UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q/A

(Mark One)

Q

For the quarterly
period ended: September 30, 2008

 ̈

For the transition
period from ____________ to _____________

Commission File Number:
001-33774

CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.

|Delaware                        | 98-0509431               
|------------------------------- | -------------------------
|(State or other jurisdiction of | (I.R.S. Empl. Ident. No.)
|incorporation or organization)  |                          

13/F, Shenzhen Special Zone Press Tower, Shennan Road Futian District, Shenzhen, China 518034 (Address of principal executive offices,
Zip Code)

(86) 755-8351-0888 (Registrants telephone number,
including area code)

Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of "large accelerated filer,"
"accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.

|Large
    Accelerated Filer                                             |  ̈ | Accelerated Filer         | Q
|----------------------------------------------------------------------- | - | ------------------------- | -
|                                                                        |   |                           |  
|Non-Accelerated
    Filer (Do not check if a smaller reporting company) |  ̈ | Smaller reporting company |  ̈

The number of shares outstanding of each of the issuers classes of common
equity, as of October 27, 2008 is as follows:

Class of Securities
      
      Shares OutstandingCommon Stock, $0.0001 par value
      
      45,843,285


Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).

Yes



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Explanatory Note

This Amendment No. 1 to the Quarterly Report on Form 10-Q for
the period ended September 30, 2008 of China Security & Surveillance Technology,
Inc. (the "Company") is filed solely to amend Item 2 "Managements Discussion
and Analysis of Financial Condition and Results of Operations" to remove the
per-share information contained in the text and graphic disclosure of the Companys
non-cash components for the three months and nine months ended September 30,
2008 and 2007.

For purposes of this Form 10-Q/A, and in accordance with Rule
12b-15 under the Securities Exchange Act of 1934, as amended, each item of the
Form 10-Q for the quarter ended September 30, 2008, as originally filed on
October 28, 2008, that was affected by the error has been amended and restated
in its entirety. Unless otherwise indicated, this report speaks only as of the
date that the original report was filed. No attempt has been made in this Form
10-Q/A to update other disclosures presented in the original report on Form
10-Q. This Form 10-Q/A does not reflect events occurring after the filing of the
original Form 10-Q or modify or update those disclosures, including the exhibits
to the Form 10-Q affected by subsequent events; however, this Form 10-Q/A
includes as exhibits 31.1, 31.2, 32.1 and 32.2 new certifications by the
Companys Chief Executive Officer and Chief Financial Officer as required by
Rule 12b-15.

1

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.



Special Note Regarding Forward Looking Statements



This Quarterly Report on Form 10-Q, including the following Management's
Discussion and Analysis of Financial Condition and Results of Operations,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Such statements include, among others, those concerning
our expected financial performance and strategic and operational plans, our
future operating results, our expectations regarding the market for security and
surveillance products, our expectations regarding the continued growth of the
security and surveillance market, as well as all assumptions, expectations,
predictions, intentions or beliefs about future events. You are cautioned that
any such forward-looking statements are not guarantees of future performance and
that a number of risks and uncertainties could cause our actual results to
differ materially from those anticipated, expressed or implied in the
forward-looking statements. These risks and uncertainties include, but are not
limited to, the factors mentioned in the Risk Factors section of our Annual
Report on Form 10-K for the year ended December 31, 2007, and other risks
mentioned in this Form 10-Q or in our other reports filed with the Securities
Exchange Commission (the SEC) since the filing date of our Annual Report on
Form 10-K for the year ended December 31, 2007. The words believe, expect,
anticipate, project, targets, optimistic, intend, aim, will or
similar expressions are intended to identify forward-looking statements. All
statements other than statements of historical fact are statements that could be
deemed forward-looking statements. The Company assumes no obligation and does
not intend to update any forward-looking statements, except as required by law.



Use of terms



Except as otherwise indicated by the context, references in this Form 10-Q to
CSR, we, us, our, our Company, or the Company are to China Security
& Surveillance Technology, Inc., a Delaware corporation and its consolidated
subsidiaries. Unless the context otherwise requires, all references to

- "Cheng Feng" are to Shanghai Cheng Feng Digital Technology Co. Ltd., a
  corporation incorporated in the Peoples Republic of China and an indirect,
  wholly owned subsidiary of the Company;
- "Chuang Guan" are to Shenzhen Chuang Guan Intelligence Network Technology Co.,
  Ltd., a corporation incorporated in the Peoples Republic of China;
- "CSST HK" are to China Security & Surveillance Technology (HK) Ltd., a Hong
  Kong corporation and an indirect, wholly owned subsidiary of the Company;
- "CSST PRC" are to China Security & Surveillance Technology (PRC) Inc., a
  corporation incorporated in the Peoples Republic of China and a direct,
  wholly owned subsidiary of the Company;
- "DM" are to Beijing DM Security & Technology Co., Ltd., a corporation
  incorporated in the Peoples Republic of China;
- "Golden" are to Golden Group Corporation (Shenzhen) Limited, a corporation
  incorporated in the Peoples Republic of China and an indirect, wholly owned
  subsidiary of the Company;
- "Guanling" are to Beijing Aurine Divine Land Technology Co., Ltd., a
  corporation incorporated in the Peoples Republic of China and an indirect,
  wholly owned subsidiary of the Company;
- "HiEasy" are to HiEasy Electronic Technology Development Co., Ltd., a
  corporation incorporated in the Peoples Republic of China and an indirect,
  wholly owned subsidiary of the Company;
- "Hongtianzhi" are to Shenzhen Hongtianzhi Electronics Co., Ltd., a corporation
  incorporated in the Peoples Republic of China and an indirect, wholly owned
  subsidiary of the Company;
- "Huge Long" are to Huge Long Limited, a Hong Kong corporation of which we have
  acquired the beneficial interest of all issued and outstanding capital stock;
- "Jin Lin" are to Shenzhen Jin Lin Technology Co., Ltd., a corporation
  incorporated in the Peoples Republic of China and an indirect, wholly owned
  subsidiary of the Company;
- "Kit Grant" are to Kit Grant Limited, a Hong Kong corporation and an indirect,
  wholly owned subsidiary of the Company;
- "Longhorn" are to Shenzhen Longhorn Security Technology Co., Ltd., a
  corporation incorporated in the Peoples Republic of China and an indirect,
  wholly owned subsidiary of the Company;
- "Long Top" are to Long Top Limited, a Hong Kong corporation and an indirect,
  wholly owned subsidiary of the Company;

2



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- 

























Overview of Our Business



China Security & Surveillance Technology, Inc. is a Delaware holding company
whose China-based operating subsidiaries are primarily engaged in manufacturing,
distributing, installing and servicing security and surveillance products and
systems and developing security and surveillance related software in China. Our
customers are mainly comprised of (i) commercial entities (including airports,
hotels, real estate, banks, mines, railways, supermarkets and entertainment
venues); (ii) governmental entities (including customs agencies, courts, public
security bureaus and prisons), and (iii) non-profit organizations (including
schools, museums, sports arenas and libraries). These account for approximately
50%, 49% and 1% of our revenues for the three months ended September 30, 2008,
respectively.



Our sales network covers most of Chinas populated areas and we do not rely on
any particular region for our business. Our subsidiaries collectively have more
than 150 branch offices and distribution points.



In the third quarter of 2008, we acquired Jin Lin. Jin Lin is primarily engaged
in professional intelligent security monitoring systems and intelligent
transportation system product development in China. We also acquired 100%
beneficial interest of all issued and outstanding stock of Huge Long Limited and
obtained the exclusive rights to use land plot No. A524-0013 located to the
south of Ban Gong Chang Road, Guangming Street, Baoan District, Shenzhen (the
Industry Park) that is owned by WDH.



On July 7, 2008, we acquired 100% ownership of Long Top Limited which is the
holding company that owns all the outstanding equity of Jin Lin. Under the
equity transfer agreement, we agreed to pay RMB68.6 million (approximately $10.0
million) in exchange for 100% ownership of Long Top Limited, consisting of RMB
40 million (approximately $5.8 million) in cash and 268,870 shares of our common
stock valued at RMB28.6 million (approximately $4.2 million). The Company has
paid RMB13.0 million (approximately $1.9 million) of the cash portion of the
purchase price, the remaining RMB27.0 million (approximately $3.9 million) of
the cash consideration will be paid upon Long Top and Jin Lins achievement of
certain financial thresholds. 268,870 shares of our common stock will be issued
in the fourth quarter of 2008.



3



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On August 6, 2008, we entered into an equity transfer agreement with the
shareholder of Huge Long Limited under which we will acquire all issued and
outstanding shares of capital stock of Huge Long Limited through a series of
transactions. We acquired 100% beneficial interest (but not record ownership) of
all issued and outstanding capital stock of Huge Long Limited and the exclusive
right to use the Industry Park on August 6, 2008 (the First Closing) and will
acquire the legal title and record ownership of all issued and outstanding
shares of capital stock of Huge Long Limited on or before December 31, 2009 (the
Second Closing).  Huge Long Limited has entered into an equity transfer
agreement to acquire WDH which will close on or before December 31, 2009. The
Second Closing is conditioned upon the acquisition by Huge Long Limited of the
legal title of WDH.  Under the equity transfer agreement, we agreed to pay a
total consideration of RMB146 million (approximately $21.3 million) in exchange
for the 100% beneficial interest of Huge Long Limited, consisting of RMB102
million (approximately $14.9 million) in cash and 453,736 shares of our common
stock valued at RMB43.8 million (approximately $6.4 million). We have paid RMB80
million (approximately $11.7 million) of the purchase price, the remaining RMB
22 million (approximately $3.2 million) of the cash consideration will be paid
at the Second Closing. 453,736 shares of our common stock will be issued in the
fourth quarter of 2008.



Reportable Operating Segments



Segment information is consistent with how management reviews the businesses,
makes investing and resource allocation decisions and assesses operating
performance. The Company has set up a new segment for distribution of security
and safety products and realigned its management and segment reporting structure
effective January 1, 2008. During 2008, we set up a new segment  Distribution
Segment. The Company reports financial and operating information in the
following three segments:



(a)

System installation: designs, sells, installs, services and monitors electronics
security systems to residential, commercial, industrial and governmental
customers (the Installation Segment);



(b)

Manufacturing of security and safety products: designs, manufactures and sells
security and safety products, including intrusion security, access control and
video management systems (the Manufacturing Segment); and



(c)

Distribution of security and safety products: sells security and safety
products, including intrusion security, access control and video management
systems (the Distribution Segment).



The Company also provides general corporate services to its segments and these
costs are reported as Corporate and others.



Third Quarter Financial Performance Highlights



We continued to experience strong demand for our products and services during
the third fiscal quarter of 2008 and growth in our revenues, but our net income
decreased primarily as a result of the increased non-cash expenses. The security
and surveillance product market in China continued to expand in the third
quarter of 2008 due, in part, to several programs and regulatory drivers
initiated by the Chinese government, such as State Ordinance 458 and the Safe
City program, which require many public places, including city-wide surveillance
systems, traffic intersections, critical government locations, cyber cafés, bars
and discotheques, to install security systems. In addition, the economic
development in China and the fact that the population in China in general is
becoming relatively wealthier also contributed to increased demand for security
and surveillance products within various industries and organizations, such as
residential estates, factories and shopping centers. Our third fiscal quarter
financial results also benefited from the consolidation of the four newly
acquired companies in 2008, which contributed approximately $12.26 million
revenues in aggregate, accounting for approximately 10.3% of the total revenues
for the third fiscal quarter of 2008.



The following are some financial highlights for the third quarter of 2008:

- 











4



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- Fully diluted net income per share:
  Fully diluted net income per share was $0.20 for the third quarter of 2008, as
  compared to $0.29 for the same period last year.
- Non-cash expenses: Non-cash
  expenses included (i) the redemption accretion on convertible notes was $5.36
  million for the third quarter of 2008, as compared to $4.36 million for the
  same period last year, (ii) depreciation and amortization was $2.51 million
  for the third quarter of 2008, as compared to $1.44 million for the same
  period last year, and (iii) non cash employee compensation expense was $3.60
  million for the third quarter of 2008, as compared to $0.99 million for the
  same period last year. Total non-cash expenses are $11.47 million for the
  third quarter of 2008, an increase of $4.68 million, or 68.9%, from $6.79
  million for the same period last year.

Our net income for the three months ended September 30, 2008 and 2007 was $9.15
million and $11.70 million, respectively. Our net income for the nine months
ended September 30, 2008 and 2007 was $21.38 million and $20.49 million,
respectively. Our net income was materially impacted by depreciation and
amortization of long-lived assets in the subsidiaries we acquired, non cash
employee compensation recognized pursuant to SFAS 123 (R) and redemption
accretion on convertible notes. In the table below, we have presented a non-GAAP
financial disclosure to provide a quantitative analysis of the impact of the
depreciation and amortization of long-lived assets in the subsidiaries we
acquired, non cash employee compensation and redemption accretion on convertible
notes on our net income. Because these items do not require the use of current
assets, management does not include these items in its analysis of our financial
results or how we allocate our resources. Because of this, we deemed it
meaningful to provide this non-GAAP disclosure of the impact of these
significant items on our financial results.



The following table summarizes the Companys non-cash expenses during the three
months ended September 30, 2008 and 2007.



All amounts in millions of U.S. dollars



|                                                                |  | Three Months Ended September 30, |       |     
|--------------------------------------------------------------- |  | -------------------------------- | ----- | ----
|Non-cash expenses                                               |  | 2008                             |       | 2007
|Depreciation and amortization                                   |  | $                                | 2.28  |     
|Depreciation and amortization (including in cost of goods sold) |  |                                  | 0.23  |     
|Non cash employee compensation                                  |  |                                  | 3.60  |     
|Redemption accretion on convertible notes                       |  |                                  | 5.36  |     
|Total                                                           |  | $                                | 11.47 |     



5



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The following table summarizes the Companys non-cash expenses during the nine
months ended September 30, 2008 and 2007.



All amounts in millions of U.S. dollars



|                                                                |  | Nine Months Ended September 30, |       |     
|--------------------------------------------------------------- |  | ------------------------------- | ----- | ----
|Non-cash expenses                                               |  | 2008                            |       | 2007
|Depreciation and amortization                                   |  | $                               | 6.23  |     
|Depreciation and amortization (including in cost of goods sold) |  |                                 | 0.52  |     
|Non cash employee compensation                                  |  |                                 | 9.66  |     
|Redemption accretion on convertible notes                       |  |                                 | 14.09 |     
|Total                                                           |  | $                               | 30.50 |     
|                                                                |  |                                 |       |     



6



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Results of Operations



The following table sets forth key components of our results of operations for
the periods indicated, in dollars and as a percentage of revenues.



All amounts, other than percentages, in millions of U.S. dollars



|                                                                                                                  | Three months ended September 30, | Nine months ended September 30,
|----------------------------------------------------------------------------------------------------------------- | -------------------------------- | -------------------------------
|                                                                                                                  | 2008                             | 2007                           
|Revenues                                                                                                          | $                                | 119.29                         
|Cost of goods sold (including depreciation and amortization amounted $0.23
    million, $0.52 million, $0 and $0) |                                  | (87.28)                        
|Gross profit                                                                                                      |                                  | 32.01                          
|Selling and marketing                                                                                             |                                  | (3.38)                         
|General and administrative                                                                                        |                                  | (7.42)                         
|Non cash employee compensation                                                                                    |                                  | (3.60)                         
|Depreciation and amortization                                                                                     |                                  | (2.28)                         
|Income from operations                                                                                            |                                  | 15.33                          
|Other income                                                                                                      |                                  | 0.55                           
|Gain on disposal of land use right and properties                                                                 |                                  | -                              
|Interest expense, Cash                                                                                            |                                  | (0.59)                         
|Redemption accretion on convertible notes                                                                         |                                  | (5.36)                         
|Income before income taxes                                                                                        |                                  | 9.93                           
|Income taxes                                                                                                      |                                  | (0.78)                         
|Net income                                                                                                        | $                                | 9.15                           



Comparison of the Three Months Ended September 30, 2008 and 2007



Revenues



Our revenues are generated from system installations and manufacturing and
distribution of security and safety products. During the three months ended
September 30, 2008, we experienced solid growth in revenues. Revenues increased
$53.85 million, or 82.3%, to $119.29 million for the three months ended
September 30, 2008 from $65.44 million for the three months ended September 30,
2007. The increase in revenues was mainly attributable to growth in the security
and surveillance market in China, the increased market demand for our products,
our increased brand recognition and the acquisition of four companies in the
second and third quarters of 2008. Our strategic efforts to increase our
distribution channels during 2007 and 2008 and sufficient working capital from
our recent fundraising activities also allowed us to successfully take advantage
of the growth in market demand in the third quarter of 2008.



After Jin Lin became our wholly owned subsidiary in the third quarter of 2008,
we consolidated its financial result beginning in the third quarters of 2008,
which contributed $0.92 million to our revenues in the third quarter of 2008. We
consolidated the financial results of Stonesonic, Longhorn and Guanling from
April 2008.



7



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Newly acquired subsidiaries including Tsingvision, Stonesonic, Longhorn,
Guanling and Jin Lin had revenues of $13.08 million in the third quarter of
2008. As the acquisitions of Hongtianzhi, HiEasy, and Minking had surpassed the
one year anniversary, we have included these revenues in our organic growth
since the third quarter of 2008. They had revenues of $12.28 million in the
third quarter of 2008. Cheng Feng, which we acquired in 2006, had revenues of
$6.73 million in the third quarter of 2008.



The following table shows the revenues recognized in the third quarter of 2008:



(In millions of U.S. dollars)

|Revenues from the Installation Segment recognized from installation
    contracts signed before the second quarter of 2008              | $ | 12.91 
|--------------------------------------------------------------------------------------------------------------------------------------- | - | ------
|Revenues from the Installation Segment recognized from installation
    contracts signed in the third quarter of 2008                   | $ | 73.94 
|Revenues from the Manufacturing Segment recognized from manufacturing
    contracts signed before the second quarter of 2008            | $ | 2.27  
|Revenues from the Manufacturing Segment recognized from manufacturing
    contracts signed in the third quarter of 2008                 | $ | 19.16 
|Revenues from the Distribution Segment recognized from sales contracts
    signed before the second quarter of 2008                     | $ | 1.14  
|Revenues from the Distribution Segment recognized from sales contracts
    signed in the third quarter of 2008                          | $ | 9.87  
|Total revenues recognized in the third quarter of 2008                                                                                  | $ | 119.29
|Revenues deferred                                                                                                                       | $ | 1.06  
|Backlog of contracts for system installation and manufacturing of security
    and safety products signed before September 30, 2008 (1) | $ | 65.20 



(1) We have not included letters of intent, framework agreements and various
other agreements in our backlog numbers as they are subject to final binding
agreements to be entered into at later dates.



Our revenues are generated from three business segments: Installation Segment,
Manufacturing Segment and Distribution Segment. The following table shows the
different segments comprising our total revenues for the three months ended
September 30, 2008 and 2007.



All amounts, except percentage of revenues, in millions of U.S. dollars



|                      |  | Three months ended September 30,
|--------------------- |  | --------------------------------
|Revenues              |  | 2008                            
|Installation Segment  |  | $                               
|Manufacturing Segment |  |                                 
|Distribution Segment  |  |                                 
|Total                 |  | $                               



For the three months ended September 30, 2008 and 2007, our Installation Segment
generated revenues of $86.85 million and $40.81 million which represented 72.8%
and 62.4% of our total revenues, respectively.  Such increase in revenues was
mainly due to the following factors: First, demand for security and surveillance
products has grown in China, which we attribute in part to the population in
China in general becoming relatively wealthier; as well as increased demand
within various industries and organizations, such as residential estates,
factories and shopping centers. Second, the Chinese government initiated several
programs and regulatory drivers during 2006, such as State Ordinance 458 and the
"3111" program, that require many public places, including city-wide
surveillance systems, traffic surveillance systems, critical government
locations, cyber cafés, bars and discotheques, to install security systems.
Third, our strategic efforts to increase our distribution channels during 2007
and 2008 allowed us to successfully take advantage of the growth in market
demand in the third quarter of 2008. Fourth, we have been successful in raising
sufficient working capital to facilitate expansion in the China market. Finally,
our increased brand recognition in 2008 also contributed to the growth in
revenue.



For the three months ended September 30, 2008 and 2007, our Manufacturing
Segment generated revenues of $21.43 million and $24.63 million, representing
18.0% and 37.6% of our total revenues, respectively. The revenue decreased due
to the sales slowdown after the Beijing Olympic Games and the development of the
Industry Park.



In the first quarter of 2008, we established a new segment  Distribution
Segment which generated revenues of $11.01 million, representing 9.2% of our
total revenues for the three months ended September 30, 2008.



8



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Management believes that revenues from the Installation Segment will continue to
be the Companys major revenue source in the next few years. With the recent
acquisitions of Stonesonic, Longhorn, Guanling, Jin Lin and other planned
acquisitions, management believes that the percentage of revenues from the
Manufacturing Segment and the Distribution Segment will increase in the future.



Management expects growth in all three segments to remain strong for the
remainder of 2008 due to (i) continued growth in the security and surveillance
market, both within the corporate and government sectors, (ii) better
capitalization of the Company to fuel its growth, (iii) continuing enhancement
of our branding and profiling in China, and (iv) acquisition strategy intended
to boost our market share and competitiveness.



Cost of goods sold



Our cost of goods sold is primarily comprised of the costs of our raw materials,
labor and overhead. Our cost of goods sold increased $41.58 million, or 91.0%,
to $87.28 million for the three months ended September 30, 2008 from $45.70
million during the same period in 2007. This dollar increase was primarily
attributable to the increase of our revenues in the third quarter of 2008 as
discussed above.



Gross profit and gross margin



Our gross profit is equal to the difference between our revenues and our cost of
goods sold. Our gross profit increased $12.27 million, or 62.2%, to $32.01
million for the three months ended September 30, 2008 from $19.74 million for
the same period last year. Gross margin for the three months ended September 30,
2008 was 26.8%, as compared to 30.2% for the same period of 2007.



The following table shows the different segment components comprising our gross
margin during the three months ended September 30, 2008 and 2007.



|                      |  | Three months ended September 30,
|--------------------- |  | --------------------------------
|Gross Margin          |  | 2008                            
|Installation Segment  |  |                                 
|Manufacturing Segment |  |                                 
|Distribution Segment  |  |                                 
|Total                 |  |                                 



For the three months ended September 30, 2008, gross margins of the Installation
Segment and Manufacturing Segment were approximately 25.7% and 32.2%,
respectively, compared to 31.8% and 27.3% for the same period last year. Gross
margin of our newly established segment Distribution Segment was 25.1% in the
third quarter of 2008.



The decreased gross margin in the Installation segment was primarily due to the
gradual increase in outsourcing of physical installation to the third party
contractors. The increase in our gross margin of the Manufacturing segment is
primarily driven by the increased economies of scale.



Selling and marketing expenses



Our selling and marketing expenses are composed primarily of sales commissions,
the cost of advertising and promotional materials, salaries and fringe benefits
of sales personnel, after-sale support services and other sales related costs.
Our selling and marketing expenses increased $1.92 million, or 131.5%, to $3.38
million for the three months ended September 30, 2008 from $1.46 million for the
same period in 2007. This dollar increase was primarily attributable to the
consolidation of the financial results of Stonesonic, Longhorn, Guanling and Jin
Lin, which incurred selling and marketing expenses associated with sales of
their products. As a percentage of revenues, our selling and marketing expenses
increased to 2.8% for the three months ended September 30, 2008 from 2.2% for
the same period in 2007. The percentage increase was mainly due to the hiring of
additional staff and the increased cost in promotion of our products to new
customers.



General and administrative expenses



Our general and administrative expenses consist of the costs associated with
staff and support personnel who manage our business activities and professional
fees paid to third parties. Our general and administrative expenses increased
$4.58 million, or 161.3%, to $7.42 million for the three months ended September
30, 2008 from $2.84 million for the same period in 2007. As a percentage of
revenues, general and administrative expenses increased to 6.2% for the three
months ended September 30, 2008 from 4.4% for the same period in 2007. The
dollar and percentage increase was mainly due to the consolidation of the
financial results of Stonesonic, Longhorn, Guanling, and Jin Lin, the hiring of
additional staff, the increased costs in connection with documenting and testing
our internal controls and professional expenses related to the costs of these
newly acquired subsidiaries becoming part of a public reporting company.



9



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Non cash employee compensation



Non cash employee compensation for the three months ended September 30, 2008
increased to $3.60 million from $0.99 million for the same period in 2007. Such
increase was primarily because we granted shares of restricted stock to our
employees, directors and consultant with a vesting period of four years under
the 2007 Equity Incentive Plan in 2007 and 2008. Such costs are generally
recognized over a four-year period.



Depreciation and amortization



Our depreciation and amortization costs increased $1.07 million, or 74.3%, to
$2.51 million (amounted $0.23 million of depreciation and amortization included
in cost of goods sold) for the three months ended September 30, 2008 from $1.44
million for the same period in 2007. Such dollar increase was primarily due to
the recent corporate acquisitions. As a percentage of revenues, depreciation and
amortization expenses decreased to 2.1% for the three months ended September 30,
2008 from 2.2% for the same period in 2007. Such percentage decrease was
primarily due to the increase in incremental revenue in this quarter.



Income from operations



Our income from operations increased $2.32 million, or 17.8%, to $15.33 million
for the three months ended September 30, 2008 from $13.01 million for the same
period in 2007. As a percentage of revenues, income from operations decreased to
12.8% for the three months ended September 30, 2008 from 19.9% for the same
period in 2007. Such percentage decrease was primarily due to the increase in
our selling and marketing expenses as well as the general and administrative
expenses and non cash employee compensation as discussed above.



The following table shows the different segments comprising our income from
operations for the three months ended September 30, 2008 and 2007.



All amounts, except percentage of income from operations, in millions of U.S.
dollars



|                       |  | Three months ended September 30,
|---------------------- |  | --------------------------------
|Income from operations |  | 2008                            
|Installation Segment   |  | $                               
|Manufacturing Segment  |  |                                 
|Distribution Segment   |  |                                 
|Corporate and others   |  |                                 
|Total                  |  | $                               



Income from operations related to the Installation Segment increased 87.1%, or
$8.70 million to $18.69 million for the three months ended September 30, 2008,
compared to $9.99 million for the same period in 2007. Such increase was mainly
due to higher demand for total one-stop-shop installations from customers. We
finished more projects than we planned in the third quarter of 2008.



Income from operations related to the Manufacturing Segment decreased 65.1%, or
$2.84 million to $1.52 million for the three months ended September 30, 2008,
compared to $4.36 million for the same period in 2007. The Manufacturing Segment
concentrated on developing the Industry Park in this quarter for future
development. The Company expects that the Manufacturing Segment margin will
increase as we integrate the recently completed acquisitions and realize more
economies of scale.



Income from operations related to our newly established Distribution Segment was
$0.21 million for the three months ended September 30, 2008.



Loss from operations related to Corporate and others increased 279.9% or $3.75
million to $5.09 million for the three months ended September 30, 2008, compared
to $1.34 million for the same period in 2007. Such increase was mainly due to
the increase of non cash employee compensation as discussed above and
professional expenses related to the costs of these newly acquired subsidiaries
becoming part of a public reporting company.



10



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Other income



Our other income increased $0.02 million, or 3.8% to $0.55 million for the three
months ended September 30, 2008 from $0.53 million for the same period in 2007.
As a percentage of revenues, other income decreased to 0.5% for the three months
ended September 30, 2008 from 0.8% for the same period in 2007. Such percentage
decrease was primarily because we received rental income from related parties in
the three months ended September 30, 2007 and the land use rights and buildings
generating such rental income were disposed of in 2007.



Gain on disposal of land use rights and properties



We sold certain properties and land use rights. Net proceeds of $5.52 million
from such dispositions were recognized in the third quarter of 2007. Fully
diluted net proceeds per share were $0.14 for the third quarter of 2007, as
compared to $0 for the same period this year.



Interest expense (excluding redemption accretion on convertible notes)



Interest expense for the three months ended September 30, 2008 was $0.59
million, as compared to $0.41 million of the same period in 2007. Such increase
was primarily due to increased borrowing under bank loans and obligation under
product financing arrangements for our operations.



Redemption accretion on convertible notes



Redemption accretion on convertible notes for the three months ended September
30, 2008 was $5.36 million, as compared to $4.36 million for the same period in
2007. We raised $110 million from issuance of convertible notes in February and
April 2007 to finance our acquisitions. The redemption accretion on convertible
notes will not be paid if the convertible notes are converted into shares of our
common stock before their maturities.



Income before taxes



Our income before taxes decreased $4.36 million, or 30.5%, to $9.93 million for
the three months ended September 30, 2008 from $14.29 million for the same
period in 2007. As a percentage of revenues, income before taxes decreased to
8.3% for the three months ended September 30, 2008 from 21.8% for the same
period in 2007. Such percentage decrease was primarily due to increased non-cash
expenses including the redemption accretion on convertible notes, depreciation
and amortization and non cash employee compensation as discussed above.



Income taxes



China Security & Surveillance Technology, Inc. is subject to the United States
federal income tax at a tax rate of 34%. No provision for income taxes in the
United States has been made as China Security & Surveillance Technology, Inc.
had no United States taxable income during the three months ended September 30,
2008.



Our wholly owned subsidiary Safetech is incorporated in the British Virgin
Island and, under the current laws of the BVI, is not subject to income taxes.



Before January 1, 2008, foreign invested enterprises (FIEs) established in the
PRC were generally subject to an enterprise income tax (EIT) rate of 33.0%,
which included a 30% state income tax and a 3.0% local income tax. FIEs
established in Shenzhen Special Economic Zone, such as our Chinese subsidiaries
Golden and certain high-technology company were subject to reduced tax rate. On
March 16, 2007, the National Peoples Congress of China passed the new
Enterprise Income Tax Law (EIT Law), and on November 28, 2007, the State
Council of China passed the Implementing Rules for the EIT Law ("Implementing
Rules") which took effect on January 1, 2008. The EIT Law and Implementing Rules
impose a unified EIT of 25.0% on all domestic-invested enterprises and FIEs,
unless they qualify under certain limited exceptions. Therefore, nearly all FIEs
are subject to the new tax rate alongside other domestic businesses rather than
benefiting from the FEIT, and its associated preferential tax treatments,
beginning January 1, 2008.



Despite these pending changes, the EIT Law gives the FIEs established before
March 16, 2007 (Old FIEs) a five-year grandfather period during which they can
continue to enjoy their existing preferential tax treatments. During this
five-year grandfather period, the Old FIEs which enjoyed tax rates lower than
25% under the original EIT Law shall gradually increase their EIT rate by 2% per
year until the tax rate reaches 25%. In addition, the Old FIEs that are eligible
for the two-year exemption and three-year half reduction or five-year
exemption and five-year half-reduction under the original EIT Law, are allowed
to remain to enjoy their preference until these holidays expire. The
discontinuation of any such special or preferential tax treatment or other
incentives would have an adverse effect on any organization's business, fiscal
condition and current operations in China.



11



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In addition to the changes to the current tax structure, under the EIT Law, an
enterprise established outside of China with de facto management bodies within
China is considered a resident enterprise and will normally be subject to an EIT
of 25.0% on its global income. The Implementing Rules define the term de facto
management bodies as an establishment that exercises, in substance, overall
management and control over the production, business, personnel, accounting,
etc., of a Chinese enterprise. If the PRC tax authorities subsequently
determine that the Company should be classified as a resident enterprise, then
the organization's global income will be subject to PRC income tax of 25%.



Our subsidiary Golden is subject to an EIT rate of 15% for the fiscal year 2008.
Our subsidiary Hongtianzhi is located in Shenzhen and its corporate tax rate is
7.5% because it receives a lower tax rate as a high-tech company. Our subsidiary
Cheng Feng is subject to an EIT rate of 15% for fiscal year 2008 due to the
software and high technology company status. HiEasy, Minking, Tsingvision,
Stonesonic, Guanling and Jin Lin are subject to an EIT rate of 25%. CSST PRC and
Longhorn are exempted from EIT in 2008.



Our income taxes decreased $1.81 million to $0.78 million for the three months
ended September 30, 2008 from $2.59 million for the same period of 2007. We paid
less taxes during the three months ended September 30, 2008 as a result of
decreased income before income taxes during that period. Also, we fully utilized
the tax exemption of our subsidiaries CSST PRC which was incorporated in 2006
and Longhorn that became our subsidiary in 2008.



Net income



Net income decreased $2.55 million, or 21.8%, to $9.15 million for the three
months ended September 30, 2008 from $11.70 million for the same period in 2007.
As a percentage of revenues, net income decreased to 7.7% for the three months
ended September 30, 2008 from 17.9% for the same period in 2007. This percentage
decrease was mainly due to the non-cash expenses such as redemption accretion on
convertible notes, depreciation and amortization and non cash employee
compensation.



Comparison of Nine Months Ended September 30, 2008 and September 30, 2007



Revenue



During the nine months ended September 30, 2008, we experienced solid growth in
revenues. The following table shows the different segments comprising our total
revenues for the nine months ended September 30, 2008 and 2007.



All amounts, except percentage of revenues, in millions of U.S. dollars



|                      | Nine months ended September 30,
|--------------------- | -------------------------------
|Revenues              |                                
|Installation Segment  |                                
|Manufacturing Segment |                                
|Distribution Segment  |                                
|Total                 |                                



For the nine months ended September 30, 2008 and 2007, our Installation Segment
generated revenues of $208.54 million and $114.19 million which represented
73.5% and 73.2% of our total revenues, respectively. The increase in revenues
was mainly due to the following factors: First, demand for security and
surveillance products has grown in China, which we attribute in part to the
population in China in general becoming relatively wealthier; as well as
increased demand within various industries and organizations, such as
residential estates, factories and shopping centers. Second, the Chinese
government initiated several programs and regulatory drivers during 2006, such
as State Ordinance 458 and the "3111" program, that require many public places,
including city-wide surveillance systems, traffic surveillance systems, critical
government locations, cyber cafés, bars and discotheques, to install security
systems. Third, our strategic efforts to increase our distribution channels
during 2007 and 2008 allowed us to successfully take advantage of the growth in
market demand in the first nine months of 2008. Fourth, we have been successful
in raising sufficient working capital to facilitate expansion in the China
market. Finally, our increased brand recognition also contributed to the growth
in revenue.



For the nine months ended September 30, 2008 and 2007, our Manufacturing Segment
generated revenues of $49.92 million and $41.82 million, representing 17.6% and
26.8% of our total revenues, respectively. The revenue decreased due to the
sales slowdown after the Beijing Olympic Games and the development of the
Industry Park.



In the first nine months of 2008, we established a new segment  our
Distribution Segment which generated revenues of $25.35 million, representing
8.9% of our total revenues for the nine months ended September 30, 2008.



12



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Cost of goods sold



Our cost of goods sold increased $87.83 million, or 78.9%, to $199.09 million
for the nine months ended September 30, 2008 from $111.26 million during the
same period in 2007. This dollar increase was mainly attributable to our revenue
increase in the first nine months of 2008 as discussed above.



Gross profit and gross margin



Our gross profit increased $39.97 million, or 89.3%, to $84.72 million for the
nine months ended September 30, 2008 from $44.75 million for the same period
last year. Gross margin for the nine months ended September 30, 2008 was 29.9%,
as compared to 28.7% for the same period of 2007. The increase in our gross
margin was primarily driven by the increased economies of scale.



The following table shows the different segment components comprising our gross
margin over the nine months ended September 30, 2008 and 2007.



|                      |  | Nine months ended September 30,
|--------------------- |  | -------------------------------
|Gross Margin          |  | 2008                           
|Installation Segment  |  |                                
|Manufacturing Segment |  |                                
|Distribution Segment  |  |                                
|Total                 |  |                                



For the nine months ended September 30, 2008, gross margins of the Installation
Segment and Manufacturing Segment were approximately 29.3% and 33.9%,
respectively, compared to 29.0% and 27.9% for the same period last year. The
increase in our gross margin of Manufacturing Segment was primarily driven by
the increased economies of scale. Gross margin of our newly established segment
Distribution Segment was 26.1% in the first nine months of 2008. We decreased
our selling prices as a strategic move to increase our market penetration into
new markets.



Selling and marketing expenses



Our selling and marketing expenses increased $5.60 million, or 192.4%, to $8.51
million for the nine months ended September 30, 2008 from $2.91 million for the
same period in 2007. This dollar increase was primarily attributable to the
consolidation of the financial results of Stonesonic, Longhorn, Guanling and Jin
Lin in 2008, which incurred selling and marketing expenses associated with sales
of their products. As a percentage of revenues, our selling and marketing
expenses increased to 3.0% for the nine months ended September 30, 2008 from
1.9% for the same period in 2007. The percentage increase was mainly due to the
hiring of additional sales staff and promotion cost of new products and
services.



General and administrative expenses



Our general and administrative expenses increased $12.28 million, or 167.5%, to
$19.61 million for the nine months ended September 30, 2008 from $7.33 million
of the same period in 2007. As a percentage of revenues, general and
administrative expenses increased to 6.9% for the nine months ended September
30, 2008 from 4.7% for the same period in 2007. The dollar and percentage
increase was mainly due to the consolidation of the financial results of
Stonesonic, Longhorn, Guanling and Jin Lin, the hiring of additional staff, the
increased costs in connection with documenting and testing our internal controls
and professional expenses related to the costs of these newly acquired
subsidiaries becoming a part of a public reporting company.



Non cash employee compensation



Non cash employee compensation for the nine months ended September 30, 2008
increased to $9.66 million from $2.06 million for the same period in 2007. Such
increase was primarily because we granted shares of restricted stock to our
employees, directors and consultant with a vesting period of four years under
the 2007 Equity Incentive Plan in 2007 and 2008. Such costs are generally
recognized over a four-year period.



13



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Depreciation and amortization



Our depreciation and amortization costs increased $3.42 million, or 102.7%, to
$6.75 million (including $0.52 million depreciation and amortization expense
included under cost of goods sold) for the nine months ended September 30, 2008
from $3.33 million for the same period in 2007. As a percentage of revenues,
depreciation and amortization expenses increased to 2.3% for the nine months
ended September 30, 2008 from 2.1% for the same period in 2007. Such dollar and
percentage increase was primarily due to the amortization of intangible assets
from the acquisition of Stonesonic, Longhorn, Guanling and Jin Lin and the
establishment of the exclusive cooperation relationship with DM and Chuang Guan.



Income from operations



Our income from operations increased $11.59 million, or 39.8%, to $40.71 million
for the nine months ended September 30, 2008 from $29.12 million for the same
period in 2007. As a percentage of revenues, income from operations decreased to
14.3% for the nine months ended September 30, 2008 from 18.7% for the same
period in 2007. Such percentage decrease was primarily due to the increase of
our selling and marketing expenses as well as the general and administrative
expenses and non cash employee compensation as discussed above.



The following table shows the different segments comprising our income from
operations for the nine months ended September 30, 2008 and 2007.

All amounts, except percentage of income from operations, in millions of U.S.
dollars



|                       |  | Nine months ended September 30,
|---------------------- |  | -------------------------------
|Income from operations |  | 2008                           
|Installation Segment   |  | $                              
|Manufacturing Segment  |  |                                
|Distribution Segment   |  |                                
|Corporate and others   |  |                                
|Total                  |  | $                              



Income from operations related to the Installation Segment increased 86.8%, or
$23.79 million to $51.21 million for the nine months ended September 30, 2008,
compared to $27.42 million for the same period in 2007. Such increase was mainly
due to higher demand for total one-stop-shop installations from customers.



Income from operations related to the Manufacturing Segment decreased 24.5%, or
$1.55 million to $4.77 million for the nine months ended September 30, 2008,
compared to the income from operations of $6.32 million for the same period in
2007. The Manufacturing Segment moved to the Industry Park in the third quarter
for future development. The Company expects that the income from operations of
the Manufacturing Segment will increase as we integrate the recently completed
acquisitions which will allow us to further benefit from economies of scale.



Income from operations related to our newly established Distribution Segment was
$0.60 million for the nine months ended September 30, 2008.



Loss from operations related to Corporate and others increased 243.5% or $11.25
million to $15.87 million for the nine months ended September 30, 2008, compared
to $4.62 million for the same period in 2007. Such increase was mainly due to
the increase of non cash employee compensation as discussed above and
professional expenses related to the costs of being a public reporting company.



Other income



Our other income decreased $0.34 million, or 19.9% to $1.37 million for the nine
months ended September 30, 2008 from $1.71 million for the same period in 2007.
As a percentage of revenues, other income decreased to 0.5% for the nine months
ended September 30, 2008 from 1.1% for the same period in 2007. Such percentage
decrease was primarily because we received rental income from related parties in
the first nine months of 2007 and the land use rights and buildings generating
such rental income were disposed of in 2007.



14



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Gain on disposal of land use rights and properties



We sold certain properties and land use rights in 2007. Net proceeds of $5.52
million from such dispositions were recognized in the third quarter of 2007.
Fully diluted net proceeds per share were $0.15 for the first nine months of
2007, as compared to $0 for the same period in 2008.



Interest expense (excluding redemption accretion on convertible notes)



Interest expense for the nine months ended September 30, 2008 was $1.51 million,
as compared to $0.85 million of the same period in 2007. Such increase was
primarily due to new borrowings under bank loans and obligation under product
financing arrangements for our operations.



Redemption accretion on convertible notes



Redemption accretion on convertible notes for the nine months ended September
30, 2008 was $14.09 million, as compared to $9.34 million for the same period in
2007. We raised $110 million from issuance of convertible notes in February and
April 2007 to finance our acquisitions. The redemption accretion on convertible
notes will not be paid if the convertible notes are converted into shares of our
common stock before their maturities.



Income before taxes



Our income before taxes increased $0.32 million, or 1.2%, to $26.48 million for
the nine months ended September 30, 2008 from $26.16 million for the same period
in 2007. As a percentage of revenues, income before taxes decreased to 9.3% for
the nine months ended September 30, 2008 from 16.8% for the same period in 2007.
Such percentage decrease was primarily due to increased non-cash expenses
including the redemption accretion on convertible notes, depreciation and
amortization and non cash employee compensation as discussed above.



Income taxes



Our income taxes decreased $0.57 million to $5.10 million for the nine months
ended September 30, 2008 from $5.67 million for the same period of 2007. We
incurred less taxes during the nine months ended September 30, 2008 because we
fully utilized the tax exemption of our subsidiaries CSST PRC which was
incorporated in 2006 and Longhorn that became our subsidiary in 2008.



Net income



Net income increased $0.89 million, or 4.3%, to $21.38 million for the nine
months ended September 30, 2008 from $20.49 million for the same period in 2007.
As a percentage of revenues, net income decreased to 7.5% for the nine months
ended September 30, 2008 from 13.1% for the same period in 2007. This percentage
decrease was mainly due to the non-cash expenses such as redemption accretion on
convertible notes, depreciation and amortization and non cash employee
compensation.



Liquidity and Capital Resources



General



As of September 30, 2008, we had cash and cash equivalents of $65.93 million.
The following table sets forth a summary of our net cash flows for the periods
indicated.



CASH FLOW

(All amounts in millions of U.S. dollars)



|                                                    |  | Nine Months Ended
    September 30, |        
|--------------------------------------------------- |  | ----------------------------------- | -------
|                                                    |  | 2008                                |        
|Net cash (used in) provided by operating activities |  | $                                   | (30.55)
|Net cash used in investing activities               |  | $                                   | (16.13)
|Net cash provided by financing activities           |  | $                                   | 13.66  
|Effect of exchange rate changes on cash             |  | $                                   | 9.87   
|Net cash (outflow) inflow                           |  | $                                   | (23.15)



Operating Activities



Net cash used in operating activities was $30.55 million for the nine months
period ended September 30, 2008, which is an increase of $41.92 million from
$11.37 million net cash provided by operating activities for the same period of
2007. The increase in net cash used in operating activities in the nine months
ended September 30, 2008 was primarily due to increases in inventories and
accounts receivable during the nine months ended September 30, 2008.



15



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Investing Activities



Our main uses of cash for investing activities during the first nine months of
2008 were deposits for the acquisition of subsidiaries and acquisitions of
subsidiaries, properties and intangible assets.



Net cash used in investing activities for the nine months ended September 30,
2008 was $16.13 million. Our net cash used in investing activities for the nine
months ended September 30, 2007 was $81.15 million. The decrease of net cash
used in investing activities was mainly because we paid less deposit for the
acquisition of subsidiaries, properties and intangible assets in the nine months
ended September 30, 2008.



We closed the acquisition of Stonesonic, Longhorn and Guanling in April 2008. We
also closed the acquisition of Jin Lin in the third quarter of 2008. In
addition, we have signed letters of intent to acquire Shenzhen Coson Technology
Development Co., Ltd., DIT Digital Co., Ltd., and Shenzhen Skyvise Technology
Limited. Pursuant to the letters of intent, the cash consideration for these
three intended acquisitions is expected to total $39 million with additional
consideration to be paid in equity. Consummation of these three acquisitions is
subject to customary closing conditions, including execution of definitive
agreements and receipt of governmental approval. We expect to finance the cash
portion of the purchase price with the net proceeds from our $50 million
convertible notes financing that closed in April 2007. The number of our shares
to issued as part of the purchase price for Stonesonic, Longhorn, Guanling and
Jin Lin acquisitions are subject to the achievement of certain net income
performance targets over certain period. The acquisitions of Stonesonic,
Longhorn, Guanling, and Jin Lin are expected to be accretive to earnings upon
closing and are expected to provide support to the Companys city-wide projects.



Financing Activities



Net cash provided by financing activities in the nine months ended September 30,
2008 totaled $13.66 million as compared to $116.91 million provided in the same
period of 2007. The cash provided by financing activities during the first nine
months of 2008 was mainly attributable to new borrowing and a private placement
of common stock. The cash used in financing activities was mainly attributable
to the repayment of bank loans and new funds raised from obligation under
product financing arrangements in the first nine months of 2008, whereas the net
cash provided by financing activities in the nine months ended September 30,
2007 was mainly attributable to proceeds from the two convertible notes received
in February 2007 and in April 2007.



Loan Facilities



As of September 30, 2008, the amount, maturity date and duration of each of our
bank loans and obligation under finance leases were as follows:

All amounts in millions of U.S. dollars



|Lender                  |   | Amount | Maturity Date | Duration
|----------------------- | - | ------ | ------------- | --------
|                        |   |        |               |         
|China Citic Bank        | $ | 4.40   | November 2008 | 1 year  
|China Construction Bank |   | 7.26   | August 2010   | 2 years 
|Shenzhen Ping An Bank   |   | 0.88   | March 2009    | 3 years 
|A Financial Institution |   | 7.28   | July 2011     | 3 years 
|                        |   |        |               |         
|Total                   | $ | 19.82  |               |         



In July 2008, we entered into finance lease agreements with a financial
institution pursuant to which the Company borrowed RMB53 million (approximately
$7.85 million), consisting of a 3-year loan payable to that financial
institution. These loans mature on July 2011. The interest is payable at the end
of each quarter.



On August 28, 2008, we entered into a long term loan agreement with China
Construction Bank. As of September 30, 2008, the liability relating to this loan
was RMB49.5 million (approximately $7.26 million), consisting of a 2-year loan
payable to the bank. This loan matures on August 27, 2010 with an annual
interest rate equal to 105% of the one to three years benchmark lending rate of
The Peoples Bank of China (7.37% as of September 30, 2008). The interest rate
is changed based on the change of 1 to 3 years benchmark lending rate quarterly,
and the interest is payable at the 20th of each month. The loan
agreement requires us to use the loan proceeds only for our operations.



On October 3, 2006, we signed a banking facility agreement with China
Construction Bank under which the bank agreed to provide a new receivable-based
facility to support our efforts in securing new contracts relating to the Safe
City Project initiative, also known as Plan 3111. This facility will provide
three possible financing options: (1) the government takes a loan from the bank
to finance the project; (2) we sell the accounts receivable to the bank, 85% of
the total account receivables value will be paid by the bank to the Company and
the remaining 15% will be collected by the bank from the government; from the
15% collected from the government, the bank will retain certain finance charges
and pay the remainder over to Company; or (3) we take a loan from the bank to
finance the project. As part of this agreement, we will make periodic deposits
with the bank, which, depending upon the specific project, will provide a
maximum factoring capacity of five to ten times the amount deposited. None of
the facility has been drawn down as of the date of this Report.



16



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



Obligations Under Material Contracts



Below is a table setting forth our material contractual obligations as of
September 30, 2008:



All amounts in millions of U.S. dollars



|                            | Payments due by period
|--------------------------- | ----------------------
|                            |                       
|                            |                       
|Long-Term Debt Obligations  |                       
|Operating Lease Obligations |                       
|Total                       |                       



Recent Pronouncements



In June 2008, the FASB issued EITF No. 07-5, Determining Whether an
Instrument (or Embedded Feature) Is Indexed to an Entitys Own Stock
effective for financial statements issued for fiscal years and interim periods
beginning after December 15, 2008. EITF No.07-5 provides guidance for
determining whether an equity-linked financial instrument (or embedded feature)
is indexed to an entitys own stock. The adoption of EITF No. 07-5 is not
expected to have a material effect on the Companys consolidated financial
statements.



In May 2008, the FASB issued Statement of Financial Accounting Standards ("SFAS")
No. 162, "The Hierarchy of Generally Accepted Accounting Principles" (SFAS
No. 162). SFAS No. 162 identifies the sources of accounting principles and the
framework for selecting the principles used in the preparation of financial
statements. SFAS No. 162 is effective 60 days following the SEC's approval of
the Public Company Accounting Oversight Board amendments to AU Section 411, "The
Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles". The Company does not expect that this standard will have a
material impact on its results of operations, financial position or cash flows.



In April 2008, the FASB issued FASB Staff Position (FSP) No. FAS 142-3, Determination
of Useful Life of Intangible Assets (FSP 142-3). FSP 142-3 amends the
factors that should be considered in developing the renewal or extension
assumptions used to determine the useful life of a recognized intangible asset
under SFAS 142, Goodwill and Other Intangible Assets (SFAS 142). The
intent of this FSP is to improve the consistency between the useful life of an
intangible asset determined under SFAS 142 and the period of expected cash flows
used to measure the fair value of the asset under SFAS 141R. FSP 142-3 is
effective for fiscal years beginning after December 15, 2008, and interim
periods within those fiscal years. The Company is currently evaluating the
impact of adopting FSP 142-3 on the financial statements.



In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities  an amendment of FASB Statement No. 133
(SFAS 161) effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. SFAS 161 requires an entity
to provide enhanced disclosures about derivative instruments and hedging
activities. The Company is currently evaluating the impact of adopting SFAS 161
on the financial statements.



In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations (SFAS 141R), effective for business combinations for which
the acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. SFAS 141R establishes principles
and requirements for how an acquirer recognizes and measures identifiable assets
acquired, liabilities assumed, any noncontrolling interest in the acquiree and
goodwill. SFAS 141R also expands disclosure requirements for business
combinations. The Company is currently evaluating the impact of adopting SFAS
141R on the financial statements.



17



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In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements  an amendment of ARB No. 51 (SFAS 160)
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. SFAS 160 establishes accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. The adoption of SFAS 160 is not expected to
have a material effect on the Company's consolidated financial statements.



Critical Accounting Policies



See Item 7, Managements Discussion and Analysis of Results of Operations and
Financial Condition in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2007, for a discussion of the Company's critical
accounting policies.



Seasonality



Our operating results and operating cash flows historically have been subject to
seasonal variations. Our revenues are usually higher in the second half of the
year than in the first half of the year and the first quarter is usually the
slowest quarter because fewer projects are undertaken during and around the
Chinese spring festival.



Off-Balance Sheet Arrangements



We do not have any off-balance sheet arrangements.





ITEM 4. CONTROLS AND PROCEDURES



Evaluation of Disclosure Controls and Procedures. We maintain a system of
disclosure controls and procedures. The term disclosure controls and
procedures, as defined by regulations of the SEC, means controls and other
procedures that are designed to ensure that information required to be disclosed
in the reports that we file or submit to the SEC under the Exchange Act, is
recorded, processed, summarized and reported, within the time periods specified
in the SECs rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by us in the reports that we file or submit to the SEC
under the Exchange Act is accumulated and communicated to our management,
including our principal executive officer and our principal financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions to be made regarding required disclosure. Each of Guoshen Tu, our
Chief Executive Officer, and Terence Yap, our Chief Financial Officer, have
evaluated the design and operating effectiveness of our disclosure controls and
procedures as of September 30, 2008. Based upon their evaluation, these
executive officers have concluded that our disclosure controls and procedures
are effective as of September 30, 2008.



Changes in Internal Control over Financial Reporting. There has been no
change to our internal control over financial reporting during the nine months
ended September 30, 2008 that has materially affected, or is reasonably likely
to materially affect, our internal control over financial reporting.



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PART II

OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



From time to time, we may have disputes that arise in the ordinary course of our
business. Currently, there are no legal proceedings to which we are a party, or
to which any of our property is subject, that we expect to have a material
adverse effect on our financial condition.



ITEM 1A. RISK FACTORS



There are no material changes from the risk factors previously disclosed in Part
I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended
December 31, 2007, filed with the SEC on March 10, 2008.



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



On July 7, 2008, pursuant to an equity transfer agreement with Qingqing Peng,
the sole owner of Long Top, we agreed to issue 268,870 shares of our common
stock to Qingqing Peng as part of the total consideration for the acquisition of
100% of the equity interest of Long Top. The offer and sales of the securities
were made in an offshore transaction pursuant to Regulation S under the
Securities Act.



On August 6, 2008, pursuant to an equity transfer agreement with Ms. Wenyan Zeng,
the sole owner of Huge Long, we agreed to issue 453,736 shares of our common
stock to Wenyan Zeng as part of the total consideration for the acquisition of
100% of the equity interest of Huge Long. The offer and sales of the securities
were made in an offshore transaction pursuant to Regulation S under the
Securities Act.



ITEM 3. DEFAULTS UPON SENIOR SECURITIES



There were no defaults upon senior securities in the quarter ended September 30,
2008.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



N/A



ITEM 5. OTHER INFORMATION



On October 13, 2008, the Companys common stock commenced secondary trading on
the Dubai International Financial Exchange (DIFX). The Companys common stock
is trading on the DIFX in U.S. dollars under the ticker symbol CSR.  The
Companys common stock is primarily listed on the New York Stock Exchange.



ITEM 6. EXHIBITS



|Exhibit Number |  | Description                                                                                                                                                             
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |  |                                                                                                                                                                         
|31.1           |  | Certification of Principal Executive Officer filed pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.                                                       
|               |  |                                                                                                                                                                         
|31.2           |  | Certification of Principal Financial Officer filed pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.                                                       
|               |  |                                                                                                                                                                         
|32.1           |  | Certification of Principal Executive Officer furnished pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.
|               |  |                                                                                                                                                                         
|32.2           |  | Certification of Principal Financial Officer furnished pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



DATED: December 5, 2008



| | China Security & Surveillance Technology, Inc.
| | ----------------------------------------------
| |                                               
| |                                               
| | By:                                           
| |                                               
| |                                               
| |                                               
| |                                               
| | By:                                           
| |                                               
| |                                               



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EXHIBIT INDEX

|Exhibit Number |  | Description                                                                                                                                                             
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |  |                                                                                                                                                                         
|31.1           |  | Certification of Principal Executive Officer filed pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.                                                       
|               |  |                                                                                                                                                                         
|31.2           |  | Certification of Principal Financial Officer filed pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.                                                       
|               |  |                                                                                                                                                                         
|32.1           |  | Certification of Principal Executive Officer furnished pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.
|               |  |                                                                                                                                                                         
|32.2           |  | Certification of Principal Financial Officer furnished pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.





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