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Cantronic Moves to Acquire Chinese Security Systems Company

August 7, 2008

The completion of the technical and legal due diligence steps clears the way for preparation of a definitive acquisition agreement that will add CCTV cameras and additional surveillance and security products to the company's portfolio.

VANCOUVER, BRITISH COLUMBIA /Marketwire/ -- Cantronic Systems Inc. announced that it has completed its technical and legal due diligence for the previously announced acquisition (see press release dated June 2, 2008) of the video surveillance technology company (the Target) in China and will now begin preparation of a definitive agreement. The Target, a profitable company, founded in 1995, is an ISO 9001–certified manufacturer and distributor of CCTV cameras and surveillance and security products, with forecasted annual revenues in excess of $10 million in the current fiscal year.

This strategic acquisition marks Cantronic's first undertaking in the rapidly growing Chinese security and surveillance market. Acquisitions of companies with complementary products in the security and video surveillance sector is a key component in Cantronic's overall growth strategy and will significantly broaden the company's existing product portfolio and revenue growth potential. The company expects the acquisition to be completed by late fall 2008.

"The due diligence reinforces our excitement about the potential synergies between the two companies," said James Zahn, President and CEO of Cantronic Systems. The Target's extensive experience in video surveillance technology will contribute to establishing Cantronic as an industry leader in the China market. We have identified and are currently pursuing several other carefully selected companies that will further expand our market reach and product offering, both domestically and in new international markets."

The highly fragmented Chinese surveillance and security market has been growing at an annual rate in excess of 30% and is estimated to reach $43 billion by 2010, according to China Public Security Guide (published by the Chinese Security and Protection Association). This represents a unique opportunity as the Chinese government continues to mandate nationwide installation of surveillance and security systems through programs such as the Safe City Initiative, which covers more than 666 cities countrywide.

The acquisition is expected to be payable in cash and stock over a four-year period, based on the successful achievement of performance milestones. More details will be available at the time of closing. The final transaction remains subject to a number of conditions, including satisfactory financial audit of the Target and required regulatory approvals. Cantronic intends to acquire 100% ownership of the Target.

About Cantronic
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 application.

Cantronic, through its U.S. subsidiary QWIP Technologies Inc., 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.

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