Atlantis Systems Corp.
TSX VENTURE : AIQ.H

Atlantis Systems Corp.

November 29, 2010 17:24 ET

Atlantis Reports Third Quarter 2010 Financial Results

TORONTO, ONTARIO--(Marketwire - Nov. 29, 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 third quarter ended September 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 Gain/(Loss) and Deficit  
For the three and nine months ended September 30, 2010 and 2009
(Expressed in thousands of Canadian dollars except per share amounts)  
(unaudited)
   
  For the three months       For the nine months  
  ended September 30       ended September 30  
  2010     2009       2010     2009  
Revenue (notes 4, 6, 7, 17, 18, and 19) $ 4,485   $ 2,937     $ 13,621   $ 8,391  
Cost of revenue (note 6)   2,707     2,443       8,529     5,608  
Gross margin   1,778     494       5,092     2,783  
   
Expenses                          
 General and administrative   853     1,180       3,143     3,347  
 Selling and marketing   120     144       372     814  
 Stock options   2     18       11     114  
    975     1,342       3,526     4,275  
Operating income / (loss) before the undernoted items   803     (848 )     1,566     (1,492 )
   
 Depreciation and amortization   342     357       1,034     1,072  
 Write-off of mortgage receivable (note 8)   -     -       -     167  
 Interest expense and financing Cost (note 10)   208     395       982     1,767  
 Currency exchange (gain)/loss on foreign debt   (265 )   (637 )     (257 )   (969 )
 (Gain) / loss on sale / disposal of assets   (479 )   -       (479 )   -  
Net gain / (loss) from continuing operations   997     (963 )     286     (3,529 )
Net gain / (loss) from discontinued operations (note 4)   -     119       -     (361 )
Net gain / (loss) and comprehensive loss   997     (844 )     286     (3,890 )
   
Deficit, beginning of period   (109,812 )   (105,426 )     (109,101 )   (102,380 )
Deficit, end of period $ (108,815 ) $ (106,270 )   $ (108,815 ) $ (106,270 )
   
Net gain / (loss) per share (note 15)                          
 Basic and diluted:                          
  Continuing operations $ -   $ (0.02 )   $ -   $ (0.06 )
  Discontinued operations   -     -       -     (0.01 )
  Net gain / (loss)   -     (0.02 )     -     (0.07 )
   
Weighted average number of shares                          
Basic and diluted   204,679,929     55,993,929       204,679,929     55,993,929  
 
The accompanying notes are an integral part of these consolidated statements.
 
ATLANTIS SYSTEMS CORP.  
Consolidated Balance Sheets  
As at September 30, 2010 and December 31, 2009  
(Expressed in thousands of Canadian dollars)  
   
      2010       2009  
  ASSETS   (unaudited)   (audited)  
  Current assets              
   Cash $ 324     $ 161  
   Trade receivables (note 5)   3,174       2,089  
   Unbilled revenue (note 5)   3,585       2,376  
   Inventory (note 6)   237       489  
   Prepaid expenses   107       143  
   Core technology, net (note 9)   -       -  
   Current assets of discontinued operations (note 4)   16       16  
      7,443       5,274  
   
  Note receivable   100       -  
  Capital assets, net (note 7)   482       667  
  Long-term prepaid expenses   153       54  
  Other long-term assets   77       77  
  Mortgage receivable (note 8)   -       -  
  Core technology, net (note 9)   -       797  
  Long-lived assets of discontinued operations (note 4)   -       -  
      812       1,595  
    $ 8,255     $ 6,869  
   
  LIABILITIES              
  Current liabilities              
   Operating line of credit and over-advances (notes 11 and 13) $ 6,450     $ 5,555  
   Accounts payable and accrued liabilities   3,933       4,162  
   Deferred revenue   3,479       3,367  
   Bridge loans, net (notes 11 and 13 )   1,022       898  
   Term debt (notes 11, 13 and 18)   -       2,733  
   Current liabilities of discontinued operations (note 4)   11       11  
      14,895       16,726  
   
  SHAREHOLDERS' DEFICIENCY              
   Share capital and warrants (notes 12 and 13)   92,837       89,917  
   Contributed surplus   9,338       9,327  
   Deficit   (108,815 )     (109,101 )
      (6,640 )     (9,857 )
    $ 8,255     $ 6,869  
   
   
  Subsequent events (note 22)  
   
  On behalf of the Board:  
   
   
  Henrik Noesgaard Ron Brown  
  Chief Executive Officer and Chairman of the Board Chief Financial Officer  
   
The accompanying notes are an integral part of these consolidated statements.  
   
ATLANTIS SYSTEMS CORP.  
Interim Consolidated Statements of Cash Flows  
For the three and nine months ended September 30, 2010 and 2009  
(Expressed in thousands of Canadian dollars)  
(unaudited)  
    For the three months
ended September 30
    For the nine monthsended September 30  
Cash flows provided by (used in):    
Operating activities:   2010   2009     2010   2009  
Net gain / (loss) $ 997   $ (844 ) $ 286   $ (3,890 )
Net gain /(loss) from discontinued operations   -     119     -     (361 )
Net gain / (loss) from continuing operations   997     (963 )   286     (3,529 )
Items not affecting cash:                        
  Depreciation and amortization   342     357     1,034     1,072  
  Write off of mortgage receivable (note 8)   -     -     -     167  
  Loss on disposal of capital assets   35     -     35     -  
  (Gain) / loss on sale of capital assets   (514 )   -     (514 )   -  
  Stock options expensed   2     18     11     114  
  Accretion on term debt   -     -     -     238  
  Write-off of un-accreted financing costs (note 10 and 11)   -     -     -     594  
  Financing costs related to re-pricing of common share purchase warrants   -     -     -     16  
  Financing costs related to issuing of common share purchase warrants   -     10     -     10  
    862     (578 )   852     (1,318 )
  Interest on mortgage receivable   -     -     -     (3 )
  Long-term prepaid expenses   (100 )   -     (100 )   -  
  Other long-term assets   1     2     (99 )   (7 )
  Net change in non-cash working capital (note 20)   (1,551 )   177     (2,132 )   (1,059 )
  Cash provided by (used in) discontinued operations   -     342     -     (445 )
    (788 )   (57 )   (1,479 )   (2,832 )
Investing activities:                        
Investment in capital assets   (67 )   -     (124 )   (24 )
Proceeds from disposal of capital assets   514     -     514     -  
Cash provided by discontinued operations   -     -     -     21  
    447     -     390     (3 )
Financing activities:                        
Term debt repayment   (220 )   -     (2,820 )   -  
New Term debt   (220 )   -     -     -  
Term debt conversion to common shares   -     -     2,641     -  
Warrant conversion to common shares   279     -     279     -  
Bridge loan proceeds, net   24     700     124     700  
Principal payment on original term debt   -     (186 )   -     (821 )
    (137 )   514     224     (121 )
Net cash (used in) provided by foreign exchange loss on term debt   252     (183 )   133     (259 )
Net decrease in cash   (226 )   274     (732 )   (3,215 )
(Bank indebtedness, net) cash and cash equivalents, end of period -                        
continuing operations   (5,900 )   (5,650 )   (5,394 )   (2,217 )
(Bank indebtedness, net) cash and cash equivalents, end of period -                        
discontinued operations   -     3     -     59  
Cash, end of period $ (6,126 ) $ (5,373 ) $ (6,126 ) $ (5,373 )
SUPPLEMENTAL INFORMATION                        
Bank indebtedness, net for continuing operations is comprised of:                        
    Cash $ 324   $ 61   $ 324   $ 61  
    Bank operating line of credit   (6,450 )   (5,434 )   (6,450 )   (5,434 )
  $ (6,126 ) $ (5,373 ) $ (6,126 ) $ (5,373 )
Interest paid $ 6   $ 324   $ 487   $ 831  
Income taxes paid $ -   $ -   $ -   $ -  

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