Cantronic Systems Inc.
TSX VENTURE : CTS

Cantronic Systems Inc.

September 24, 2008 08:00 ET

Cantronic Reports Eighth Consecutive Quarter of Revenue Growth

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 24, 2008) - Cantronic Systems Inc. ("Cantronic" or "the Company") (TSX VENTURE:CTS) today announced its financial results for the three-month and six-month periods ended July 31, 2008. All currency amounts referred to in this news release are in Canadian dollars unless stated otherwise.



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($000s except amounts First First
per share) Q2 Q2 Half Half
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Year end: January 31st F2009 F2008 F2009 F2008
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Operating results
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Revenues $ 1,283 $ 1,080 $ 3,139 $ 2,855
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Adjusted EBITDA for
stock-based compensation costs $ (127) $ 148 $ 149 $ 386
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Net earnings (loss) $ (381) $ 16 $ (258) $ 123
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Earnings per share - Basic $(0.006) $ 0.000 $(0.004) $ 0.002
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Earnings per share - Fully diluted $(0.005) $ 0.000 $(0.003) $ 0.002
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For the three-month period ended July 31, 2008 the Company reported its eighth consecutive quarter of revenue growth amounting to $1.3 million versus $1.1 million in the corresponding quarter last year, representing a 19% growth rate. Excluding the impact of the strengthening of the Canadian dollar, revenues would have increased by approximately 30% on a year over year basis. Gross profit during the quarter amounted to $474,008 or 37% of revenues versus $526,240 or 49% of revenues during the same period last year. The decrease in gross margin is attributable to a change in the product mix sold during the quarter, which included a large order of lower end products. Net loss during the three-month period amounted to $381,934 or $0.006 per share versus net income of $15,745 or $0.000 per share. The decreased profitability in the quarter is directly linked to the lower contribution from the product mix, the increase in R&D spending and in non-cash stock based compensation expenses.

EBITDA (a non GAAP financial measure), excluding the $120,666 impact of stock based compensation amounted to a loss of $126,589 versus a gain of $147,745 during the second quarter of 2007.

For the six-month period ended July 31, 2008 Cantronic reported increased revenues of $3.1 million versus $2.9 million during the same period in 2007. Gross profit during the first half of 2008 amounted to $1.4 million or 46% of revenues compared to $1.3 million or 47% of revenues during the first six months of last year. During the six-month period net loss amounted to $258,109 or $0.004 per share versus net income of $123,316 or $0.002 per share in 2007.

"We are pleased with our overall performance and consistent top line growth. We continue to invest in the Company's future to expand Cantronic's product offering in international markets," notes Mr. James Zahn, president and chief executive officer. "We are diligently investing in R&D and have grown our sales and marketing team with anticipation for periods of strong revenue and earning growth."

At July 31, 2008, the Company had cash and cash equivalents amounting to $5.4 million, compared to $1.4 million at January 31, 2008. The increase in cash position is the result of completing a brokered private placement of 16,428,570 common shares at a price of $0.35 per share, resulting in gross proceeds of $5,750,000 on July 10, 2008. Net proceeds of the offering in the amount of $5,347,500 will be used for the strategic acquisition in China, commercialization and general working capital purposes.

Cash flow from operating activities during the quarter amounted to a deficit of $117,651 versus a surplus of $128,852 during the corresponding quarter in 2007.

The financial statements are available for review on SEDAR at www.sedar.com and on the Company's website at www.cantronics.com.

About Cantronic

Cantronic 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, 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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