Arete Industries (ARET)

[james_1]

NEWS:


Arete Industries Addresses Issues of Overhead, Funding, Structure and Shareholder Value


BOULDER, Colo., Jul 12, 2001 /PRNewswire via COMTEX/ -- Arete Industries, Inc.
(OTC Bulletin Board: AREE) issued an update to its shareholders about its plans
to address its current challenges and its vision for the future of the Company.
Thomas P. Raabe, CEO, stated that the Company is in the process of a major
restructuring to eliminate overhead, preserve its assets and opportunities that
it has developed to date and to prepare the Company for executing a program to
bring new business opportunities with fundamental value into the Company.

(Photo: http://www.newscom.com/cgi-bin/prnh/19990916/ARETE )

Raabe stated that, as described in its recently filed annual report for fiscal
2000, and its quarterly report for the first quarter 2001, the Company was
forced to cease funding development efforts for its outdoor sports business,
Arete Outdoors and for Applied Behavior Systems (ABS) and Seventh Generation
Technologies (7GT). The chief reasons cited were a lack of sufficient revenue
from sales of Arete Outdoors products and evaporation of funding sources for the
development of the technology of ABS and 7GT. Raabe cited adverse conditions
effecting the market as well as a shift in funding criteria for professional
investors, "angels" and venture capital firms for this situation and stated that
in order for the Company to survive, it must recognize these trends and take
immediate action to bring in new opportunities with good business fundamentals
including existing revenues, the prospect of significant growth, a history of
operations and a short term path to profitability. Raabe stated that in order to
pursue this objective, it must first stabilize its financial situation by
cutting back severely on its overhead to assure survival and to effect a
recapitalization to become attractive to viable candidates as a financial
vehicle.

Raabe stated that, "In addition to the mandate to eliminate overhead and attract
viable business acquisitions, the Company is going to take measures to preserve
the value of the assets that it has developed over the past 12 months in ABS/7GT
and Arete Outdoors and to share that value directly with its shareholders. The
Company will continue to develop opportunities to make these entities
independent, self-sustaining businesses and to seek outside sources of capital
for continued development. "We believe our plan will give the current
shareholders an opportunity to continue to participate in businesses that they
have supported over the past months and will free resources at the Company to
pursue its new direction," Raabe stated.

The Company has eliminated most of its overhead by reductions in staff and
closing its incubator facilities. It is in the process of cleaning debt off its
balance sheet by converting debt into equity and pursuing payment plans with
vendors and tax authorities. Finally, to enable the Company to attract viable
acquisition candidates and to successfully close one or more acquisitions, it
needs to prepare itself to qualify for listing on the NASDAQ Small Cap Market
including taking steps to improve its capital structure. The Company will
address these matters at the next meeting of shareholders which it hopes to hold
in September of this year, depending on logistics and available resources to
cover the cost of holding the meeting.

The Company is also anticipating resolution of the SEC enforcement action in the
near term. A settlement agreement has been signed by the Company, but awaits
execution by the SEC central office. "This has been pending for several months
and while management is optimistic that it will be signed, there is no
indication of when that will happen," stated Raabe.

Raabe stated that, "The position we find ourselves in now is obviously not what
we intended when we launched the incubator concept. However, we believe that we
not only have the ability to adapt to the current situation, but we believe
there is an abundance of viable candidates seeking to go public that do not have
access in the current situation to the traditional channels for doing so. In
that regard, we are optimistic that we have a window of opportunity to make one
or more acquisitions that may provide significant value to our shareholders and
we will need to act swiftly and decisively in order to take advantage of that
window of opportunity."

Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995:

Certain statements contained herein which are not historical are forward-looking
statements that are subject to risks and uncertainties not known or disclosed
herein that could cause actual results to differ materially from those expressed
herein.

For information contact: James Stock, President, Stock Enterprises, Inc., Phone:
[phone], Email: [e-mail].