Cantronic Systems Inc.
TSX VENTURE : CTS

Cantronic Systems Inc.

March 29, 2011 08:00 ET

Cantronic Announces Definitive Agreement to Sell Its North American Business

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 29, 2011) - Cantronic Systems Inc. ("Cantronic" or the "Company") (TSX VENTURE:CTS) today announced that it has entered into a definitive agreement for the sale of its North American Business, comprising the thermal imaging business located in Coquitlam, British Columbia as well as QWIP Technologies Inc. of Brea, California. The North American Business will be sold to Skytech Systems Inc., a private company located in Vancouver, British Columbia controlled by a current mid-level employee of the North American Business, who will no longer work for Cantronic once the sale is completed. Skytech Systems Inc. will change its name to Cantronic Systems (Canada) Inc.

The transaction is valued at approximately C$5.7 million subject to post-closing adjustments, reflecting a purchase price of C$4.3 million and accrued interest of $1.4 million, with payments to Cantronic Systems Inc. scheduled over a 9-year period. The sale is expected to close in the beginning of April 2011, subject to customary closing conditions. After the sale, Cantronic will continue to have the right to use some of the thermal imaging technologies of the North American Business for commercial security and surveillance applications outside of North America.

"We believe that this transaction is strategically important for us," commented James Zahn, President and CEO of Cantronic. "After the sale of the North American Business, we will continue focus on our China Growth Strategy. In the short term, we will no longer be required to fund losses in the North American Business that have had a negative impact on the Company's income statement in recent quarters. In the long term, we will be able to focus all our efforts on continued development in the China video surveillance market which we believe will offer tremendous growth opportunities for us in the coming years," Mr. Zahn concluded. 

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 applications.

Cantronic, through its U.S. 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"), Shenzhen Huanghe Digital Technology Co. Ltd. ("Yellow River") and Actiontop Electronics (Shenzhen) Co. Ltd. ("Actiontop") provides high-speed and 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 Cantronic China, please visit our websites at www.cantronics.com and www.cantronics.com.cn.

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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