SHENZHEN, China, Sept. 30 /Xinhua-PRNewswire/ -- China Information Security Technology, Inc., (Nasdaq: CPBY) ("China Information Security," "CIST" or the "Company"), a leading application software developer, systems integrator and full-service Geographic Information Systems ("GIS") solutions provider to the public security and civil-use markets in China, today announced that it was awarded its first contract to construct the digital hospital and medical information systems for three Shenzhen city hospitals. The contract is valued at $2.2 million and is expected to be completed in the first quarter of 2009.
This win follows CIST’s recently announced plan to acquire Shenzhen Zhongtian Technology Development Co., Ltd. ("Zhongtian Technology"), a leading provider of digital hospital information systems in Guangdong Province, China. CIST was able to leverage its strong brand recognition and solid reputation, along with Zhongtian Technology’s high-quality product offering to achieve this award. This contract marks CIST’s first advance into the largely under-penetrated digital hospital industry in China and further exemplifies the Company’s status as a leader in the development of robust, mission critical information systems infrastructure. The contract and related revenue recognition will commence after the closing of the Zhongtian Technology acquisition, which is expected to close on or before October 31, 2008.
Under the terms of the contract, CIST will build a comprehensive system at each of three Shenzhen city hospitals to provide efficient information and clinical case management. Construction of the system will include an information platform and a database of medical and scientific research and practices. The system will also enable consolidation of all related information and resources within the hospital and other related agencies. CIST will enjoy a revenue stream similar to previous projects delivered in its existing business where it will collect a one-time fee as well as 5% to 10% of the maintenance fee for the subsequent year. The Company also expects
follow-on opportunities to expand the application’s features and the database to accommodate patient medical records. In this phase, each of the hospitals will not be linked to each other, but the system can be upgraded in the future to allow doctors across different hospitals to retrieve patient records remotely and update them efficiently, providing additional follow-on opportunities.
Zhongtian Technology and its patented Medical Case Statistics Software serve the growing demand for digital hospital and electronic medical record (EMR) systems in China. Medical records, including health examinations, medical care, immunity or infectious diseases, will be integrated into one centralized system so that doctors within the network can review a patient’s complete medical history. Such digital hospital systems are expected to reduce medical errors and improve the efficiency of delivering healthcare services, so as to benefit patients, while helping to minimize medical claims fraud. Zhongtian Technology’s Medical Case Statistics Software can also be used to provide public health authorities with an integrated command and decision system for public health and disease control.
"We planned to leverage our acquisition of Zhongtian Technology, our reputation and strong brand recognition in the market, and our distribution network to quickly and efficiently introduce new products, and this contract demonstrates our ability to successfully accomplish this objective," said Mr. Jiang Huai Lin, CEO of China Information Security. "We believe that CIST combined with Zhongtian Technology represented a powerful combination in the contract bidding process and was an important factor in this win. We believe that our ability to deploy mission critical public security related applications influenced acceptance of our solution for its medical software applications. More important, we expect to benefit from a higher blended profit margin as we rollout this product offering. We remain excited about the future potential to digitize the healthcare industry in China."
About China Information Security Technology, Inc.
Through its wholly-owned Chinese subsidiary, China Information Security Technology, Inc. ("CIST" or the "Company") headquartered in Shenzhen, China ("PRC"), is a leading application software developer, systems integrator and full-service Geographic Information Systems ("GIS") solutions provider to the public security and civil-use markets in China, aiming to use information technology to improve public safety and information management. Its main business lines range from digital public security, to intelligent border control, and residence card information management systems. Its commitment to leading-edge technology and quality assurance has won the Company numerous government and enterprise contracts throughout China. To learn more about the Company, please visit the corporate website at http://www.chinacpby.com .
Safe Harbor Statement
This press release may contain certain "forward-looking statements" relating to the business of China Information Security Technology, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding the significance of the first contract win in the digital hospital industry in Shenzhen and the ability of the Company to capitalize on other opportunities in the healthcare sector; the general ability of the Company to achieve its commercial objectives; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of
non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
