SOURCE: American TonerServ

April 02, 2008 16:23 ET

American TonerServ Reports Fourth-Quarter, Full-Year Results, Reviews Strategy and Outlook

Full-Year 2007 Revenue Increases to $3,630,531 From $456,433 in 2006; Fourth-Quarter Revenue Grows to $1,054,731, From $131,047 in 2006

SANTA ROSA, CA--(Marketwire - April 2, 2008) - American TonerServ Corp. (OTCBB: ASVP) ("ATS"), a strategic consolidator in the more than $6.0 billion highly fragmented independent segment of the printer supplies and services industry, today announced financial results for the fourth quarter and year ended December 31, 2007.

"In 2007, American TonerServ went from planning our future to executing the steps necessary to achieve our goal of building the company's annual revenue run rate to approximately $45 million by the end of 2008," said Dan Brinker, chief executive officer.

"As we stated at the beginning of 2007, our strategy is to acquire and grow strong independent printer supply and service companies in the top 30 metropolitan areas in the United States. Building upon foundational work in 2006, in 2007 we acquired Optima Technologies LLC and Tonertype of Florida, LLC. The Optima acquisition was completed in April, and the Tonertype acquisition closed in late December, making 2007 the biggest year in the Company's history for acquisitions."

Mr. Brinker continued, "Looking forward, we have identified several attractive targets to add to the American TonerServ family of companies. At the same time, we are achieving improvements in sourcing that strengthens our ability to provide cost-effective printer supplies, and we are maximizing operational infrastructure to support our growing business."

In 2007, the American TonerServ Board of Directors was strengthened by the addition of two new members. Chuck Mache joined the board in November and was subsequently named Chairman of the Board in January 2008. Steven Jensen, who was Chief Executive Officer of Optima Technologies, joined the Board in August. Additionally, the company established an advisory board of industry and management experts to provide counsel to the executive management team.

Recent Highlights

In March, 2008, American TonerServ announced the establishment of NC TonerServ, a wholly-owned subsidiary located in North Carolina's Research Triangle.

Also in March, American TonerServ consolidated its Dallas, Texas, operations under the leadership of Clay Allbright, who owned and operated an independent printer supply and service company prior to joining ATS. Additionally, ATS engaged printer supply and service consultant Rob Cowman, founder of the Cowman Group, to work with the Corporate Development team in identifying and evaluating acquisition prospects for ATS.

Mr. Brinker said, "We recognized that the growth we experienced in 2007 represented an opportunity to build best practices internally from the ground up. In early 2008, we established new accounting and audit functions within our Finance department. This group has begun to institute best practices on internal controls. This is one example of how we are building the team to take ATS to a much larger operating model."

Fourth-Quarter and Fiscal Year 2007 Financial Results

ATS reported revenue of $1.1 million for the quarter ended December 31, 2007, compared to approximately $0.1 million for the quarter ended December 31, 2006. ATS reported a net loss for the quarter ended December 31, 2007 of $1.75 million, compared to a net loss of $1.1 million for the quarter ended December 31, 2006, or a net loss of $0.04 per share in the fourth quarter compared to a net loss of $0.06 per share in the same period of the previous year.

The Company reported revenue of $3.6 million for the year ended December 31, 2007, compared to $0.5 million for the year ended December 31, 2006. For the twelve months ended December 31, 2007, ATS reported a net loss of $4.8 million, compared to a net loss of $1.9 million for the year ended December 31, 2006.

Based on 29.4 million weighted shares of common stock outstanding during the year ended December 31, 2007, ATS reported a loss of approximately $0.16 per share for the year ended December 31, 2007 and a loss of $0.17 per share for the year ended December 31, 2006.

Outlook

"Printing is the largest undocumented cost in business, according to our research," said Mr. Brinker. "ATS customers gain print management systems and service that increase their ability to budget for printing and increase efficiency by reducing equipment down time. Furthermore, using recycled components in top-quality printer cartridges compatible with all leading printer brands reduces cost and reduces waste going to landfills.

"We are actively identifying and evaluating acquisition targets in major metropolitan areas around the country. Our strategy is to make favorable offers to owners and in many cases to engage the expertise of those owners to continue building their operations under the ATS umbrella," said Mr. Brinker. "We plan to add five to seven businesses that together we expect would build the Company's level of revenue to approximately $45 million on an annualized basis by the end of 2008. We believe the industry is ready for a national consolidator capable of providing buying power, operational infrastructure, inventory management, and best business practices. American TonerServ is that consolidator."

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Consolidated Statements of Operations

                                                 December 31,  December 31,
                                                     2007          2006
                                                 -----------    ----------
Revenues:
  Toner                                          $ 3,203,894    $  267,784
  Service                                            426,637       188,649
                                                 -----------    ----------
Total revenues                                     3,630,531       456,433
                                                 -----------    ----------
Cost of sales:
  Toner                                            2,116,802       171,229
  Service                                            420,046        90,873
  Inventory write-down                                68,500          -
                                                 -----------    ----------
Total cost of sales                                2,605,348       262,102
                                                 -----------    ----------
Gross profit                                       1,025,183       194,331

Operating Expenses:
  Salaries and wages                               1,768,024       580,560
  Professional fees and services                   1,346,706       982,493
  Sales and marketing                                287,616        87,990
  General and administrative                       1,334,711       239,145
  Amortization of customer lists                     338,173        11,503
                                                 -----------    ----------
Total operating expenses                           5,075,230     1,901,691
                                                 -----------    ----------
Loss from operations                              (4,050,047)   (1,707,360)

Other income (expense):
  Fair value of convertible debt                      85,417      (154,166)
  Termination of management agreement               (550,000)         -
  Interest expense                                  (260,267)      (75,162)
  Change in fair value of warrant liabilities        (71,873)      (35,000)
  Gain on claims settlements                          14,445        37,819
                                                 -----------   -----------
  Net loss                                       $(4,832,325)  $(1,933,869)
                                                 ===========   ===========
Net loss per share:
  Basic and diluted                              $     (0.16)  $     (0.17)
                                                 ===========   ===========

Weighted average number of shares outstanding:
  Basic and diluted                               29,373,589    11,359,337
                                                 ===========   ===========





AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Unaudited Statements of Operations
                                                    Three Months Ended
                                                 December 31,  December 31,
                                                     2007          2006
                                                 ------------  -----------
Revenues:
  Toner                                          $   911,458    $  114,779
  Service                                            143,273        16,268
                                                 -----------    ----------
Total revenues                                     1,054,731       131,047
                                                 -----------    ----------
Cost of sales:
  Toner                                              659,870        69,500
  Service                                            150,872        11,975
                                                 -----------    ----------
Total cost of sales                                  810,742        81,475
                                                 -----------    ----------
Gross profit                                         243,989        49,572

Operating Expenses:
  Salaries and wages                                 606,375       218,427
  Professional fees and services                     197,221       666,688
  Sales and marketing                                 75,953        72,115
  General and administrative                         457,774        90,841
  Amortization of customer lists                     105,951          -
                                                 -----------    ----------
Total operating expenses                           1,443,274     1,048,071
                                                 -----------    ----------
Loss from operations                              (1,199,285)     (998,499)

Other income (expense):
  Fair value of convertible debt                     131,250        (3,994)
  Termination of Azaria management agreement        (550,000)         -
  Interest expense                                   (69,218)      (21,737)
  Change in fair value of warrant liabilities        (78,205)      (47,827)
  Gain on claims settlements                          13,144           462
                                                 -----------   -----------
  Net loss                                       $(1,752,314)  $(1,071,595)
                                                 ===========   ===========
Net loss per share:
  Basic and diluted                              $     (0.04)  $     (0.06)
                                                 ===========   ===========





AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Consolidated Balance Sheet
                                                              December 31,
                                                                  2007
                                                              ------------
ASSETS
Current assets:
  Cash and cash equivalents                                   $     60,196
  Accounts receivable, net of doubtful accounts of $35,224       1,326,891
  Inventory                                                        715,328
  Prepaid expenses and other current assets                         33,127
  Deferred compensation                                            471,298
                                                              ------------
     Total current assets                                        2,606,840

  Customer lists, net                                            4,002,862
  Goodwill                                                       1,801,895
  Property and equipment, net                                      394,745
  Other assets                                                      29,959
                                                              ------------
     Total Assets                                             $  8,836,301
                                                              ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses                       $  1,767,997
  Shareholder advances                                             431,095
  Notes payable - current portion (net of unamortized
   discount of $(223,120)                                        2,068,033
  Notes payable, related parties - current portion                 150,000
  Convertible notes payable, related parties - current portion      31,250
  Convertible notes payable - current portion                      187,500
  Deferred revenue                                                  92,589
                                                              ------------
     Total current liabilities                                   4,728,464
                                                              ------------
Long-term liabilities:
  Notes payable (net of unamortized discount of $(343,815)       1,281,400
  Convertible notes payable                                        925,000
  Warrant liabilities                                              119,700
                                                              ------------
     Total long-term liabilities                                 2,326,100
                                                              ------------
     Total liabilities                                           7,054,564
                                                              ------------
Commitments and contingencies
Stockholders' equity:
Common stock; $.001 par value; 450,000,000 shares authorized;
 60,390,956 shares issued and outstanding                           60,391
Additional paid-in capital                                      19,300,186
Accumulated deficit                                            (17,578,840)
                                                              ------------
     Total stockholders' equity                                  1,781,737
                                                              ------------
     Total Liabilities and Stockholders' Equity               $  8,836,301
                                                              ============

About American TonerServ:

American TonerServ Corp. ("ATS") is building a nationwide organization to efficiently serve the printing needs of small-and medium-sized businesses by consolidating leading independent operators in the $6 billion recycled printer cartridge and printer services industry, offering top-quality, environmentally-friendly products and local service teams. Please see www.AmericanTonerServ.com for more information.

Forward-Looking Statements

Except for historical information contained herein, the matters set forth above may be forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ from those in the forward-looking statements. Words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Such forward-looking statements are based on the current beliefs of management, as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors such as the level of business and consumer spending, the amount of sales of the Company's products, the competitive environment within the industry, the ability of the Company to continue to expand its operations, the level of costs incurred in connection with the Company's expansion efforts, economic conditions in the industry and the financial strength of the Company's customers and suppliers. The Company does not undertake any obligation to update such forward-looking statements. Investors are also directed to consider all other risks and uncertainties.

Contact Information

  • Contact:

    American TonerServ Corp.
    Phone: 800-736-3515

    Jordan Goldstein
    Stakeholder Communications
    Phone: 415-369-9000
    E-mail: Email Contact