Andover Medical, Inc. Anticipates Closing $2.0 Million Private Financing

Andover Medical, Inc. (AMI) is seeking to take advantage of projected growth and evolving economies of scale arising from consolidation in the procedure specific durable medical equipment (DME) and services segments of the orthopedic, podiatric, and physician care markets in the United States. By establishing a nationwide subsidiary network, AMI plans to offer physicians the largest selection of competitively priced brand-name DME. These products include, devices to aid the recovery from Anterior Cruciate Ligament (ACL) surgery, knee replacements, and hip replacements.

2007 Year to Date Business Developments:

Over the past twelve months, Andover Medical has begun successfully building its national subsidiary network of DME providers. Following the equity raise of over seven million dollars and an additional line of credit from TD Banknorth for up to five million dollars, Andover is well-positioned to move forward with its multi-faceted acquisition and growth strategies.

The Andover management team is pleased with the company’s first two acquisitions, Ortho-Medical Products, Inc. and Rainier Surgical, Incorporated, companies which will act as the platform from which the larger, unified network will grow. Through careful due diligence and analysis of the financials and organizational structure of its targeted acquisitions, Andover seeks to ensure that the most promising and regionally successful private DME distributors form the company’s foundation. From this solid foundation, Andover drives to develop a nationally recognized DME brand providing practitioners and patients in the orthopedic and podiatric markets with the largest selection of the most competitively priced, high quality DME available.

Andover is committed to its strategy of targeting and acquiring the most effective DME providers for its unified network. Andover’s management team is looking forward to the Company’s continued growth and development of a national brand.

Industry Snapshot:

Orthopedics is one of the fastest growing segments in healthcare products and services. The "graying" of the population and the increase in the active physical lifestyle of seniors, among other factors, play key roles in this growth. DME products specific to these three areas are most significantly used by aging baby boomers and seniors age 65 and over. This senior demographic, which is expanding rapidly both in size and in its need for services, has been increasing from approximately 35 million people in 2000, to an estimated 40.2 million by 2010, and eventually to an estimated 71 million people by 2030, representing approximately 20 percent of the U.S. population.

As the aging/active population lives longer, they require a greater number of prescribed DME devices for treating injuries, chronic medical conditions, and orthopedic surgeries. These factors account for the anticipated growth in the size of the patient market for DME products and the need for their increased frequency of prescription of them. Andover aims to satisfy this increased demand for DME in a highly fragmented marketplace, and is optimistic that the Company’s strategy will prove successful as greater purchasing and distribution efficiencies will provide attractive solutions to physicians and patients.

Outlook:

Andover's annualized revenues, based on the acquisitions of Ortho-Medical, Inc. and Rainier Surgical Incorporated., are approximately $8.6M, and steady growth is anticipated over the next twelve to sixteen months as Andover continues to research currently targeted acquisitions and increase the pipeline of potential acquisition opportunities.

To date, Andover has targeted a number of private orthopedic DME distributors nationally. The initial focus remains on “platform” companies with revenues of between $3M and $7M. The secondary focus will be on smaller companies that will strengthen the regional presence of the Company’s initial acquisitions. Andover is optimistic about its growth potential, and is seeking to double its revenue by the end of 2008, as the currently targeted acquisitions are completed and pricing efficiencies in the marketplace are recognized and increased.