Advanced Energy Recovery, Inc. Announces Closing of Two Significant Transactions.

MISSION, Kan. -- Advanced Energy Recovery, Inc. ("AER")(OTC-PINK SHEETS: AVRC) a mid-stream natural gas and production company, reported the closing of two transactions.

In the first transaction, AER, through its wholly owned subsidiary, Allen Drilling Acquisition Company, ("ADAC") entered into a joint venture (Elgin Holdings, L.L.C.) ("Elgin") with GulfWest Energy Inc, ("GWEI") a publicly traded oil and gas company located in Houston, Texas. The joint venture was formed for the purpose of initially developing certain portions of the GWEI oil and gas asset bases in Madison and Hardin Counties, Texas. Certain of the Madison County gas reserves, if developed and produced, are expected to require treatment similar to that described later in the second transaction. GWEI contributed certain assets valued at approximately $540,000, and ADAC committed to provide up to $595,000 in initial cash capital funding to Elgin. ADAC holds a 52.5% interest in Elgin. The initial capital commitment funds are being raised by ADAC through the private placement of a new series of ADAC participating preferred stock.

In the second transaction, AER entered into a license agreement (the "Agreement") with Gateway Energy Corporation ("Gateway"), another publicly traded energy company located in Houston, Texas. The Agreement, provides, among other things, for the granting of a sublicense to AER and Elgin to enable Elgin to treat the gas produced from the leasehold interests owned by Elgin in Madison County, Texas. The gas treatment process employs the state-of-the-art, patented, absorption based technology developed by Advanced Extraction Technologies, Inc., ("AET") for which Gateway has the exclusive U.S. license, to remove nitrogen from the gas. In addition, the Agreement provides that AER and Elgin will dedicate all gas requiring treatment produced from its Madison County reserves to Mehra Gas Treating Units pursuant to Gateway's exclusive license under the AET licensing agreement. The Agreement further grants to AER or its designees, an option to participate pari passu with Gateway, subject to certain limitations, in future projects which require the treatment of natural gas containing high nitrogen, which projects utilize the AET license held by Gateway

President Charles Holtgraves commented: "The completion of these two transactions should provide an excellent platform on which to build future stockholder value for the Company. In addition, these transactions complete the transformation of the Company from the financial industry to the energy industry. In late March, 2004, the Company's shareholders approved our name change from Advanced Financial, Inc. to Advanced Energy Recovery, Inc. and a reverse 1 for 3 stock split. They also approved the disposition of all of our financial operations, which transaction was completed at the end of August, but effective as of April 1, 2004, which is the date our fiscal year begins. As of April 1, 2004, all of the Company's operations and assets are now based in the energy industry. Although we are a very small-sized energy company at this time, we believe our new business strategy, which is to focus on the development and production of known natural gas reserves which can be treated and brought to market, will provide investment opportunities to significantly grow the Company and enhance stockholder value. We are entering the industry at a time when the current and future projected sustained price of natural gas, as well as the demand for natural gas are at all-time highs, while at the same time the amount of natural gas reserves in the continental United States that cannot be developed and produced because of nitrogen and other impurities is substantial. Some estimates put these "non-spec" gas reserves to be in the range of 30% to 40% of all natural gas reserves in the continental United States. Our joint ventures with GulfWest and Gateway are an economically viable integral part of implementing our new business strategy."