SOURCE: American TonerServ

May 15, 2008 16:56 ET

American TonerServ Reports First-Quarter Results, Recent Highlights

First Quarter 2008 Revenue Increases 155% from Fourth Quarter 2007; Company States Intention to Acquire Pendl Companies

SANTA ROSA, CA--(Marketwire - May 15, 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 quarter ended March 31, 2008.

First-Quarter 2008 Financial Results

ATS reported revenue of $2,689,679 for the quarter ended March 31, 2008, compared to $390,568 for the quarter ended March 31, 2007. Revenue increased 155% from fourth quarter 2007 revenue of $1,054,731.

ATS reported a net loss for the quarter ended March 31, 2008 of $1.2 million, compared to a net loss of $0.97 million for the quarter ended March 31, 2007. ATS reported a net loss of approximately $0.02 per share for the quarter ended March 31, 2008.

"The first quarter saw significant top line revenue growth as we continue to execute our business model," said Dan Brinker, chief executive officer. "We are very pleased with our entry into the North Carolina market, and with the efficiencies we are beginning to realize in our Florida operations." In March, ATS announced the establishment of NC TonerServ, LLC a wholly-owned subsidiary located in North Carolina's Research Triangle.

Mr. Brinker added, "The results of the quarter include the first full quarter of sales from our acquisition of Tonertype of Florida, which was completed at the end of December 2007. The management team of Tonertype is now enjoying the benefits of our buying power for re-manufactured toner cartridges. We believe the quarter demonstrates the merits of our business strategy to locate, evaluate and acquire the best independent printer supply and service businesses in the top metro markets around the United States."

Recent Highlights

During the first quarter, ATS engaged printer supply and service consultant Rob Cowman to work with the company's Corporate Development team in identifying and evaluating additional acquisition prospects for ATS. Further, the company 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.

In April, ATS announced that the company had signed a letter of intent to acquire the retail business of Pendl Companies, Inc. ("Pendl"), headquartered in Brookfield, Wisconsin. Pendl has been providing printer supplies and service to national and regional business customers since 1988. According to unaudited financial information provided to ATS by Pendl, the retail segment of the business generated approximately $5.0 million in revenue in 2007. Due diligence and negotiations of an acquisition agreement are underway.

Outlook

"We remain on plan toward our goal of adding five to seven businesses that together we expect would build the company's level of revenue to approximately $45.0 million on an annualized basis by the end of 2008," said Mr. Brinker. "ATS offers owners of independent businesses the opportunity to grow and develop under the umbrella of a national brand, enjoying volume purchasing power and operational infrastructure and efficiencies. Our customers gain print management systems and service that increase their ability to control their printing costs. And of course, using recycled components in top-quality printer cartridges compatible with all leading printer brands lowers cost and reduces waste going to landfills."

AMERICAN TONERSERV CORP. AND SUBSIDIARIES

Results of Operations:

                                                   Three months ended
                                                        March 31,
                                                -------------------------
                                                   2008           2007
                                                ----------     ----------
Revenues:
  Toner                                        $ 2,317,860    $   369,784
  Service                                          371,819         20,784
                                                ----------     ----------
Total revenues                                   2,689,679        390,568
                                                ----------     ----------
Cost of sales:
  Toner                                          1,453,214        215,964
  Service                                          341,376         16,849
                                                ----------     ----------
Total cost of sales                              1,794,590        232,813

Gross profit                                       895,089        157,755

Operating expenses:
  Salaries and wages                               673,936        308,864
  Professional fees and services                   584,882        511,899
  Sales and marketing                              193,221         92,569
  General and administrative                       335,241        136,728
  Amortization of customer lists                   151,977         33,211
                                                ----------     ----------
Total operating expenses                         1,939,257      1,083,271
                                                ----------     ----------
Loss from operations                            (1,044,168)      (925,516)

Other income (expense):
  Fair value of convertible debt                    12,500        (12,500)
  Interest expense                                (168,441)       (32,557)
  Change in fair value of warrant liability          2,927            107
  Gain on claims settlement                             66          1,301
                                                ----------     ----------
Net loss                                       $(1,197,116)   $  (969,165)
                                               ===========    ===========
Net loss per share:
  Basic and diluted                            $     (0.02)   $     (0.04)
                                               ===========    ===========
Weighted average number of shares
outstanding:
  Basic and diluted                             61,980,196     22,942,061
                                                ==========     ==========




Balance Sheet Data
                                                               -----------
                                                                March 31,
                                                                  2008
                                                               -----------

ASSETS
Current assets:
 Cash and cash equivalents                                    $    434,497
 Accounts receivable, net of doubtful accounts of $67,535        1,352,372
 Inventory                                                         741,463
 Prepaid expenses and other current assets                          40,046
 Deferred compensation                                             315,526
                                                              ------------
     Total current assets                                        2,883,904

 Customer lists, net                                             3,850,885
 Goodwill                                                        1,801,895
 Property and equipment, net                                       372,264
 Other assets                                                       32,021
                                                              ------------
     Total Assets                                             $  8,940,969
                                                              ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable and accrued expenses                        $  1,580,934
 Shareholder advances                                              377,345
 Notes payable - current portion
  (net of unamortized discount of $190,047)                      2,117,591
 Convertible notes payable - current portion                       250,000
 Convertible notes payable, related parties – current portion       31,250
 Notes payable, related parties - current portion                   75,000
 Deferred revenue                                                  270,335
                                                              ------------
     Total current liabilities                                   4,702,455
                                                              ------------
Long-term liabilities:
 Notes payable (net of unamortized discount of $318,814)         1,070,909
 Convertible notes payable                                         800,000
 Warrant liabilities                                               116,773
                                                              ------------
     Total long-term liabilities                                 1,987,682
                                                              ------------
     Total liabilities                                           6,690,137
                                                              ------------
Commitments and contingencies

Stockholders' equity:
 Common stock; $.001 par value; 450,000,000 shares authorized;
  65,036,221 shares issued and outstanding                          65,036
Additional paid-in capital                                      20,961,752
Accumulated deficit                                            (18,775,956)
                                                              ------------
     Total stockholders' equity                                  2,250,832
                                                              ------------
     Total Liabilities and Stockholders' Equity               $  8,940,969
                                                              ============

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 more than $6.0 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