Atlantic Systems Group Inc. Announces Further Revisions to Ineo Facility and Additional Financing.

Business Editors

FREDERICTON, New Brunswick--(BUSINESS WIRE)--Aug. 15, 2002

Atlantic Systems Group Inc. ("ASG" or the "Corporation") (TSX Venture Exchange: YGT) announced today that it has entered into an agreement with Ineo Inc. ("Ineo") dated as of August 2, 2002 (the "August Agreement") pursuant to which Ineo has agreed to provide the Corporation with a bridge loan of $350,000 and the Corporation has agreed to issue to Ineo a convertible secured debenture (the "August Debenture") in the principal amount of $350,000.

The August Debenture has a term of five years and is convertible at Ineo's option into units consisting of one common share and one common share purchase warrant (the "August Warrants") of ASG at a price of $.01 per unit.

Each August Warrant will be exercisable for one common share of ASG for two years from the date of issuance or separation from the August Debenture at a price of $.01 per common share. In consideration for the additional funding, ASG has agreed: (i) to issue to Ineo an additional 5,000 subscription receipts under the amended financing facility entered into on October 15, 2001 (the "Facility"); (ii) to reduce the conversion price under the entire Facility to $.01 from $.16 in the event that the Corporation has not received, prior to August 31, 2002, a firm order without contingencies from a major customer with certain specified pricing terms and minimum revenue of US$4,000,000 payable to the Corporation on or before February 2, 2003; (iii) to amend the Facility to provide Ineo with the right, after an event of default has occurred, to add any accrued or outstanding interest under the Facility to the outstanding principal amount of the secured convertible debentures; (iv) to provide Ineo with a copy of the source code to Passwerks as collateral for the August Debenture along with all other related relevant documentation; (v) to grant Ineo an unrestricted perpetual licence to use Passwerks in the event that ASG files for bankruptcy protection, Ineo realizes on the security granted to it by ASG under the Facility or a material adverse event occurs that affects the Corporation's business; and (vi) to waive all non-compete, non-solicitation and other restrictive provisions contained in employment and other contracts with ASG employees so that such employees shall be free to solicit, consider and accept employment and other arrangements with Ineo provided that the Corporation has either filed for bankruptcy protection or Ineo has realized on the security granted to it by ASG under the Facility.

To date, Ineo has converted $6,580,000 (exclusive of any capitalized interest) of subscription receipts into secured convertible debentures under the Facility and has given notice to ASG of its election to capitalize all interest owing under the Facility up to and including June 30, 2002. The debentures held by Ineo as of the date hereof under the Facility along with the August Debenture will entitle Ineo to acquire approximately 86% of the common shares ASG (based on the number on the common shares currently issued and outstanding).

If the balance of the subscription receipts are exercised, Ineo would be entitled to acquire approximately 93% of the common shares of ASG (based on the number on the common shares currently issued and outstanding and assuming a $.16 conversion price under the Facility). Ineo has no obligation to provide further funding to the Corporation under the Facility. Further, Ineo has advised ASG that, in the event that it does agree to provide additional funding to the Corporation, the conversion price or price per share shall be no higher than $.01.

As a condition to the August Agreement, Roy Nicholl, an employee of ASG and a founder of Passwerks, has assigned any intellectual property or other rights that he may have in Passwerks to ASG in exchange for the transfer by ASG to Mr. Nicholl of all rights in and to the intellectual property of EnGuarde, a software package that the Corporation discontinued work on earlier this year. The August Agreement has been approved by the Corporation's independent directors in accordance with the requirements of Ontario Securities Commission Rule 61-501. The August Agreement requires, but is not subject to, the approval of the TSX Venture Exchange. In the event that the TSX Venture Exchange does not grant the required approvals, the Corporation's common shares could be delisted. There is no certainty that ASG will have the financial resources to continue operations after August 31, 2002.

About ASG

ASG is a software developer of core network solutions, specifically designed for Service Providers and telecom OEMs. ASG's principal product, Passwerks, is a network access control and security (NAC&S) solution for network elements that provides single sign-on authentication, role based network wide access control, event driven audit capabilities and centralized administration. Headquartered in Fredericton, NB Canada, ASG has offices in Cary, North Carolina and The Netherlands.

The common shares of Atlantic Systems Group, Inc. are listed and posted for trading on the TSX Venture Exchange (TSX Venture Exchange: YGT). ASG's total presently outstanding shares as of June 18, 2002 are 25,183,048.

For more information on ASG, call 506-460-5400, 1-866-PASSWERKS or visit the Company's web site at www.ASGTechnologies.com.

About Ineo Inc.

Ineo Inc. is an indirect subsidiary of Xcelera Inc. (AMEX: XLA), a European technology company focused on operating, developing and financing technology companies providing content delivery solutions, distributed applications, imaging and infrastructure software. For more information, visit Xcelera at www.xcelera.com.

Note: This press release may contain forward-looking statements, including statements regarding the business and anticipated financial performance of ASG, which involve risks and uncertainties. These risks and uncertainties may cause ASG's actual results to differ materially from those contemplated by the forward-looking statements. Factors that might cause or contribute to such differences include, among others, competitive pressures, the growth rate of the Internet and telecommunications concerns, constantly changing technology and market acceptance of the company's products and services. Investors are also directed to consider the other risks and uncertainties discussed in ASG Technologies required financial statements and filings. All other companies and products listed herein may be trademarks or registered trademarks of their respective holders.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.