Atlantis Systems Corp.
TSX VENTURE : AIQ.H

Atlantis Systems Corp.

August 30, 2010 13:13 ET

Atlantis Reports Second Quarter 2010 Financial Results

TORONTO, ONTARIO--(Marketwire - Aug. 30, 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 its financial and operating results for the second quarter ended June 30, 2010. Results are available on www.sedar.com

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 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

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 .available on SEDAR at www.sedar.com.

ATLANTIS SYSTEMS CORP.
Interim Consolidated Statements of Operations, Comprehensive Loss and Deficit
Six months ended June 30, 2010 and 2009
(Expressed in thousands of Canadian dollars except per share amounts)
(unaudited)
         
    For the three months     For the six months  
    ended June 30     ended June 30  
    2010     2009     2010     2009  
Revenue (notes 4, 6, 7, 17, 18, and 19) $ 4,962   $ 1,992   $ 9,136   $ 5,454  
Cost of revenue (note 6)   3,275     1,667     5,822     2,833  
Gross margin   1,687     325     3,314     2,621  
                         
Expenses                        
  General and administrative   1,047     1,120     2,290     2,167  
  Selling and marketing   68     260     252     670  
  Stock options   4     43     9     96  
    1,119     1,423     2,551     2,933  
Operating income loss before the undernoted items   568     (1,098 )   763     (312 )
                         
  Depreciation and amortization   344     359     692     715  
  Write-off of mortgage receivable (note 8)   -     167     -     167  
  Interest expense and financing Cost (note 10)   331     1,018     774     1,372  
  Currency exchange (gain)/loss on foreign debt   339     -     8     -  
Net loss from continuing operations   (446 )   (2,642 )   (711 )   (2,566 )
Net loss from discontinued operations (note 4)   -     (293 )   -     (480 )
Net loss and comprehensive loss   (446 )   (2,935 )   (711 )   (3,046 )
                         
Deficit, beginning of period   (109,366 )   (102,491 )   (109,101 )   (102,380 )
Deficit, end of period $ (109,812 ) $ (105,426 ) $ (109,812 ) $ (105,426 )
                         
Net loss per share (note 15)                        
  Basic and diluted:                        
    Continuing operations $ -   $ (0.05 ) $ -   $ (0.05 )
    Discontinued operations   -     (0.01 )   -     (0.01 )
    Net loss   -     (0.05 )   -     (0.05 )
                         
Weighted average number of shares                        
    Basic and diluted   195,379,929     55,993,929     195,379,929     55,993,929  
                         
The accompanying notes are an integral part of these consolidated statements.             
   
ATLANTIS SYSTEMS CORP.
Consolidated Balance Sheets
As at June 30, 2010 and December 31, 2009
(Expressed in thousands of Canadian dollars)
 
    2010     2009  
ASSETS   (unaudited )   (audited )
Current assets            
  Cash $ 227   $ 161  
  Trade receivables (note 5)   1,858     2,089  
  Unbilled revenue (note 5)   3,728     2,376  
  Inventory (note 6)   487     489  
  Prepaid expenses   119     143  
  Core technology, net (note 9)   -     -  
  Current assets of discontinued operations (note 4)   17     16  
    6,436     5,274  
             
Capital assets, net (note 7)   554     667  
Long-term prepaid expenses   154     54  
Other long-term assets   77     77  
Mortgage receivable (note 8)   -     -  
Core technology, net (note 9)   266     797  
Long-lived assets of discontinued operations (note 4)   -     -  
    1,051     1,595  
  $ 7,487   $ 6,869  
             
LIABILITIES            
Current liabilities            
  Operating line of credit and over-advances (notes 11 and 13) $ 6,127   $ 5,555  
  Accounts payable and accrued liabilities   3,591     4,162  
  Deferred revenue   4,444     3,367  
  Bridge loans, net (notes 11 and 13)   998     898  
  Term debt (notes 11, 13 and 18)   234     2,733  
  Current liabilities of discontinued operations (note 4)   11     11  
    15,405     16,726  
             
SHAREHOLDERS' DEFICIENCY            
  Share capital and warrants (notes 12 and 13)   92,558     89,917  
  Contributed surplus   9,336     9,327  
  Deficit   (109,812 )   (109,101 )
    (7,918 )   (9,857 )
  $ 7,487   $ 6,869  
             
Subsequent events (note 22)            
             
On behalf of the Board:            
             
Mark Rivers    Henrik Noesgaard         
Director   Chief Executive Officer      
               
The accompanying notes are an integral part of these consolidated statements.      
   
ATLANTIS SYSTEMS CORP.    
Interim Consolidated Statements of Cash Flows    
Six months ended June 30, 2010 and 2009    
(Expressed in thousands of Canadian dollars)    
(unaudited)    
     
Cash flows provided by (used in) :       For the three months
ended June 30
        For the six months
ended June 30
 
Operating activities :   2010     2009     2010     2009  
Net loss $ (446 ) $ (2,935 ) $ (711 ) $ (3,046 )
Net loss from discontinued operations   -     (293 )   -     (480 )
Net loss from continuing operations   (446 )   (2,642 )   (711 )   (2,566 )
Items not affecting cash:                        
  Depreciation and amortization   344     359     692     715  
  Write off of mortgage receivable (note 8)   -     167     -     167  
  Stock options expensed   4     43     9     96  
  Accretion on term debt   -     113     -     238  
  Write-off of un-accreted financing costs (note 10 and 11)   -     594     -     594  
  Financing costs related to re-pricing of common share purchase warrants   -     -     -     16  
    (98 )   (1,366 )   (10 )   (740 )
                         
  Interest on mortgage receivable   -     (1 )   -     (3 )
  Long-term prepaid expenses   (24 )   (10 )   (100 )   (9 )
  Net change in non-cash working capital (note 20)   (188 )   1,521     (581 )   (1,236 )
  Cash provided by (used in) discontinued operations   -     (409 )   -     (787 )
    (310 )   (265 )   (691 )   (2,775 )
Investing activities :                        
Investment in capital assets   (48 )   (10 )   (57 )   (24 )
Cash provided by discontinued operations   -     21     -     21  
    (48 )   11     (57 )   (3 )
Financing activities :                        
Term debt conversion   (2,600 )   -     (2,600 )   -  
New Term debt   220     -     220     -  
Term debt conversion to common shares   2,641     -     2,641     -  
Bridge loan proceeds, net   (129 )   -     100     -  
Principal payment on term debt   -     (314 )   -     (635 )
    132     (314 )   361     (635 )
Net cash (used in) provided by foreign exchange loss on term debt   (27 )   (149 )   (119 )   (76 )
Net decrease in cash   (253 )   (717 )   (506 )   (3,489 )
(Bank indebtedness, net) cash and cash equivalents, end of period - continuing operations   (5,647 )   (4,946 )   (5,394 )   (2,217 )
(Bank indebtedness, net) cash and cash equivalents, end of period - discontinued operations   -     16     -     59  
Cash, end of period $ (5,900 ) $ (5,647 ) $ (5,900 ) $ (5,647 )
                         
(Bank indebtedness, net) cash and cash equivalents, end of period - continuing operations   (5,900 )   (5,650 )   (5,900 )   (5,650 )
(Bank indebtedness, net) cash and cash equivalents, end of period - discontinued operations   -     3     -     3  
                         
SUPPLEMENTAL INFORMATION                        
Bank indebtedness, net for continuing operations is comprised of:                        
  Cash $ 227   $ 50   $ 227   $ 50  
  Bank operating line of credit   (6,127 )   (5,700 )   (6,127 )   (5,700 )
Bank indebtedness, net for discontinued operations is comprised of:                        
  Cash $ -   $ 3   $ -   $ 3  
  $ (5,900 ) $ (5,647 ) $ (5,900 ) $ (5,647 )
                         
Interest paid $ 76   $ 296   $ 481   $ 507  
Income taxes paid $ -   $ -   $ -   $ -  
                         
The accompanying notes are an integral part of these consolidated statements.          

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