ADW Capital Partners L.P. Seeks Sale of Lorex Technologies Inc.

NEW YORK, April 30, 2012 /CNW Telbec/ - Adam Wyden of ADW Capital Partners, L.P. ("ADW Capital"), a New York City based hedge fund, transmitted today a letter to the board of directors and management of Lorex Technology Inc. (the "Company") (TSXV: LOX.) seeking a strategic sale of the Company.  ADW Capital along with its affiliates hold almost 10% of the Company and believe that in seeking a strategic/financial partner it will ensure that the Company can grow significantly.

Found below is the full text of Mr. Wyden's letter to the Company:

April 30, 2012

Lorex Technology Inc.
c/o Reuben Klein, Chairman, President and CEO
250 Royal Crest Court
Markham, Ontario
L3R 3S1

Dear Board and Management of Lorex Technology Inc.,

I would like to begin by commending the board and management on a successful turnaround of the Company and the steps taken to return it to growth and profitability. Notwithstanding these recent accomplishments, I believe the Company is at a crossroads today and as a substantial shareholder believe I  have identified the most advantageous path for the Company going forward. Bluntly, I do not think it makes sense for this Company to continue as a publicly "traded" entity and that it should hire a financial advisor to pursue a sale of the company.

I have arrived at this conclusion for the following reasons:

• While the Company has averaged trading volume of CAD $40,000 over the last 50 days, the Company has gone days in the not-too- distant past without trading a single share.
• It is my belief this lack of trading activity is due in large part to the very closely held nature of the shares today. I estimate between insiders, the board, and a few institutions, over 80 percent of the Company's shares are in firm hands and not "for sale".
• I think it is fair to assume that these shares are not "for sale" because the Company's concentrated investor base (many of whom have owned its shares since the Company first went public) have followed its progress closely and recognize the shares continued heavily discounted value.
• In addition to the sparse liquidity barring new investors from taking a meaningful stake in the Company, Management has been unwilling to share certain segment/unit information in its disclosures and generally engage in open dialog with its shareholders via conference calls and regular distribution of news about the Company.
• I understand that the industry the Company competes in is intensely competitive and the Company's reluctance to share certain information may be in the best interest of the Company with regard to its financial results (its ability to grow and gain market share from its competitors). However, in conducting itself in this manner, the Company has conveyed a certain message to its existing shareholders and perhaps alienated itself from new ones.
• I believe the Company could ameliorate this issue and continue growing with the help of the right strategic or financial partner. In addition to being able to provide capital to accelerate the growth of the business, I think the Company would benefit from substantial cost and revenue synergies by joining with a larger strategic partner.  At the very least, the Company would benefit from the reduction of public company costs.
• To give the Company an idea of the value we believe is being "left on the table" by remaining a public company, let us examine Napco Security Technologies (NASDAQ:NSSC). While Napco's business is not identical to Lorex's, the two companies overlap in a few product categories. Today, Napco trades at 12.5 X Total Enterprise Value to trailing twelve month EBITDA. After adjustments for non-recurring expenses, Lorex has earned almost CAD $8 mm of EBITDA in the last twelve months. If the Company were in the hands of a private market holder, we believe the Company would save at least CAD $ 1mm dollars costs in miscellaneous public company costs and substantially more in the hands of a larger strategic buyer.
• By our conservative estimates of 2012 EBITDA, we think the Company could contribute roughly CAD $10 mm of EBITDA to a new buyer in 2012. Ascribing a multiple somewhere between 7 and 10x EBITDA we would arrive at share prices in the ranges of CAD $1.50 to CAD $2.25 - roughly two to three times the value of the listed shares today. This valuation also discounts the significant growth we expect the Company to achieve over the next several years.

I am asking management to do the right thing for all stakeholders today. By seeking a strategic/financial partner at this stage in the game, it will ensure that the Company can grow significantly without many of the competitive risks of staying a public company. At the same time, the Company will reward its patient shareholders who have earned zero return on their shares since becoming a public company.

ADW Capital Partners, L.P. and its affiliates hold just under 10 percent of the Company's basic shares and urge the board to take our recommendations seriously. I look forward to hearing your response.

Sincerely yours,

Adam D. Wyden

Managing Member of ADW Capital Partners, L.P.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements. All statements that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. These statements are based on current expectations of ADW Capital Partners and currently available information. They are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict, and are based upon assumptions as to future events that may not prove to be accurate..  Accordingly, readers should not place undue reliance on forward looking information.  ADW Capital Partners does not assume any obligation to update any forward-looking statements contained in this press release, except as required by applicable law.

SOURCE: ADW Capital Partners, L.P.

For further information:

Adam D. Wyden,  tel.: [phone]   e-mail: [email protected]