Regulations promulgated by governmental agencies in China relating to the surveillance and safety industry often create opportunities for us. Currently, there are a number of current and planned regulations that the Company believes offer significant growth opportunities. These include the estimated $6 billion to $12 billion that the Chinese government expects to spend for surveillance and safety infrastructure in preparation for the planned investment by Shanghai for the 2010 Worlds Fair. In addition, several ordinances have been passed by the Chinese government which require surveillance and safety systems to be installed in: (1) approximately 660 cities throughout China for street surveillance; (2) all entertainment locations starting from March 1, 2006; (3) all Justice Departments and Courts; and (4) all coal mines in China (currently estimated at 24,000) from the beginning of 2008.

We are actively pursuing near-term acquisition prospects and other strategic opportunities. In 2009, we successfully acquired Coson. We have also recently announced plans to acquire, Shanghai Forever Security Co., Ltd. ("SFSC"), Beijing Emergency Security Service Center for Maintenance and Repair ("BESC"), Santachi Video Technology Co., Ltd. ("Santach"), Zhejiang Loyal Co., Ltd. ("Zhejiang Loyal"), Anhui Guangcheng Technology Co., Ltd. ("Anhui Guangcheng"), and Shanghai Nanxiao Fire Protection Engineering Equipment Co., Ltd. ("Shanghai Nanxiao"). We also plan to establish a cooperation agreement with Beijing Aurine Yingke Intelligent System Integration Co. Ltd. ("Yingke").

SFSC is a security service company based in Shanghai. With its call center, digital supervision alarm system and guard dispatch and patrol vehicles, it provides safety and surveillance monitoring and alarm responses.

BESC is a safety and surveillance emergency maintenance services provider based in Beijing, authorized by the local government and the Beijing Security Industry Association. It is the only company in Beijing approved by the Beijing Municipal Administration for Industry and Commerce to engage in maintenance and repair services for safety and surveillance systems related to specific government projects. Its services include the provision of emergency maintenance services, routine maintenance services, and consulting services.

Santachi is devoted to the development, manufacturing, sales, material requisition, custom engineering and post-sale service of a full range of electronic surveillance products and focuses on surveillance solutions for highways and railways nationwide.

Zhejiang Loyal is engaged primarily in the design and installation of fire safety auto-alarm networking systems. It also provides fire monitoring and management services to customers in its network. It has constructed and now administers one central monitoring center in Hangzhou city and regional sub-centers in 11 cites in Zhejiang province in China.

Anhui Guangcheng focuses on providing total solutions and applications to the intelligent transportation industry. In conjunction with the Ministry of Transport of the PRC, Anhui Guangcheng participates in the development of the National Intelligent Transportation Networking Standards
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