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Cantronic Reports Results for Q3 Ended October 31, 2011: Revenue Increased 27%

(December 29, 2011)

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 12/29/11 -- Cantronic Systems Inc. ("Cantronic" or the "Company") (TSX VENTURE:CTS)(PINKSHEETS:CRIXF) today announced its financial results for the third quarter of fiscal year 2012, ended October 31, 2011. All amounts are reported in Canadian dollars and in accordance with International Financial Reporting Standards ("IFRS") unless otherwise stated.

Selected highlights of the quarter:


-- Revenue of $4.3 million from continuing operations, an increase of 27% compared to $3.4 million for the corresponding quarter of the previous fiscal year. -- Adjusted EBITDA (a non-GAAP term) of $74,119, a decrease of 70% compared to $249,147 for the corresponding quarter of the previous fiscal year. The Company uses adjusted EBITDA (a non-GAAP financial measure) internally to make strategic decisions, forecast future results and evaluate its performance, defined as net income before interest, income taxes, depreciation, amortization, stock based compensation expenses, foreign currency loss, and minority interest. -- Net loss after minority interest was $906K or $0.009 per basic and diluted share, net income was $97K or $0.001 per basic and diluted share in the corresponding quarter of the previous fiscal year. The loss for the quarter was mainly due to one-time "non-cash" costs related to our disposal of equity interest and associated foreign currency translation loss. Net income for the nine months ended October 31, 2011 increased by $1,334,857 (or 116%) to $180,085 (from a loss of $1,154,772), compared with the same period last year. -- Working capital was positive $4.4 million as of October 31, 2011 compared to negative $107K as of January 31, 2011. ---------------------------------------------------------------------------- Operating results ($000's except per share amounts) Q3 Fiscal 2012 Q3 Fiscal 2011 Quarter Quarter ended ended October 31, October 31, 2011 2010 ---------------------------------------------------------------------------- Revenue from continuing operations 4,292 3,371 ---------------------------------------------------------------------------- Adjusted EBITDA 74 249 ---------------------------------------------------------------------------- Net income to shareholders (906) 97 ---------------------------------------------------------------------------- Net earnings per share, basic and diluted (0.009) 0.001 ----------------------------------------------------------------------------


-- During the quarter, our wholly-owned subsidiary, Cantronic Security Systems (China) Co., Ltd. of Shanghai, China ("CSSC"), completed the sale of its 51% equity interest in Shenzhen Huanghe Digital Technology Co. Ltd., of Shenzhen, China ("Yellow River") for cash consideration of RMB 10.71 million or approximately $1.65 million. Cantronic's original cost of this 51% equity interest was approximately $1.37 million in May 2009. After the sale of Yellow River stake, another wholly-owned subsidiary Actiontop will be the dedicated manufacturing base for the Company, eliminating possible duplications between Actiontop and Yellow River. Going forward, Cantronic will still have the complete capabilities of providing end-to-end solutions and individual technology products and software to Safe City project customers and other IP based video surveillance system customers.

"Although revenue increased 27% in Q3, adjusted EBITDA and net income decreased significantly in Q3, mainly due to one-time non-cash charges resulted from our divestment of Yellow River equity interest which has no future operational effect. Less percentage of Safe City project revenue (having typically higher gross margins as percentage of revenue) was recognized in the quarter as compared to eighty percent of revenue generated from Safe City projects for the corresponding quarter of the previous fiscal year. During the quarter, we have been focusing our efforts on our manufacturing operations of producing video surveillance technology products under OEM and ODM agreements and selling to our system integration customers as we typically get payment in advance or cash upon delivery for product sale. This allowed us to increase our working capital significantly during the quarter. Due to uncertain worldwide economic situation, it was important for us to preserve cash and improve our working capital situation," said James Zahn, President and CEO of Cantronic Systems.

"The sale of Yellow River also improved our working capital to a total of $4.4 million as of October 31, 2011 as compared to negative working capital of 107K as of January 31, 2011. This makes it unnecessary for the Company to raise additional equity in the immediate near-term. This will also allow us to take on more Safe City projects in the future, which generally have higher gross margins than product sales," said Mr. Zahn.

Regulatory Filings

The material will be available through SEDAR at and on the Company's website,

About Cantronic Systems Inc.

Cantronic Systems Inc. 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") and Actiontop Electronics (Shenzhen) Co. Ltd. ("Actiontop"), provides IP-based high-definition 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, please visit our website at

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.

Cantronic Systems Inc.
James Zahn
Chief Executive Officer
604-516-6667 ext. 228
[email protected]

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