SOURCE: American TonerServ

American TonerServ

August 13, 2009 08:00 ET

American TonerServ Reports Record Revenue and EBITDA for Second Quarter

SANTA ROSA, CA--(Marketwire - August 13, 2009) - American TonerServ Corp. (OTCBB: ASVP) ("ATS"), a strategic consolidator in the highly fragmented $6.0 billion printer supplies and services industry, today announced continued strong growth momentum for the second quarter ended June 30, 2009.

"We are very pleased to report record numbers this quarter, with revenues growing more than 166% over last year's second quarter," said Chuck Mache, who was named chief executive officer in February 2009. "As evidence of the company's momentum, second quarter revenues were 15% above those of the preceding first quarter."

Revenue for the three months ended June 30, 2009, advanced to $7.4 million from $2.8 million for the corresponding quarter a year ago and from $6.4 million for the preceding 2009 first quarter. The company's net loss for the 2009 second quarter decreased significantly to $568,452, or $.01 per share, from a net loss of $1,254,809, or $.01 per share, for the same quarter the previous year.

American TonerServ achieved earnings before interest, taxes, depreciation and amortization (EBITDA) of $87,984 for the 2009 second quarter compared with a loss of $803,893 in the second quarter of 2008. Adjusted EBITDA (EBITDA less stock-based compensation expense, other non-cash items and other one-time expenses) totaled $270,193 for the 2009 second quarter, versus a loss of $338,693 last year.

"The strong increase in revenues and EBITDA for the second quarter is attributable to the execution of our three 2009 strategic initiatives: our Sales Partner Program; a significant hospital contract; and continued execution of our acquisition strategy," Mache said. "Continuing to achieve positive EBITDA confirms that our formula is working, as we move forward in growing the company and moving closer to our goal of becoming a formidable national consolidator in our sector. Selective acquisitions will play a role in our strategic growth initiatives, as we also concentrate on organically growing our existing operations," Mache added.

Presentation of Non-GAAP Information

This press release contains non-GAAP financial measures, including EBITDA (earnings before interest, income taxes, depreciation and amortization) and Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization and other non-cash related expenditures). The Company believes these non-GAAP financial measures are useful to investors in evaluating its results. These measures are not a measurement of financial performance under GAAP and should not be considered as alternatives to net income, income from operations, or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating, investing or financing activities as a measure of liquidity. In addition, because EBITDA and Adjusted EBITDA may not be calculated identically by all companies, this presentation may not be comparable to other similarly titled measures of other companies. For a reconciliation of these non-GAAP financial measures to the most comparable GAAP equivalent, see the Non-GAAP Reconciliation - EBITDA and Adjusted EBITDA, along with related footnotes, below.

About American TonerServ

American TonerServ Corp., a leading marketer of compatible toner cartridges, is building a nationwide organization to efficiently serve the printing needs of small- and medium-sized businesses by consolidating best-in-class 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.

Safe Harbor Statement

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.

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
RESULTS OF OPERATIONS

                            Three months ended       Six months ended
                                 June 30,                 June 30,
                            2009          2008       2009         2008
                        -----------  -----------  -----------  -----------
Revenues:
  Toner and supplies    $ 6,352,395  $ 2,284,076  $11,717,620  $ 4,538,965
  Service                 1,003,981      478,471    2,014,871      913,261
                        -----------  -----------  -----------  -----------
Total revenues            7,356,376    2,762,547   13,732,491    5,452,226
                        -----------  -----------  -----------  -----------
Cost of sales:
  Toner                   4,644,588    1,424,389    8,814,812    2,877,603
  Service                   477,971      275,193      702,457      616,569
                        -----------  -----------  -----------  -----------
Total cost of sales       5,122,559    1,699,582    9,517,269    3,494,172

Gross profit              2,233,817    1,062,965    4,215,222    1,958,054

Operating expenses:
  Salaries and wages        872,044      682,724    1,749,613    1,356,660
  Professional fees and
   services                 494,652      146,244      783,309      731,126
  Sales and marketing       610,748      286,986    1,100,500      480,207
  General and
   administrative           500,250      407,270      987,530      742,511
  Amortization of
   intangible assets        181,310      154,229      353,491      306,206
                        -----------  -----------  -----------  -----------
Total operating expenses  2,659,004    1,677,453    4,974,443    3,616,710
                        -----------  -----------  -----------  -----------
Loss from operations       (425,187)    (614,488)    (759,221)  (1,658,656)

Other (expense) income:
  Change in fair value of
    warrant liability        35,603       (1,053)     452,669        1,874
  Gain on claims settlement       -            -            -           66
  Fair value of
   convertible debt         250,000     (375,000)     250,000     (362,500)
  Interest expense, net    (430,019)    (264,268)    (793,419)    (432,709)
  Other income                1,151            -        3,905            -
                        -----------  -----------  -----------  -----------
Net loss                $  (568,452) $(1,254,809) $  (846,066) $(2,451,925)
                        ===========  ===========  ===========  ===========
Net loss per share:
   Basic and diluted    $     (0.01) $     (0.02) $     (0.01) $     (0.04)
                        ===========  ===========  ===========  ===========
Weighted average number
  of shares outstanding:
   Basic and diluted     78,154,691   64,542,512   77,873,619   62,233,698
                        ===========  ===========  ===========  ===========



BALANCE SHEET DATA

                                                  June 30,
                                                    2009      December 31,
                                                 (unaudited)      2008
                                                ------------   -----------
ASSETS
Current assets
  Cash and cash equivalents                     $     25,836   $     4,033
  Accounts receivable, net                         3,645,204     2,753,445
  Inventory                                        1,156,766       774,747
  Prepaid expenses and other current assets          178,816        75,716
  Deferred compensation                               27,382        73,275
                                                ------------   -----------
     Total current assets                          5,034,004     3,681,216
                                                ------------   -----------
  Intangible assets, net                           3,941,769     4,058,036
  Goodwill                                         7,127,999     6,935,468
  Property and equipment, net                        598,892       644,477
  Other assets                                        76,540        80,044
                                                 -----------   -----------
     Total assets                                $16,779,204   $15,399,241
                                                 ===========   ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Cash overdraft                                 $    46,384   $    39,381
  Accounts payable and accrued expenses            4,190,938     3,030,599
  Shareholder advances                               118,595       173,595
  Revolving line of credit                         1,668,179     1,346,722
  Notes payable - current portion
   (net of unamortized discount of $121,451
   and $194,937 at June 30, 2009 and
   December 31, 2008)                              1,523,754     2,080,865
  Convertible notes payable, current portion
   (net of unamortized discount of $140,461
   and $147,566 at June 30, 2009 and
   December 31, 2008)                                856,092     1,782,712
  Convertible notes payable, related parties -
   current portion(net of unamortized
   discount of $0 and $1,466 at June 30,
   2009 and December 31, 2008)                             -       123,534
  Note payable, related parties                      200,000             -
  Deferred revenue                                   276,079        77,245
                                                 -----------   -----------
     Total current liabilities                     8,880,021     8,654,653
                                                 -----------   -----------
Long-term liabilities
  Notes payable (net of unamortized discount
   of $218,789 and $244,016 at June 30, 2009
   and December 31, 2008)                          1,533,210       929,842
  Convertible notes payable (net of unamortized
   discount of $549,371 and $669,042 at
   June 30, 2009 and December 31, 2008)            2,906,836     2,926,524


BALANCE SHEET DATA (continued)

  Warrant liabilities                                193,329       639,193
                                                 -----------   -----------
     Total long-term liabilities                   4,633,375     4,495,559
                                                 -----------   -----------
     Total liabilities                            13,513,396    13,150,212
                                                 -----------   -----------
Commitments and contingencies

Stockholders' equity:
  Preferred stock
   4,700,000 and 0 shares issued and
   outstanding at June 30, 2009 and
   December 31, 2008, respectively                     4,700             -
  Common stock
   78,345,996 and 77,045,995 shares issued and
   outstanding at June 30, 2009 and
   December 31, 2008, respectively                    78,346        77,046
  Additional paid-in capital                      26,248,664    24,391,819
  Accumulated deficit                            (23,065,902)  (22,219,836)
                                                ------------  ------------
     Total stockholders' equity                    3,265,808     2,249,029
                                                ------------  ------------
     Total liabilities and stockholders' equity $ 16,779,204  $ 15,399,241
                                                ============  ============



The following is a reconciliation of cash flows provided by operating
 activities to EBIT, EBITDA, and net loss:


                           Three Months Ended         Six Months Ended
                                June 30,                   June 30,
                           2009          2008         2009        2008
                       -----------   -----------  -----------  -----------
Cash flows from
 operating activities  $    69,489   $  (690,878) $  (266,891) $(1,326,103)
Changes in operating
 assets and liabilities    (73,064)      202,514       16,831      304,950
Non-cash (expenses)
 income, including
 depreciation and
 amortization             (554,251)     (766,445)    (596,006)  (1,430,772)
Interest expense, net      430,019       264,268      793,419      432,709
                       -----------   -----------  -----------  -----------
EBIT                      (138,433)     (990,541)     (52,647)  (2,019,216)
Depreciation and
 amortization              226,417       186,648      444,568      370,823
                       -----------   -----------  -----------  -----------
EBITDA                     87,984       (803,893)     391,921   (1,648,393)
Interest expense         (430,019)      (264,268)    (793,419)    (432,709)
Depreciation and
 amortization            (226,417)      (186,648)    (444,568)    (370,823)
                      -----------    -----------  -----------  -----------
Net loss              $  (568,452)   $(1,254,809) $  (846,066) $(2,451,925)
                      ===========    ===========  ===========  ===========


The following is a reconciliation of net loss to EBITDA:

                         Three Months Ended          Six Months Ended
                              June 30,                    June 30,
                         2009          2008          2009         2008
                     -----------   -----------   -----------   -----------
Net loss             $  (568,452)  $(1,254,809)  $  (846,066)  $(2,451,925)
Interest expense, net    430,019       264,268       793,419       432,709
                     -----------   -----------   -----------   -----------
EBIT                    (138,433)     (990,541)      (52,647)   (2,019,216)
Depreciation and
 amortization            226,417       186,648       444,568       370,823
                     -----------   -----------   -----------   -----------
EBITDA               $    87,984   $  (803,893)  $   391,921   $(1,648,393)
                     ===========   ===========   ===========   ===========



The following is a reconciliation of net EBITDA to Adjusted EBITDA; which
 excludes all non-cash items; one time expenditures and stock related
 compensation:


                       Three Months Ended           Six Months Ended
                           June 30,                     June 30,
                      2009          2008           2009         2008
                  -----------    -----------    -----------   -----------
EBITDA            $    87,984    $  (803,893)   $   391,921   $(1,648,393)
Stock related
 compensation         434,785         88,926        547,238       493,909

Fair value of
 conversion feature
 of convertible debt (250,000)       375,000       (250,000)      362,500
Fair value of warrant
 liabilities          (35,603)         1,053       (452,669)       (1,874)
Bad debt allowance
 for entities           2,500          3,856          2,500        36,356
Other costs            31,247              -         45,426             -
                  -----------    -----------    -----------   -----------
ADJUSTED EBITDA   $   270,913    $  (338,693)   $   284,416   $  (761,137)
                  ===========    ===========    ===========   ===========

Contact Information

  • For more information, contact:

    American TonerServ Corp.
    800-736-3515
    Mark Warnell
    Director of Administration
    Email: Email Contact
    or
    PondelWilkinson Inc.
    Roger Pondel/Evan Pondel
    310-279-5980
    Email: Email Contact