RONKONKOMA, New York, February 4, 2015 -- Sentry Technology Corporation (OTC Markets: SKVY) today announced a major restructuring of its business.
The company completed the first stage of an agreement to sell the manufacturing and marketing rights for its traveling camera technology in Europe and Asia. The purchaser is a French company operating under the name SentryWay. It is expected the transaction will be finalized on April 30, 2015.
Proceeds from the $1.1 million sale are being used to repay bank debt and Sentry's secured debt obligation to Brookfield Technology Fund. Additional annual payments may be received by Sentry Technology during the first three years of the agreement at the rate of 20% of SentryWay's annual traveling CCTV sales above the company's Europe/Asia revenue for the year 2013. Based on anticipated SentryWay sales, management believes annual payments by SentryWay will make a substantial contribution to Sentry's future profits.
As part of the restructuring plan, Sentry's library security business was sold to Sentry Funding Partnership for $1 million. The sale price was based on an evaluation of Sentry's library operations by Corporate Valuation Services. The sale will reduce secured debt owing to Sentry Funding Partnership. In addition, substantial debt restructuring agreements have been signed with the company's largest unsecured creditors. Approximately $2.5 million in unsecured debt has been settled in exchange for the payment of $100,000 in cash and the issuance of 10,000,000 Sentry common shares. To date, a total of $4.4 million of debt has been eliminated as a result of the restructuring including $2M owed to Custom Security Industries, a majority owned subsidiary.
During the first quarter of 2015, Sentry is implementing a cloud based ERP accounting system. In addition, annual expenses will be significantly reduced by exiting the company's European distribution center and reducing operating costs and rental space at the headquarters in Long Island, NY.
"The reported transactions mark a significant change in our company's current and future business operations," said Peter L. Murdoch, President and CEO or Sentry Technology. "We believe that by dramatically improving our balance sheet, reducing expenses and focusing sales efforts on our new
VideoRailway, HD/IP traveling camera technology, Sentry will generate an operating profit during 2015."
"VideoRailway is now installed and performing well in leading U.S., Canadian and South African retailers. The high quality HD image improves the effectiveness of OperationalVideo, our online platform for managing retail operations, merchandising compliance and security. While selling the
CCTV technology in Europe and our library business will reduce total revenue, the company is better positioned to take advantage of the significant opportunity in the fast growing digital, networked video
Sentry Technology Corporation designs, manufactures, sells and installs Closed Circuit Television (CCTV) solutions. Our CCTV product line features VideoRailway and SmartTrack, a proprietary, traveling camera technology. Our OperationalVideo, OVportal software application assists retailers with on-line management of safety and security, merchandising audits and employee procedure compliance. More information can be found at www.sentrytechnology.com.