Atlantis Systems Corp.
TSX VENTURE : AIQ.H

Atlantis Systems Corp.

February 24, 2010 09:22 ET

Atlantis Systems Announces Recapitalization

TORONTO, ONTARIO--(Marketwire - Feb. 24, 2010) -

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 Canadian dollars except where otherwise noted.

Atlantis Systems Corp. (NEX:AIQ.H), a globally recognized training integrator in the military and commercial aviation markets, today announced that it has negotiated a debt to equity conversion and an increased revolving facility with its principal lender ComVest Capital, LLC.

These amendments formalize the ad hoc over-advances made to date by ComVest Capital, LLC and CEO Capital Corporation and provide for an entitlement to a US$1.5million over-advance facility to sit on top of the existing US$4 million revolving line that has been in place pursuant to the Revolving Credit and Term Loan Agreement with ComVest dated April 30, 2008 (the "Original ComVest Agreement"). Substantially all of such facility has already been advanced.

As part of this amending transaction, Atlantis has procured the removal of the Borrowing Base and EBITDA financial test covenants (which covenants Atlantis has been in perpetual breach since 2008) contained in the Original ComVest Agreement and Atlantis has procured an extension of the revised facilities to April 30, 2011. 

As part of this amending transaction, the US$2.6 million term facility advanced in April 2008 will be converted to common shares @$0.02 per share, resulting in the issuance of 139,386,000 additional Common Shares.

The effect of the transaction is that interest expense will be substantially reduced, and Atlantis will have eliminated the financial test covenant defaults for the balance of the extended term of the loan facilities.

ComVest Capital, LLC will hold approximately 70% of the outstanding Common Shares on a fully-diluted basis and CEO Capital Corporation will hold approximately 10% of the outstanding Common Shares on a fully-diluted basis.

"I am very pleased with this announcement and especially the ongoing support of ComVest" said Mark Rivers, Chairman of the Board. "It demonstrates support by our Bankers during difficult times, as well as confidence in the team we have assembled over the last 18 months to rebuild Atlantis. This has been echoed by our customers as we have nearly doubled our backlog in the last twelve months, during the company's worst economic condition in many years. As we continue to rebuild this company, we are winning the confidence of senior talent in the industry with some very strong, recent senior appointments. This recapitalization takes away the stigma and pressure of constantly being in default. It transforms our Bankers into owners, which ensures our ability to continue to bridge the business. As we ramp up our business to service the growth we are experiencing, it strengthens our balance sheet, reduces our interest costs and preserves a stake for our loyal shareholders during a time when there were very limited options available to the company. This is a significant accomplishment, and is the result of the resolve of our Board, our Management, our Staff and our two primary funders. This lays the foundation for a successful future"

CEO Capital Corporation has provided approximately half of the interim over-advances received by Atlantis to date and it will participate to that extent in the new over-advance facility. CEO Capital Corporation, is a company in which Mark Rivers, the Chairman of the Board of Atlantis is a director, officer and significant shareholder. 

The terms of this amending and recapitalization transaction are conditional upon shareholder approval by April 30, 2010, Atlantis remaining in compliance with the terms of the loan facilities other than the financial test covenants as well as final approval of the NEX. Notice of a Special Meeting of shareholders to approve the transaction has been posted on Sedar. Those shareholders who hold shares as at February 11, 2010, the Record Date, will be eligible to vote at the Meeting.

About Atlantis Systems Corp.

Atlantis Systems (NEX: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 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.

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