Adsero issues corporate update

The past 12 months have seen substantial changes for Adsero. The company has undergone the following changes in order to re-position the Company for the future, based on changing market conditions resulting from discounted pricing pressures due to offshore production and a strengthening Canadian dollar.

Production Changes/Business Direct Model 

• In June 2006, Adsero announced the closing of its production facilities in Quebec, and the complete outsourcing of products to Turbon AG, one of the world’s largest remanufacturers of laser printer cartridges. It entered into a 10 year supply agreement which provides access to high quality, low cost manufacturing in order to service customers going forward.

• Adsero has reduced its employees from over 140 to less than 20. 

• A new strategic aggressive focus on a business direct model to operate on higher margins. At present it services close to 3,000 accounts on a direct basis and seeks to grow this aggressively throughout North America. Also, substantial changes in the retail market (Staples delisting HP compatible cartridges) further enhances the opportunity in this Business direct model.

Debt Reduction 

• During August 2006, Adsero sold a number of larger, low margin, commodity customers in the USA, which were probably going to be lost due to pricing issues.

• During August 2006, Adsero filed for protection from creditors within its Canadian subsidiary, Tecknolaser Company. This was necessitated in order to restructure the business in an orderly fashion. The company worked with its two senior secured creditors (National Bank and Heath Bank) through this process. The National Bank was paid off in full during September 2006. On February 3, 2007, Adsero successfully negotiated with Heath Bank, who was the senior secured lender, to purchase the assets through one of its wholly owned subsidiaries (Tecknolaser Services), to continue the business without any interruption. Currently Heath Bank is owed approximately $1.6 million, as the only remaining senior lender. The Company is presently actively negotiating with various financial parties to restructure the remaining debt and establish a new working capital facility for its aggressive growth strategy. 

• During September 2006, Adsero negotiated the return of its investment in Turbon shares (400,000 shares of Turbon AG) to Turbon in exchange for the elimination, in full, of any and all debts outstanding with Turbon at that time.

• In November 2006, the issue related to one of the company’s old subsidiaries was closed therefore allowing for the removal of $2.1 million in liabilities from its balance sheet. 

• During the fall of 2006 the company converted an additional $2.9 million in existing debt into equity.

• Through this aggressive restructuring, Adsero has strengthened its balance sheet by eliminating approximately $15 million of debt.&nbs