Monday, 02 June 2008 11:34 AM
Cantronic Systems Inc., ("Cantronic" or "Company") (TSX VENTURE:CTS) is pleased to announce that it has entered into a Letter of Intent ("LOI") to acquire a video surveillance technology company (the "Target") in China. The LOI outlines Cantronic's intention to acquire 100% ownership of the "Target". The Target is a profitable company with forecasted annual revenues in excess of $10 million in the current year.
The acquisition of the Target company is expected to be payable in cash and stock over a four year period under an earn out provision based on the successful achievement of performance milestones. Details on the agreement to be released at the time of closing. The parties are proceeding to due diligence and preparation of definitive agreement, and expect to complete the transaction by the end of fall 2008.
"This strategic acquisition marks Cantronic's first initiative in accessing the rapidly growing Chinese security and surveillance market through mergers and acquisitions of several carefully selected manufacturing companies. These companies with complementary products in the security and video surveillance sector will significantly broaden the Company's existing product portfolio", commented James Zahn, president and chief executive officer of Cantronic Systems. "By leveraging its leading-edge infrared technology expertise and expanding its reach in China, Cantronic will have a distinct advantage over local competition. We are excited about the synergies that this transaction can create for us. The Target's extensive experience in the video surveillance technology will further Cantronic's efforts in establishing the Company as an industry leader in infrared vision and video surveillance technology".
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.
Outlook
Cantronic has exhibited significant organic growth to date and is well positioned to continue its growth strategy to:
- Be an industry leader in infrared vision and video surveillance technology
- Pursue strategic alliances and acquisitions with a special focus on 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 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.
SOURCE: Cantronic Systems Inc.
Cantronic Systems Inc. Mr. James Zahn President and CEO 866-391-6970 x 226 [email protected] Sun International Communications Nicole Blanchard B.Sc., B.Comm, Managing Partner 450-973-6600 [email protected]