Atlantis Systems Corp.
NEX BOARD : AIQ.H

Atlantis Systems Corp.

November 23, 2009 16:41 ET

Atlantis Reports Third Quarter 2009 Financial Results

New Strategy Continues to Show Results with approximately $10.6 million in New Business Year to Date

TORONTO, ONTARIO--(Marketwire - Nov. 23, 2009) - Atlantis Systems Corp. (NEX BOARD:AIQ.H) -

This news release may contain forward-looking statements. Reference should be made to "Forward-looking Statements" at the end of this news release. All amounts are stated in thousands of Canadian dollars except where otherwise noted.

Atlantis Systems Corp. (NEX BOARD:AIQ.H), a globally recognized training integrator in the military, commercial aviation and energy markets, today announced its financial and operating results for the third quarter.

Third Quarter 2009 Operational & Financial Summary

- On July 15, 2009, and August 21, 2009, CEO Capital Corporation ("CEO Capital") provided bridge loans of $250 and $450, respectively, to the Company. The bridge loans are due on January 11, 2010 and August 14, 2010, unless the due dates are extended at CEO Capital's sole option. The bridge loans were secured in order to ramp up for newly awarded contracts as well as to keep our existing programs on track. The bridge loans require interest payments of 2% per month.

- In July 2009, we reached an agreement with a U.S. based company to transfer our qualification rights to bid as a contractor with the U.S. Army under STOC II. We received an irrevocable payment of U.S. $130 in July 2009 for completing a written submission to the U.S. Government to transfer these rights ("Novation Request"). An additional U.S. $130 was received in October 2009 when the Novation Request was approved by the U.S. Government. Previously the Company's Board of Directors (the "Board") concluded that future sales prospects for ASA were not sufficient to allow the U.S. subsidiary to become self-sustaining, and on that basis discontinued the U.S. operations.

- During the nine months ended September 30, 2009, we have been awarded new business of approximately $10.6 million from new contracts and from renewals and amendments to existing contracts. This new business has pushed our revenue from continuing operations for the three months ended September 30, 2009 to $2.9 million, a 38% increase over the third quarter of 2008.

- Our order backlog from continuing operations at September 30, 2009, was $30.9 million, an increase of $2.6 million from the same order backlog at December 31, 2008. The September 30, 2009 backlog includes $18.9 million for CFTS program, including $17.5 million for support services to be recognized over the next 18 years, $4.7 million for the SMHP and $6.5 million for three large projects awarded in 2009.

- Our shareholders elected five new Directors to the Board at the Company's Annual General and Special Meeting. The five individuals bring considerable business and military experience and will underscore the Company's focus on business development going forward.

- On November 6, 2009, the Company accepted a proposal (the "Proposal") from its landlord, to enter into a new triple-net lease resulting in substantial annual operating savings. The new lease will expire on October 31, 2014 with a stipulation that the landlord has the right to terminate the lease at any time after November 1, 2012 with nine months notice. Under the terms of the Proposal, the minimum rental payment under a new lease would be approximately $24.4 per month, with annual increases of 2.0%. In addition, per the terms of the Proposal, under a new lease agreement, the Company will be obligated to pay approximately $478 for rent in arrears prior to the expiry of the new lease; however, the landlord also agrees to release the Company from this obligation provided that the Company is not "in default" throughout the term of a new lease. The Company is obligated to pay up to $350 for recent repairs made by the landlord to the property.

"We continue to progress in our plan to get the company back on its feet" said Henrik Noesgaard, CEO for Atlantis. "We have added to our backlog and have successfully eliminated an additional $1MM in annualized overhead expenses. This will allow us a quicker return to profitability and help ensure that new business finds its way to the bottom line"

Third Quarter 2009 Results

Revenue from continuing operations for the three months ended September 30, 2009 was $2.9 million, a 38% increase from revenue from continuing operations of $2.1 million in the third quarter of the prior year. Revenues in the third quarter of 2009 and 2008 include a decrease in revenues related to prior periods due to reconfigured cost estimates to complete major programs of approximately $0.5 million and $0.6 million, respectively. Excluding the effect of these adjustments to revenue for both quarters, revenue for continuing operations in the third quarter of 2009 would have increased by 30% to $3.4 million.

Gross margin from continuing operations for the quarter ended September 30, 2009 was $494, or 17% of revenue for continuing operations, as compared to a gross margin of $249, or 12% of revenue, for the same period in 2008.

Net loss from continuing operations for the three months ended September 30, 2009 and 2008 was $1.0 and $2.3 million.

Additional Information

For more information about the Company's third quarter results, please refer to the Third Quarter 2009 Management's Discussion and Analysis filed on SEDAR (www.sedar.com).

About Atlantis Systems Corp.

Atlantis Systems (NEX BOARD:AIQ.H) uses its core capabilities in simulation-aided design and engineering and e-learning, combined with various technology tools, to help customers in military aviation and civil aviation to ensure the feasibility, capability, and effective utilization of their complex assets. In more than 30 years of operation, Atlantis has developed a solid reputation for its creative workforce and innovative solutions in supporting global OEM customers and defence organizations. To learn more, please visit the Company's web site at www.atlantissi.com.

Forward-Looking Statements

Certain statements in this release are considered "forward-looking". These forward-looking statements are based on current expectations and various estimates, factors and assumptions and involve known and unknown risks, uncertainties and other factors. The material factors and assumptions that were applied in making the forward-looking statements in this release include but are not limited to assumptions regarding: our ability to obtain financing to fund our losses and continue to operate as a going concern; our ability to retain our current banking relationship; our ability to win new projects and to successfully complete ongoing negotiations with new and existing customers for new work and to accurately forecast the timing of such wins; our current order backlog and the timing of its recognition; our ability to secure spinoff programs to the CFTS program; the stability and growth of military markets and expenditures worldwide and expected developments in the energy and aerospace industries; the stability and growth of markets for simulation-based training products; the availability of skilled personnel and that our cost reduction plan will not affect this availability; our ability to meet contractual obligations under the CFTS and SMHP programs or any other major program; our ability to complete new and existing projects on time and on budget; the performance of subcontractors; our ability to protect and exploit our intellectual property; the value of the Canadian dollar relative to foreign currencies, in particular, the U.S. dollar; the level of capital programs to be completed and the accuracy of our projections of infrastructure spending at our facilities;
Material factors that could cause Atlantis' actual results to differ materially from the forward-looking statements in this release include risks and uncertainties relating to: our ability to meet debt obligations as required by our lending arrangements or secure waivers; our ability to source capital to fund our operations; our ability to continue to operate as a going concern; our ability to convert sales, negotiations and marketing pursuits into actual awards and order backlog; our inability to repay bank debt on demand; the current global financial crisis; the level of military expenditures and developments in the aerospace industry; our continued reliance on key customers for existing and new work including our ability to leverage off the CFTS program; the availability of skilled personnel to ramp up new programs and complete existing programs; our reliance on subcontractors; our ability to protect the ownership of our technology and intellectual property; and the volatility of foreign exchange rates. Atlantis cannot provide any assurance that the predictions of forward-looking statements will materialize. Atlantis assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason. Additional information regarding risks and uncertainties that could affect Atlantis' business is contained in the Business Risk Factors section of Atlantis's Annual MD&A and the Description of the Business - Risk Factors section in Atlantis' Annual Information Form, both of which are available on SEDAR at www.sedar.com.



ATLANTIS SYSTEMS CORP.
Consolidated Statements of Operations, Comprehensive Loss and Deficit
For the three and nine months ended September 30 2009 and 2008
(Expressed in thousands of Canadian dollars except per share amounts)
(unaudited)
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For the three months For the nine months
ended September 30 ended September 30
--------------------- --------------------
2009 2008 2009 2008
----------------------------------------------------------------------------
Revenue (notes 6, 7, 18
and 19) $ 2,937 $ 2,124 $ 8,391 $ 9,939
Cost of revenue (note 6) 2,443 1,875 5,608 8,680
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Gross margin 494 249 2,783 1,259
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Expenses
General and administrative 1,180 1,265 3,347 3,706
Selling and marketing 144 364 814 1,100
Stock options 18 45 114 117
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1,342 1,674 4,275 4,923
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Operating income (loss) before
the undernoted items (848) (1,425) (1,492) (3,664)

Depreciation and amortization 357 479 1,072 1,440
Write-off of mortgage
receivable (note 8) - - 167
Interest and financing costs,
net (note 11) 395 281 1,767 668
Currency exchange (gain)/loss
on foreign debt (637) 156 (969) 211
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Net loss from continuing
operations (963) (2,341) (3,529) (5,983)
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Net income (loss) from
discontinued operations
(note 6) 119 (189) (361) (1,186)
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Net loss and comprehensive
loss (844) (2,530) (3,890) (7,169)

Deficit, beginning of period (105,426) (83,602) (102,380) (78,963)
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Deficit, end of period $(106,270) $(86,132) $(106,270) $(86,132)
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Net loss per share (note 16)
Basic and diluted:
Continuing operations $ (0.02) $ (0.04) $ (0.06) $ (0.11)
Discontinued operations - - (0.01) (0.02)
Net Loss (0.02) (0.05) (0.07) (0.13)

Weighted average number of
shares
Basic and diluted 55,993,929 55,993,929 55,993,929 55,993,929

The accompanying notes are an integral part of these consolidated
statements.



ATLANTIS SYSTEMS CORP.
Consolidated Balance Sheets
As at September 30, 2009 and December 31, 2008
(Expressed in thousands of Canadian dollars)
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2009 2008
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(unaudited) (audited)

ASSETS
Current assets
Cash and cash equivalents $ 61 $ 1,041
Trade and other receivables (note 7) 2,365 503
Unbilled revenue (note 7) 2,814 1,571
Inventory 493 315
Prepaid expenses 176 242
Current assets of discontinued operations
(note 6) 17 191
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5,926 3,863
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Capital assets, net 735 976
Long-term prepaid expenses 64 57
Other long-term assets 77 77
Mortgage receivable (note 8) - 164
Deferred development costs and core technology,
net (note 10) 1,063 1,859
Capital assets of discontinued operations (note 6) - 168
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1,939 3,301
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$ 7,865 $ 7,164
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LIABILITIES
Current liabilities
Operating line of credit (note 12) $ 5,434 $ 3,258
Accounts payable and accrued liabilities 4,381 3,238
Accrued costs on percentage completion 367 424
Deferred revenue 2,062 990
Bridge loans (notes 11 and 12) 700 -
Term debt (notes 11, 12, 14 and 16) 1,949 2,197
Current liabilities of discontinued operations 11 347
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14,904 10,454
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SHAREHOLDERS' (DEFICIENCY) EQUITY
Share capital and warrants (notes 13 and 14) 89,917 89,890
Contributed surplus 9,314 9,200
Deficit (106,270) (102,380)
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(7,039) (3,290)
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$ 7,865 $ 7,164
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The accompanying notes are an integral part of these consolidated
statements.


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