Interactive Systems Worldwide, Inc. Signs Letter of Intent with Shantech, Inc. for Strategic Interna

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) February 6, 2009 -- WEST PATERSON, N.J. -- Interactive Systems Worldwide, Inc. (NASDAQ: ISWI), has signed a Letter of Intent ("LOI") with Shantech Inc. Under the terms of the agreement, the two companies are to enter into a non-exclusive marketing and business development agreement under which Shantech would market ISWI's products internationally with a particular emphasis on certain Asian gaming markets.

As part of the contemplated transaction, Shantech, and/or parties identified by Shantech, would make a strategic investment of $2 million in ISWI and would receive Common Stock at a 20% discount to the closing market price, with a maximum of 2.4 million shares of Common Stock. In addition, Shantech would receive 50% warrant coverage, which will be exercisable at a 5% premium to the closing market price. These warrants will have a term of 5 years and will not be exercisable until 6 months after issuance.

Under the terms of the LOI, Shantech would provide marketing and business development services, and would receive commission fees based on the revenue resulting from its efforts. All marketing expenses would be borne by Shantech. In addition to the commission fees, Shantech would receive incentive bonuses in ISWI equity, subject to shareholder approval, for achieving certain revenue targets during the term of the marketing and business development arrangement. These revenue targets are the generation of a minimum of $10 million of revenue with at least 25% net profit during the first 12 months after the agreement is signed and the transaction closes, and/or for the generation of a minimum of $30 million of revenue with at least 25% net profit during the first 24 months after the agreement is signed and the transaction closes. The combination of strategic investments and incentive bonuses, if achieved, would likely result in Shantech becoming a controlling shareholder of ISWI.
Bernard Albanese, CEO of ISWI, said: "This is an exciting day for ISWI. The proposed agreement is an opportunity to enter Asia's substantial and growing gaming marketplace. Suneel Sawant, the founder and CEO of Shantech, has an impressive track record of creating value through the development of meaningful strategic relationships in Asia."

Suneel Sawant, CEO of Shantech, said: "We are excited at the prospects of establishing a relationship with Interactive Systems and the opportunities presented by this relationship. We believe that our network in certain Asian markets complements Interactive Systems' unique product line and that by working together, we will be able to expand ISWI's geographic reach."
The transaction contemplated by this non-binding LOI is subject to several conditions precedent, including the entering into a definitive agreement by the parties, completion of mutually satisfactory due diligence, satisfaction of appropriate representations and warranties, obtaining shareholder approval and other considerations. The term of the marketing agreement will be for 24 months.

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