Cantronic Systems Inc.

Cantronic Systems Inc.

June 11, 2008 08:59 ET

Cantronic Announces $5.0 Million Private Placement

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 11, 2008) - Cantronic Systems Inc. ("Cantronic" or "Company")(TSX VENTURE:CTS) has entered into an agreement with a syndicate to raise up to a maximum of $5,000,000 of Units composed of one share and one half warrant (the "Units") by way of best efforts private placement ("the Offering"). The syndicate, to be led by Leede Financial Markets Inc. and Blackmont Capital Inc., also includes Canaccord Capital Corporation and Research Capital Corporation, (collectively the "Agents"). The price of each Unit will be determined, in the context of the market, by the Agents and Cantronic. Each full warrant will entitle the holder to purchase one additional common share for a period of 24 months following the closing date. The Units will be offered to accredited investors in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, and Quebec. The securities issued pursuant to the Offering will be subject to a four-month hold period. The Offering will be subject to normal regulatory approvals.

The Company has granted the Agents an Option to purchase up to an additional 15% of the Units sold under the Offering at the unit issue price, exercisable until 24 hours prior to Closing.

Cantronic will pay a 7% cash commission to the Agents and also issue warrants (the "Broker Warrants") entitling them to purchase a number of common shares of Cantronic equal to 7% of the number of Units sold under the Offering. The Broker Warrants shall be issuable at an exercise price per common share equal to the higher of the Unit issue price or the market price for a period of 12 months from the date of closing.

The net proceeds of the Offering will be used to finance the strategic acquisition in China (see press release June 2, 2008), as well as for commercialization and general working capital purposes.

This strategic acquisition marks Cantronic's entry into the rapidly growing Chinese security and surveillance market. The Company is evaluating mergers and acquisitions with several carefully selected manufacturing companies. Firms with complementary products in the security and video surveillance sector will significantly broaden the Company's existing product portfolio.

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


Cantronic has exhibited significant organic growth to date and is well positioned to continue its growth strategy to:

- Leverage tier-one client base to expand in North America and Europe

- Use proprietary technology to enter the Chinese market and pursue strategic alliances and acquisitions in China

- Focus on market share gains in high-growth markets

- Aggressively grow sales, marketing and distribution capabilities worldwide

- Expand technology and product leadership

- Achieve excellence in manufacturing, outsourcing and supply chain management

- Improve financial performance and enhance shareholder value

The use of infrared technology is gaining momentum within a diverse set of industries. No longer limited to defence, infrared is now widely used in homeland security; border surveillance and infrastructure protection; automotive driver vision enhancement; building diagnostics; manufacturing and process monitoring; and a range of other industries. Globally, homeland security, border control and infrastructure protection are among the fastest growing market segments.

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 and

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.

Certain of the information and statements contained herein that are not historical facts, constitute "forward-looking information" within the meaning of the applicable securities laws ("Forward-Looking Information"). Forward-Looking Information is often, but not always, identified by the use of words such as "estimate", statements that an event or result is "may", "will", "should", "could", or "might" occur or be achieved; and other similar expressions. More specifically, Forward-Looking Information contained herein includes, without limitation, (i) the anticipation of the completion of the strategic acquisition announced on June 2, 2008 and that the Company will be successful in completing other strategic acquisitions; (ii) the use of the net proceeds of the Offering; (iii) the expectation of the continued growth of the security and surveillance market in China and globally and the estimate of the Chinese market in 2010; (v) the anticipation of the continued growth of the Company and the Company achieving the objectives of its growth strategy; and (vi) the anticipation that the use of infrared technology will continue to grow; all of which involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from a conclusion or projection in the Forward-Looking Information; including, without limitation, risks and uncertainties associated with the competitive nature of the security and surveillance markets; doing business in foreign jurisdictions; entering new markets and with the development of new products and technologies; the continued maintenance of the company's intellectual property; and other risks and uncertainties, including those described in the Company's Management's Discussion and Analysis. The material factors or assumptions that were applied in drawing a conclusion or making a projection set out in the Forward-Looking Information are: the successful completion of due diligence and receipt of all requisite approvals to complete the strategic acquisition, along with the closing of such transaction; and the continued growth of the security and surveillance market and that the Company will be able to maintain its competitive position in that market. Should one or more of any of the aforementioned risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results could differ materially from any conclusions, forecasts or projections in the Forward-Looking Information. Accordingly, readers are advised not to place undue reliance on Forward-Looking Information. Except as required under applicable securities legislation, the company undertakes no obligation to publicly update or revise Forward-Looking Information, whether as a result of new information, future events or otherwise.

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

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