Interactive Q&A: Brian Lin, CEO of China Fire and Security Group, Inc. (CFSG.OB)

This is the latest in Seeking Alpha's series of interviews with leading companies of interest to our readers. Ours are interviews with a twist: the respondent has agreed to answer questions and respond to comments not from a single interviewer, but rather from our community of readers and contributors.

This interactive Q&A is with Brian Lin, CEO of China Fire and Security Group, Inc. (CFSG.OB). China Fire and Security, Inc. was founded in 1995 and listed in the U.S in October 2006, China Fire & Security Group, Inc. “China Fire” is currently the largest manufacturer, distributor and installer of industrial fire protection products and services in China. The Company currently offers a broad product portfolio including fire detection, fire control and fire extinguishers to customers operating in the iron, steel, power and petrochemical industries, in addition to providing the necessary design and installation service for each system. Sales are conducted through company owned and liaison offices in more than 20 cities across China. The Company’s established suite of products and services are sold under the “Sureland” brand name. In addition, China Fire sells and integrates other manufacturers' products to offer a total packaged solution. The Company has 28 issued patents covering fire detection, system control and fire extinguishing technologies with 3 additional patents pending. In 2006 the Company reported revenue of over $32 million and proforma net income of over $9 million. (See the latest CFSG earnings call transcript, Roth Conference presentation transcript, and corporate fact sheet for more background on the company.)

China Fire has sponsored this interview, which works like this:

• Brian briefly introduces himself and the issues he's focused on below.
• Readers and contributors can immediately start to post questions and remarks using the comment box below (Note: you need to sign up for free registration and be logged in to do so).
• Seeking Alpha editors will not filter or edit the questions and comments from readers, except to delete profane or hostile language.
• Brian will respond to the questions and remarks beginning Monday, July 9th. Readers can track his answers and respond to them during that period.

Yahoo Finance readers may join the Q&A by following this link.

Over to Brian:

• • •

My name is Brian Lin and I'm Chief Executive Officer of China Fire and Security Group (CFSG.OB). Thanks to Seeking Alpha for providing this opportunity to interact with investors.

I'm happy to discuss a range of topics with Seeking Alpha readers, including:

1. Our focus on providing fire prevention and remediation solutions to the rapidly growing Chinese industrial manufacturing sectors.

2. Initiation of new rules and regulations by the Chinese government which are driving demand for our products.

3. Recent contract wins and expansion opportunities.

4. The competitive landscape.

5. Plans to move from the bulletin board to a national exchange.

Please leave your questions by using the comment box below.

Thank you!

-- Brian

This Q&A represents the opinion of China Fire and Security Group, Inc. management and is not intended to be a forecast of future events, a guarantee of future results nor investment advice. Except for the statements of historical fact, information presented herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general economic and business conditions, the ability to fund operations, the ability to forge partnerships and other factors over which China Fire and Security Group, Inc. has little or no control. China Fire and Security Group, Inc. assumes no obligation to publicly update or revise any forward-looking statements provided in this Q&A, or to correct any erroneous information presented in any investor questions herein.

For information on sponsoring Q&As please contact us.

Comments

[Brian Lin:]

Allan,

I know this might be not what you want to hear, but it is important for you to carefully go over our 10kSB for disclosure on investing in our company.
yahoo.brand.edgar-onli...;Type=HTML

Brian

2007 Jul 10 02:14 AM

[suoucon:]

Sir,

In you recent filing that you referred to it states " All our products meet or exceed both the China and US standards.", to that end what if any plans do you have for entry into the US or other foreign markets? Also, are the China & US standards the highest in the world or are there other countries with more demanding standards?

Would it require a large capital infusion, possible joint ventures to enter the US?

Thanks in advance.

2007 Jul 10 10:14 AM

[Brian Lin:]

We currently don't have a plan for directly entering US or other foreign markets. We will make an announcement when we have such a plan. We don't know the standards of other countries at this point.

Brian

2007 Jul 10 11:15 AM

[RUFCrazy:]

Hi Brian,

This is an excellent forum and I appreciate the chance for such dialog. I wish more companies would do this...

1) Can you share with us what the company's 2-3 year goals are for revenue and earnings growth - maybe a range such as 30% revenues, 25% earnings etc ? As an investor, it is incredibly useful to understand the companies aspirations for growth.
2) Have you determined what size of contract that would warrant a press release by the company ?
3) Most of your business has come from the steel industry. Going forward, on average over the next several years, what pecent of business would you expect to come from steel, and what other business areas are you targeting for growth ?

Thanks

RUF

2007 Jul 10 01:02 PM

[Brian Lin:]

Ruf,

1) I'm sorry but we don't provide any guidance on our financial related information. But historically we have been growing over 30% top line and we don't see any reason we can slow down.

2) In our last press release, we announced that we will issue a press release for contracts over US$3 million.

3) We have been very strong in Iron and Steel industry with a significant portion of our business coming from clients in this industry. We can't say the exact percentage over the years but Iron and Steel industry will remain a focus of CFSG, probably still be the relatively largest contributor to our revenue. In our 10-KSB, we stated that we are expanding into other vertical industries, including Transportations

Brian

2007 Jul 11 05:40 AM

[ryan_plovie:]

Brian,

Is CFSG attracting any reputable Wall St. Analysts, or are institutional investors nervous of investing in a small chinese company?

Ryan

2007 Jul 10 01:41 PM

[Brian Lin:]

Ryan,

There are currently three independent analysts covering the Company. They are Roth Capital Partners, Susquehanna International Group and HC Wainwright. Please contact your sales person at each respective firm if you would like a copy of the report.

Brian

2007 Jul 10 09:58 PM

[Frank Waddell:]

Hello again, Brian. A couple more questions if you don't mind...

Your new linear heat detectors are highly recomended for companies in the Iron & Steel Industry. Are there any other industries where your new linear heat detectors are highly recommended that will provide additonal growth? Is there any legislation in the works (or that has already been approved) in either China or abroad in these other industries for those linear heat detectors?

Thank you,

Frank

2007 Jul 10 04:48 PM

[Brian Lin:]

Frank,

Sorry about my late reply but I thought I submitted it earlier. Anyways, here is my comment:

Linear Heat Detectors are used in many industrial environments, including Iron and Steel plants, Power plants, Petrochemical plants, highway tunnels, etc. In China, we are working with government to release fire codes for different industries to ensure appropriate amount of linear heat detectors are deployed in industrial plants for fire detection. Even though there is no legislation on non-compliance yet, plant owners are paying more and more attention to fire safety due to various potential liabilities.

Brian

2007 Jul 11 11:25 AM

[ryan_plovie:]

Brian,

Instead of asking questions that you cannot give the answers to. Could you share with us investors, what we should be looking for from the company that will let us know that you are executing the business plan and what kind of things we have to look forward to this year that could result in price appreciation for the stock or get the company on people's radar.

2007 Jul 11 01:47 PM

[Brian Lin:]

Ryan,

Thanks for the understanding.

We are doing everything we can do increase shareholder value. Financially, even though we don't provide guidance for 2007, we do have a committment to our PIPE investors in the form of "make Good" number - comprehensive income above $0.46 per share. If we don't make this number, certain personal shares of the Chairman and myself will be given to PIPE investors. Business wise, in addition to our continous focus on Iron and Steel industry, Power plant, and Petrochemical plants, we are expanding into Transportation industry and other vertical industries. We also very much focus on investor relations. I personally go to US and meet with institional investors on the quarterly basis. We have talked with many analysts and have research reports from three brokerage firms. We applied for Nasdaq and was just approved by Nasdaq on July 10. This showcases our focus on improving our corporate governance and this move will lead to increased visibility, liquidity and institutional sponsorship for the Company.

Brian

2007 Jul 12 11:49 AM

[ChinaMart:]

Hi Brian,

I just wanted to say thanks for the Nasdaq listing!

Now CFSG can trade at a PE it deserves going forward.

You seem to have a pattern of underpromsing and overdelivering which I really like.

Keep up the great work.

Gary

2007 Jul 12 11:41 AM

[Brian Lin:]

Gary,

Thanks for the compliments. We certainly will work hard to increase values of our shareholders.

Brian

2007 Jul 12 11:52 AM

[Brian Lin:]

Thank you all for your comments and I enjoyed talking with you here for the last three days. As a closing remark, I would like to thank you to Seeking Alpha for allowing us to participate in this event. As the only Chinese Fire Safety company listed in the US stock market (and will be trading on Nasdaq on Monday, July 16, 2007), we feel we are uniquely positioned to capitalize on this large and
growing market opportunity as China begins to implement these necessary fire
safety standards. We look forward to updating investors on our progress over
the balance of the year as we continue to reach our corporate initiatives.

Brian Lin
Chief Executive Officer,
China Fire & Security Group, Inc.

2007 Jul 12 12:03 PM

[User 1:]

This Seeking Alpha interactive Q & A is now closed for further questions. Thank you very much to Brian Lin of China Fire & Security Group, and to our readers who participated.

~ The Seeking Alpha Team

2007 Jul 12 12:39 PM