Update on proposed reverse takeover of FOX-TEK by Marcon International

TSX Venture Exchange symbol: FOX

TORONTO, Aug. 4 /CNW/ - Fiber Optic Systems Technology, Inc. ("FOX-TEK"), (TSX-V: FOX), a developer and manufacturer of patented non-intrusive sensing systems, are pleased to provide an update on the proposed acquisition, (the "Acquisition"), by FOX-TEK of Marcon International Inc. ("Marcon"), originally announced April 8, 2010 which Acquisition will constitute a reverse takeover of FOX-TEK as defined by the policies of the TSX Venture Exchange (the "Exchange").

The parties have signed a Share Exchange Agreement dated August 1, 2010, whereby FOX-TEK will issue 91,814,668 common shares from treasury to Marcon's sole shareholder, Knoxbridge Corp, in exchange for all of the Marcon outstanding shares representing approximately 65% of the issued and outstanding shares of FOX-TEK prior to the proposed Financing described below. The shares of FOX-TEK to be issued to satisfy the purchase price will have a deemed price of $0.06 per share. The shares issued to Knoxbridge Corp. will be subject to escrow requirements imposed by the Exchange. The transaction is not subject to Multilateral Instrument 61-101-Protection of Minority Security Holders in Special Transactions. The Share Exchange Agreement provides that if either party decides not to proceed with the transaction such party will be responsible for the payment of a break fee of $80,000 to the other party, provided that no such break fee will be due and payable if one or more of the conditions of closing for its benefit set out in the Share Exchange Agreement have not been fulfilled.

Fraser Mackenzie Limited has completed its preliminary report and concluded that no information or facts have come to their attention during the course of its due diligence that might reasonably impact the Exchange's determination of the suitability for listing of FOX-TEK or the suitability of the directors and officers to act in such capacity.

FOX-TEK has also engaged Fraser Mackenzie to complete a minimum equity financing of $1,000,000 and maximum of $2,000,000 (the "Financing"), on a reasonable best efforts basis as part of the Acquisition. Proceeds of the Financing will be used to promote the sale of PinPoint and FT technologies through Marcon's existing distribution channel. Fraser Mackenzie will receive a commission equal to 8% of the gross proceeds of the Financing payable in cash. In addition, Fraser Mackenzie will receive 8% agent's compensation options. Each compensation option will entitle the holder to acquire one common share of the FOX-TEK at a price equal to the purchase prices of a unit of the financing for period of 24 months from the closing of the Financing.

About FOX-TEK:

Fiber Optic Systems Technology, Inc. "FOX-TEK" develops non-intrusive asset health monitoring sensor systems for the oil and gas market to help operators track the thinning of pipelines and refinery vessels due to corrosion/erosion, strain due to bending/buckling, and process pressure and temperature. FOX-TEK's FT fiber optic sensor and PinPoint systems allow cost-effective, 24/7 remote monitoring capabilities to improve scheduled maintenance operations, avoid unnecessary shutdowns, and prevent accidents and leaks.

FOX-TEK has offices in Toronto, ON and Alberta; FOX-TEK is traded on the TSX Venture Exchange under the symbol "FOX". For more information, visit www.fox-tek.com.

This press release contains forward-looking statements based on assumptions, uncertainties and management's best estimates of future events. Actual results may differ materially from those currently anticipated. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements are detailed from time to time in FOX-TEK's periodic reports filed with the Ontario Securities Commission and other regulatory authorities. FOX-TEK has no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Completion of the transaction is subject to a number of conditions, including Exchange acceptance and disinterested Shareholder approval. 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 to be prepared in connection with the transaction, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the securities of FOX-TEK should be considered highly speculative.

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

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For further information: FOX-TEK contact: Sean Carr, President & CFO, Fiber Optic Systems Technology, Inc., Tel: [phone], email: [email protected]