Avatech Solutions Strengthens Operating Program with Enhanced Offerings and Additional Cost Cutting Measures

BALTIMORE—(BUSINESS WIRE)—April 2, 2009— Avatech Solutions, Inc. (OTCBB: AVSO), America's leading professional services company for design and engineering technologies, today announced that it has implemented a new operating program aimed at streamlining operations and addressing new revenue sources in order to align its business with current market demands.

Avatech’s new program is focused on managing its business through the current market contraction and the inherent impact on sales and profitability, while simultaneously identifying new and evolving market opportunities. By proactively identifying changes in the market Avatech will be able to create responsive, diverse technology based solutions ahead of other providers.

In support of this program, Avatech is leveraging its strong team of technical and business development talent to create solutions that address its customers’ needs associated with cost reduction, productivity and competitiveness. Areas of opportunity include integrated solutions for both manufacturing and building sector customers and include packaged solutions that support state of the art technology with seamless methodology and processes. In the Manufacturing sector Avatech is building and implementing integrated solutions that expand the reach of technology utilization from traditional engineering use to disparate functions including sales and procurement. In the Building and Infrastructure, or AEC sector, the Company is building and implementing solutions that will address the pending demand for advanced technology solutions in support of expected U.S. infrastructure spending and Sustainable and Green technology integration. Additionally, Avatech is engaging with customers and partners to create value added solutions in support of Building Information Modeling and Integrated Product Delivery initiatives.

The cost reduction components of the program include:

  • A temporary 10% reduction in base pay for all employees and management; and
  • Further reductions in the company’s workforce that, coupled with a small reduction in force that was done in January 2009, are expected to result in a decrease in the overall workforce of approximately 10%.

These cost reduction and containment programs are expected to reduce ongoing operating expenses by approximately $500,000 per quarter. The temporary pay reduction will remain in place until Avatech’s business has returned to a level that supports the previous levels of compensation.

The Company expects the new program to support near term cash management objectives while also providing additional and incremental revenue opportunities.

George Davis, President and CEO of Avatech commented, “The economic downturn that has overtaken the U.S. within the past 12-18 months has significantly impacted the markets we serve - including Architecture, Engineering & Construction (AEC) and Manufacturing. This has caused the companies operating within these markets to reduce and delay spending, including spending on the traditional technology and services we provide. In order to protect the financial strength of the Company during this period, we have implemented a focused operating plan that addresses containment and maintenance, discovery, creation and execution. This strategy is expected to cut costs by approximately $2 million annually and put us in a unique position of strength for when this economic downturn comes to an end and the economy improves.

While we are currently experiencing reduced demand for the traditional technology and services we provide to our customers, we are seeing increased demand for new and creative solutions that support productivity improvements and cost reduction initiatives with a focus on enhancing competitiveness. With our technical and business development strength, we are uniquely positioned to be a go-to-company in the markets we serve by developing and providing value added solutions that support these critically important initiatives. We expect to manage through the downturn and emerge in a position of strength.”

Mr. Davis concluded, “Due to the current economic environment and complex level of influencing factors, we will not be providing specific earnings guidance. However, I believe we have taken significant and necessary steps in order to ensure the financial security of our business while simultaneously positioning for future growth.”

About Avatech Solutions

Avatech Solutions, Inc. (OTCBB: AVSO) is America’s leading professional services company for design and engineering technologies. Avatech advances the way organizations design, develop, and manage building, infrastructure, and manufacturing projects. Fortune 500 and Engineering News-Record's Top 100 companies work with Avatech to gain a competitive advantage through technology consulting, implementation, training, and support services. One of the world’s largest integrators of Autodesk software, Avatech designs systems that accelerate innovation while improving quality and profitability. For more information, please visit www.avatech.com.

Forward-Looking Statements

This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature, including those that include the words “anticipate”, “estimate”, “should”, “expect”, “believe”, “intend”, and similar expressions, are based on current expectations, estimates and projections about, among other things, the industry and the markets in which Avatech Solutions, Inc. operates, and they are not guarantees of future performance. Whether actual results will conform to expectations and predictions is subject to known and unknown risks and uncertainties, including risks and uncertainties discussed in this report; general economic, market, or business conditions; cost of capital, demand for products and services; changes in Avatech Solutions, Inc.’s competitive position or competitive actions by other companies; the ability to manage growth; changes in laws or regulations or policies of federal and state regulators and agencies; and other circumstances beyond the Avatech Solutions, Inc.’s control. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements, and there can be no assurance that the actual results anticipated will be realized, or if substantially realized, will have the expected consequences on the Avatech Solutions, Inc.’s business or operations. Except as required by applicable laws, Avatech Solutions, Inc. does not intend to publish updates or revisions of forward-looking statements it makes to reflect new information, future events or otherwise.

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