareholders materially breaches the Management Service Agreement and fails to remedy the breach within 60 days’ notice from Public Security of such breach, they will be jointly and severally obligated to pay to Public Security liquidated damages in an amount equal to the higher of (a) eight times the annualized revenues of Public Security for the last completed fiscal quarter, or (b) US$50 million.

The Management Service Agreement contains a true-up provision which requires iASPEC and Public Security, on or before September 30, 2007, to calculate all prior amounts owed to Public Security under the Turnkey Agreement, and requires iASPEC to pay such amounts. The parties are required to calculate the cumulative net profit of iASPEC from October 9, 2006, when iASPEC commenced its contractual relationship with Public Security, through the commencement date of the Management Service Agreement, and iASPEC is required to pay the amount due to Public Security, if there is a net received profit, while Public Security is obligated to reimburse any amount to iASPEC if it is there is a net loss. "Net Received Profit" means the Net Received Profit of iASPEC, calculated as follows: accrued accounts receivable plus net turnover (revenue), minus cost of sales, minus operating expenses, and minus accrued but not collected accounts receivable, but only if the result is a positive number. "Net Losses" means the net losses of iASPEC, calculated as follows: accrued accounts receivable plus net turnover (revenue), minus cost of sales, minus operating expenses, and minus accrued but not collected accounts receivable, but only if the result is a negative number. In accordance with this calculation, at June 30, 2007, the day prior to the effective date of the Management Service Agreement and the termination of the Turnkey Agreement, iASPEC owed Public Security $6.7 million, which represents iASPEC’s net revenues, less the annual payment and expenses incurred on behalf of Public Security in connection with the services provided under the Turnkey Agreement during 2006 and for the six months ended June 30, 2007. Public Security, iASPEC and the iASPEC shareholders have subsequently entered into a letter agreement, or Letter Agreement, dated September 12, 2007, requiring iASPEC to pay the true-up amount to Public Security, on or before December 31, 2007. As of September 30, 2007, iASPEC has repaid $3.91of the true-up amount which leaves a balance of $3.09 million.. In addition, at September 30, 2007, iASPEC also owes the Company $3.16 million under the Management Services Agreement and $6.28 for advances made by the Company to iASPEC. Therefore, the total amount owed by iASPEC at September 30, 2007, both under the Turnkey Agreement and under the Management Service Agreement is $12.53 million.

In connection with the Management Service Agreement, on August 1, 2007, Public Security also entered into an option agreement, or Option Agreement, with iASPEC and its shareholders, effective as of July 1, 2007, pursuant to which the iASPEC shareholders granted Public Security, or its designee(s), an exclusive, irrevocable option to purchase, from time to time, all or a part of iASPEC’s shares or iASPEC’s assets from the iASPEC shareholders.

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As a result of the restructuring, iASPEC has become our variable interest entity. A variable interest represents a contractual or ownership interest in another entity that causes the holder to absorb the changes in fair value of the other entity’s net assets. Potential variable interests include: holding economic interests, voting rights, or obligations to an entity; issuing guarantees on behalf of an entity; transferring assets to an entity; managing the assets of an entity; leasing assets from an entity; and providing financing to an entity. In such cases FASB Interpretation 46(R) requires consolidation of such entity by the enterprise that controls the economic risks and rewards of the entity, regardless of ownership. While we have held an economic interest in iASPEC since October 9, 2006, the Management Service Agreement and the Option Agreement have now given us control over the business and operations of iASPEC. As a result, iASPEC’s financial data is subject to consolidation with our financial data in accordance with the provisions of FASB Interpretation 46(R), commencing with our Quarterly Report on Form 10-QSB for the period ending September 30, 2007. For more details regarding the Management Service Agreement and Option Agreement, see our Current Report on Form 8-K filed with the SEC on August 6, 2007.

Our GIS software services and operations have been concentrated in and are used by the public security sector (such as by the Police, Fire Department and Healthcare Emergency Services). The use of GIS in the private sector is still developing in China and presents a great growth opportunity for us. In the future we plan to target the telecommunications, logistics and insurance sectors as areas for business development within the private GIS market.

Our industry is characterized by extremely rapid technological change, evolving industry standards and changing customer demands. These conditions require continuous expenditures on product research and development to enhance existing products, create new products and avoid product obsolescence. As a result, our future revenue stream will depend to a large degree on our ability to utilize our technology in a way that will allow us to successfully define, develop and introduce competitive new software applications, and enhance existing software applications and services to a broader client base.

In order to address this factor we plan to make investments in research and development to:

Our Predecessor, iASPEC serves about 17 customers in over 5 cities in Guangdong Province and Hainan Province in China. One customer accounted for 13.8% of our revenues in 2006.

Our services are designed to provide our largely public sector customers with integrated and innovative public safety and security solutions. Key advantages of our solution include:

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Our objective is to be the leading provider of integrated solutions for public security information technology and GIS software service operations in China. Our intelligence solutions can help organizations make more insightful decisions and improve the efficiency of their internal processes. Three key elements of our strategy are as follows:

We expect to execute these three elements of our growth strategy through a combination of investment in internal initiatives. Internal initiatives will focus typically on expanding capacity and enhancing our technology and services capabilities. We may also attempt to grow through acquisitions.

The revenue growth and profitability of our business depend on the overall market demand for software products and related services. Our products and services in the public security sector are considerably mature. However, If we fail to quickly expand our market share in the public security sector, our financial results could be adversely affected.

Under the Management Service Agreement, we license 16 copyrighted software applications from iASPEC on an exclusive basis. To protect the intellectual property underlying these applications and our other intellectual property, we rely on a combination of copyright, trademark, and trade secret laws worldwide. We also rely on non-disclosure agreements and other confidentiality procedures and contractual provisions under the laws of various jurisdictions to protect our intellectual property rights. Some of these technologies, other than the iASPEC copyrighted software applications, are very important to our business and are not protected by copyrights or patents. It may be possible for unauthorized third parties to copy or reverse engineer our products, or otherwise obtain and use information that we regard as proprietary. Further, third parties could challenge the scope or enforceability of our copyrights. In certain foreign countries, including China where we operate, the laws do not protect our proprietary rights to the same extent as the laws of the United States. Any misappropriation of our intellectual property could have a material adverse effect on our business and results of operations. See our Risk Factors under the headings "Risks Related to our Business" and "Risks Related to Doing Business in China" to read about significant risk factors related to our intellectual property and our ability to protect them under PRC law.

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The following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of sales revenues. The financial data for the period from January 1, 2006 through September 30, 2006 (the Predecessor Period) reflect the results of operations of iASPEC (our Predecessor) and the financial data for the period from January 1, 2007 through September 30, 2007 (the Successor Period) reflect the results of operations of the Company, its subsidiaries, and iASPEC from July 1, 2007, the date iASPEC became our VIE.

For the Nine Months Ended September 30, 2007 Compared To September 30, 2006 (Unaudited)

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AS A PERCENTAGE OF REVENUES

Revenues. For the nine months ended September 30, 2007, revenues were $25.8 million, compared to $9.7 million for the nine months ended September 30, 2006, an increase of $16.1 million, or 166%, largely due to the development of our new product line, our expansion to markets outside Shenzhen City and our procurement of several large-scale system integration projects. Significant projects include the Residence ID Card Project for Shenzhen City Public Security Bureau, and Shenzhen City Immigration Border Check Station Project.

Cost of Revenues. For the nine months ended September 30, 2007, our cost of revenues increased to $12.6 from $3.7 million for the months ended September 30, 2006, a $8.9 million, or 241% increase. As a percentage of revenues, our cost of revenues were 48.8% for the nine months ended September 30, 2007 as compared to 38.3% for the nine months ended September 30, 2006. During the third quarter of 2007, we were engaged in several large-scale system integration projects. Those large-scale projects involved higher costs for procured hardware and other subcontracting costs. The cost for accomplishing those projects is much higher than pure software development services, and therefore, led to an increase in our cost of revenues.

Gross Profit. For the nine months ended September 30, 2007, our gross profit increased to $13.2 million from $6.0 million for the months ended September 30, 2006, a $7.2 million, or 120% increase. For the nine months ended September 30, 2007, our gross profit as a percentage of revenues decreased to 51.2%, from 61.7% for the nine months ended September 30, 2006. This 10.5% decrease in gross profit was due to significantly higher costs for procured hardware and other subcontracting costs related to the implementation of several large-scale system integration projects.

Administrative Expenses. For the nine months ended September 30, 2007, our administrative expenses increased to $2.1 million from $0.9 million for the nine months ended September 30, 2006, a $1.2 million, or 133% increase, from period to period. This increase in administrative expenses was mainly attributable to an increase in our administrative staff and increased administrative costs due to the expansion of our operations.

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Selling Expenses. For the nine months ended September 30, 2007, our selling expenses increased to $0.5 million from $0.15 million for the nine months ended September 30, 2006, a $0.35 million, or 233% increase, from period to period. As a percentage of revenues, our selling expenses for the nine months ended September 30, 2007 and 2006 remained stable at around 1% to 2%, mainly due to management’s implementation of more stringent cost controls.

Income before Taxes and Minority Interest. Income before taxes for the nine months ended September 30, 2007 and 2006 was $10.5 million and $4.9 million respectively, an increase of $5.6, or 114%. Income before taxes and minority interest as a percentage of revenues was 40.6% and 50.6% for the nine months ended September 30, 2007 and 2006, respectively. The decrease is due to higher costs for procured hardware and other subcontracting costs related to the implementation of several large-scale system integration projects.

Provision for Income Taxes. Our subsidiary, Public Security and our VIE, iASPEC are subject to EIT at a rate of 15% of assessable profits. Accordingly, Public Security was subject to a tax rate of 15% for 2006. In addition, Public Security is a Foreign Investment Enterprise, or FIE, engaged in the advanced technology industry which entitles it to a two-year exemption from EIT followed by a 7.5% tax exemption for the next 3 years. On August 10, 2007, Public Security was granted the EIT exemption by PRC tax authorities, retroactive to as of January 1, 2007. Income tax expense for the nine months ended September 30, 2007 was $0.03 million and represents taxes on iASPEC’s income not attributable to the Company under the Management Services Agreement. Income tax expenses was $0.8 million for the nine months ended September 30, 2006.

Net Income. As a result of the factors described above, net income increased $6.3 million or 154%, from $4.1 million for the months ended September 30, 2006 to $10.4 million for the same period in 2007.

For the Three Months Ended September 30, 2007 Compared To September 30, 2006 (Unaudited)

AS A PERCENTAGE OF REVENUES

Revenues. For the three months ended September 30, 2007, our revenues were $10.2 million, compared to $4.5 million for the three months ended September 30, 2006, an increase of $5.7 million, or 127%, largely due to the development of our new product line, our expansion to markets outside Shenzhen City and our procurement of several large-scale system integration projects. Significant projects include the Residency ID Card Project for Shenzhen City Public Security Bureau, and Shenzhen City Immigration Border Check Station Project.

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Cost of Revenues. For the three months ended September 30, 2007, our cost of revenues increased to $5.2 million from $1.8 million for the three months ended September 30, 2006, an increase of $3.4 million, or 188%. As a percentage of revenues, our cost of revenues was 51.6% for the three months ended September 30, 2007 as compared to 37.9% for the three months ended September 30, 2006. Continuing from the second quarter of 2007, we were engaged in several large-scale system integration projects. Those large-scale projects involved higher costs for procured hardware and other subcontracting costs. The costs for completing those projects are much higher than pure software development services, and therefore, led to an increase in our cost of revenues.

Gross Profit. For the three months ended September 30, 2007 and 2006, our gross profit was $4.9 million and $2.6 million, respectively, an increase of $2.3 million, or 88%. Gross profit as a percentage of revenues was 48.4% and 58.9% for the three months ended September 30, 2007 and 2006, respectively. This 10.5% decrease in gross profit is due to significantly higher costs for procured hardware and other subcontracting costs related to the implementation of several large-scale system integration projects.

Administrative Expenses. For the three months ended September 30, 2007 and 2006, our administrative expenses were $0.9 million and $0.3 million, respectively. This $0.6 million, or 200%, increase in administrative expenses is mainly attributable to more staff being hired and increased consumption of other administrative charges due to the expansion of our operations. As a percentage of revenues, administrative expenses for the three months ended September 30, 2007 and 2006 were 8.9% and 6.7%, respectively. This increase was mainly attributable to an increase in our administrative staff and increased administrative costs due to the expansion of our operations.

Selling Expenses. Our selling expenses for the three months ended September 30, 2007 and 2006 were $0.1 million and $0.03 million, respectively. The increase of $0.07 million, or 233%, is due to the expansion of our marketing and sales functions during the period. As a percentage of revenues, our selling expenses for the fiscal quarter ended September 30, 2007 and 2006 were stable at between 1% and 0.8%, mainly due to management’s implementation of more stringent cost controls.

Income before Taxes and Minority Interest. Income before taxes for the three months ended September 30, 2007 and 2006 was $3.8 million and $2.3 million respectively, an increase of $1.5 million, or 65%. Income before taxes and minority interest as a percentage of revenues was 37.4% and 51.6% for the three months ended September 30, 2007 and 2006, respectively. The decrease is due to significantly higher costs for procured hardware and other subcontracting costs related to the implementation of several large-scale system integration projects.

Provision for Income Taxes. Our subsidiary, Public Security, and our VIE, iASPEC, are subject to the EIT at a rate of 15% of assessable profits. In addition, Public Security, is a FIE engaged in the advanced technology industry which entitles it to a two-year exemption from EIT followed by a 7.5% tax exemption for the next 3 years. On August 10, 2007, Public Security was granted the EIT exemption by PRC tax authorities, retroactive to January 1, 2007. Income tax expenses was $0.4 million for the three months ended September 30, 2006.

Net Income. As a result of the factors described above, net income increased $1.8 million, or 95%, from $1.9 million for the three months ended September 30, 2006, to $3.7 million for the same period in 2007.

The following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of sales revenues. We have combined the Predecessor Period from January 1 through October 8, 2006 and the Successor Period from January 17 through December 31, 2006 for purpose of the 2006 analysis. This is not in accordance with US GAAP and the periods presented are not comparable due to our reverse acquisition by CPSH.

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Revenues. Revenues increased approximately $6.8 million, or 136%, to $11.8 million for the Combined Period ended December 31, 2006 from approximately $5.0 million for the same period in 2005. Comparing with the same period in 2005, 29 more contracts have been signed for the Combined Period ended December 31, 2006.

Cost of Revenues. Our cost of revenues increased approximately $1.5 million, or 67%, to $3.8 million for the Combined Period ended December 31, 2006, from approximately $2.3 million during the same period in 2005. This increase was due to the increase of revenues. As a percentage of revenues, the cost of revenues decreased to 32% during the Combined Period ended December 31, 2006 from 46% in the same period of 2005. The increase in gross margin was the total effect of the execution of more contracts and the increased controls over contract costs.

Gross Profit. Our gross profit increased approximately $5.3 million to $8.0 million for the Combined Period ended December 31, 2006 from $2.7 million for the same period in 2005. Gross profit as a percentage of sales revenues was 68% for the Combined Period ended December 31, 2006, an increase of 14% from 54% during the same period in 2005.

Administrative Expenses. Our administrative expenses increased approximately $0.5 million or 100% to $1.0 million for the Combined Period ended December 31, 2006 from $0.5 million for the same period in 2005. The increase is mainly attributable to the expansion in operations during the year. As a percentage of sales revenues, administrative expenses remain stable at 9% for the Combined Period ended December 31, 2006 and for the same period in 2005.

Selling Expenses. Our selling expenses increased $33,374 or 18% to $217,868 for the Combined Period ended December 31, 2006 from $184,494 for the same period in 2005. The increase is mainly attributable to more marketing fees incurred for getting sales contracts during the year. As a percentage of sales revenues, our selling expenses decreased to 2% for the Combined Period ended December 31, 2006 from 4% for the same period in 2005. This percentage decrease was primarily attributable to the increase in sales revenues and increased controls over our selling expenses.

Income before Taxes. Income before taxes increased approximately $4.6 million, or 219%, to $6.7 million during the Combined Period ended December 31, 2006 from $2.1 million during the same period in 2005. Income before taxes as a percentage of sales revenues increased to 57% during the Combined Period ended December 31, 2006 from 43% during the same period in 2005. The increase is the combined effect of more contracts having been signed and our increased control over expenses.

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Provision for Income Taxes. Our subsidiary, Public Security, is subject to the PRC’s enterprises income tax, or EIT, at a rate of 15% of assessable profits. Accordingly, Public Security was subject to a tax rate of 15% for 2006. Furthermore, Bo Ha Wen, is a Foreign Investment Enterprise or FIE engaged in the advanced technology industry. As such, commencing in 2007, Public Security expects to be entitled to a two-year exemption from the EIT followed by a 12.5% tax exemption for the next 3 years.

Provision for income taxes increased approximately $0.7 million to $1.0 million during the Combined Period ended December 31, 2006 from $0.3 million during the same period in 2005. Our effective tax rate for the Combined Period ended December 31, 2006 was 15.5%. Our 2005 effective tax rate was 15%.

Net Income. Net income increased approximately $3.9 million, or 213%, to $5.7 million during the Combined Period ended December 31, 2006 from $1.8 million during the same period in 2005, as a result of the factors described above.

As of September 30, 2007, we had cash and cash equivalents of $8,839,082.

On February 6, 2007, we completed a private placement of 7,868,422 shares of our common stock to two accredited investors. As a result of the private placement we raised $14.95 million in gross proceeds, which left us with $13.31 million net proceeds after the deduction of offering expenses in the amount of $1.64 million.

On October 29, 2007, we completed a private placement of 5,000,000 shares of our common stock to certain accredited investors. As a result of the private placement we raised $40 million in gross proceeds, which left us with $36 million net proceeds, after the deduction of offering expenses.

On November 7, 2007, we acquired 100% of the equity interests of Fortune Fame and its operating PRC subsidiary, ISDT. The agreement with Fortune Fame provided for RMB53,000,000 (approximately, $7.1 million) to be paid in cash and the issuance of 883,333 shares of our common stock. As of September 30 2007, we had paid $1,331,558 as a good faith deposit for this acquisition.

We believe that our currently available working capital, after receiving the aggregate proceeds of our capital raising activities, should be adequate to sustain our operations at our current levels through at least the next twelve months.

The following table provides the statements of net cash flows for the Nine Months ended September 30, 2007 compared to September 30,2006 (Unaudited):

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Operating Activities

For the nine months ended September 30, 2007, net cash used in our operating activities was $1.6 million, which is a decrease of $8.4 million from $6.8 million net cash provided by operating activities for the same period in 2006. Increase in cash used in operations during the nine months ended September 30, 2007 was mainly due to the increase in accounts receivable and the decrease in related party payables as a result of consolidating iASPEC effective in the third quarter.

Investing Activities

For the nine months ended September 30, 2007 and 2006, we used $7.3 million (before netting off the $4.7 million of cash acquired from iASPEC) and $5.0 million, respectively, in investing activities. This increase of approximately $2.3 million, or 46%, is mainly attributed to our use during the first quarter of 2007 for the purchase of our new office building in the Futian District and the procurement of computer software and motor vehicles. In addition, to leverage our business, we paid $1.3 million as a good faith deposit for the acquisition of Fortune Fame in the third quarter.

Financing Activities

Net cash provided by financing activities was $12.5 million for the nine-month period ended on September 30, 2007, as compared to $0.63 million for the same period in 2006. The significant increase in cash provided by financing activities was primarily attributable to the net proceeds of $13.3 million raised in the private placement during January and February 2007.

The following table provides detailed information about our net cash flow for all financial statement periods presented in this filing. We have combined the Predecessor Period from January 1 through October 8, 2006 and the Successor Period from January 17 through December 31, 2006 for purpose of the following 2006 analysis. This is not in accordance with US GAAP and the periods presented are not comparable due to our reverse acquisition by CPSH.

Operating Activities

Net cash provided by operating activities was approximately $7.2 million for the Combined Period ended December 31, 2006 which is an increase of $6.8 million from the $0.4 million net cash provided by operating activities for the same period in 2005. The increase was mainly due to an increase in net profit for the Combined period of December 31 2006.

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Investing Activities

Our main uses of cash in investing activities is for the purchase of plant and equipment and advances to related and third parties.

Net cash used in investing activities in the Combined Period ended December 31, 2006 was approximately $5.5 million, which is an increase of $5.1 million from net cash used in investing activities of $0.4 million in the same period of 2005 due to advances to related and third parties of $2.0 million, the purchase of plant and equipment for $3.3 million and the capitalization of software costs of $0.1 million.

Financing Activities

Net cash provided by financing activities in the Combined Period ended December 31, 2006 totaled approximately $1.0 million as compared to nil used in the same period of 2005. The increase of the cash provided by financing activities was mainly attributable to our issuance of common stock in connection with the stock purchase transaction in the fourth quarter of 2006 and an advance grant from the Shenzhen Bureau of Science Technology and Information amounting to $0.6 million, and advances from third parties of $0.2 million.

We had total current assets of $24,126,567 as of September 30, 2007, of which approximately $8,839,082 was cash and cash equivalents. Our total assets as of September 30, 2007 were $39,423,418 and our total current liabilities were $3,118,276. Our total stockholders' equity as of September 30, 2007 was $26,233,782. Changes in individual balances were mainly attributable to net proceeds raised in the private placement during January and February 2007, profits during nine months ended September 30 2007, as well as iASPEC’s assets that are now consolidated, as iASPEC became our VIE effective as of July 1, 2007.

We had total current assets of $2,159,214 as of December 31, 2006, of which $172,316 was cash. Our total assets as of December 31, 2006 were $2,209,040,and total current liabilities were $564,391. Our total stockholders’ equity as of December 31, 2006 was $1,644,649. Changes in individual balances were mainly attributable to profits during fiscal year 2006.

During the first half of 2007, our wholly-owned subsidiary, Public Security, was a party to the Turnkey Agreement with iASPEC, pursuant to which Public Security was exclusively engaged as a subcontractor providing iASPEC’s customers with certain outsourcing services (to the extent that those services did not violate any special governmental permits held by iASPEC and did not involve the transfer of any sensitive confidential governmental or other data), and Public Security was obligated under the terms of the Turnkey Agreement to pay for its own costs in providing these services and to pay iASPEC $180,000 per year throughout the term of the agreement.

Public Security, iASPEC and iASPEC’s shareholders, Mr. Lin and Mr. Jin Zhu Cai, terminated the Turnkey Agreement, effective as of July 1, 2007, and replaced it on the same day with the Management Services Agreement, effective as of July 1, 2007. Pursuant to the terms of the Management Services Agreement, iASPEC granted Public Security an exclusive, royalty-free, transferable, worldwide, license to use and install for a ten-year term, certain iASPEC software, along with copies of source and object code relating to such software, in any manner permitted by applicable laws, and Public Security licensed back to iASPEC a royalty-free, limited, non-exclusive license to the Software, without right of sub-license, for the sole purpose of permitting iASPEC to carry out its business as presently conducted. Public Security also has the right to designate two Chinese citizens to serve as senior managers of iASPEC, to serve as a majority on iASPEC’s board of directors and assist in managing the business and operations of iASPEC. In addition, both iASPEC and Public Security will require the affirmative vote of the majority of the Company’s board of directors, as well as at least one non-insider director, for certain material actions with respect to iASPEC, including, but not limited to: (a) the nomination, appointment, election or replacement of any board members; (b) the distribution of any dividend or profits; (c) any merger, division, change of corporate form, dissolution or liquidation; (d) any reimbursement of net losses or other payments or transfers of funds from Public Security to iASPEC; (e) the formation or disposition of a subsidiary or the acquisition or disposition of any interest in any other entity; and (f) the encumbrance of any assets under any lien not in the ordinary course of business.

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Under the Management Services Agreement, Public Security receives 100% of the net received profit of iASPEC, and reimburses iASPEC for all net losses incurred by iASPEC, as such terms are defined in the Management Services Agreement, and iASPEC is permitted to retain $180,000 per year out of net received profits. The Management Services Agreement also provides that Public Security may advance to iASPEC, at its sole discretion, amounts to be credited against Public Security’s future obligations to iASPEC. Any such advances are treated as prepayments and not as loans and iASPEC has no obligation to repay any such advances except by crediting the amount of such advances against Public Security’s obligation to reimburse net losses, or by adding the amount thereof to net received profit when and as requested by Public Security. The parties to the Management Services Agreement also agreed that, by no later than September 30, 2007, a calculation will be prepared of a true-up amount, consisting of the cumulative net profit or net losses of iASPEC from October 9, 2006, when iASPEC commenced its contractual relationship with Public Security, through the date of the Management Services Agreement, and iASPEC will pay such true-up amount to Public Security if there is a net received profit, while Public Security is obligated to reimburse such true-up amount to iASPEC if it is there is a net loss. The true up amount has been calculated to be $7,005,183 payable by iASPEC to Public Security. As of September 30, 2007, iASPEC has repaid $3,913,490 of the true-up and will pay the remaining amounts of $3,091,693 before December 31, 2007. In addition, at September 30, 2007, iASPEC also owes the Company $3,163,779 under the Management Services Agreement, and $6,277,069 for advances made by the Company to iASPEC.

In connection with the Management Services Agreement, on August 1, 2007, Public Security also entered into the Option Agreement with iASPEC and its shareholders, effective as of July 1, 2007, pursuant to which the iASPEC shareholders granted the Company or its designee(s)an exclusive, irrevocable option to purchase, from time to time, all or a part of iASPEC’s shares or iASPEC’s assets from the iASPEC shareholders. However, according to the Option Agreement, the option may not be exercised by Public Security if the exercise would violate any applicable laws and regulations in China or cause any license or permit held by, and necessary for the operation of iASPEC, to be cancelled or invalidated. Under the terms of the Option Agreement, the option is immediately exercisable at an exercise price of $1,800,000 in the aggregate, subject to regulatory approval. In addition, iASPEC and the iASPEC shareholders agreed to use their best efforts to acquire all necessary government approvals and other consents to complete a share purchase under the Option Agreement. The Option Agreement may be rescinded by the Company upon 30days’ notice and will terminate on the date that the Company purchases all remaining shares or assets of the Company pursuant to the terms of the Option Agreement. If any of the parties breaches the Option Agreement and fails to remedy the breach, the breaching party will pay a penalty of RMB 5,000,000 to the non-breaching party or parties, and compensate the non-breaching party or parties for any losses caused by the breach. For more details regarding the Management Services Agreement and Option Agreement, see our Current Report on Form 8-K filed with the SEC on August 6, 2007.

Our operating results and operating cash flows historically have not been subject to seasonal variations. This pattern may change, however, as a result of new market opportunities or new product introductions.

Inflation does not materially affect our business or the results of our operations.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. We consider our critical accounting policies to be those that require the more significant judgments and estimates in the preparation of financial statements, including the following:

• Revenue recognition – During the Predecessor Period, revenues from products were recognized only when persuasive evidence of an arrangement existed, delivery had occurred or services had been rendered, the price to the customer was fixed or determinable, and collectibility was reasonably assured. Generally, revenue was recognized (1) upon shipment for equipment and software, (2) as work was performed for professional services and (3) in equal periodic amounts over the term of the contract for software and hardware maintenance. Our revenue recognition policies are in accordance with SEC Staff Accounting Bulletin No. 104, "Revenue Recognition," and Statement of Position No. 97-2, "Software Revenue Recognition"

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During the Successor Period, Public Security generated revenues from CGIS contracts with its customers. Revenues from products are recognized only when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the customer is fixed or determinable, and collectibility is reasonably assured. Generally, revenue is recognized (1) upon shipment for equipment and software, (2) as work is performed for professional services and (3) in equal periodic amounts over the term of the contract for software and hardware maintenance. Our revenue recognition policies are in accordance with SEC Staff Accounting Bulletin No. 104, "Revenue Recognition," and Statement of Position No. 97-2, "Software Revenue Recognition".

In addition, during the Successor Period Public Security generated revenues under the Turnkey Agreement. Through December 31, 2006, Public Security had neither the PRC required licenses nor the workforce necessary to perform under the turnkey agreement and relied upon iASPEC’s licenses and workforce to fulfill its obligations thereunder. Because iASPEC maintains all customer relationships, procures the hardware required for each contract, and provides the workforce and facilities necessary to fulfill contracts. Accordingly, amounts reported by Public Security under the turnkey agreement reflect contract amounts net of costs incurred by iASPEC.

The majority of our revenues are generated from fixed-price contracts, which provide for licenses to our software products, and services to customize such software to meet our customers’ use. Generally, when the services are determined to be essential to the functionality of the delivered software, we recognize revenue using the percentage of completion method of accounting in accordance with SOP 97-2 and 81-1 "Accounting for Long-term Construction Type Contracts". The percentage of completion for each contract is estimated based on the ratio of direct labor hours incurred to total estimated direct labor hours.

• Income taxes – We account for income tax under the provisions of Statement of Financial Accounting Standards No. 109, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statement bases of assets and liabilities.
   

• Accounting for Computer Software to Be Sold, Leased or Otherwise Marketed - We account for software development costs in accordance with the Statement of Financial Accounting Standards ("SFAS") No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed". Costs related to establishing the technological feasibility of a software product are expensed as incurred as a part of research and development in general and administrative expenses. Costs that are incurred to produce the finished product after technological feasibility is established are capitalized and amortized over the estimated economic life of 5 years. We perform periodic reviews to ensure that unamortized program costs remain recoverable from future revenue.
   

• Foreign Currency Translation and Transactions – The functional currency of Public Security is the Renminbi or RMB, and the RMB is not freely convertible into foreign currencies. Public Security maintains its financial statements in the functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet date. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods. Transaction gains or losses were not significant for the periods presented.
  
  For the purpose of preparing group accounts at the holding company level, our financial statements are expressed in United States dollars or USD. All our assets and liabilities are translated into USD using the closing rate method. Under this method, our assets and liabilities are translated into USD at the applicable rates of exchange in effect at the balance sheet date. Income and expenses are translated at the average exchange rates for the year. Share capital and other reserves are translated into USD.

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Recent Accounting Pronouncements

We adopted the provisions of Financial Standards Accounting Board Interpretation No. 48, Accounting for

Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109 ("FIN 48"), on January 1, 2007. There were no unrecognized tax benefits and there was no effect on the Company's financial condition or results of operations as a result of implementing FIN 48.

Our subsidiary Public Security is governed by the Income Tax Laws of the PRC. The EIT statutory rate is 33%. As both the Predecessor and Successor companies are situated in the Shenzhen Economic Special Zone, both companies are entitled to a permanent preferential income tax rate of 15%.

The Company is not subject to U.S. federal tax because we have no operations in the United States, however, we are obligated to file an annual tax return with federal and state authorities. Management has filed our 2006 annual U.S. income tax return on September 17, 2007 and does not believe there will be any material changes in our unrecognized tax positions over the next 12 months.

Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of the date of adoption of FIN 48, there was no accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the quarter.

We do not have any off-balance arrangements.

The following chart reflects our organizational structure as of the date of this prospectus.

We were originally organized under the laws of the State of Florida, on September 19, 1979, under the name Mark Thomas Publishing Inc. and on April 29, 2003 we changed our name to Irish Mag, Inc. From our inception through October 6, 2006, we provided consulting services in the offset printing industry, targeting individual retail consumers as well as small to mid-size companies. However, as a result of the reverse merger transaction discussed below, we are now a provider of integrated solutions for the public security sector in China, specializing in providing public security information communication applications and GIS software services. On January 26, 2007, we changed our name to China Public Security Technology, Inc. to more accurately reflect our new business and commercial objectives.

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Recent Developments

Between October 6, 2006 and January 31, 2007, our shareholders approved a series of transactions whereby we purchased all the issued and outstanding stock of CPSH from our current Chairman and Executive Officer Jiang Huai Lin, for 25,500,000 shares of our common stock in the aggregate. As a result of these transactions CPSH and its wholly-owned subsidiary, Public Security, became our wholly-owned subsidiaries, and Mr. Lin became the beneficial owner of 25,500,000 shares of our common stock in the aggregate, which, at January 31, 2007, constituted 80.8% of our issued and outstanding common stock. Mr. Lin has since transferred 1,182,065 of these shares and now holds 21,717,935 of these shares directly and 2,600,000 of these shares indirectly through Total Device Management Limited, an entity controlled by Mr. Lin.

From October 9 through June 30, 2007, we operated under a Business Turnkey Agreement, or Turnkey Agreement, with iASPEC, pursuant to which iASPEC exclusively engaged Public Security as its subcontractor to provide iASPEC with outsourcing services (to the extent that those services do not violate any special governmental permits held by iASPEC and do not involve the improper transfer of any sensitive confidential governmental or other data). The Turnkey Agreement also provided for a revenue sharing arrangement between iASPEC and Public Security where Public Security was entitled to between 90% and 100% of the revenues actually received by iASPEC from servicing contracts involving any iASPEC business, but was obligated to pay for its own costs in providing these services and to pay iASPEC $180,000 per year throughout the term of the agreement. At September 30, 2007, iASPEC owed Public Security $3.09 million, which represented iASPEC’s net revenues, less the annual payment and expenses incurred on behalf of Public Security in connection with the services provided under the Turnkey Agreement.

On August 1, 2007, Public Security, iASPEC and iASPEC’s shareholders, Mr. Lin and Mr. Jin Zhu Cai agreed to terminate the Turnkey Agreement, effective as of July 1, 2007, and replaced it on the same day with a management service agreement, or Management Service Agreement, effective as of July 1, 2007. Pursuant to the terms of the Management Service Agreement, iASPEC granted Public Security an exclusive, royalty-free, transferable, worldwide, license to use and install for a ten-year term, certain iASPEC software, along with copies of source and object code relating to such software, in any manner permitted by applicable laws, and Public Security licensed back to iASPEC a royalty-free, limited, non-exclusive license to the Software, without right of sub-license, for the sole purpose of permitting iASPEC to carry out its business as presently conducted. Public Security will also have the right to designate two Chinese citizens to serve as senior managers of iASPEC, to serve on iASPEC’s board of directors and assist in managing the business and operations of iASPEC. In addition, both iASPEC and Public Security will require the affirmative vote of the majority of our board of directors, as well as at least one non-insider director, for certain material actions with respect to iASPEC, including, but not limited to: (a) the nomination, appointment, election or replacement of any board members; (b) the distribution of any dividend or profits; (c) any merger, division, change of corporate form, dissolution or liquidation; (d) any reimbursement of net losses or other payments or transfers of funds from Public Security to iASPEC; (e) the formation or disposition of a subsidiary or the acquisition or disposition of any interest in any other entity; and (f) the encumbrance of any assets under any lien not in the ordinary course of business. Furthermore, under the Management Service Agreement, Public Security will receive 100% of the net received profit of iASPEC and will reimburse iASPEC for all net losses incurred by iASPEC. The net profit of iASPEC will be paid to Public Security, and the net losses of iASPEC will be reimbursed by Public Security, no later than the last day of the month following the end of each calendar quarter, commencing on July 1, 2007. Public Security is also obligated to pay iASPEC $180,000 per year, no later than the last day of the month following the end of each calendar year, commencing on July 1, 2007, and this amount may be retained by iASPEC out of any net received profit due and payable to Public Security as of such payment date. Public Security may also advance to iASPEC, at its sole discretion, amounts to be credited against Public Security’s future obligations to iASPEC, but any such advances will be treated as prepayments and not as loans. iASPEC will have no obligation to repay any such advances except by crediting the amount of such advances against Public Security’s obligation to reimburse net losses, or by adding the amount thereof to net profit when and as requested by Public Security. As of September 30, 2007, iASPEC has repaid $3.91of the true-up and is obligated to pay the remaining amounts of $3.09 before December 31, 2007. In addition, at September 30, 2007, iASPEC also owes the Company $3.16 million under the Management Services Agreement and $6.28 for advances made by the Company to iASPEC. If iASPEC or any of the iASPEC shareholders materially breaches the Management Service Agreement and fails to remedy the breach within 60 days’ notice from Public Security of such breach, they will be jointly and severally obligated to pay to Public Security liquidated damages in an amount equal to the higher of (a) eight times the annualized revenues of Public Security for the last completed fiscal quarter, or (b) US$50 million.

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The Management Service Agreement contains a true-up provision which requires iASPEC and Public Security, on or before September 30, 2007, to calculate all prior amounts owed to Public Security under the Turnkey Agreement, and requires iASPEC to pay such amounts. The parties are required to calculate the cumulative net profit of iASPEC from October 9, 2006, when iASPEC commenced its contractual relationship with Public Security, through the commencement date of the Management Service Agreement, and iASPEC is required to pay the amount due to Public Security, if there is a net received profit, while Public Security is obligated to reimburse any amount to iASPEC if it is there is a net loss. "Net Received Profit" means the Net Received Profit of iASPEC, calculated as follows: accrued accounts receivable plus net turnover (revenue), minus cost of sales, minus operating expenses, and minus accrued but not collected accounts receivable, but only if the result is a positive number. "Net Losses" means the net losses of iASPEC, calculated as follows: accrued accounts receivable plus net turnover (revenue), minus cost of sales, minus operating expenses, and minus accrued but not collected accounts receivable, but only if the result is a negative number. In accordance with this calculation, at June 30, 2007, the day prior to the effective date of the Management Service Agreement and the termination of the Turnkey Agreement, iASPEC owed Public Security $6.7 million, which represents iASPEC’s net revenues, less the annual payment and expenses incurred on behalf of Public Security in connection with the services provided under the Turnkey Agreement during 2006 and for the six months ended June 30, 2007. Public Security, iASPEC and the iASPEC shareholders have subsequently entered into a letter agreement, or Letter Agreement, dated September 12, 2007, requiring iASPEC to pay the true-up amount to Public Security, on or before December 31, 2007. As of September 30, 2007, iASPEC has repaid $3.91of the true-up amount which leaves a balance of $3.09 million.. In addition, at September 30, 2007, iASPEC also owes the Company $3.16 million under the Management Services Agreement and $6.28 for advances made by the Company to iASPEC. Therefore, the total amount owed by iASPEC at September 30, 2007, both under the Turnkey Agreement and under the Management Service Agreement is $12.53 million.

In connection with the Management Service Agreement, on August 1, 2007, Public Security also entered into a purchase option agreement, or Option Agreement, with iASPEC and its shareholders, effective as of July 1, 2007, pursuant to which the iASPEC shareholders granted Public Security, or its designee(s), an exclusive, irrevocable option to purchase from the iASPEC shareholders, from time to time, all or a part of iASPEC’s shares, pursuant to an equity transfer agreement, or all or a part of iASPEC’s assets, pursuant to an asset purchase and transfer agreement. However, according to the Option Agreement, the option may not be exercised by Public Security if the exercise would violate any applicable laws and regulations in China or cause any license or permit held by, and necessary for the operation of iASPEC, to be cancelled or invalidated. Under the terms of the Option Agreement, the option is immediately exercisable at an exercise price of $1,800,000, in the aggregate, subject to regulatory approval. In addition, iASPEC and the iASPEC shareholders agreed to use their best efforts to acquire all necessary government approvals and other consents to complete a share purchase under the Option Agreement. The Option Agreement may be rescinded by Public Security upon 30 days’ notice and will terminate on the date that we purchase all remaining shares or assets of iASPEC pursuant to the terms of the Option Agreement. If any of the parties breaches the Option Agreement and fails to remedy the breach, the breaching party will pay a penalty of RMB 5,000,000 to the non-breaching party or parties, and compensate the non-breaching party or parties for any losses caused by the breach.

As a result of the restructuring of its relationship with iASPEC, iASPEC has become a variable interest entity of our Company. A variable interest represents a contractual or ownership interest in another entity that causes the holder to absorb the changes in fair value of the other entity’s net assets. Potential variable interests include: holding economic interests, voting rights, or obligations to an entity; issuing guarantees on behalf of an entity; transferring assets to an entity; managing the assets of an entity; leasing assets from an entity; and providing financing to an entity. In such cases FASB Interpretation 46(R), which interprets Accounting Research Bulletin (ARB) 51, Consolidated Financial Statements, requires consolidation of such entity by the enterprise that controls the economic risks and rewards of the entity, regardless of ownership. While we have held an economic interest in iASPEC since October 9, 2006, the Management Service Agreement and the Option Agreement have now given us control over the business and operations of iASPEC. As a result, iASPEC’s financial data is subject to consolidation with our financial data in accordance with the provisions of FASB Interpretation 46(R), commencing with our Quarterly Report on Form 10-QSB for the period ending September 30, 2007. For more details regarding the Management Service Agreement and Option Agreement, see our Current Report on Form 8-K filed with the SEC on August 6, 2007. 

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Acquisition of Fortune Fame

On November 7, 2007, we acquired 100% of the equity interests of Fortune Fame and its operating PRC subsidiary ISDT for a purchase price of RMB53,000,000 (approximately, $7.1 million) in cash and 883,333 shares of our common stock valued at $7,066,667, or $8.00 per share. Pursuant to the terms and conditions of a share transfer agreement, or Transfer Agreement, entered into by and among CPSH, Cheer Crown International Investment Limited, or Cheer Crown, Dongwei Gao and the Company, within ninety days of the closing, 383,333 shares of our common stock issuable under the equity portion of the purchase price will be issued to Cheer Crown and 500,000 will be issued to Mr. Gao, the Chairman of ISDT’s board of directors. Under the terms of the Transfer Agreement, Mr. Gao has also agreed to continue on as the Chairman of ISDT and to procure the continued performance of ISDT. Mr. Gao agreed that he will return 250,000 of his shares of our common stock to us if ISDT does not meet an audited after tax net income of at least $2 million for its 2008 fiscal year; and another 250,000 of his shares of our common stock if ISDT does not meet an audited after tax net income of $2.6 million for its 2009 fiscal year.

ISDT provides a leading Certification Authority, or CA, application platform and e-Government solution technology, and is an exclusive CA application provider for the Shenzhen municipality in the PRC. The CA certification allows ISDT to issue digital certificates which contain a public key and the identity of the owner. The CA also attests that the public key contained in the certificate belongs to the person, organization, server or other entity noted in the certificate. CAs are currently used in China’s e-Government industry and can be successfully integrated with our platform and solutions, to enhance our customer applications.

We are a holding company that owns all of the issued and outstanding capital stock of CPSH. CPSH is also a holding company. We operate through CPSH’s wholly-owned operating Chinese subsidiary, Public Security, and through Public Security’s commercial arrangement with iASPEC, our VIE. Through Public Security, we are a China based company providing integrated solutions for the public security sector in China, specializing in providing public security information communication applications and GIS software services.

Our customers are mostly public sector entities that use our products and services to improve the service quality and management level of civil and medical emergencies, traffic control, fire control, medical rescue and border control. Our customers include the Guangdong Public Security Department, the Shenzhen Border Check Station, the Shenzhen Public Security Bureau, the Shenzhen Traffic Police Bureau, the Shenzhen Fire Department and the Dongfang Public Security Bureau of Hainan Province. In the future we expect to expand the application of our products and services in the public security sector and to other sectors in China as well.

We generate revenues through the sale of our integrated hardware and software products and through the provision of related support services. In fiscal year 2006 and during the nine months ended September 30, 2007, 55% and 72% of our revenues, respectively, were generated under our exclusive commercial arrangement with iASPEC. However, fulfillment of certain PGIS contracts with PRC Government customers is restricted to entities possessing the necessary government licenses and approvals which Public Security does not have. The Management Service Agreement anticipates that iASPEC will fulfill all obligations for PGIS contracts, Public Security will receive 100% of the net received profit of iASPEC, net of an annual fee of $180,000, and Public Security will reimburse iASPEC for all net losses incurred by iASPEC.

Over the past two decades, the PRC government has encouraged the development and use of new technologies for information and communication (or ICTs) and their application in all spheres of government, industry, education and culture. The term "Informatization" or "xinxihua" has been coined in China to describe the overall process of ICT application in China and has in recent years become a key component of central and many local economic development strategies.

As a part of the Informatization process, the PRC government has launched a series of online programs to accelerate its pace of implementing and using information technology to improve China’s current government information management systems, and help promote China’s economic development. The Informatization process has led to a growth in the use of information technology, such as e-Government platforms and GIS, for public security. An example of this has been the Government Online Project or GOP. The Government Online Project is a three-stage initiative: Stage One focused upon connecting 800-1,000 government offices and agencies to the Internet; Stage Two focused on having government offices and agencies move their information systems into compatible electronic form; and Stage Three focused on making government offices and agencies paperless. The purpose of the GOP is to create a centrally accessible administrative system that collects and transports data to and from users; users being the public and the enterprise system, as well as government departments.

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On January 22, 1999, the GOP was formally launched by China Telecom and the State Economic and Trade Commission’s (SETCs) Economic Information Center along with the Information Offices of more than 40 central government departments. The project interconnects government offices of every province, autonomous region and municipality. The network will promote the establishment of formal government websites to provide information and services and then (in theory) also facilitate collaboration between the government and the nation’s growing number of IT enterprises. By developing the basic infrastructure and encouraging government agencies at all levels to incorporate Internet technologies, the government hopes to set the tone for online development and, ultimately, e-commerce. Our Three-In-One Platform and Electronic Border Control programs are a part of the Informatization of the public security sector in China.

The GIS field is a rapidly growing field that incorporates geographical features with data in order to assess real world problems. In the strictest sense, a GIS is a computer system capable of capturing, storing, analyzing, and displaying geographically referenced information; that is, data identified according to location. The term GIS also includes the procedures, operating personnel, and spatial data that go into the system.

The power of a GIS comes from the ability to relate different information in a spatial context and reach a conclusion about this relationship. Most of the information we have about our world contains a location reference, placing that information at some point on the globe. However, GIS can be used to emphasize objects on a map, their absolute location on the Earth's surface and their spatial relationships, in a series of attribute tables—the "information" part of a GIS. For example, while a computer-aided mapping system may represent a road simply as a line, a GIS may also recognize that road as the boundary between wetland and urban development between two census statistical areas. A GIS, therefore, can reveal important new information (such as whether features intersect or whether they are adjacent) that leads to better decision making or solutions.

Data Capture and Integration – In order to utilize a GIS, data must be directly entered into (or captured by) a GIS in digital form, that is, in a form the computer can recognize. A GIS can also convert existing digital information, which may not yet be in map form, into forms it can recognize and use. Map data may also be created by (1) digitizing maps by hand-tracing with a computer mouse on the screen or on a digitizing tablet to collect the coordinates of features, (2) using electronic scanners to convert maps to digits, or (3) uploading coordinates from Global Positioning System or GPS receivers into a GIS. Once a time-consuming process, the data capture process is now made easier by the development in the GIS industry of software tools to automatically extract features from satellite images or aerial photographs and create databases in map form for use in a GIS.

Information Retrieval and Data Output – With a GIS you can "point" at a location, object, or area on the screen and retrieve recorded information about it from off-screen files. For example, using scanned aerial photographs as a visual guide, you can ask a GIS about the location of a fire, analyze the area around the fire and determine conditions of adjacency (what is next to it), containment (what is enclosed by it) and proximity (how close is something to it). Another critical component of a GIS is its ability to produce graphics on the screen or on paper to convey the results of analyses to the people who make decisions about resources. Wall maps, Internet-ready maps, interactive maps and other graphics can be generated, allowing decision makers to visualize and thereby understand the results of analyses or simulations of potential events.

• Hardware – Hardware comprises the equipment needed to support the many activities ranging from data collection to data analysis. A central piece of the equipment is a workstation, which runs the GIS software and is the attachment point for the equipment. Data collection efforts can also require the use of a digitizer for conversion of hard copy data to digital data and a GPS data logger to collect the field. The use of handheld field technology is also becoming an important tool in GIS. With the advent of web-enabled GIS, web servers have become an important piece of equipment for GIS.
   

• Software – Different software packages are important for GIS. Central to this is the GIS application package. Such software is essential for creating, editing and adding spatial and attribute data, therefore these packages contain a myriad of functions inherent to them. Extensions or add-ons are software that extend capabilities of the GIS software package. Component GIS software is the opposite of application software. Component GIS seeks to build software applications that meet a specific purpose and thus are limited in their spatial analysis capabilities. Utilities are stand-alone programs that perform a specific function. For example, a file format utility that converts from one type of GIS file to another. There is also web-GIS software that helps serve data through Internet browsers.

• Data – Data is the core of any GIS. There are two primary types of data that are used in GIS, a geodatabase and attribute data. A geodatabase is a database that is in some way referenced to locations on the earth. Geodatabases are grouped into two different types: vector and raster. A vector image is stored as geometric objects, such as lines and arcs, which are drawn between specific coordinates. If you magnify a vector image you see the lines more accurately, and the line edges stay smooth. A raster image is made up from pixels, like the picture obtained from a scanner, or the screen image on a computer monitor, and has a finite amount of detail which is dependent upon the image size and resolution. However, the closer you look at a raster image the more coarse it appears and you don't see any extra detail. Vector drawings are utilized in GIS and other applications where accuracy is important. Coupled with this data is usually data known as attribute data. Attribute data are data that relate to a specific, precisely defined location. The data are often statistical but may be text, images or multi-media. These are linked in the GIS to spatial data that define the location.
   

• People - Well-trained people knowledgeable in spatial analysis and skilled in using GIS software are essential to the GIS process.

GIS can be used by the public sector in the following ways:

• Pubic Safety and Emergency Response Planning – GIS technology gives public safety personnel the ability to manage and analyze large amounts of location-based information. Data (including files from legacy systems) can be stored in a geodatabase and used to visualize spatial relationships and reveal trends critical to public safety response and planning. Computer-generated maps can be shared across a network or the Internet with multiple agencies to coordinate efforts and maximize resources.
   

• Law Enforcement – GIS software uses geography and computer-generated maps as an interface for integrating and accessing massive amounts of location-based information. GIS allows law enforcement and criminal justice personnel to effectively plan for emergency response, determine mitigation priorities, analyze historical events, and predict future events. GIS can also be used to get critical information to emergency responders upon dispatch or while en route to an incident to assist in tactical planning and response. While law enforcement agencies collect vast amounts of data, only a very small part of this information can be absorbed from spreadsheets and database files. GIS provides a visual, spatial means of displaying data, allowing law enforcement agencies to integrate and leverage their data for more informed decision making.
   

• Public Works and Development – Use of GIS software in public works improves efficiency and productivity to better serve citizens. For example, GIS applications are in demand in connection with the construction of the Pan Asia Railway and development of the Meigong River and Tumen River in the Northwest of China. Such public works systems could use GIS to connect all divisions in a public works department from engineering to accounting, which streamlines work flows, asset management, operations, and planning. Using a GIS throughout the department allows all sections to share and easily access geographic data. GIS promotes data integrity and facilitates better communication and decision making throughout the organization.
   

• Economic Development – GIS may be used to foster economic development. Agencies could work to advance the quality of life and strengthen the economic base of their region by retaining and growing existing businesses and attracting new investment.
   

• Urban Planning and Site Selection – Information regarding a proposed site for parcel zoning, transportation planning, waste disposal or other use may be combined and manipulated in a GIS to address planning and natural resource issues (such as the location of a water well near a proposed waste disposal site) to guarantee the quality of life for everyone in livable communities. Planning agencies have realized the power of enterprise GIS to identify problems, respond to them efficiently, and share the results with the public.

Public Security Information in China

With the urbanization and fast economic growth along the coastal areas of China, the demands for information technology by government agencies has greatly increased, especially in the areas of urban planning, travel and land management. PRC government agencies face challenges, such as financial constraints and public safety, and must find ways to better manage resources and serve their citizens. For example, police departments explore methods to better protect the public by more effectively and efficiently analyzing crime patterns within specific geographic areas. Likewise, government authorities look to improve security by assessing threats across their geographic areas and departments and plan appropriate emergency responses. Our software services and operations have been concentrated in and are used by the public security sector (such as by the Police, Fire Department and Healthcare Emergency Services). The use of security information technology in the private sector is still developing in China and presents a growth opportunity for us. In the future, we plan to target the telecommunications, logistics and insurance sectors as areas for business development within the private sector.

We offer the following four products and services:

• Consolidated Emergency Response or "Three-In-One" Platform

• Electronic Border Control

• GIS Software Services and Operations

• Software Sales and Support Services

Our Consolidated Emergency Response or "Three-In-One" Platform is a software program which integrates fire, traffic and general police contact numbers into one contact number and enables these agencies to consolidate and perfect their public emergency response. Though our Three-In-One Platform our public security customers are able to command and coordinate joint responses to provide the public with immediate, efficient and reliable assistance. As a result of our Three-In-One Platform, our government customers are able to adopt one consolidated calling number through which the public can report and seek help in the event of an emergency, and as a result provide the public with long-term security. This Three-In-One Platform allows our governmental clients to have an all in one notification and response system that is similar to the integrated "911" system used in the U.S.

Our Electronic Border Control program will be used by our government customers for effective border control systems. By adopting biological features recognition technology such as fingerprint recognition and facial recognition, and by integrating advanced intelligent technology such as infrared checking and vehicle license plate recognition, our Electronic Border Control program enables our government customers to remotely identify persons crossing their borders. The border-crossing public may be identified through the use of self-operated automated systems that record their vehicle license plates, read their Identification Cards and take their fingerprints at the border. The border crosser may continue across the border as soon as the system confirms the information provided. This system will greatly improve the efficiency of our government customers’ border controls.

We provide system management and support services in connection with our Police-Use Geographical Information Services or PGIS Platform. The PGIS platform is a GIS that was developed by iASPEC and licensed exclusively to us, for use in creating, editing and adding data to our customers’ systems. The PGIS platform allows us to provide our law enforcement customers with different services, including specialized mapping services, positioning services, messaging services and services which monitor access to their GIS by users of different levels. We offer the PGIS platform with a full complement of services, including providing basic map image data from the GIS and specific data in connection with that map image (such as a bus stop), a consolidation of both basic data and specific data services for data inquiry services, and application system services, which is the application of consolidated services to a specific service requirement, such as the position of a police officer in the field.

We also provide application interface services which ensure that our PGIS platform is equipped to interact with other programs to the benefit of our customers. The data from different law enforcement command systems can be integrated with our PGIS platform to provide our law enforcement customers with more robust communication and location information. Typically, our platforms are integrated with the City Emergency Commanding System, the Police Resource Consolidated Management System, the Residence Management System, the Internet Surveillance System, the Traffic Commanding System, the Criminal Investigation System and the City Surveillance System.

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Software Sales and Support Services

As a result of our Turnkey Agreement with iASPEC and our 16 exclusive licenses to iASPEC’s 16 copyrighted applications, we have inherited iASPEC’s prior service line involving the software sales and distribution and support services. Our Software Sales and Support Services include the following four categories of services:

• Software Operation – Application software development, including consolidating the software development and pure application software development of different IT projects. Currently our customers for this service mainly include government agencies which outsource software development to us.
   

• System integration – We build integrated systems with necessary hardware equipment purchased by iASPEC on behalf of our customers. The system integration project sometimes includes application software development, the revenue of which is incorporated into our Software Operation services.
   

• Consulting – We provide IT consulting services related to the development of IT systems. For example, if a customer needs to build an IT system, we fully investigate the customer’s requirements and then submit relevant solutions.
   

• Software Sales and Distribution – Through our exclusive software license from iASPEC, we are entitled to sell and provide relevant software services to our customers. Also, as a distributor for some specialized software developers, we sell software products to the end-users, which may occur during the delivery of Software Operation, System Integration or Consulting services.

Our Company usually offers a one-year service warranty for our system integration services. The warranty includes support services, minimal updates and system maintenance. In our experience the cost of providing this warranty has been immaterial.

We also offer warranties for our hardware sales, but the suppliers of such hardware provide the final warranty services.

We currently license the following copyrighted software applications from iASPEC under our Management Service Agreement with iASPEC:

All copyrighted software applications are effective 5 years from the date of registration. We expect to renew all copyrighted software applications prior to their respective expiration date.

In addition, we protect our know how technologies through confidentiality provisions in the employment contracts we enter into with our employees.

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Sales and Marketing

Through our exclusive Turnkey Agreement with iASPEC, we are exploring markets outside Shenzhen City. We develop new business by identifying and contacting potential new customers and through referrals, or as a result of new customers contacting us because of our reputation in the industry. We strengthen our market presence through various types of marketing campaigns, such as participating in exhibitions, trade fairs and seminars, and presenting solutions to prospective customers. We participate in several domestic and international trade fairs such as the China High-Tech Fair in Shenzhen and the eGovChina Fair in Beijing. We also participate in seminars held by ESRI, IBM etc. each year, to raise our recognition and promote our products. These trade fairs not only promote our reputation, but also our brand name.

Our main marketing and business development focus is on public security Informatization and GIS software services and operations, and software sales and distribution. We have a good reputation and brand recognition in this market. We expect to expand in the market and obtain more market shares through our mature products and quality services.

Our Major Customers

Our Predecessor, iASPEC serves 17 customers located in the Guandong Province and Hainan Province in China. iASPEC has begun to explore markets outside of Guandong and Hainan Province in China. We do not have any customers outside of China. Our largest client, Shenzhen City Police Department, accounted for 13.8% of our sales in 2006 and our five largest customers accounted for 31.9% of our revenue in 2006.

The following table provides information on our major customers in 2006 and 2005. For 2005, revenues were generated by our Predecessor company, iASPEC. For 2006, revenues were generated by our Predecessor company, iASPEC, during the Predecessor period of January 1, 2006 to October 8, 2006 and by us directly through our turnkey arrangement with iASPEC or directly with clients for the successor period of January 17, 2006 to December 31, 2006. We have combined the Predecessor Period from January 1 through October 8, 2006 and the Successor Period from January 17 through December 31, 2006 for purposes of the following 2006 analysis. This is not in accordance with US GAAP and the periods presented are not comparable due to our reverse acquisition by CPSH.

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The markets for public security Informatization and GIS in China have developed in recent years, and currently there are only a few software developers engaged in these fields, especially in the PGIS area, where we do not currently face any direct competition. However, there are many potential competitors in this area who could enter the market without significant barriers to entry.

We believe that Beijing Founder Digital Company Limited and Zheng Xian Technology (Shenzhen) Company Limited pose a threat as potential market entrants in the public security Informatization and GIS areas. However, we believe that we will be able to effectively compete with these software development companies should they enter the market for our product and service offerings in the future. There are barriers to accessing the PGIS market which give us a competitive advantage over our potential competitors. Our pioneering PGIS platform and our ongoing customer relationships have enabled us to develop a reputation in the industry.

We are subject to the PRC’s foreign currency regulations. The PRC government has control over RMB reserves through, among other things, direct regulation of the conversion of RMB into other foreign currencies. Although foreign currencies which are required for "current account" transactions can be bought freely at authorized Chinese banks, the proper procedural requirements prescribed by Chinese law must be met. At the same time, Chinese companies are also required to sell their foreign exchange earnings to authorized Chinese banks and the purchase of foreign currencies for capital account transactions still requires prior approval of the Chinese government.

Fulfillment of certain PGIS contracts with PRC Government customers is restricted to entities possessing the necessary government licenses and approvals which Public Security does not have. However, through our exclusive commercial arrangements with iASPEC we benefit from the following governmental licenses and permits previously awarded and currently held by iASPEC:

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As of September 30, 2007, we had a total of 107 full-time employees. The following table illustrates the allocation of these employees among the various job functions conducted at our company.

We believe that our relationship with our employees is good. The remuneration payable to employees includes basic salaries and allowances. We also provide training for our staff from time to time to enhance their technical knowledge. We have not experienced any significant problems or disruption to our operations due to labor disputes, nor have we experienced any difficulties in recruitment and retention of experienced staff.

Our Chinese subsidiary has trade unions which protect employees’ rights, aim to assist in the fulfillment of our economic objectives, encourage employee participation in management decisions and assist in mediating disputes between us and union members.

As required by applicable Chinese law, we have entered into employment contracts with all of our officers, managers and employees.

Our employees in China participate in a state pension plan organized by Chinese municipal and provincial governments. We are required to contribute to the plan at the rates ranging from 6% to 8% of the average monthly salary. The compensation expenses related to this plan was $40,556 and $27,190, respectively, for the year ended December 31, 2006 and for the year ended December 31, 2005.

In addition, we are required by Chinese law to cover employees in China with various types of social insurance. We have purchased social insurance for all of our employees.

All land in China is owned by the state or collectives. Individuals and companies are permitted to acquire rights to use land or land use rights for specific purposes. In the case of land used for industrial purposes, the land use rights are granted for a period of 50 years. This period may be renewed at the expiration of the initial and any subsequent terms according to the relevant Chinese laws. Granted land use rights are transferable and may be used as security for borrowings and other obligations.

During fiscal year 2006, our subsidiary Public Security occupied space in offices pursuant to a short-term rental agreement which was terminated in June 2007 when we moved into our new executive offices. Public Security currently has land use rights to our new executive offices which are located in the Futian District of Shenzhen City. Our new executive offices, consist of approximately 1,200 square meters, all of which are dedicated to administrative office space. We have fully paid the land use fees. Our other property primarily consists of computer equipment, servers, licensed software and some furniture or fixtures. There is no lien on any of our property and we currently do not have any intention to make large scale improvements or developments with respect to these properties.

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The following sets forth the name and position of each of our current executive officers and directors.

MR. JIANG HUAI LIN has been a member of our board of directors since September 6, 2006 and he became our President and Chief Executive Officer on October 3, 2006. Mr. Lin has also served as the Chairman and Chief Executive Officer of our subsidiary, Public Security, since its incorporation in January 2006. During the period from September 2000 to June 2004, Mr. Lin served as the President and Chief Executive Officer of Hong Kong United Development Group, a consolidated enterprise engaging in investment, high technology and education. Before that, during the period from February 1995 through August 2000, Mr. Lin was a Director and the General Manager of Fujian Wild Wolf Electronics Limited, a company engaged in the business of manufacturing electrical consumer products. Mr. Lin holds a Bachelor’s degree from Xiamen University.

MR. WILLIAM HO was appointed as our Chief Financial Officer on March 30, 2007 and has served as our Financial Controller since February 2007. From July 2005 to February 2007, Mr. Ho served as a Corporate Finance Executive for First Asia Finance Group Limited and was responsible for advising prospective US listing clients on accounting, deal structure and tax issues. In addition, Mr. Ho successfully assisted several Chinese enterprises to list on the OTC Bulletin Board maintained by the National Association of Securities Dealers, Inc.. Between September 2002 and June 2005, Mr. Ho served as an auditor in the Assurance and Advisory Services of Deloitte Hong Kong and was responsible for assuring internal controls and advising clients on their accounting issues. In this capacity, Mr. Ho assisted in many engagements involving large-sized Hong Kong listed companies. Mr. Ho holds a Bachelor Degree of Finance from the City University of Hong Kong. He is also a Hong Kong Certified Public Accountant.

MR. ZHI XIONG HUANG was appointed as our Chief Operating Officer on May 10, 2007 and has served on our board of directors since November 28, 2006. Mr. Huang has also serves as the Vice-President of our subsidiary Public Security since its incorporation in January 2006. Since September 2002, he has also been a Vice President of Shenzhen iASPEC Software Engineering Co. Ltd. where he supervises iASPEC’s research and development activities and consults on various types of sophisticated, technical issues. Between July 2001 and March 2002, Mr. Huang served as the CFO and general manager of product development of Shenzhen Runsheng Information Systems Company Ltd. and was responsible for overseeing general operations and the accounting tasks including the handling of all finance-related matters such as financial planning, tax planning and financial forecasting. He holds a B.S. in computer science from Hehai University.

MR. YUN SEN HUANG has been a member of our board of directors since August 10, 2007. Mr. Huang has been a Professor in the School of Information Engineering at Shenzhen University since September 1984. He has been involved in many computer application projects, and has received many awards, including a First Grade Award of Technology Advancement from Sichuan Province, a Second Grade Award of Technology Advancement from Guangdong Province, and a Third Grade Award of Technology Advancement from the Chemical Ministry. Mr. Huang has published eight books in the field of Networks and Multimedia Applications. In addition, Mr. Huang was a founder of the International Software Development (Shenzhen) Co., Ltd, a co-partnership company incorporated by IBM, East Asia Bank, and Shenzhen SDC Company, and its Chairman between 2001-2006. Currently, Mr. Huang is a Director of the Shenzhen Computer Academy, a Vice Director of the Guangdong Province Computer Academy, as well as, Executive Director of the China University Computer Basic Education Committee. Mr. Huang holds a Bachelor Degree of Electronics Engineering from Tsinghua University. There is no relationship between Mr. Huang and our Chief Operating Officer, Zhi Xiong Huang.

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MR. QIANG LIN has been a member of our board of directors since August 10, 2007. Mr. Lin has been a Professor in the School of Information Engineering at Shenzhen University since September 2002. From July 1997 to September 2002, Mr. Lin served as the Director of Computer Science and Technology Department at Shenzhen University. Mr. Lin has been engaged in teaching and research in the Computer Applications field for many years. Presently, he is a postgraduate advisor and teacher and focuses his research in the fields of Computer Networks, Information Systems, Databases, and ERP systems. Mr. Lin has published many research papers in China’s Computer Science. He is also the editor-in-chief of Electrical Business Foundation. Mr. Lin has significant research experience in information systems, electronic business, logistics, and image disposal and has successfully developed many computer application systems as a project principal. He has been awarded with a First Grade Award of Software Development from the Chinese Chemical Ministry and a Third Grade Award of Science and Technology Development by Guangdong Province. Mr. Lin holds a Master Degree of Computing Mathematics from Zhongshan University. There is no relationship between Mr. Lin and our Chief Executive Officer, Jiang Huai Lin.

MR. YI GANG SHEN was appointed as our Chief Technology Officer on May 10, 2007. Prior to this, Mr. Shen served as the Director of the R&D Center of Shenzhen iASPEC Software Engineering Co., Ltd. from February 2006 to May 2007. From March 2003 to January 2006, Mr. Shen served as the Director of product and business development of Li Ming Network Co., Ltd., and from June 2000 to February 2003, Mr. Shen served as the Project Manager of "TOM.COM", a company listed on the Hong Kong GEM. Mr. Shen has over ten years of IT experience in different areas such as e-government and financing. Mr. Shen graduated from Lanzhou University of China where he earned a BA in Electronics and Information Science and holds the Senior Project Manager certificate awarded by China’s Ministry of Information Industry.

There are no agreements or understandings for any of our executive officers or directors to resign at the request of another person and no officer or director is acting on behalf of nor will any of them act at the direction of any other person.

The board of directors is currently composed of 4 members, Mr. Jiang Huai Lin, Mr. Zhi Xiong Huang, Mr. Qiang Lin and Mr. Yun Sen Huang. Mr. Qiang Lin and Mr. Yun Sen Huang are independent directors, as that term is defined under the Nasdaq listing standards.

Our directors are elected at the annual meeting of our stockholders and thereafter hold office until their resignation, removal, death or incapacity, or until their respective successors are elected. Our officers are elected by and serve at the discretion of the board of directors.

Our directors have a duty of to act in good faith with a view to our interests. In fulfilling their duty of care to us, our directors must ensure compliance with our articles of incorporation. A stockholder has the right to seek damages if a duty owed by our directors is breached. All Board action requires the approval of a majority of the directors in attendance at a meeting at which a quorum is present. During 2006, our board met three times and no director missed more than 25% of the meetings of the board.

We currently do not have standing audit, nominating or compensation committees. Currently, our entire board of directors is responsible for the functions that would otherwise be handled by these committees. We intend, however, to establish an audit committee, a nominating committee and a compensation committee of the board of directors. We envision that the audit committee will be primarily responsible for reviewing the services performed by our independent auditors, evaluating our accounting policies and our system of internal controls. The nominating committee would be responsible for nomination of new director candidates and will be responsible for implementing our corporate governance policies and procedures. The compensation committee will be primarily responsible for reviewing and approving our salary and benefits policies (including stock options) and other compensation of our executive officers. Our board of directors has not made a determination as to whether any member of our board is an audit committee financial expert. Upon the establishment of an audit committee, the board will determine whether any of the directors qualify as an audit committee financial expert.

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Shareholder Communications

There are no family relationships among our directors or officers.

To the best of our knowledge, except as set forth in our discussion below in "Certain Relationships and Related Transactions", none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC. None of the directors, director designees or executive officers to our knowledge has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement.

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the following persons for services rendered in all capacities during the noted periods: John Maguire, our former President and Chief Executive Officer and Jiang Huai Lin, who became our Chief Executive Officer on October 3, 2006 when John Maguire resigned from such position. No other executive officers received total annual salary and bonus compensation in excess of $100,000.

Narrative to Summary Compensation Table

(1)   On October 3, 2006, Mr. McGuire resigned as our President and Chief Executive Officer and Mr. Lin became our President and Chief Executive Officer.

(2)   On September 6, 2006, Mr. Lin became our Chairman and on October 3, 2006 he became our President and Chief Executive Officer. Before that, Mr. Lin was (and continues to be) the Chairman and Chief Executive Officer of our subsidiary, Public Security. The annual, long term and other compensation shown in this table includes the amount Mr. Lin received from Public Security prior to during the applicable periods.

(3)   This amount constitutes amounts due to iASPEC under the license agreement between iASPEC and Public Security. Mr. Lin controls 60% of the equity interests iASPEC.

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None of our executive officers received any equity awards, including options, restricted stock or other equity incentives, during the fiscal year ended December 31, 2006.

All our employees, including Messrs Lin and Huang and Ms. Hong, have executed our form employment agreement and non-disclosure agreement. Mr. Lin earns RMB 20,000 per month (approximately $2,600) for his services as Chief Executive Officer of the Company and Public Security, Mr. Huang earns RMB 15,000 per month (approximately $2,000) for his services as Public Security’s Vice President and Ms. Hong earns RMB 15,000 per month (approximately $2,000) for her services as our Chief Marketing Officer. No other benefits have been granted by us to officers at this time.

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our directors for services rendered during our last completed fiscal year.

Narrative to Director Compensation Table

Mr. Lin earns RMB 10,000 per month (approximately $1,331) for his services as the Chairman of our board of directors and Mr. Huang earns RMB 8,000 per month (approximately $1,065) for his services as our director. Other than as set forth herein, there have been no fees earned or paid in cash for services to our directors. No stock or stock options or other equity incentives were awarded to our directors during the fiscal year ended December 31, 2006. We do not have non-equity incentive or a deferred compensation plan in which our directors may participate.

The following discloses transactions with related persons entered into over the past two years.

On October 20, 2006, our subsidiary, Public Security, iASPEC, and iASPEC’s shareholders, Mr. Lin and Mr. Jin Zhu Cai, entered into a software license agreement, or Software License Agreement. Under the terms of the Software License Agreement, Public Security was granted an exclusive license to use various different software that was developed by iASPEC and necessary to operate the business of servicing the iASPEC customers through the Turnkey Agreement. In consideration for the license, Public Security transferred to Mr. Lin 16,898,714 shares of our common stock valued at $0.58. The closing of the transactions contemplated by the Software License Agreement occurred on November 13, 2006. The shares transferred to Mr. Lin under the Software License Agreement constituted 53.5% of our issued and outstanding common stock on that date.

From October 9 through June 30, 2007, we operated under the Turnkey Agreement, with iASPEC, pursuant to which iASPEC exclusively engaged Public Security as its subcontractor to provide iASPEC with outsourcing services (to the extent that those services do not violate any special governmental permits held by iASPEC and do not involve the improper transfer of any sensitive confidential governmental or other data). The Turnkey Agreement also provided for a revenue sharing arrangement between iASPEC and Public Security where Public Security was entitled to between 90% and 100% of the revenues actually received by iASPEC from servicing contracts involving any iASPEC business, but was obligated to pay for its own costs in providing these services and to pay iASPEC $180,000 per year throughout the term of the agreement. At September 30, 2007, iASPEC owed Public Security $3.09 million, which represented iASPEC’s net revenues, less the annual payment and expenses incurred on behalf of Public Security in connection with the services provided under the Turnkey Agreement.

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The Management Service Agreement contains a true-up provision which requires iASPEC and Public Security, on or before September 30, 2007, to calculate all prior amounts owed to Public Security under the Turnkey Agreement, and requires iASPEC to pay such amounts. The parties are required to calculate the cumulative net profit of iASPEC from October 9, 2006, when iASPEC commenced its contractual relationship with Public Security, through the commencement date of the Management Service Agreement, and iASPEC is required to pay the amount due to Public Security, if there is a net received profit, while Public Security is obligated to reimburse any amount to iASPEC if it is there is a net loss. "Net Received Profit" means the Net Received Profit of iASPEC, calculated as follows: accrued accounts receivable plus net turnover (revenue), minus cost of sales, minus operating expenses, and minus accrued but not collected accounts receivable, but only if the result is a positive number. "Net Losses" means the net losses of iASPEC, calculated as follows: accrued accounts receivable plus net turnover (revenue), minus cost of sales, minus operating expenses, and minus accrued but not collected accounts receivable, but only if the result is a negative number. In accordance with this calculation, at June 30, 2007, the day prior to the effective date of the Management Service Agreement and the termination of the Turnkey Agreement, iASPEC owed Public Security $6.7 million, which represents iASPEC’s net revenues, less the annual payment and expenses incurred on behalf of Public Security in connection with the services provided under the Turnkey Agreement during 2006 and for the six months ended June 30, 2007. Public Security, iASPEC and the iASPEC shareholders have subsequently entered into a letter agreement, or Letter Agreement, dated September 12, 2007, requiring iASPEC to pay the true-up amount to Public Security, on or before December 31, 2007. As of September 30, 2007, iASPEC has repaid $3.91of the true-up amount which leaves a balance of $3.09 million.. In addition, at September 30, 2007, iASPEC also owes the Company $3.16 million under the Management Services Agreement and $6.28 for advances made by the Company to iASPEC. Therefore, the total amount owed by iASPEC at September 30, 2007, both under the Turnkey Agreement and under the Management Service Agreement is $12.53 million.

In connection with the Management Service Agreement, on August 1, 2007, Public Security also entered into the Option Agreement with iASPEC and its shareholders, effective as of July 1, 2007, pursuant to which the iASPEC shareholders granted Public Security or its designee(s) an exclusive, irrevocable option to purchase from the iASPEC shareholders, from time to time, all or a part of iASPEC’s shares, pursuant to an equity transfer agreement, or all or a part of iASPEC’s assets, pursuant to an asset purchase and transfer agreement. However, according to the Option Agreement, the option may not be exercised by Public Security if the exercise would violate any applicable laws and regulations in China or cause any license or permit held by, and necessary for the operation of iASPEC, to be cancelled or invalidated. Under the terms of the Option Agreement, the option is immediately exercisable at an exercise price of $1,800,000, in the aggregate, subject to regulatory approval. In addition, iASPEC and the iASPEC shareholders agreed to use their best efforts to acquire all necessary government approvals and other consents to complete a share purchase under the Option Agreement. The Option Agreement may be rescinded by Public Security upon 30 days’ notice and will terminate on the date that Public Security purchases all remaining shares or assets of iASPEC pursuant to the terms of the Option Agreement. If any of the parties breaches the Option Agreement and fails to remedy the breach, the breaching party will pay a penalty of RMB 5,000,000 to the non-breaching party or parties, and compensate the non-breaching party or parties for any losses caused by the breach.

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On November 9, 2006, we consummated the transactions contemplated by a stock purchase agreement, dated October 16, 2006, between our subsidiary Public Security and Mr. Lin. Pursuant to the stock purchase agreement, Mr. Lin acquired 8,601,286 shares of our common stock, representing 58.91% of our issued and outstanding common stock at the time of the acquisition. In consideration for those shares, Mr. Lin and Mr. Jin Zhu Cai caused iASPEC to transfer to Public Security, RMB 14,000,000 in cash (approximately $1,750,000) and all of the accounts receivable of iASPEC as of August 31, 2006, which were valued by the parties at RMB 27,286,172 (approximately $3,410,771). No provision for doubtful accounts was made for the accounts receivable balance. At the closing of the stock purchase agreement, Mr. Lin became our controlling shareholder.

On January 31, 2007, our board of directors recommended and our stockholders approved the rescission and simultaneous restructuring of the arrangements provided for by the CPSH transaction, the Public Security transactions and the software license agreement, pursuant to a rescission; termination and share exchange agreement among ourselves, Public Security, CPSH, iASPEC and iASPEC’s shareholders, including Mr. Lin. Pursuant to this restructuring agreement, the parties agreed: (1) to rescind the CPSH transaction whereby we returned the CPSH shares to Mr. Lin in exchange for his return of the US$50,000 purchase price; (2) to terminate the software license agreement and return the 16,898,714 shares of our common stock to us; (3) to terminate the stock purchase agreement, return to iASPEC the payments and rights received by Public Security and return the 8,601,286 shares of our common stock to us; and (4) that Mr. Lin will exchange all the issued and outstanding stock of CPSH for 25,500,00 shares of our common stock, the sum of the shares Mr. Lin personally received pursuant to the software license agreement and the stock purchase agreement. As a result of the transactions effected under the restructuring agreement, Mr. Lin became the beneficial owner of 25,500,000 shares of our common stock in the aggregate, which, at January 31, 2007, constituted 80.8% of our issued and outstanding common stock. Mr. Lin has since transferred 1,182,065 of these shares and now holds 21,717,935 of these shares directly and 2,600,000 of these shares indirectly through Total Device Management Limited, an entity controlled by Mr. Lin.

Prior to being subject to the Sarbanes-Oxley Act of 2002, in July 2006, Public Security advanced funds to Hong Kong United Development Group Limited, a company that is 51% controlled by Mr. Lin, for use as working capital. At December 31, 2006 the balance owed by Hong Kong United Development Group Limited was $115,312, however, this balance was fully paid on April 6, 2007.

From time to time Mr. Lin has advanced us various amounts for our working capital. At September 30, 2007, we owed Mr. Lin $82,304.

At December 31, 2006 and September 30, 2007, related party receivables and amount due from a director consist of (at September 30 2007, the balances with iASPEC were totally eliminated since iASPEC was consolidated):

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