Adeptron Technologie : Adeptron and Artaflex Announce Letter of Intent on Business Combination Transaction

TORONTO

,

Oct. 25, 2011

/CNW/ - Adeptron Technologies Corporation  (TSX-V : ATQ) ("Adeptron"), a specialist at delivering integrated product solutions and support to the global technology and electronics industry has entered into a letter of intent (the "Letter of Intent") dated

October 25, 2011

, to enter into a business combination (the "Transaction") with Artaflex Inc. ("Artaflex") of Markham, Ontario.  The Transaction, which is currently proposed to be structured as an amalgamation between Adeptron and Artaflex (or a wholly-owned subsidiary of Adeptron and Artaflex) will constitute a reverse takeover of Adeptron as such term is defined in the policies of the TSX Venture Exchange (the "Exchange"). Following completion of the Transaction, Artaflex's shareholders will own approximately 75% of the resulting issuer and Adeptron's existing shareholders will own approximately 25% of the resulting issuer.

Terms of Transaction

Pursuant to the terms of the Letter of Intent, subject to completion of satisfactory due diligence, a definitive purchase agreement and receipt of applicable regulatory and shareholder approvals, Adeptron intends to combine with Artaflex in consideration for the issuance of 300 million common shares. Common shares of Artaflex will be converted into common shares of Adeptron on the basis of 300 Adeptron shares for each Artaflex share.  In conjunction with the Transaction, Artaflex has agreed to advance Adeptron

$500,000

by way of a secured subordinated loan, which carries interest at 12% per annum.

Concurrent with closing of the Transaction or shortly thereafter and subject to necessary regulatory and shareholder approvals, it is the intention that Adeptron will consolidate the outstanding common shares of Adeptron on the basis of one share for every 25 shares then outstanding.

As Artaflex is incorporated under the laws of the Province of Ontario, as a first step in completing the Transaction, Adeptron intends to proceed with the continuance into Ontario, which was approved by the shareholders at the Adeptron's shareholder meeting held in August 2011.  Adeptron and Artaflex may mutually agree to amend the structure of the Transaction to an acquisition by Adeptron of all of the issued and outstanding securities of Artaflex or other form of transaction should an alternative structure be determined by the parties to be more efficient from a tax, regulatory or commercial perspective. In conjunction with the Transaction, and subject to shareholder and regulatory approvals, Adeptron will change its name to "Artaflex Inc."

The Transaction is an arm's length transaction.  No insiders of Adeptron own securities in Artaflex and no insiders of Artaflex own securities of Adeptron.

R.H. Global Technologies Ltd., who currently holds approximately 62% of the issued and outstanding common shares of Adeptron, has agreed to support the Transaction subject to the terms and conditions set out in the Letter of Intent.

Artaflex

Artaflex is an integrated product development, commercialization and manufacturing company providing services to original equipment manufacturers (OEM) requiring expertise in a high mix and high complexity manufacturing environment. With expert engineering, logistical and manufacturing capabilities, customers partner with Artaflex to produce high quality products in time to meet today's ever shortening delivery cycles. In addition to assembling high quality circuit boards, Artaflex offers a full suite of additional services such as: electronic circuit design, PCB layout, test, rework/repair and box build enabling customers to benefit from greater vertical integration in their supplier base.

Artaflex currently has one million common shares outstanding, all of which are currently controlled by

Paul Walker

of Markham, Ontario, the President of Artaflex.

Management and Board of Directors of the Resulting Issuer

Upon completion of the Transaction, it is anticipated that the resulting issuer's board of directors will consist of up to seven members, one of whom will be a current board members of Adeptron. It is intended that one of the new board members will be

Paul Walker

, who will also be appointed the Chief Executive Officer of the resulting issuer.  It is also intended that

Trent Carruthers

, the Chief Executive Officer of Adeptron will become the Executive Vice President of the resulting issuer, Jon Szczur, the Chief Financial Officer of Adeptron will become the Chief Financial Officer of the resulting issuer and

Phil Woodard

, the Chief Operating Officer of Artaflex will become the Chief Operating Officer of the resulting issuer.

Paul Walker

is an industry veteran with over 25 years of EMS experience from founding SMTC Manufacturing Corporation of

Canada

in 1985 and its Chief Executive Officer until 2003, to most recently working for or advising such other firms in the industry. An advisory and restructuring role lead to the eventual purchase of Artaflex Inc in late 2010.

Trent Carruthers

has been the Chief Executive Officer of Adeptron since

September 2010

and a director since January 2011. 

Mr. Carruthers

joined Adeptron in

February 2004

when Adeptron acquired its

Ottawa

operations and has been a member of senior management in a sales and business development capacity since that time. 

Mr. Carruthers

has been involved in the EMS industry for 26 years and has extensive experience with the industry from both an operations and sales perspective.

Jon Szczur, Chief Financial Officer

Jon Szczur has been the Chief Financial Officer since

June 2010

and joined Adeptron as Vice President, Finance in April 2010. 

Mr. Szczur

has over 16 years of management and operational experience in corporate finance and accounting.

Phil Woodard

will become the Chief Operating Officer of the resulting issuer, the position he currently holds at Artaflex.

Mr. Woodard

has over 25 years experience in the EMS industry, and was formerly the Chief Operating Officer of another TSX listed EMS company.

Sponsorship of Transaction

Sponsorship of a reverse takeover is required by the Exchange unless exempt in accordance with the Exchange policies. Adeptron is currently reviewing the requirements for sponsorship and may apply for exemption from sponsorship requirements pursuant to the policies of the Exchange, however there is no assurance that Adeptron will ultimately obtain this exemption.

Proforma Capital Structure and Financial Information

Adeptron currently has 96,707,755 common shares issued and outstanding and 12,600,000 reserved for issuance on the exercise of options.  Upon closing of the Transaction, Adeptron will have approximately 396,707,755 common shares issued and outstanding, or approximately 15,868,311 following the completion of the consolidation.  There may also be additional options to directors, officers and consultants granted.

The Transaction is expected to increase Adeptron's revenues, EBITDA and earnings.  Based on actual results, on a pro forma basis, Adeptron's

June 30, 2011

revenue increases to US$61.7 million from US$42 million.  EBITDA increases to US$1.4 million from negative US$1.7 million.  On a normalized basis, Adeptron's adjusted EBITDA will increase to US$3.8 million from US$0.7 million.

Adeptron Technologies Corporation (Post Transaction)
Pro Forma Balance Sheet
As at June 30, 2011
(Unaudited - in thousands of U.S. dollars)
ASSETS
Current assets				19,560
Total assets		$		26,293
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities				17,823
Total liabilities				22,299
SHAREHOLDERS' EQUITY
Share capital				2,473
Retained earnings				1,521
Total liabilities and shareholders' equity		$		26,293
Adeptron Technologies Corporation (Post Transaction)
Pro Forma Statement of Operations
For the 12 Months Ended June 30, 2011
(Unaudited - in thousands of U.S. dollars)
Sales		$		61,677
Cost of goods sold				52,270
Gross profit				9,407
Expenses				10,874
Net income		$		(1,467)
EBITDA1,3		$		1,351
Adjusted EBITDA2,3		$		3,790

Description of Significant Conditions to Closing

Completion of the Transaction is subject to customary conditions, including completion of satisfactory due diligence, the entering into of a definitive transaction agreement, receipt of all regulatory approvals and a favourable vote of the Adeptron common shares voted at a special meeting of shareholders called to approve the Transaction.  Further information regarding the Transaction will be contained in a information circular that Adeptron will prepare and mail to its shareholders in connection with the special meeting of shareholders to be held to approve the Transaction.  Once mailed, the proxy circular will also be available on SEDAR at www.sedar.com. All shareholders are urged to read their proxy circulars once they become available as they will contain additional important information concerning the Transaction.

Trent Carruthers

, CEO of Adeptron  "The benefits of scale, financial stability and purchasing power are immeasurable in the EMS industry and with this deal our customers, suppliers and employees will be part of an organization that is poised for growth, both now and in the future. By combining our facilities, technical expertise and high reliability manufacturing expertise and focusing these on high mix medium volume requirements we will now be able to pursue some of the significant opportunities that exist in the Canadian market place.

Carruthers continued, "Paul and his team have done an excellent job growing Artaflex into a successful and respected EMS provider and we are excited to be a part of that continued success."

Paul Walker

, the President of Artaflex comments: "We are extremely pleased about the proposed transaction and joining of forces with the team at Adeptron, as this is a logical first step in the industry consolidation. Our organizations and senior management know each other very well both from competing in the Canadian market place over the years, as well as sharing customers and suppliers which will lead to what we expect to be a seamless integration of the two companies. The opportunity to combine our management teams now, while we prepare for possible acquisitions in the future, is what made this deal extremely attractive to Artaflex."

About Adeptron:

Adeptron is a specialist at delivering integrated product solutions and support to the global technology and electronics industry. As a leading global provider of complete Electronics Manufacturing Services (EMS), Adeptron offers world class manufacturing facilities and global partners throughout

Canada

, the

United States

,

Israel

and

China

, allowing Adeptron to provide its customers the flexibility and scalability to competitively achieve total solutions to their present and future electronics outsourcing needs. Adeptron is a public company whose common shares are listed for trading on the TSX Venture Exchange under the symbol: "ATQ". Visit Adeptron at: www.adeptron.com.

1EBITDA means earnings before interest, taxes, depreciation and amortization.

2Adjusted EBITDA means earnings before interest, taxes, depreciation, amortization, loss on settlement of subordinated debenture, stock-based compensation, embedded foreign currency derivatives, goodwill impairment, severance and termination benefits and discontinued operations.

3EBITDA and Adjusted EBITDA are not recognized measures under IFRS. However, management believes that EBITDA and Adjusted EBITDA as herein defined are  useful supplemental measures to net income (loss), as it provides investors with an indication of cash earnings prior to debt service, capital expenditures, income taxes and other non-recurring and non-cash items. Readers should be cautioned, however, that EBITDA and Adjusted EBITDA should not be construed as an alternative to net income (loss) determined in accordance IFRS as an indicator of the Company's performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. The Company's method of calculating EBITDA and Adjusted EBITDA may differ from the methods by which other companies calculate EBITDA and Adjusted EBITDA and, accordingly, the EBITDA and Adjusted EBITDA used herein may not be comparable to measures used by other companies.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

THIS NEWS RELEASE MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO SUCH MATTERS AS EXPECTED FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, TECHNOLOGICAL DEVELOPMENTS, DEVELOPMENT ACTIVITIES AND LIKE MATTERS.  THESE STATEMENTS INVOLVE RISK AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO RISK FACTORS DESCRIBED IN DOCUMENTS FILED WITH REGULATORY AUTHORITIES, SUCH AS ADEPTRON'S MOST RECENTLY FILED ANNUAL AND QUARTERLY REPORTS AND ANNUAL INFORMATION FORM.  ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED AS A RESULT OF THESE RISKS AND SHOULD NOT BE RELIED UPON AS A PREDICTION OF FUTURE EVENTS.  ADEPTRON TECHNOLOGIES CORPORATION UNDERTAKES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE ON WHICH SUCH STATEMENT IS MADE, OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

Completion of the Transaction is subject to a number of conditions including but not limited to, due diligence, Exchange acceptance and if required by Exchange policies, shareholder approval.  Where applicable, the Transaction cannot close until the required shareholder approval is obtained.  There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon.  Trading in the securities of Adeptron should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release.

Adeptron will make a subsequent news release with information on sponsorship and summary financial information in accordance with Exchange policy.

For further information:

Adeptron Contact:		Adeptron Contact:		Artaflex Contact:
Trent Carruthers Chief Executive Officer Tel: [phone] [e-mail]		Jon Szczur Chief Financial Officer Tel: [phone] [e-mail]		Paul Walker President Tel: [phone] [e-mail]

Phil Woodard

, Chief Operating Officer

Trent Carruthers

, Executive Vice President

Paul Walker

, Chief Executive Officer and and Director