Sentry Telecom's website is sentrytelecom.com
CTI Diversified Holdings, Inc. (OTCBB:CDHI) (the “Company”) today announced
that it has entered into a letter of intent with Sentry Telecom Systems
Inc., (“Sentry”) of Burnaby, British Columbia, and its principal
shareholders pursuant to which, subject to satisfaction of certain
conditions, including satisfactory completion of due diligence and the
preparation of definitive agreements, the Company will acquire by way of
private placement (the “Private Placement”) 4,400,000 Sentry units (“Sentry
Units”) at a price of US$0.25 per Sentry Unit. Each Sentry Unit consists of
one common share (a “Sentry Share”) and one warrant (a “Sentry Warrant”) to
acquire an additional Sentry Shares. The Sentry Warrants are exercisable at
a price of US$0.25 each and expire on December 31, 2001, but the exercise
period may be extended by agreement. If the Company exercises the warrants,
it will own 51% of the then issued and outstanding Sentry Shares.
Sentry is a privately-held start-up company engaged in the development of
security and detection products for corporate and public telecommunications
systems. Its initial product is a communications firewall product known as
“Phonewall Enforcer,” which has been designed to protect data networks from
the threat of unauthorized modems and to protect voice networks from the
theft of unauthorized services. The Enforcer is a combination of hardware
and software that is installed on telephone lines between an enterprise and
its telephone service provider. It monitors calls on the telephone lines and
classifies their content as voice, fax or data using proprietary signal
processing algorithms. The Enforcer can be configured to allow or disallow
particular types of traffic, such as data calls via modems, to an entire
organization, or configured to define limits for access to telephone numbers
within an organization. It includes extensive reporting and analysis
capabilities, including reporting on the duration of calls, the type of
traffic including data, fax and voice calls, the number dialed and the
originating number and pattern analysis of normal business traffic. The
Phonewall Enforcer is currently undergoing field trials in North America and
in Korea.
The letter of intent also contemplates if the Company exercises all of the
Warrants, it will have the right, but not the obligation, to acquire the
Sentry Shares not then held by it in exchange for common shares of the
Company on an exchange basis based on a third party valuation of the
relative values of Sentry and the Company at the time, subject to the
present Sentry shareholders receiving, as the result of the exchange, not
fewer than 5 per cent nor more than 20 per cent of the shares of the Company
to be outstanding after completion of the exchange. The majority
shareholders of Sentry have agreed that any shares of the Company they may
receive on any such exchange may only be resold, subject to applicable law,
at the rate of 25 per cent annually.
Under the letter of intent two nominees of the Company will be appointed to
Sentry’s five-person board of directors on closing of the Private Placement,
and, if the Company exercises the Sentry Warrants in full, it will acquire a
majority of the seats on Sentry’s board. The letter of intent also
contemplates that if the Company acquires the remaining Sentry Shares, the
principals of Sentry will have the right to appoint one director to the
board of directors of the Company, for so long as they hold at least 10 per
cent of the Company’s outstanding shares.
In anticipation of the closing of the Private Placement, the Company has
advanced US$100,000 to Sentry for the purposes of its business. Upon
closing of the private placement the funds advanced will be converted into
Units at the rate of one Unit for each US$0.25 advanced.
The acquisition of Sentry will complement the Company’s core business of
providing leading North American IT, ISP, ASP products and services into the
Asian e-security, e-business and e-financial markets, as well as providing
consulting services for IT security. |
