China Fire & Security Group (CFSG)

[deathtotaxes]

China Fire Reports Record Second Quarter 2007 Results
Tuesday August 14, 7:30 am ET

BEIJING, Aug. 14 /Xinhua-PRNewswire-FirstCall/ -- China Fire & Security Group, Inc. (Nasdaq: CFSG - News), a leading industrial fire protection products and solutions provider in China announced its financial results for the quarter ended June 30, 2007. The Company will host a conference call to discuss these results after the market closes.

Q2 Highlights

-- Revenues increase 37.9 % compared to Q2 last year to a record $11.5
million
-- Company reports proforma net income of $3.9 million and EPS of $0.14
-- In June, Company signs total solutions contract with Anshan Iron &
Steel for $7.6 million
-- Approved to list on Nasdaq Capital Market

Revenue increased for the second consecutive quarter to a record $11.5 million, up 37.9 percent from $8.4 million for the second quarter 2006. This increase was a result of further penetration of the Company's customer base across various industries and improved sales execution. Total solutions accounted for 85.6 percent of revenue with product sales representing 13.3 percent and maintenance services comprising the balance of revenue. Gross profit for the quarter increased 31.9 percent to $6.3 million from $4.8 million for the comparable period last year with gross margins slightly lower than the same quarter a year ago at 54.6 percent in 2007. Gross margins decreased from last year as the Company utilized a higher percentage of third party products, which tend to carry lower margins.

"We are pleased to report another consecutive quarter of record revenues despite a challenging second quarter 2006 comparison as we continue to see strong demand from new and existing clients," commented Mr. Brian Lin, Chief Executive Officer of China Fire & Security Group, Inc. "During the second quarter we made further progress in product development and market expansion while positioning the Company for future growth. The successful win of total solution contract from Anshan Iron and Steel Group demonstrates China Fire's capacity to further penetrate the sector, as the China Fire Protection Bureau is increasingly becoming more stringent on compliance."

Operating expenses increased 128.8 percent to $2.8 million during the second quarter as the Company increased sales and marketing initiatives to further establish the Company's products in the market while also incurring higher public company expenses compared to the same quarter last year. Income from operations was $3.5 million, which was relatively unchanged from the second quarter last year. GAAP net income increased 16.8 percent to $4.2 million for the second quarter of 2007 with earnings per weighted average diluted share increasing to $0.16. Excluding a non-cash gain of $0.4 million related to Change in fair value of derivative instruments during the quarter, pro forma net income increased to $3.9 million with earnings per weighted average diluted share of $0.14.

"During the second quarter we significantly ramped up our sales and marketing efforts as we targeted new customers, introduced new products and sought industry verticals to penetrate," Mr. Lin continued. "We continue to believe that our core industrial market represents at least a $1 billion opportunity and we are confident given our industry leading product suite, value added proposition for manufacturers and increasing government regulations that we will capture a significant portion of the business in the future."

Six Month Financial Results

Revenue for the first six months of 2007 was $21.0 million, up 40.1 percent from $15.0 million in revenue for the first six months of 2006. Gross profit for the period increased 36.4 percent to $11.3 million. Income from operations increased 19.6 percent to $6.8 million as the Company benefited from increased revenue, which was offset by higher operating expenses. GAAP net income increased 43.9 percent to $8.4 million with earnings per weighted average diluted share increasing to $0.31. Excluding non-cash charges related to Change in fair value of derivative instruments and expenses, proforma net income increased 23.2 percent to $7.2 million or $0.26 per weighted average diluted share.

The Company continues to maintain a strong financial position. As of June 30, 2007, China Fire had $8.5 million in cash and cash equivalents, working capital of $28.9 million and no long-term debt. For the second quarter 2007, day sales outstanding or DSOs, were 127, down from DSOs of 145 in the first quarter 2007. Shareholders' equity stood at $35.8 million, up from $25.0 million at the end of 2006.

"We have been working diligently on improving our operational efficiencies and expect both further revenue growth and margin improvement to contribute to a record 2007. Given our strong results thus far through 2007, we are confident that we are going to deliver full year results above our stated "make good" comprehensive income target of $13.0 million and $0.46 in earnings per share associated with our October 2006 private placement. We expect this momentum to continue in 2008 as we look to maintain our number one industry position and report another record year," concluded Mr. Lin.

Teleconference Information

The conference call will take place at 4:15 p.m. EDT on Tuesday, August 14, 2007. Interested participants should call 1-866-328-4270 when calling within the United States or 1-480-629-9563 when calling internationally. There will be a playback available until 11:59 p.m. eastern time August 21, 2007. To listen to the playback, please call 1-800-406-7325 when calling within the United States or 1-303-590-3030 when calling internationally. Please use pass code 3769237 for the replay.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://viavid.net/dce.aspx?sid=0000435A or at ViaVid's website at http://www.viavid.net . The webcast can be accessed through September 14, 2007.

About China Fire & Security Group, Inc.

China Fire & Security Group, Inc., through its wholly owned subsidiaries, Sureland Industrial Fire Safety Limited ("Sureland") and Sureland Industrial Fire Equipment (Beijing) Limited ("Sureland Equipment"), is engaged primarily in the design, development, manufacture and sale in China of a variety of fire safety products for the industrial fire safety market and the design and installation of industrial fire safety systems in which it uses its own fire safety products. It also provides maintenance services for customers of its industrial fire safety systems.

Headquartered in Beijing with over 30 sales and project offices throughout China, Sureland markets its industrial fire safety products and systems primarily to major companies in the iron and steel, power and petrochemical industries in China. It is developing and expanding its business in other industrial sectors including transportation, wine and tobacco, vessels, nuclear energy, and public space markets.

Cautionary Statement Regarding Forward Looking Information

This presentation may contain forward-looking information about China Fire & Security Group, Inc. and its wholly owned subsidiary Sureland which are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward- looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology, and include discussions of strategy, and statements about industry trends and China Fire & Security Groups' future performance, operations and products. This and other "Risk Factors" contained in China Fire & Security Groups' public filings with the SEC.

CHINA FIRE & SECURITY GROUP, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS UNIPRO FINANCIAL SERVICES, INC.)

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(Unaudited)

Three months Six months
ended June 30, ended June 30,
2007 2006 2007 2006
REVENUES
System contracting
projects $9,887,878 $4,100,476 $17,164,386 $8,322,758
Products 1,538,049 4,138,369 3,639,805 6,507,601
Maintenance Services 121,258 132,888 242,456 195,724
Total revenues 11,547,185 8,371,733 21,046,647 15,026,083

COST OF REVENUES
System contracting
projects 4,379,902 2,092,985 8,024,570 4,748,617
Products 811,081 1,474,627 1,639,783 1,940,888
Maintenance Services 46,689 19,014 56,874 35,495

Total cost of
revenues 5,237,672 3,586,626 9,721,227 6,725,000

GROSS PROFIT 6,309,513 4,785,107 11,325,420 8,301,083

OPERATING EXPENSE
Selling and marketing 1,210,100 267,180 1,761,509 849,080
General and
administrative 1,174,309 590,685 2,185,353 1,092,414
Depreciation and
amortization 133,056 132,889 259,539 269,778
Research and
development 267,626 226,548 317,921 403,520
Total operating
expense 2,785,091 1,217,302 4,524,322 2,614,792

INCOME FROM OPERATIONS 3,524,422 3,567,805 6,801,098 5,686,291


OTHER INCOME
(EXPENSE)
Other income 323,702 128,091 327,998 225,484
Other expense (2,146) -- (6,417) --
Interest income 24,915 4,372 44,170 6,080
Interest expense -- (43,019) -- (43,019)
Change in fair value
of derivative
instruments 371,628 1,205,791
Total other income
(expense) 718,099 89,444 1,571,542 188,545

INCOME BEFORE PROVISION
FOR INCOME TAXES
AND MINORITY
INTEREST 4,242,521 3,657,249 8,372,640 5,874,836


PROVISION FOR INCOME
TAXES -- 43,144 -- 56,800

NET INCOME BEFORE
MINORITY INTEREST 4,242,521 3,614,105 8,372,640 5,818,036

MINORITY INTEREST -- (18,890) -- --

NET INCOME 4,242,521 3,632,995 8,372,640 5,818,036

OTHER COMPREHENSIVE
INCOME
Foreign currency
Translation
adjustment 514,775 32,993 810,334 120,677


COMPREHENSIVE
INCOME $4,757,296 $3,665,988 $9,182,974 $5,938,713

WEIGHTED AVERAGE
NUMBER OF SHARES ¨C
BASIC 26,461,678 24,000,000 26,461,678 24,000,000

WEIGHTED AVERAGE
NUMBER OF SHARES ¨C
DILUTED 27,164,207 24,000,000 27,085,807 24,000,000

EARNING PER SHARE ¨C
BASIC $0.16 $0.15 $0.32 $0.24
EARNING PER SHARE
- DILUTED $0.16 $0.15 $0.31 $0.24




CHINA FIRE & SECURITY GROUP, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS UNIPRO FINANCIAL SERVICES, INC.)

CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2007 AND DECEMBER 31, 2006

A S S E T S
June 30, December 31,
2007 2006
Unaudited
CURRENT ASSETS:
Cash $8,487,318 $9,426,091
Restricted cash 894,494 1,622,833
Accounts receivable, net of
allowance for doubtful
accounts of $1,496,398 and
$1,252,947 as of June 30,
2007 and December 31,
2006, respectively 14,377,790 12,878,665
Accounts receivable -
related party -- 333,056
Notes receivable 1,550,911 903,425
Other receivables 1,993,014 785,111
Other receivables - related
party -- 90,008
Inventories 4,741,890 4,190,830
Costs and estimated
earnings in excess of
billings 12,258,012 9,020,122
Employee advances 2,186,930 1,648,560
Prepayments and deferred
expenses 2,557,245 2,396,571
Total current
assets 49,047,604 43,295,272

PLANT AND EQUIPMENT, net 3,929,627 3,529,808

OTHER ASSETS:
Accounts receivable -
retentions 667,103 383,375
Deferred expenses - non
current -- 40,830
Advances on building
purchases 896,865 --
Investment in joint venture 149,910 501,288
Land use rights, net of
accumulated amortization 565,797 558,255
Technology rights, net of
accumulated amortization 598,599 --
Total other assets 2,878,274 1,483,748

Total
assets $55,855,505 $48,308,828


L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y

CURRENT LIABILITIES:
Accounts payable $5,553,119 $5,796,979
Accounts payable - related
party -- 320,754
Customer deposits 8,335,538 2,713,451
Billings in excess of costs
and estimated earnings 2,331,174 8,867,624
Other payables 826,569 388,434
Other payables - related
party -- 50,523
Accrued liabilities 2,898,232 1,891,628
Taxes payable 162,204 619,949
Total current
liabilities 20,106,836 20,649,342

DERIVATIVE INSTRUMENT LIABILITIES -- 2,680,811

COMMITMENTS AND CONTINGENCIES -- --

SHAREHOLDERS' EQUITY:
Common stock, $0.001 par
value, 65,000,000 shares
authorized,
26,461,678 shares
issued and
outstanding 26,462 26,462
Additional paid-in-capital 14,980,191 13,393,171
Statutory reserves 3,123,127 3,728,127
Retained earnings 15,743,033 6,765,393
Accumulated other
comprehensive income 1,875,856 1,065,522
Total
shareholders'
equity 35,748,669 24,978,675

Total
Liabilities and
shareholders'
equity $55,855,505 $48,308,828



For more information, please contact:

China Fire & Security Group, Inc.
Brian Lin
CEO
Tel: [phone]
Email: [e-mail]