Cantronic Systems Inc.
TSX VENTURE : CTS

Cantronic Systems Inc.

June 30, 2008 15:30 ET

Cantronic Continues its Growth Trend in the First Quarter

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 30, 2008) - Cantronic Systems Inc. ("Cantronic") (TSX VENTURE:CTS) is pleased to announce today its financial results for the first quarter of fiscal year 2009, ended April 30th. (All amounts are expressed in Canadian dollars unless otherwise indicated.)

Financial highlights

- Gross margins increased from 47% to 52%

- Adjusted EBITDA increased to $276,000 from $239,000 in 2007

- R&D spending on new products increased to $152,000 (8.2% of sales) from $32,000 in 2007



For The First Quarter ended April 30, 2008 and 2007

---------------------------------------------------------------------------
($000s except amounts per share) Q1 Q1
---------------------------------------------------------------------------
F2009 F2008
---------------------------------------------------------------------------
Operating results
---------------------------------------------------------------------------
Revenues $1,857 $1,776
---------------------------------------------------------------------------
Adjusted EBITDA for stock-based
compensation costs $276 $239
---------------------------------------------------------------------------
Net earnings $124 $108
---------------------------------------------------------------------------
Basic and diluted net earnings
per share $0.002 $0.002
$0.002 $0.002
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Financial Position F2009 Q1 FY 2008
---------------------------------------------------------------------------
Total assets $5,683 $5,979
---------------------------------------------------------------------------
Working capital $2,403 $1,843
---------------------------------------------------------------------------
Total liability $890 $1,674
---------------------------------------------------------------------------
Shareholders' equity $4,793 $4,305
---------------------------------------------------------------------------
Shareholders' equity per share 0.08 $0.07
---------------------------------------------------------------------------
Number of shares outstanding(i) 61,175 58,820
---------------------------------------------------------------------------
Number of shares fully diluted(i) 65,645 63,919
---------------------------------------------------------------------------
(i) Weighted average


Revenues

For the first quarter ended April 30, 2008, Cantronic recorded revenues of $1.9 million compared with $1.8 million for the same period in 2007, an increase of 4.5%. Cantronic managed to increase sales despite an average increase of 15% in the Canadian dollar against the U.S. dollar, as well as a historically weaker first half of the year due to the sector's seasonality effect. Without the strong Canadian currency effect, revenue would have increased by close to 20% for the period. Research and development expenses amounted to $152,038 (8.2% of revenues) for the first quarter, compared with $31,548 for the same quarter of the previous year resulting from the development of new products, including a Long Range Thermal Imager for homeland security and surveillance market.

Adjusted EBITDA

For the first quarter ended April 31, 2008 we are disclosing adjusted EBITDA, a non-GAAP financial measure and supplemental indicator of operating performance. We define adjusted EBITDA as net income before interest, income taxes, depreciation, amortization, stock option compensation expenses. We use the adjusted EBITDA internally to make strategic decisions, forecast future results and evaluate our performance. We believe our current and potential investors can use this measure to assess our current and future operating results and to make investment decisions. Investors should not consider adjusted EBITDA as an alternative to cash provided by operating activities, nor to any other indicators of performance or liquidity which have been determined under GAAP. Adjusted EBITDA do not have any standardized meaning prescribed by GAAP and may be different from and therefore not comparable to similar measures presented by other companies.

For the first quarter, adjusted EBITDA amounted to $275,916 compared with $239,251 for the same quarter the previous fiscal year. This increase is due to increased sales and improved gross margins. Three factors were mainly responsible:-- Elimination of redundant positions and reduction of operational costs further contributed to annual and ongoing savings;-- Introduction of new infrared technology products with unique functionality on the world-wide market allowed for improved gross margins;-- As sales increased the portion of our fixed costs were spread over more products resulting in increased gross margins.

Net Earnings

Cantronic's net earnings for the first quarter of fiscal 2009 amounted to $123,825 compared with $107,572 for the same quarter the previous fiscal year. The improved profitability in fiscal 2008 is directly linked to increased sales and improved margins.

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.

Contact Information