Delta Systems Inc.

Delta Systems Inc.

July 14, 2005 09:28 ET

Delta Systems Announces Plans To Re-Domicile As A Canadian Company

ROGERS, ARKANSAS--(CCNMatthews - July 14, 2005) -

Not for distribution to U.S. newswire services or for dissemination by any means into the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities laws.

Delta Systems, Inc. (TSX VENTURE:DLT.S) ("Delta"), a leader in automation and motion control solutions for the consumer products industry, today announced its plans to re-domicile as a Canadian company.

Delta's wholly-owned subsidiary, Delta Systems, Inc., a corporation incorporated under the laws of Canada ("New Delta''), will make an offer (the "offer") to purchase all of the outstanding shares, options and warrants of Delta, a corporation incorporated under the laws of Arkansas, in exchange for shares, options and warrants of New Delta, in each case on a one-for-one basis. Upon the successful completion of this proposed reorganization transaction, securityholders of Delta will become securityholders of New Delta and Delta will become a subsidiary of New Delta.

Although structured as a formal take-over bid, the proposed transaction is functionally an internal reorganization that Delta is proposing to re-domicile as a Canadian company. Delta believes that its current corporate structure is unnecessarily complex and imposes significant compliance costs and that these factors have negatively impacted the trading of its stock and its access to capital. Consequently, the Board of Directors of Delta has determined that Delta should be reorganized so that it falls under the laws of Canada. Although a continuance under the Canada Business Corporations Act would also accomplish this objective, the Board of Directors has been advised that a continuance would have significant adverse tax consequences to Delta. The proposed reorganization does not result in any negative tax consequences for either Delta or its common shareholders.

Following the completion of the reorganization, New Delta as a Canadian company will be considered a "foreign private issuer" for purposes of United States securities laws. Delta believes that this change will benefit Delta as it will ease the restrictions imposed on U.S. persons and allow them to buy and sell shares through the TSX Venture Exchange on a similar basis as Canadian residents. This change will also allow Delta to remove the ".s'' from the Delta trading symbol and eliminate the associated compliance burdens.

In addition, Delta's securities will no longer be considered "foreign content'' for trusts governed by registered retirement savings plans, registered retirement income funds and deferred profit sharing plans in Canada. This change will remove a significant impediment to Canadian institutional investors purchasing New Delta securities and is expected to enhance trading liquidity.

Delta's Board of Directors has determined unanimously that the offer is in the best interests of Delta's securityholders and recommends that Delta securityholders accept the offer and tender their common shares, options and warrants to the offer.

A take-over bid circular and directors' circular, which include the recommendation of Delta's Board of Directors, will be mailed by New Delta and Delta, respectively, to Delta's securityholders shortly. Investors are urged to read carefully the take-over bid circular, the directors' circular and any other relevant documents filed with certain Canadian securities regulators when they become available because those documents will contain important information regarding the proposed transaction.

About Delta Systems

Headquartered in Rogers, Arkansas, Delta Systems, Inc. is a leading developer of automation solutions for manufacturing and distribution operations. The Company operates two related business units: Delta Controls Inc. and Delta Automation Solutions Inc. Delta Controls' PC-based motion control software solution, SoftFlow™ is designed to enhance the speed, efficiency, precision and flexibility of automation applications on the plant floor, while providing connectivity to other enterprise systems. Delta Automation Solutions offers a comprehensive line of automation equipment including high-speed flow wrappers, feeding and distribution solutions, and labelling and product tracking systems. The Company offers a range of support services including: systems training, implementation, and engineering consulting to optimize customer deployment, utilization and systems integration. Delta currently has more than 400 installations with approximately 70 customers, including 11 Fortune 500 companies. For more information, please visit:

No stock exchange or regulatory authority has approved or disapproved of the information contained herein. None of Delta's or New Delta's securities have been registered under the United States Securities Act of 1933 (the "1933 Act") and may not be offered or sold to persons in the United States or to U.S. persons, except pursuant to an applicable exemption from the registration requirements of the 1933 Act. The ".s" suffix in the trading symbol indicates that certain restrictions are imposed by Regulation S under the 1933 Act.

Certain statements contained in this news release may constitute "forward looking statements". When used in this news release, the words "may," "would," "could," "will," "intend," "plan," anticipate," "believe," "estimate," "expect," and similar expressions, as they relate to Delta or its management are intended to identify forward-looking statements. Such statements reflect Delta's current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause Delta's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward looking statements, including among other things, those which are discussed under the headings "Risk Factors" and elsewhere in documents that Delta files from time to time with securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Delta does not intend, and does not assume any obligation, to update these forward looking statements.

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