| [x] | Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|-----|----------------------------------------------------------------------------------------|

| [ ] | Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|-----|-----------------------------------------------------------------------------------------|

| Florida                                  |   | 65-1193022          |
|------------------------------------------|--------|---------------------|
| (State or other jurisdiction             |   | (I.R.S. Employer    |
| of incorporation or organization)        |   | Identification No.) |
|                                     |   |                |
| B-2508 TYG Center, C2                    |   |                |
| Dongsanhuanbeilu,                        |   |                |
| Chaoyang District, Beijing 100027,       |   |                |
| People’s Republic of China         |   | 100027              |
| (Address of principal executive offices) |   | (Zip Code)          |

| Large accelerated filer [  ]                              |   | Accelerated filer [ x ]   |
|---------------------------------------------------------------------|--------|-------------------------------------|
|                                                                |   |                                |
| Non-accelerated filer [  ]                           |   |                                |
| (Do not check if smaller reporting company)     |   | Smaller reporting company [  ] |

----

|                |   |                                                                                                                                              |   | Page            |
|---------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|
| PART I -            |   | FINANCIAL INFORMATION                                                                                                                             |   |            |
|                |   |                                                                                                                                              |   |            |
| Item 1.             |   | Financial Statements (unaudited):                                                                                                                 |   |   1        |
|                |   |                                                                                                                                              |   |            |
|                |   | Consolidated Balance Sheets as of September 30, 2010 (unaudited) and December 31, 2009                                                            |   |   1        |
|                |   |                                                                                                                                              |   |            |
|                |   | Consolidated Statements of Income and Other Comprehensive Income For the Three and Nine Months Ended September 30, 2010 and 2009 (unaudited) |   |   2        |
|                |   |                                                                                                                                              |   |            |
|                |   | Consolidated Statements of Changes in Equity                                                                                                 |   |   3        |
|                |   |                                                                                                                                              |   |            |
|                |   | Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2010 and 2009 (unaudited)                                           |   |   4        |
|                |   |                                                                                                                                              |   |            |
|                |   | Notes to Consolidated Financial Statements (unaudited)                                                                                       |   |   5        |
|                |   |                                                                                                                                              |   |            |
| Item 2.             |   | Management's Discussion and Analysis of Financial Condition and Results of Operations                                                             |   |   36       |
|                |   |                                                                                                                                              |   |            |
| Item 3.             |   | Quantitative and Qualitative Disclosures About Market Risk                                                                                        |   |   48       |
|                |   |                                                                                                                                              |   |            |
| Item 4.             |   | Controls and Procedures                                                                                                                           |   |   48       |
|                |   |                                                                                                                                              |   |       |
| PART II - |   | OTHER INFORMATION                                                                                                                                 |   |    49 |
|                |   |                                                                                                                                              |   |       |
| Item 1.             |   | Legal Proceedings                                                                                                                                 |   |    49 |
|                |   |                                                                                                                                              |   |            |
| Item 1A.            |   | Risk Factors                                                                                                                                      |   |    49 |
|                |   |                                                                                                                                              |   |            |
| Item 2.             |   | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                       |   |    49 |
|                |   |                                                                                                                                              |   |            |
| Item 3.             |   | Defaults Upon Senior Securities                                                                                                                   |   |    49 |
|                |   |                                                                                                                                              |   |            |
| Item 4.             |   | (Removed and Reserved)                                                                                                                            |   |    49 |
|                |   |                                                                                                                                              |   |            |
| Item 5.             |   | Other Information                                                                                                                                 |   |    49 |
|                |   |                                                                                                                                              |   |            |
| Item 6.             |   | Exhibits                                                                                                                                          |   |   49       |

----

Item 

CHINA 

|                                                                          |   | September 30, |        |   | December 31, |   |
|-------------------------------------------------------------------------------|--------|---------------|-------------|--------|--------------|--------|
|                                                                          |   | 2010          |        |   | 2009         |   |
|                                                                          |   | (Unaudited)   |        |   |         |   |
| ASSETS                                                                        |   |          |        |   |         |   |
|                                                                          |   |          |        |   |         |   |
| CURRENT ASSETS:                                                               |   |          |        |   |         |   |
| Cash and cash equivalents                                                     |   | $             | 29,648,947  |   |         | $      | 34,976,880 |   |
| Restricted cash                                                               |   |          | 2,408,849   |   |         |   | 1,837,134 |   |
| Notes receivable                                                              |   |          | 3,168,585   |   |         |   | 4,274,268 |   |
| Accounts receivable, net of allowance for doubtful accounts of $7,670,678 and |   |          |        |   |         |   |   |   |
| $6,539,787 as of September 30, 2010 and December 31, 2009, respectively       |   |          | 50,174,053  |   |         |   | 30,989,569 |   |
| Receivables from and prepayments to related parties                           |   |          | 2,252,082   |   |         |   | 551,792 |   |
| Other receivables                                                             |   |          | 756,246     |   |         |   | 368,679 |   |
| Refundable bidding and system contracting project deposits                    |   |          | 1,576,937   |   |         |   | 1,774,330 |   |
| Inventories                                                                   |   |          | 5,549,687   |   |         |   | 5,360,520 |   |
| Costs and estimated earnings in excess of billings                            |   |          | 47,140,074  |   |         |   | 36,562,573 |   |
| Employee advances                                                             |   |          | 1,466,720   |   |         |   | 953,625 |   |
| Prepayments and deferred expenses                                             |   |          | 4,824,423   |   |         |   | 3,397,358 |   |
| Total current assets                                                          |   |          | 148,966,603 |   |         |   | 121,046,728 |   |
|                                                                          |   |          |        |   |         |   |   |   |
| PLANT AND EQUIPMENT, net                                                      |   |          | 9,250,820   |   |         |   | 8,617,521 |   |
|                                                                          |   |          |        |   |         |   |   |   |
| OTHER ASSETS:                                                                 |   |          |        |   |         |   |   |   |
| Restricted cash - non current                                                 |   |          | 6,299,843   |   |         |   | 3,602,906 |   |
| Accounts receivable - retentions                                              |   |          | 4,204,286   |   |         |   | 3,463,998 |   |
| Deferred expenses - non current                                               |   |          | 118,418     |   |         |   | 116,045 |   |
| Investment in joint ventures                                                  |   |          | 490,320     |   |         |   | 477,837 |   |
| Intangible assets, net                                                        |   |          | 996,628     |   |         |   | 1,041,156 |   |
| Total other assets                                                            |   |          | 12,109,495  |   |         |   | 8,701,942 |   |
|                                                                          |   |          |        |   |         |   |   |   |
| Total assets                                                                  |   | $             | 170,326,918 |   |         | $      | 138,366,191 |   |
|                                                                          |   |          |        |   |         |   |   |   |
| LIABILITIES AND EQUITY                                                        |   |          |        |   |         |   |   |   |
|                                                                          |   |          |        |   |         |   |   |   |
| CURRENT LIABILITIES:                                                          |   |          |        |   |         |   |   |   |
| Accounts payable                                                              |   | $             | 8,373,556   |   |         | $      | 6,903,961 |   |
| Accounts payable to related party                                             |   |          | -           |   |         |   | 272,994 |   |
| Customer deposits                                                             |   |          | 1,916,956   |   |         |   | 2,182,790 |   |
| Billings in excess of costs and estimated earnings                            |   |          | 1,422,530   |   |         |   | 1,429,999 |   |
| Other payables                                                                |   |          | 489,757     |   |         |   | 333,121 |   |
| Accrued liabilities                                                           |   |          | 20,229,103  |   |         |   | 13,841,300 |   |
| Taxes payable                                                                 |   |          | 10,441,748  |   |         |   | 9,002,470 |   |
| Total current liabilities                                                     |   |          | 42,873,650  |   |         |   | 33,966,635 |   |
|                                                                          |   |          |        |   |         |   |   |   |
| COMMITMENTS AND CONTINGENCIES                                                 |   |          |        |   |         |   |   |   |
|                                                                          |   |          |        |   |         |   |   |   |
| EQUITY:                                                                       |   |          |        |   |         |   |   |   |
| Common stock, $0.001 par value, 65,000,000 shares authorized,                 |   |          |        |   |         |   |   |   |
| 27,601,663 and 27,595,541 shares issued and outstanding as of                 |   |          |        |   |         |   |   |   |
| September 30, 2010 and December 31, 2009, respectively                        |   |          | 27,601      |   |         |   | 27,595 |   |
| Additional paid-in-capital                                                    |   |          | 23,708,154  |   |         |   | 20,601,138 |   |
| Statutory reserves                                                            |   |          | 7,147,795   |   |         |   | 7,147,795 |   |
| Retained earnings                                                             |   |          | 86,781,704  |   |         |   | 69,266,049 |   |
| Accumulated other comprehensive income                                        |   |          | 9,770,476   |   |         |   | 7,324,237 |   |
| Total shareholders' equity                                                    |   |          | 127,435,730 |   |         |   | 104,366,814 |   |
| Noncontrolling interest                                                       |   |          | 17,538      |   |         |   | 32,742 |   |
| Total equity                                                                  |   |          | 127,453,268 |   |         |   | 104,399,556 |   |
|                                                                          |   |          |        |   |         |   |   |   |
| Total liabilities and equity                                                  |   | $             | 170,326,918 |   |         | $      | 138,366,191 |   |

----

CHINA 

|                                                                                  |                                                                                                                                                | Three Months Ended September 30,                                                                                                                                                                                 | Nine Months Ended September 30,                                                                                                                                                                                     |
|---------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                  |                                                                                                                                                | 2010                                                                                                                                                                                                             |                                                                                                                                                                                                                | 2009 |   |   | 2010 |   | 2009 |
| REVENUES                                                                              |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
|   System contracting projects                                               | $                                                                                                                                                   | 19,874,490                                                                                                                                                                                                       | $                                                                                                                                                                                                                   |                   18,710,099 |   | $ | 53,663,486 | $ |                  50,004,213 |
|   Products                                                                  |                                                                                                                                                | 4,092,838                                                                                                                                                                                                        |                                                                                                                                                                                                                |                     5,351,659 |   |   | 12,179,859 |   |                  12,267,472 |
|   Maintenance services                                                      |                                                                                                                                                | 850,260                                                                                                                                                                                                          |                                                                                                                                                                                                                |                        754,671 |   |   | 2,751,400 |   |                    1,988,823 |
|       Total revenues                                    |                                                                                                                                                | 24,817,588                                                                                                                                                                                                       |                                                                                                                                                                                                                | 24,816,429 |   |   | 68,594,745 |   | 64,260,508 |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| COST OF REVENUES                                                                      |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
|   System contracting projects                                               |                                                                                                                                                | 9,579,909                                                                                                                                                                                                        |                                                                                                                                                                                                                |                     7,821,254 |   |   | 24,767,752 |   |                  19,598,795 |
|   Products                                                                  |                                                                                                                                                | 2,091,895                                                                                                                                                                                                        |                                                                                                                                                                                                                |                     2,559,838 |   |   | 5,402,095 |   |                    4,636,886 |
|   Maintenance services                                                      |                                                                                                                                                | 604,209                                                                                                                                                                                                          |                                                                                                                                                                                                                |                        436,026 |   |   | 1,856,115 |   |                    1,228,186 |
|       Total cost of revenues                            |                                                                                                                                                | 12,276,013                                                                                                                                                                                                       |                                                                                                                                                                                                                | 10,817,118 |   |   | 32,025,962 |   | 25,463,867 |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| GROSS PROFIT                                                                          |                                                                                                                                                |                      12,541,575                                                                         |                                                                                                                                                                                                                |                   13,999,311 |   |   |               36,568,783 |   |                  38,796,641 |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| OPERATING EXPENSES                                                                    |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
|   Selling and marketing                                                     |                                                                                                                                                | 2,533,778                                                                                                                                                                                                        |                                                                                                                                                                                                                |                     2,470,092 |   |   | 6,739,138 |   | 6,610,283 |
|   General and administrative                                                |                                                                                                                                                | 2,552,035                                                                                                                                                                                                        |                                                                                                                                                                                                                |                     2,416,007 |   |   | 8,110,776 |   | 6,080,089 |
|   Depreciation and amortization                                             |                                                                                                                                                | 218,029                                                                                                                                                                                                          |                                                                                                                                                                                                                |                        197,042 |   |   | 620,190 |   | 573,892 |
|   Research and development                                                  |                                                                                                                                                | 465,199                                                                                                                                                                                                          |                                                                                                                                                                                                                |                        390,029 |   |   | 1,261,796 |   | 1,224,046 |
|       Total operating expenses                          |                                                                                                                                                |                        5,769,041                                                              |                                                                                                                                                                                                                |                     5,473,170 |   |   |               16,731,900 |   |                  14,488,310 |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| INCOME FROM OPERATIONS                                                                |                                                                                                                                                |                        6,772,534                                                              |                                                                                                                                                                                                                |                     8,526,141 |   |   |               19,836,883 |   |                  24,308,331 |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| OTHER INCOME (EXPENSES)                                                               |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
|    Other income, net                                                   |                                                                                                                                                | 107,954                                                                                                                                                                                                          |                                                                                                                                                                                                                |                        235,917 |   |   | 445,486 |   |                        456,914 |
|    Interest income, net                                                |                                                                                                                                                | 141,062                                                                                                                                                                                                          |                                                                                                                                                                                                                |                           99,205 |   |   | 324,410 |   | 228,507 |
|       Total other income, net                           |                                                                                                                                                |                            249,016                                        |                                                                                                                                                                                                                |                        335,122 |   |   |                    769,896 |   |                        685,421 |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| INCOME BEFORE PROVISION FOR INCOME TAXES AND                                          |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |
|   NONCONTROLING INTEREST                                                    |                                                                                                                                                |                        7,021,550                                                              |                                                                                                                                                                                                                |                     8,861,263 |   |   |               20,606,779 |   |                  24,993,752 |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| PROVISION FOR INCOME TAXES                                                            |                                                                                                                                                | 1,111,428                                                                                                                                                                                                        |                                                                                                                                                                                                                |                     1,329,732 |   |   | 3,165,561 |   | 3,480,396 |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| NET INCOME BEFORE NONCONTROLLING INTEREST                                             |                        5,910,122 |                                                                                                                                                                                                             |                     7,531,531                                                                                   |   |   |               17,441,218 |   |                  21,513,356 |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| Less: Net loss attributable to noncontrolling interest                                | (24,648)                                                                                                                                            |                                                                                                                                                                                                             |                         (22,410)                                                            |   |   | (74,437) |   |                        (22,410) |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST                                       |                        5,934,770 |                                                                                                                                                                                                             |                     7,553,941                                                                                   |   |   |               17,515,655 |   |                  21,535,766 |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| OTHER COMPREHENSIVE INCOME                                                            |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
|    Foreign currency translation adjustment                             |                                                                                                                                                | 1,978,892                                                                                                                                                                                                        |                                                                                                                                                                                                                |                        121,290 |   |   |                 2,446,239 |   |                          12,367 |
|    Comprehensive (income) loss attributable to noncontrolling interest | (573)                                                                                                                                               |                                                                                                                                                                                                             |                                    - |   |   | (647) |   |                                   - |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                  | $                                                                                                                                                   |                        7,913,089                                                              | $                                                                                                                                                                                                                   |                     7,675,231 |   | $ |               19,961,247 | $ |                  21,548,133 |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| BASIC EARNINGS PER SHARE                                                              |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
|    Weighted average number of shares                                   |                                                                                                                                                |                      27,598,542                                                                         |                                                                                                                                                                                                                |                   27,593,275 |   |   |               27,596,541 |   |                  27,589,489 |
|    Earnings per share                                                  | $                                                                                                                                                   |                                   0.22 | $                                                                                                                                                                                                                   |                               0.27 |   | $ |                           0.63 | $ |                               0.78 |
|                                                                                  |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
| DILUTED EARNINGS PER SHARE                                                            |                                                                                                                                                |                                                                                                                                                                                                             |                                                                                                                                                                                                                |   |   |   |   |   |   |
|    Weighted average number of shares                                   |                                                                                                                                                |                      29,423,482                                                                         |                                                                                                                                                                                                                |                   28,372,332 |   |   |               29,644,739 |   |                  28,299,552 |
|    Earnings per share                                                  | $                                                                                                                                                   |                                   0.20 | $                                                                                                                                                                                                                   |                               0.27 |   | $ |                           0.59 | $ |                               0.76 |

----

CHINA 

|                                                  |   |         |       |   |       |   |   | Retained Earnings |   |   | Accumulated other |   |   |          |      |   |           |   |
|-------------------------------------------------------|--------|--------------|------------|--------|------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|---------------|-----------|--------|----------------|--------|
|                                                  |   | Common Stock |       |   | Additional |   |   | Statutory         |   |   |              |   |   | comprehensive |      |   | Noncontrolling |   |   |   |   |
|                                                  |   | Shares       |       |   | Par value  |   |   | paid-in-capital   |   |   | reserves          |   |   | Unrestricted  |      |   | income         |   |   | interest |   |   | Totals |   |
| BALANCE, December 31, 2008                            |   |         | 27,586,593 |   |       | $      | 27,586 |              |   | $      | 19,357,409        |   |   | $             | 7,148,827 |   |           | $      | 44,850,181 |   |   | $ | 7,305,144 |   |   | $ | - |   |   | $ | 78,689,147 |   |
|                                                  |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital received from non-controlling interest        |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   |   |   |   |   |   | 88,003 |   |   |   | 88,003 |   |
| Net income (loss)                                     |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   | 21,535,766 |   |   |   |   |   |   |   | (22,410 | ) |   |   | 21,513,356 |   |
| Warrants exercised                                    |   |         | 6,682      |   |       |   | 7      |              |   |   | (7                | )      |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Options issued to employees                           |   |         |       |   |       |   |   |              |   |   | 735,146           |   |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   | 735,146 |   |
| Foreign currency translation adjustment               |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   |   |   |   |   | 12,367 |   |   |   |   |   |   |   | 12,367 |   |
|                                                  |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE, September 30, 2009, (Unaudited)              |   |         | 27,593,275 |   |       |   | 27,593 |              |   |   | 20,092,548        |   |   |          | 7,148,827 |   |           |   | 66,385,947 |   |   |   | 7,317,511 |   |   |   | 65,593 |   |   |   | 101,038,019 |   |
|                                                  |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                     |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   | 2,879,070 |   |   |   |   |   |   |   | (32,834 | ) |   |   | 2,846,236 |   |
| Options exercised                                     |   |         | 2,266      |   |       |   | 2      |              |   |   | (2                | )      |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Options issued to employees                           |   |         |       |   |       |   |   |              |   |   | 245,050           |   |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   | 245,050 |   |
| Stock based compensation for services                 |   |         |       |   |       |   |   |              |   |   | 263,542           |   |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   | 263,542 |   |
| Deconsolidation of statutory reserves held in Tianjin |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |
|  Tianxiao Fire Safety Equipment Co., Ltd.        |   |         |       |   |       |   |   |              |   |   |              |   |   |          | (1,032    | )      |           |   | 1,032 |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Foreign currency translation adjustment               |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   |   |   |   |   | 6,726 |   |   |   | (17 | ) |   |   | 6,709 |   |
|                                                  |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE, December 31, 2009                            |   |         | 27,595,541 |   |       |   | 27,595 |              |   |   | 20,601,138        |   |   |          | 7,147,795 |   |           |   | 69,266,049 |   |   |   | 7,324,237 |   |   |   | 32,742 |   |   |   | 104,399,556 |   |
|                                                  |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital received from non-controlling interest        |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   |   |   |   |   |   | 59,880 |   |   |   | 59,880 |   |
| Options exercised                                     |   |         | 6,122      |   |       |   | 6      |              |   |   | (6                | )      |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Net income (loss)                                     |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   | 17,515,655 |   |   |   |   |   |   |   | (74,437 | ) |   |   | 17,441,218 |   |
| Options issued to employees                           |   |         |       |   |       |   |   |              |   |   | 735,147           |   |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   | 735,147 |   |
| Stock based compensation for services                 |   |         |       |   |       |   |   |              |   |   | 2,371,875         |   |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,371,875 |   |
| Foreign currency translation adjustment               |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   |   |   |   |   | 2,446,239 |   |   |   | (647 | ) |   |   | 2,445,592 |   |
|                                                  |   |         |       |   |       |   |   |              |   |   |              |   |   |          |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE, September 30, 2010, (Unaudited)              |   |         | 27,601,663 |   |       |   | 27,601 |              |   |   | 23,708,154        |   |   |          | 7,147,795 |   |           |   | 86,781,704 |   |   |   | 9,770,476 |   |   |   | 17,538 |   |   |   | 127,453,268 |   |

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|                                                                   |   | Nine Months Ended September 30, |        |
|------------------------------------------------------------------------|--------|---------------------------------|-------------|
|                                                                   |   | 2010                            |        |   | 2009 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                  |   |                            |        |   |   |   |
| Net income attributable to controlling interest                        |   | $                               | 17,515,655  |   |   | $ | 21,535,766 |   |
| Net loss attributable to noncontrolling interest                       |   |                            | (74,437     | ) |   |   | (22,410 | ) |
| Consolidated net income                                                |   |                            | 17,441,218  |   |   |   | 21,513,356 |   |
| Adjustments to reconcile net income to cash                            |   |                            |        |   |   |   |   |   |
| provided by operating activities:                                      |   |                            |        |   |   |   |   |   |
| Depreciation                                                           |   |                            | 608,967     |   |   |   | 611,661 |   |
| Amortization                                                           |   |                            | 56,498      |   |   |   | 56,461 |   |
| Provision for doubtful accounts                                        |   |                            | 979,834     |   |   |   | 1,724,705 |   |
| (Gain) loss on disposal of equipment                                   |   |                            | (487        | ) |   |   | 9,427 |   |
| Option issued to employees                                             |   |                            | 735,147     |   |   |   | 735,146 |   |
| Stock based compensation for services                                  |   |                            | 2,371,875   |   |   |   | - |   |
| Provision for estimated warranty claims                                |   |                            | 278,384     |   |   |   | 74,866 |   |
| Change in operating assets and liabilities                             |   |                            |        |   |   |   |   |   |
| Notes receivable                                                       |   |                            | 1,172,370   |   |   |   | (2,414,263 | ) |
| Accounts receivable                                                    |   |                            | (19,873,352 | ) |   |   | (10,825,671 | ) |
| Prepayments to related parties                                         |   |                            | (1,544,613  | ) |   |   | (84,231 | ) |
| Other receivables                                                      |   |                            | (342,768    | ) |   |   | (277,941 | ) |
| Refundable bidding and system contracting project deposits             |   |                            | 197,393     |   |   |   | - |   |
| Inventories                                                            |   |                            | (81,301     | ) |   |   | 212,023 |   |
| Costs and estimated earnings in excess of billings                     |   |                            | (9,659,076  | ) |   |   | (17,939,056 | ) |
| Employee advances                                                      |   |                            | (485,021    | ) |   |   | (660,086 | ) |
| Prepayments and deferred expenses                                      |   |                            | (1,334,790  | ) |   |   | (592,077 | ) |
| Accounts payable                                                       |   |                            | 983,055     |   |   |   | 1,340,372 |   |
| Accounts payable related party                                         |   |                            | 272,994     |   |   |   | - |   |
| Customer deposits                                                      |   |                            | (302,520    | ) |   |   | (3,254,294 | ) |
| Billings in excess of costs and estimated earnings                     |   |                            | (36,075     | ) |   |   | (2,974,893 | ) |
| Other payables                                                         |   |                            | 147,230     |   |   |   | (412,977 | ) |
| Accrued liabilities                                                    |   |                            | 5,502,957   |   |   |   | 4,771,623 |   |
| Taxes payable                                                          |   |                            | 1,234,762   |   |   |   | 6,596,492 |   |
| Net cash used in operating activities                                  |   |                            | (1,677,319  | ) |   |   | (1,789,357 | ) |
|                                                                   |   |                            |        |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                  |   |                            |        |   |   |   |   |   |
| Purchase of plant and equipment                                        |   |                            | (1,072,029  | ) |   |   | (1,039,560 | ) |
| Proceeds from sale of equipment                                        |   |                            | 14,416      |   |   |   | 9,828 |   |
| Payments for long term investments                                     |   |                            | (2,710      | ) |   |   | - |   |
| Deconsolidation of cash held at Tianxiao Fire Equipment Co. Ltd.       |   |                            | -           |   |   |   | (241,311 | ) |
| Proceeds from restructuring on Tianxiao Fire Safety Equipment Co. Ltd. |   |                            | -           |   |   |   | 1,550,922 |   |
| Proceeds from sales of investment in King Galaxy Investments Limited   |   |                            | -           |   |   |   | 1,000,000 |   |
| Net cash (used in) provided by investing activities                    |   |                            | (1,060,323  | ) |   |   | 1,279,879 |   |
|                                                                   |   |                            |        |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                  |   |                            |        |   |   |   |   |   |
| Change in restricted cash                                              |   |                            | (3,104,563  | ) |   |   | 2,252,851 |   |
| Capital contributed by noncontrolling interest shareholder             |   |                            | 58,840      |   |   |   | 87,954 |   |
| Net cash (used in) provided by financing activities                    |   |                            | (3,045,723  | ) |   |   | 2,340,805 |   |
|                                                                   |   |                            |        |   |   |   |   |   |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH                                |   |                            | 455,432     |   |   |   | (3,649 | ) |
|                                                                   |   |                            |        |   |   |   |   |   |
| INCREASE (DECREASE) IN CASH                                            |   |                            | (5,327,933  | ) |   |   | 1,827,678 |   |
|                                                                   |   |                            |        |   |   |   |   |   |
| CASH and CASH EQUIVALENTS, beginning of periods                        |   |                            | 34,976,880  |   |   |   | 26,655,333 |   |
|                                                                   |   |                            |        |   |   |   |   |   |
| CASH and CASH EQUIVALENTS, end of periods                              |   | $                               | 29,648,947  |   |   | $ | 28,483,011 |   |
|                                                                   |   |                            |        |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                       |   |                            |        |   |   |   |   |   |
| Income taxes paid                                                      |   | $                               | 4,115,124   |   |   | $ | 759,948 |   |
| Interest paid                                                          |   | $                               | -           |   |   | $ | - |   |
|                                                                   |   |                            |        |   |   |   |   |   |
| NON-CASH TRANSACTIONS INVESTING AND FINANCING ACTIVITIES:              |   |                            |        |   |   |   |   |   |
| Reclassification of advances on building and equipment purchase        |   |                            |        |   |   |   |   |   |
| to plant and equipment upon receipt of purchase                        |   | $                               | -           |   |   | $ | 249,672 |   |

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| Subsidiaries                                                                    |   | Incorporated in        |    | Ownership Percentage |    |
|--------------------------------------------------------------------------------------|--------|----------------------------------|--------------|---------------------------|--------------|
| China Fire Protection Group Inc. (“CFPG”)                                |   | British Virgin Islands           |         |                      | 100          | % |
| Zeetech System Private Limited (“Zeetech”)                               |   | India                            |         |                      | 100          | % |
| Sureland Industrial Fire Safety Limited (“Sureland Industrial”)          |   | People’s Republic of China |         |                      | 100          | % |
| Sureland Industrial Fire Equipment Co. Ltd. (“Sureland Equipment”)       |   | People’s Republic of China |         |                      | 100          | % |
| Beijing Hua An Times Fire Safety Technology Co., Ltd. (“Beijing Hua An”) |   | People’s Republic of China |         |                      | 100          | % |
| Beijing Shian Kexin Technology Co., Ltd                                              |   | People’s Republic of China |         |                      | 100          | % |
| Shenyang Hongshida Electronics Co., Ltd                                              |   | People’s Republic of China |         |                      | 80           | % |

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|   | 1. | Revenue from system contracting projects are recognized using the percentage-of-completion method of accounting, and therefore, take into account the costs, estimated earnings a revenue to date on contracts not yet completed. Revenue recognized is that percentage of the total contract price that cost expended to date bears to anticipated final total cost, based on current estimates of costs to complete. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs. Adjustments to the original estimates of the total contract revenue, total control cost, or extent of progress toward completion are often required as work in progress. Such changes and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements. The key assumptions used in the estimate of costs to complete relate to the unit material cost, the quantity of materials to be used, the installation cost and those indirect costs related to contract performance. The estimate of unit material cost is reviewed and updated on a quarterly basis, based on the updated information available on the supply markets. The estimate of material quantity to be used for completion and the installation cost is also reviewed and updated on a quarterly basis, based on the updated information on the progress of projection execution. If the supply market conditions or the progress of projection execution were different, it is likely that materially different amounts of contract costs would be used in the percentage of completion method of accounting. Thus the uncertainty associated with those estimates may impact our consolidated financial statements.  Selling, general, and administrative costs are charged to expense as incurred. At the time a loss on a contract becomes known, the entire amount of the estimated ultimate loss is recognized in the consolidated financial statements. Claims for additional contract costs are recognized upon a signed change order from the customer. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | Revenue from product sales is recognized when the goods are delivered and title has passed. Product sales revenue is presented net of a value-added tax (“VAT”). All of the Company’s products that are sold in the People’s Republic of China (“PRC”) are subject to a Chinese value-added tax at a rate of 17% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing the finished product. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Revenue from the rendering of maintenance services is recognized over the service period on a straight-line basis. |
|--------|----|--------------------------------------------------------------------------------------------------------------------|

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|                     |   | September 30, 2010(Unaudited) |        |   | December 31,2009 |    |
|-------------------------------|--------|------------------------------------|-------------|--------|-----------------------|--------------|
| Restricted cash               |   |                               |        |   |                  |         |
| Products sales                |   | $                                  | 4,779,986   |   |                  | $            | 3,728,599 |   |
| System contracting projects   |   |                               | 3,928,706   |   |                  |         | 1,711,441 |   |
| Total restricted cash         |   |                               | 8,708,692   |   |                  |         | 5,440,040 |   |
| Restricted cash - non current |   |                               | (6,299,843) |   |                  |         | (3,602,906 | ) |
| Restricted cash - current     |   | $                                  | 2,408,849   |   |                  | $            | 1,837,134 |   |

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|        |    | September 30, 2010(Unaudited) |      |   | December 31,2009 |    |
|------------------|--------------|-----------------------------------------|-----------|--------|-----------------------|--------------|
| Raw materials    |         | $                                       | 207,574   |   |                  | $            | 144,829 |   |
| Finished goods   |         |                                    | 4,609,949 |   |                  |         | 4,574,075 |   |
| Work in progress |         |                                    | 732,164   |   |                  |         | 641,616 |   |
| Total            |         | $                                       | 5,549,687 |   |                  | $            | 5,360,520 |   |

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|                                    |    | September 30, 2010(Unaudited) |       |   | December 31,2009 |    |
|----------------------------------------------|--------------|-----------------------------------------|------------|--------|-----------------------|--------------|
| Accounts receivable:                         |         |                                    |       |   |                  |         |
| System contracting projects                  |         | $                                       | 41,182,386 |   |                  | $            | 23,814,248 |   |
| Maintenance services                         |         |                                    | 3,753,307  |   |                  |         | 3,190,843 |   |
| Products sales                               |         |                                    | 17,113,324 |   |                  |         | 13,988,263 |   |
| Total accounts receivable                    |         |                                    | 62,049,017 |   |                  |         | 40,993,354 |   |
| Allowance for bad debts                      |         |                                    | (7,670,678 | )      |                  |         | (6,539,787 | ) |
| Accounts receivable, net                     |         |                                    | 54,378,339 |   |                  |         | 34,453,567 |   |
| Accounts receivable - non-current retentions |         |                                    | (4,204,286 | )      |                  |         | (3,463,998 | ) |
| Accounts receivable - current                |         | $                                       | 50,174,053 |   |                  | $            | 30,989,569 |   |

|                                 |    | September30, 2010(Unaudited) |      |   | December 31,2009 |    |
|-------------------------------------------|--------------|-----------------------------------|-----------|--------|-----------------------|--------------|
| Beginning allowance for doubtful accounts |         | $                                 | 6,539,787 |   |                  | $            | 4,370,362 |   |
| Additional charged to bad debt expense    |         |                              | 979,834   |   |                  |         | 2,172,588 |   |
| Write-off charged against the allowance   |         |                              | -         |   |                  |         | - |   |
| Foreign currency translation adjustment   |         |                              | 151,057   |   |                  |         | (3,163 | ) |
| Ending allowance for doubtful accounts    |         | $                                 | 7,670,678 |   |                  | $            | 6,539,787 |   |

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|        |    | September 30, 2010(Unaudited) |      |   | December 31,2009 |    |
|------------------|--------------|-----------------------------------------|-----------|--------|-----------------------|--------------|
| Retentions       |         |                                    |      |   |                  |         |
| Current          |         | $                                       | 3,165,888 |   |                  | $            |  2,967,248 |   |
| Non-current      |         |                                    | 4,204,286 |   |                  |         | 3,463,998 |   |
| Total retentions |         | $                                       | 7,370,174 |   |                  | $            | 6,431,246 |   |

|                                                                      |   | September 30,2010(Unaudited) |        |   | December 31,2009  |   |
|--------------------------------------------------------------------------------|--------|-----------------------------------|-------------|--------|-----------------------------|--------|
| Contract costs incurred plus recognized profits less recognized losses to date |   | $                                 | 139,286,398 |   |                        | $      | 116,754,059 |   |
| Less: progress billings                                                        |   |                              | (92,146,324 | )      |                        |   | (80,191,486 | ) |
| Costs and estimated earnings in excess of billings                             |   | $                                 | 47,140,074  |   |                        | $      | 36,562,573 |   |

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|                                                                             |   | September 30,2010(Unaudited) |        |   | December 31,2009 |    |
|---------------------------------------------------------------------------------------|--------|-----------------------------------|-------------|--------|-----------------------|--------------|
| Progress billings                                                                     |   | $                                 | 13,689,193  |   |                  | $            | 14,679,369 |   |
| Less: contracts costs incurred plus recognized profits less recognized losses to date |   |                              | (15,111,723 | )      |                  |         | (16,109,368 | ) |
| Billings in excess of costs and estimated earnings                                    |   | $                                 | 1,422,530   |   |                  | $            | 1,429,999 |   |

|                  |   | UsefulLife |
|----------------------------|--------|------------|
| Buildings and improvements |   | 40 years   |
| Transportation equipment   |   | 5 years    |
| Machinery                  |   | 10 years   |
| Office equipment           |   | 5 years    |
| Furniture                  |   | 5 years    |

|                     |    | September 30,2010(Unaudited) |       |    | December 31,2009 |    |
|-------------------------------|--------------|-----------------------------------|------------|---------|-----------------------|--------------|
| Buildings and improvements    |         | $                                 | 6,548,411  |    |                  | $            | 6,439,015 |   |
| Transportation equipment      |         |                              | 3,645,4576 |    |                  |         | 3,307,236 |   |
| Machinery                     |         |                              | 943,287    |    |                  |         | 900,781 |   |
| Office equipment              |         |                              | 1,559,615  |    |                  |         | 1,348,261 |   |
| Furniture                     |         |                              | 145,695    |    |                  |         | 165,736 |   |
| Total depreciable assets      |         |                              | 12,842,465 |    |                  |         | 12,161,029 |   |
| Less accumulated depreciation |         |                              | (4,307,265 | )  |                  |         | (3,875,487 | ) |
| Construction in progress      |         |                              | 715,620    |    |                  |         | 331,979 |   |
| Plant and equipment, net      |         | $                                 | 9,250,820  |    |                  | $            | 8,617,521 |   |

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|                |    | September 30, 2010(Unaudited) |     |   | December 31,2009 |    |
|--------------------------|--------------|-----------------------------------------|----------|--------|-----------------------|--------------|
| Land use rights          |         | $                                       | 770,789  |   |                  | $            | 770,789 |   |
| Technology rights        |         |                                    | 608,745  |   |                  |         | 608,745 |   |
| Accumulated amortization |         |                                    | (382,906 | )      |                  |         | (338,378 | ) |
| Balance                  |         | $                                       | 996,628  |   |                  | $            | 1,041,156 |   |

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| Contract revenue on uncompleted contracts at December 31, 2009                                   |   | $      | 20,706,885  |   |
|--------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|
| Contract adjustments (changes order)                                                             |   |   | 2,417,155   |   |
| Contract revenues for new contracts for the nine months ended September 30, 2010                 |   |   | 115,983,848 |   |
| Bids awarded and pending for execution of contracts for the nine months ended September 30, 2010 |   |   | 9,722,207   |   |
| Less: Contract revenue earned for the nine months ended September 30, 2010                       |   |   | (53,663,486 | )      |
| Effect of exchange rate changes                                                                  |   |   | 914,862     |   |
| Backlog at September 30, 2010 (unaudited)                                                        |   | $      | 96,081,471  |   |

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|   | · | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. |
|--------|--------|-------------------------------------------------------------------------------------------------|

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|                                                                |   | 2010(Unaudited) |       |   | 2009(Unaudited) |   |
|---------------------------------------------------------------------|--------|-----------------|------------|--------|-----------------|--------|
| Net income for earnings per share                                   |   | $               | 5,934,770  |   |            | $      | 7,553,941 |   |
|                                                                |   |            |       |   |            |   |   |   |
| Weighted average shares used in basic computation                   |   |            | 27,598,542 |   |            |   | 27,593,275 |   |
| Diluted effect of stock options, restricted stock and warrants |   |            | 1,824,940  |   |            |   | 779,057 |   |
| Weighted average shares used in diluted computation                 |   |            | 29,423,482 |   |            |   | 28,372,332 |   |
|                                                                |   |            |       |   |            |   |   |   |
| Earnings per share:                                                 |   |            |       |   |            |   |   |   |
| Basic                                                               |   | $               | 0.22       |   |            | $      | 0.27 |   |
| Diluted                                                             |   | $               | 0.20       |   |            | $      | 0.27 |   |

|                                                                |   | 2010(Unaudited) |       |   | 2009(Unaudited) |   |
|---------------------------------------------------------------------|--------|-----------------|------------|--------|-----------------|--------|
| Net income for earnings per share                                   |   | $               | 17,515,655 |   |            | $      | 21,535,766 |   |
|                                                                |   |            |       |   |            |   |   |   |
| Weighted average shares used in basic computation                   |   |            | 27,596,541 |   |            |   | 27,589,489 |   |
| Diluted effect of stock options, restricted stock and warrants |   |            | 2,048,198  |   |            |   | 710,063 |   |
| Weighted average shares used in diluted computation                 |   |            | 29,644,739 |   |            |   | 28,299,552 |   |
|                                                                |   |            |       |   |            |   |   |   |
| Earnings per share:                                                 |   |            |       |   |            |   |   |   |
| Basic                                                               |   | $               | 0.63       |   |            | $      | 0.78 |   |
| Diluted                                                             |   | $               | 0.59       |   |            | $      | 0.76 |   |

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| Subsidiaries   |    | Income tax exemption |    | Effective income tax rate |
|---------------------|--------------|--------------------------------|--------------|------------------------------------------|
| Sureland Industrial |         | 12.5                           | %            |                                     |   | 12.5 | % |
| Sureland Equipment  |         | 12.5                           | %            |                                     |   | 12.5 | % |
| Beijing Hua An      |         | 17.5                           | %            |                                     |   | 7.5 | % |
| Tianxiao Equipment  |         | -                              | %            |                                     |   | 25.0 | %  |
| Shian Kexin         |         | -                              | %            |                                     |   | 25.0 | %  |
| Shanyang Hongshida  |         | -                              | %            |                                     |   | 25.0 | % |

| Subsidiaries    |    | Income tax exemption |    | Effective income tax rate |
|----------------------|--------------|--------------------------------|--------------|------------------------------------------|
| Sureland Industrial  |         |                           | 12.5         | %                                        |   |   | 12.5 | % |
| Sureland Equipment   |         |                           | 12.5         | %                                        |   |   | 12.5 | % |
| Beijing Hua An       |         |                           | 17.5         | %                                        |   |   | 7.5 | % |
| Shian Kexin          |         |                           | -            | %                                        |   |   | 25.0 | %  |
| Zeetech              |         |                           | -            | %                                        |   |   | 40.0 | %  |
| India Project Office |         |                           | -            | %                                        |   |   | 40.0 | %  |
| Shanyang Hongshida   |         |                           | -            | %                                        |   |   | 25.0 | % |

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|                                 |   | Three months ended September 30, |   |   | Nine months ended September 30, |   |
|--------------------------------------|--------|-------------------------------------------------|--------|--------|------------------------------------------------|--------|
|                            |   | 2010(Unaudited)                                 |   |   | 2009(Unaudited)                                |   |   | 2010(Unaudited) |   |   | 2009(Unaudited) |   |
| U.S. Statutory rates                 |   | 34.0                                            | %      |   |                                           | 34.0   | % |   |   | 34.0 | % |   |   | 34.0 | % |
| Foreign income not recognized in USA |   | (34.0                                           | )      |   |                                           | (34.0  | ) |   |   | (34.0 | ) |   |   | (34.0 | ) |
| China income taxes                   |   | 25.0                                            |   |   |                                           | 25.0   |   |   |   | 25.0 |   |   |   | 25.0 |   |
| China income tax exemption           |   | (15.7                                           | )      |   |                                           | (16.4  | ) |   |   | (15.8 | ) |   |   | (11.9 | ) |
| Permanent Differences (China)(1)     |   | 1.4                                             |   |   |                                           | 5.9    |   |   |   | 2.0 |   |   |   | 3.1 |   |
| Other item (2)                       |   | 5.1                                             |   |   |                                           | 0.5    |   |   |   | 4.2 |   |   |   | 0.3 |   |
| Effective income tax rates           |   | 15.8                                            | %      |   |                                           | 15.0   | % |   |   | 15.4 | % |   |   | 13.9 | % |

----

CHINA 

----

|            |    | September 30,2010(Unaudited) |       |   | December 31,2009 |   |
|----------------------|--------------|-----------------------------------|------------|--------|-----------------------|--------|
| VAT taxes payable    |         | $                                 | 6,968,414  |   |                  | $      | 4,636,786 |   |
| Income taxes payable |         |                              | 2,063,070  |   |                  |   | 2,936,047 |   |
| Sales taxes          |         |                              | 1,319,035  |   |                  |   | 1,358,372 |   |
| Other taxes payable  |         |                              | 91,229     |   |                  |   | 71,265 |   |
| Total                |         | $                                 | 10,441,748 |   |                  | $      | 9,002,470 |   |

----

CHINA 

----

----

CHINA 

----

----

CHINA 

----

|                                        |   |   |        |    |   |   | Weighted   |   |   |   |       |   |
|---------------------------------------------|--------|--------|-------------|---------|--------|--------|------------|--------|--------|--------|------------|--------|
|                                        |   |   |        |    |   |   | Average    |   |   |   | Aggregate  |   |
|                                        |   |   | Options     |    |   |   | Exercise   |   |   |   | Intrinsic  |   |
|                                        |   |   | Outstanding |    |   |   | Price      |   |   |   | Value      |   |
|                                        |   |   |        |    |   |   |       |   |   |   |       |   |
| Outstanding, December 31, 2008              |   |   | 779,500     |    |   | $      | 1.43       |   |   | $      | 4,194,190  |   |
| Granted                                     |   |   | 1,000,000   |    |   |   | 6.81       |   |   |   | -          |   |
| Forfeited                                   |   |   |        |    |   |   |       |   |   |   |       |   |
| Exercised                                   |   |   | (3,500      | )       |   |   | 4.51       |   |   |   | -          |   |
| Outstanding, December 31, 2009              |   |   | 1,776,000   |    |   | $      | 4.45       |   |   | $      | 16,120,860 |   |
| Granted                                     |   |   |        |    |   |   |       |   |   |   |       |   |
| Forfeited                                   |   |   |        |    |   |   |       |   |   |   |       |   |
| Exercised                                   |   |   | (6,122      | )  |   |   | 3.63  |   |   |   |       |   |
| Outstanding, September 30, 2010 (Unaudited) |   |   | 1,769,878   |    |   | $      | 4.46       |   |   | $      | 6,467,521  |   |

| Outstanding Options |   |     | Exercisable Options |        |
|--------------------------|--------|----------|--------------------------|-------------|
|                     |   |     |                     | Average     |   |   |   |   |   |   |   |   | Average |   |
|                     |   |     |                     | Remaining   |   |   |   |   |   |   |   |   | Remaining |   |
| Number of           |   | Exercise |                     | Contractual |   |   | Number of |   |   | Exercise |   |   | Contractual |   |
| Options                  |   | Price    |                     | Life        |   |   | Options |   |   | Price |   |   | Life |   |
| 746,500                  |   | $        | 1.25                     |        |   | 5.75 |   |   |   | 746,500 |   |   | $ | 1.25 |   |   |   | 5.75 |   |
| 6,000                    |   | $        | 4.51                     |        |   | 1.58 |   |   |   | 6,000 |   |   | $ | 4.51 |   |   |   | 1.58 |   |
| 20,000                   |   | $        | 6.70                     |        |   | 1.75 |   |   |   | 15,000 |   |   | $ | 6.70 |   |   |   | 1.75 |   |
| 997,378                  |   | $        | 6.81                     |        |   | 3.25 |   |   |   | 434,878 |   |   | $ | 6.81 |   |   |   | 3.25 |   |

----

CHINA 

----

----

Item 

----

|   | 1. | Revenue from system contracting projects are recognized using the percentage-of-completion method of accounting, and therefore, take into account the costs, estimated earnings a revenue to date on contracts not yet completed. Revenue recognized is that percentage of the total contract price that cost expended to date bears to anticipated final total cost, based on current estimates of costs to complete. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs. Adjustments to the original estimates of the total contract revenue, total control cost, or extent of progress toward completion are often required as work in progress. Such changes and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements. The key assumptions used in the estimate of costs to complete relate to the unit material cost, the quantity of materials to be used, the installation cost and those indirect costs related to contract performance. The estimate of unit material cost is reviewed and updated on a quarterly basis, based on the updated information available on the supply markets. The estimate of material quantity to be used for completion and the installation cost is also reviewed and updated on a quarterly basis, based on the updated information on the progress of projection execution. If the supply market conditions or the progress of projection execution were different, it is likely that materially different amounts of contract costs would be used in the percentage of completion method of accounting. Thus the uncertainty associated with those estimates may impact our consolidated financial statements.  Selling, general, and administrative costs are charged to expense as incurred. At the time a loss on a contract becomes known, the entire amount of the estimated ultimate loss is recognized in the consolidated financial statements. Claims for additional contract costs are recognized upon a signed change order from the customer. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 2. | Revenue from product sales is recognized when the goods are delivered and title has passed. Product sales revenue is presented net of a value-added tax (“VAT”). All of the Company’s products that are sold in the People’s Republic of China (“PRC”) are subject to a Chinese value-added tax at a rate of 17% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing the finished product. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Revenue from the rendering of maintenance services is recognized over the service period on a straight-line basis. |
|--------|----|--------------------------------------------------------------------------------------------------------------------|

----

|     |                        |   | For the Three Months Ended September 30, |       |
|----------|-----------------------------|--------|------------------------------------------|------------|
|     |                        |   | 2010                                     |       |   | 2009 |   |   | Y/Y Change |   |
|     |                        |   | Amount ($)                               |       |   | % of Total Revenue |   |   | Amount ($) |   |   | % of Total Revenue |   |   | Amount ($) |   |   | % |   |
| Revenues |                        |   |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     | System contracting projects |   |                                     | 19,874,490 |   |   |   | 80.1 | % |   |   | 18,710,099 |   |   |   | 75.4 | % |   |   | 1,164,391 |   |   |   | 6.2 | % |
|     | Products                    |   |                                     | 4,092,838  |   |   |   | 16.5 | % |   |   | 5,351,659 |   |   |   | 21.6 | % |   |   | (1,258,821 | ) |   |   | (23.5 | )% |
|   | Maintenance services        |   |                                     | 850,260    |   |   |   | 3.4 | % |   |   | 754,671 |   |   |   | 3.0 | % |   |   | 95,589 |   |   |   | 12.7 | % |
|   | Total Revenues              |   |                                     | 24,817,588 |   |   |   | 100.0 | % |   |   | 24,816,429 |   |   |   | 100.0 | % |   |   | 1,159 |   |   |   | 0.0 | % |

----

|             |                        |   | For the Three Months Ended September 30, |       |
|------------------|-----------------------------|--------|------------------------------------------|------------|
|             |                        |   | 2010                                     |       |   | 2009 |   |   | Y/Y Change |   |
|             |                        |   | Amount ($)                               |       |   | % of Revenue |   |   | Amount ($) |   |   | % of Revenue |   |   | Amount ($) |   |   | % |   |
| Cost of revenues |                        |   |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|             | System contracting projects |   |                                     | 9,579,909  |   |   |   | 48.2 | % |   |   | 7,821,254 |   |   |   | 41.8 | % |   |   | 1,758,655 |   |   |   | 22.5 | % |
|             | Products                    |   |                                     | 2,091,895  |   |   |   | 51.1 | % |   |   | 2,559,838 |   |   |   | 47.8 | % |   |   | (467,943 | ) |   |   | (18.3 | )% |
|           | Maintenance services        |   |                                     | 604,209    |   |   |   | 71.1 | % |   |   | 436,026 |   |   |   | 57.8 | % |   |   | 168,183 |   |   |   | 38.6 | % |
|           | Total cost of revenues      |   |                                     | 12,276,013 |   |   |   | 49.5 | % |   |   | 10,817,118 |   |   |   | 43.6 | % |   |   | 1,458,895 |   |   |   | 13.5 | % |
|             |                        |   |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit     |                        |   |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|             | System contracting projects |   |                                     | 10,294,581 |   |   |   | 51.8 | % |   |   | 10,888,845 |   |   |   | 58.2 | % |   |   | (594,264 | ) |   |   | (5.5 | )% |
|             | Products                    |   |                                     | 2,000,943  |   |   |   | 48.9 | % |   |   | 2,791,821 |   |   |   | 52.2 | % |   |   | (790,878 | ) |   |   | (28.3 | )% |
|           | Maintenance services        |   |                                     | 246,051    |   |   |   | 28.9 | % |   |   | 318,645 |   |   |   | 42.2 | % |   |   | (72,594 | ) |   |   | (22.8 | )% |
|           | Total gross profit          |   |                                     | 12,541,575 |   |   |   | 50.5 | % |   |   | 13,999,311 |   |   |   | 56.4 | % |   |   | (1,457,736 | ) |   |   | (10.4 | )% |

----

|               |                          |   | For the Three Months Ended September 30, |      |
|--------------------|-------------------------------|--------|------------------------------------------|-----------|
|               |                          |   | 2010                                     |      |   | 2009 |   |   | Y/Y Change |   |
|               |                          |   | Amount ($)                               |      |   | % of Total Revenue |   |   | Amount ($) |   |   | % of Total Revenue |   |   | Amount ($) |   |   | % |   |
| Operating expenses |                          |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               | Selling expense               |   |                                     | 2,533,778 |   |   |   | 10.2 | % |   |   | 2,470,092 |   |   |   | 10.0 | % |   |   | 63,686 |   |   |   | 2.6 | % |
|               | General administrative        |   |                                     | 2,552,035 |   |   |   | 10.3 | % |   |   | 2,416,007 |   |   |   | 9.7 | % |   |   | 136,028 |   |   |   | 5.6 | % |
|               | Depreciation and amortization |   |                                     | 218,029   |   |   |   | 0.9 | % |   |   | 197,042 |   |   |   | 0.8 | % |   |   | 20,987 |   |   |   | 10.7 | % |
|             | R&D                       |   |                                     | 465,199   |   |   |   | 1.9 | % |   |   | 390,029 |   |   |   | 1.6 | % |   |   | 75,170 |   |   |   | 19.3 | % |
|             | Total Operating Expenses      |   |                                     | 5,769,041 |   |   |   | 23.2 | % |   |   | 5,473,170 |   |   |   | 22.1 | % |   |   | 295,871 |   |   |   | 5.4 | % |
|             | Income From Operations        |   |                                     | 6,772,534 |   |   |   | 27.3 | % |   |   | 8,526,141 |   |   |   | 34.4 | % |   |   | (1,753,607 | ) |   |   | (20.6 | )% |

----

----

|     |                        |   | For the Nine Months Ended September 30, |       |
|----------|-----------------------------|--------|-----------------------------------------|------------|
|     |                        |   | 2010                                    |       |   | 2009 |   |   | Y/Y Change |   |
|     |                        |   | Amount ($)                              |       |   | % of Total Revenue |   |   | Amount ($) |   |   | % of Total Revenue |   |   | Amount ($) |   |   | % |   |
| Revenues |                        |   |                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     | System contracting projects |   |                                    | 53,663,486 |   |   |   | 78.2 | % |   |   | 50,004,213 |   |   |   | 77.8 | % |   |   | 3,659,273 |   |   |   | 7.3 | % |
|     | Products                    |   |                                    | 12,179,859 |   |   |   | 17.8 | % |   |   | 12,267,472 |   |   |   | 19.1 | % |   |   | (87,613 | ) |   |   | (0.7 | )% |
|   | Maintenance services        |   |                                    | 2,751,400  |   |   |   | 4.0 | % |   |   | 1,988,823 |   |   |   | 3.1 | % |   |   | 762,577 |   |   |   | 38.3 | % |
|   | Total revenues              |   |                                    | 68,594,745 |   |   |   | 100.0 | % |   |   | 64,260,508 |   |   |   | 100.0 | % |   |   | 4,334,237 |   |   |   | 6.7 | % |

----

|             |                        |   | For the Nine months Ended September 30, |       |
|------------------|-----------------------------|--------|-----------------------------------------|------------|
|             |                        |   | 2010                                    |       |   | 2009 |   |   | Y/Y Change |   |
|             |                        |   | Amount ($)                              |       |   | % of Revenue |   |   | Amount ($) |   |   | % of Revenue |   |   | Amount ($) |   |   | % |   |
| Cost of revenues |                        |   |                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|             | System contracting projects |   |                                    | 24,767,752 |   |   |   | 46.2 | % |   |   | 19,598,795 |   |   |   | 39.2 | % |   |   | 5,168,957 |   |   |   | 26.4 | % |
|             | Products                    |   |                                    | 5,402,095  |   |   |   | 44.4 | % |   |   | 4,636,886 |   |   |   | 37.8 | % |   |   | 765,209 |   |   |   | 16.5 | % |
|           | Maintenance services        |   |                                    | 1,856,115  |   |   |   | 67.5 | % |   |   | 1,228,186 |   |   |   | 61.8 | % |   |   | 627,929 |   |   |   | 51.1 | % |
|           | Total cost of revenues      |   |                                    | 32,025,962 |   |   |   | 46.7 | % |   |   | 25,463,867 |   |   |   | 39.6 | % |   |   | 6,562,095 |   |   |   | 25.8 | % |
|             |                        |   |                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit     |                        |   |                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|             | System contracting projects |   |                                    | 28,895,734 |   |   |   | 53.8 | % |   |   | 30,405,418 |   |   |   | 60.8 | % |   |   | (1,509,684 | ) |   |   | (5.0 | )% |
|             | Products                    |   |                                    | 6,777,764  |   |   |   | 55.6 | % |   |   | 7,630,586 |   |   |   | 62.2 | % |   |   | (852,822 | ) |   |   | (11.2 | )% |
|           | Maintenance services        |   |                                    | 895,285    |   |   |   | 32.5 | % |   |   | 760,637 |   |   |   | 38.2 | % |   |   | 134,648 |   |   |   | 17.7 | % |
|           | Total gross profit          |   |                                    | 36,568,783 |   |   |   | 53.3 | % |   |   | 38,796,641 |   |   |   | 60.4 | % |   |   | (2,227,858 | ) |   |   | (5.7 | )% |

----

|               |                          |   | For the Nine Months Ended September 30, |       |
|--------------------|-------------------------------|--------|-----------------------------------------|------------|
|               |                          |   | 2010                                    |       |   | 2009 |   |   | Y/Y Change |   |
|               |                          |   | Amount ($)                              |       |   | % of Total Revenue |   |   | Amount ($) |   |   | % of Total Revenue |   |   | Amount ($) |   |   | % |   |
| Operating expenses |                          |   |                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               | Selling expense               |   |                                    | 6,739,138  |   |   |   | 9.8 | % |   |   | 6,610,283 |   |   |   | 10.3 | % |   |   | 128,855 |   |   |   | 1.9 | % |
|               | General administrative        |   |                                    | 8,110,776  |   |   |   | 11.8 | % |   |   | 6,080,089 |   |   |   | 9.5 | % |   |   | 2,030,687 |   |   |   | 33.4 | % |
|               | Depreciation and amortization |   |                                    | 620,190    |   |   |   | 0.9 | % |   |   | 573,892 |   |   |   | 0.9 | % |   |   | 46,298 |   |   |   | 8.1 | % |
|             | R&D                       |   |                                    | 1,261,796  |   |   |   | 1.8 | % |   |   | 1,224,046 |   |   |   | 1.9 | % |   |   | 37,750 |   |   |   | 3.1 | % |
|             | Total Operating Expenses      |   |                                    | 16,731,900 |   |   |   | 24.4 | % |   |   | 14,488,310 |   |   |   | 22.5 | % |   |   | 2,243,590 |   |   |   | 15.5 | % |
|             | Income From Operations        |   |                                    | 19,836,883 |   |   |   | 28.9 | % |   |   | 24,308,331 |   |   |   | 37.8 | % |   |   | (4,471,448 | ) |   |   | (18.4 | )% |

----

|                                                                |     | For the nine months EndedSeptember 30, |   |
|---------------------------------------------------------------------|----------|----------------------------------------|--------|
|                                                                |     | 2010                                   |   | 2009 |   |
|                                                                |     |                                   |   |   |   |
| Net cash used in operating activities                               |   |                                   | $      | (1,677,319 | ) |   | $ | (1,789,357 | ) |
| Net cash (used in) provided by investing activities                 |   |                                   |   | (1,060,323 | ) |   |   | 1,279,879 |   |
| Net cash (used in) provided by financing activities                 |   |                                   |   | (3,045,723 | ) |   |   | 2,340,805 |   |
| Effect of foreign currency translation on cash and cash equivalents |   |                                   |   | 455,432 |   |   |   | (3,649 | ) |
| Net cash flow                                                       |     |                                   | $      | (5,327,933 | ) |   | $ | 1,827,678 |   |

----

| Aging      |   | 1-90 Days |       |   | 91-180 Day |   |      | 181-360 Days |   |   | Above 1 year |   |   | Total  |       |
|------------|--------|-----------|------------|--------|------------|--------|-----------|--------------|--------|--------|--------------|--------|--------|--------|------------|
| Amount     |   | $         | 32,510,405 |   |       | $      | 4,240,397 |         |   | $      | 8,724,282    |   |   | $      | 16,573,933 |   |   | $ | 62,049,017 |   |
| Percentage |   |      | 52.4       | %      |       |   | 6.8       | %            |   |   | 14.1         | %      |   |   | 26.7       | % |   |   | 100.0 | % |

----

Item 

Item 

----

PART 

Item 

Item 

Item 

Item 

Item 

Item 

Item 

| ExhibitNumber: |   | Description                                                                                        |
|----------------|--------|----------------------------------------------------------------------------------------------------|
| 31.1           |   | Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.      |
|           |   |                                                                                               |
| 31.2           |   | Certification of Principal Accounting Officer under Section 302 of the Sarbanes-Oxley Act of 2002. |
|           |   |                                                                                               |
| 32.1           |   | Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350   |

|                    | CHINA FIRE & SECURITY GROUP, INC. |
|-------------------------|---------------------------------------|
|                    |                                  |
| Dated: November 9, 2010 | By:                                   | /s/ Brian Lin |
|                    |                                  | Brian Lin |
|                    |                                  | Chief Executive Officer |
|                    |                                  |   |
| Dated: November 9, 2010 | By:                                   | /s/ Tongzhou Qin |
|                    |                                  | Tongzhou Qin |
|                    |                                  | Chief Financial Officer |

----