Cantronic Systems Inc.

Cantronic Systems Inc.

September 16, 2011 20:07 ET

Cantronic Announces Planned Sale of 51% Ownership of Yellow River, Will Retain Rights for North American Distribution

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 16, 2011) - Cantronic Systems Inc. ("Cantronic" or the "Company") (TSX VENTURE:CTS)(PINK SHEETS:CRIXF) announced that on September 13, 2011, the Company's wholly-owned subsidiary, Cantronic Security Systems (China) Co., Ltd. of Shanghai, China ("CSSC"), signed an agreement to sell its 51% interest in Shenzhen Huanghe Digital Technology Co. Ltd., of Shenzhen, China ("Yellow River") to an arms-length private purchaser. Under the agreement, CSSC will sell all of the 51% interest it holds in Yellow River. Closing of the sale is conditional on completing all applicable regulatory procedures in China and Canada and a satisfactory valuation report issued by a qualified business valuator or appraiser as well as being subject to the usual terms and conditions. The transaction is expected to close before the end of October, 2011 for cash consideration of approximately RMB 10.71 million or approximately $1.65 million.

Cantronic originally purchased Yellow River, a manufacturer of IP cameras and modules, in May 2009 for RMB 7,494,900, based on a combination of cash and shares.

"The sale of this business unit will strengthen our working capital balances, making it unnecessary to raise additional equity in the near-term," said James Zahn, President and CEO of Cantronic Systems Inc. "Our strategy in China remains basically unchanged and we will continue to grow our two other technology units, AVINFO (surveillance software) and Actiontop (dome cameras and IP cameras) for both international OEM customers and Chinese domestic customers as well as bidding for contracts for private and public networked video surveillance systems. Our ability to win and execute contracts can be improved because of the better working capital situation," he continued.

"We also plan to develop North American distribution of our software and cameras, where the market for video surveillance equipment is expected to reach $11 billion by 2015 (Source: Global Industry Analysts Inc.). Not only will we realize a gain on the sale of Yellow River, we will also retain exclusive rights to distribute the Yellow River product line in North America for at least two years. As a North American-based company we will take advantage of our manufacturing strengths in China and our world-class video surveillance technology to build a North American distribution business," Mr. Zahn concluded.

About Cantronic Systems Inc.

Cantronic Systems Inc., based in Coquitlam, British Columbia, Canada, manufactures, distributes, and provides training and services in the fields of IP-based networked video security surveillance technologies, specializing in networked video management software and video analytics, IP cameras, speed dome cameras, high definition video surveillance cameras and night vision surveillance systems for demanding security and surveillance applications.

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 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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