Cantronic Systems Inc.

Cantronic Systems Inc.

March 02, 2010 08:00 ET

Cantronic Announces Letter of Intent to Acquire Actiontop Electronics

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 2, 2010) - Cantronic Systems Inc., ("Cantronic" or the "Company") (TSX VENTURE:CTS), today announced that it has signed a letter of intent (the "LOI") by which it proposes (the "Proposed Transaction") to acquire all of the issued and outstanding shares of privately-owned Actiontop Electronics (Shenzhen) Co. Ltd., a manufacturer of high-speed video surveillance cameras and related products ("Actiontop").

"The Proposed Transaction is in keeping with our strategy to acquire companies with complimentary technologies to enhance our ability to deliver end-to-end security and surveillance systems," said James Zahn, President and CEO of Cantronic. "Actiontop's high performance products and technology have enabled it to attract OEM partners for international sales. In fact, Actiontop is already an OEM supplier to Cantronic. In China, we can expand Actiontop's business by adding their products to our total security and surveillance solution and using the sales and distribution network of our China subsidiaries. The Actiontop acquisition would enhance our ability to capitalize on the large and growing market in China, driven by government goals for national video surveillance."

Highlights of the Proposed Transaction include:

Pursuant to the terms of the LOI, Cantronic expects to pay a purchase price of RMB 25 million (approximately CAD $3.9 million as at March 1, 2010) consisting of 40% RMB denominated cash and 60% common shares of Cantronic. The purchase price may be subject to a post-closing adjustment. The majority of the cash component of the purchase price would be provided by an arms-length partner, which would assume approximately 30% of the share ownership of Actiontop. Shares issued in accordance with the Proposed Transaction would be subject to a one-year lock up period. Cantronic expects that it will fund its cash portion of payment with cash on hand. Actiontop has a profitable track record including several years of revenue and earnings and this transaction will be immediately accretive to Cantronic.

The LOI provides that the parties will proceed in good faith to enter into a definitive purchase and sale agreement by March 30, 2010. Any definitive agreement would be subject to amongst other things, final due diligence by Cantronic. Completion of the Proposed Transaction is subject to a number of conditions including, but not limited to, obtaining all required regulatory approvals. There can be no assurance that the LOI will result in a transaction.

Versant Partners Inc. is acting as strategic advisor to Cantronic in relation to the Proposed Transaction.

About Actiontop Electronics (Shenzhen) Co. Ltd.

Actiontop Electronics was established in 1999 and has factory facilities in Shenzhen, China. Actiontop engages in the design, manufacturing, sales and support of high-speed video surveillance camera products, including a variety of domes and zoom lenses, vandal-proof cameras, controllers, matrices and other accessories. Actiontop manufactures its products in its facility located in Shenzhen, China. Actiontop has an established customer base in China and generates approximately 60% of sales internationally through distributors and OEM agreements. For more information on Actiontop Electronics, please visit

About Cantronic Systems Inc.

Cantronic Systems Inc. manufactures, distributes, and provides training and services in the fields of infrared vision and video security surveillance technologies, specializing in passive and active infrared cameras, infrared illuminators, low light infrared sensitive CCD cameras and long-range night vision surveillance systems for demanding homeland security and surveillance application.

Cantronic holds a valid medical device manufacturing license and is a manufacturer and distributor of its fever scan thermal imaging camera systems which have been widely deployed in public facilities such as airports, railway stations, and border crossings worldwide during the SARS (Avian/Bird Flu) outbreak in 2003 as well as during the Swine (H1N1) Flu pandemic in 2009.

Cantronic, through its US subsidiary QWIP Technologies, Inc. ("QWIPTECH"), holds a worldwide, exclusive license from the California Institute of Technology ("Caltech") to produce and sell infrared detectors and sensors based on Caltech's Quantum Well Infrared Photodetector technology.

Cantronic, through its China subsidiaries Cantronic Security Systems (China) Co. Ltd., Beijing Advanced Videoinfo Technology Co. Ltd. ("AVINFO") and Shenzhen Huanghe Digital Technology Co. Ltd. ("Yellow River"), provides digital networked video surveillance solutions to government and corporate customers in China.

Cantronic is a Tier 1 issuer on the TSX-V exchange, trading under the symbol CTS. For further information about Cantronic and QWIPTECH, please visit our websites at and

Forward-looking statements

This news release contains forward-looking statements, within the meaning of applicable securities legislation, concerning Cantronic Systems Inc. and the markets in which it operates. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance and achievements of Cantronic to be materially different from any future results, performance or achievements expressed or implied by said forward-looking statements.

Forward-looking statements include, but are not limited to: the completion of the Proposed Transaction, anticipated share capital following completion of the Proposed Transaction, expectations, opinions, forecasts, projections and other similar statements concerning anticipated future events, conditions or results that are not historical facts. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".

Readers are cautioned not to place undue reliance on such forward-looking statements. Forward-looking information is provided as of the date of this news release, and Cantronic Systems Inc. assumes no obligation to update or revise them to reflect new events or circumstances, except as may be required under applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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