Cantronic Systems Inc.
TSX VENTURE : CTS

Cantronic Systems Inc.

August 06, 2008 08:30 ET

Cantronic Completes Due Diligence of Chinese Company; Will Proceed to Definitive Agreement

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 6, 2008) - Cantronic Systems Inc. ("Cantronic" or "Company") (TSX VENTURE:CTS) announced today that it has completed its technical and legal due diligence for the previously announced acquisition (see press release dated June 2, 2008) of the video surveillance technology company (the "Target") in China and will now begin preparation of a definitive agreement. The Target, a profitable company, founded in 1995 is an ISO 9001 certified manufacturer and distributor of CCTV Cameras, surveillance and security products with forecasted annual revenues in excess of $10 million in the current fiscal year.

This strategic acquisition marks Cantronic's first undertaking in the rapidly growing Chinese security and surveillance market. Acquisitions of companies with complementary products in the security and video surveillance sector is a key component in Cantronic's overall growth strategy and will significantly broaden the Company's existing product portfolio and revenue growth potential. The Company expects the acquisition to be completed by late fall 2008.

"The due diligence reinforces our excitement about the potential synergies between the two companies," said James Zahn, president and CEO of Cantronic Systems. "The Target's extensive experience in video surveillance technology will contribute to establishing Cantronic as an industry leader in the China market. We have identified and are currently pursuing several other carefully selected companies that will further expand our market reach and product offering, both domestically and in new international markets."

The highly fragmented Chinese surveillance and security market has been growing at an annual rate in excess of 30 percent and is estimated to reach $43 billion by 2010 according to China Public Security Guide (published by the Chinese Security and Protection Association). This represents a unique opportunity as the Chinese government continues to mandate nationwide installation of surveillance and security systems through programs such as the Safe City initiative which covers more than 666 cities country-wide.

The acquisition is expected to be payable in cash and stock over a four-year period based on the successful achievement of performance milestones. More details will be available at the time of closing. The final transaction remains subject to a number of conditions including satisfactory financial audit of the Target and required regulatory approvals. Cantronic intends to acquire 100 percent ownership of in the Target.

About Cantronic

Cantronic manufactures, distributes, 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, 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 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 www.cantronics.com and www.qwip.com.

Safe Harbor Statement

The Securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

Forward-looking statements contained in this press release involves 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 the said forward-looking statements.

TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of the contents of this news release.

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