================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

           |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2005

                                       OR

           |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

            For the Transition Period from ___________ to ___________


                         Commission File Number: 0-31040


                               ADSERO CORPORATION
                               ------------------
             (Exact name of Registrant as specified in its charter)


                  Delaware                                65-0602729
                  --------                                ----------
      (State or other jurisdiction of                  (I.R.S. Employer
       incorporation or organization)                 Identification No.)


                              2101 N. Nobel Street
                              Sainte Julie, Quebec
                                     J3E 1Z8
                              --------------------
          (Address of principal executive offices, including zip code)

                                 (450) 922-5689
                                 --------------
              (Registrant's telephone number, including area code)


         Check whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]

         The number of shares of the Registrant's common stock outstanding at
August 5, 2005, was 17,241,975.

          Transitional Small Business Disclosure Format: Yes [ ] No [X]

================================================================================

<PAGE>
                               ADSERO CORPORATION
                  JUNE 30, 2005 QUARTERLY REPORT ON FORM 10-QSB
                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

         Special Note Regarding Forward Looking Statements ....................3



                          PART I FINANCIAL INFORMATION

Item 1.  Financial Statements .................................................4

Item 2.  Plan of Operation....................................................25

Item 3   Controls and Procedures..............................................26



                            PART II OTHER INFORMATION

Item 1.  Legal Proceedings....................................................26

Item 2.  Changes in Securities and Use of Proceeds............................27

Item 5.  Other Information....................................................28

Item 6.  Exhibits.............................................................31


                                        2
<PAGE>
                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         To the extent that the information presented in this Quarterly Report
on Form 10-QSB for the quarter ended June 30, 2005, discusses financial
projections, information or expectations about our products or markets, proposed
financing and acquisition activities, or otherwise makes statements about future
events, such statements are forward-looking. We are making these forward-looking
statements in reliance on the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Although we believe that the expectations
reflected in these forward-looking statements are based on reasonable
assumptions, there are a number of risks and uncertainties that could cause
actual results to differ materially from such forward-looking statements. These
risks and uncertainties are described, among other places in this Quarterly
Report, in "Plan of Operation".

         In addition, we disclaim any obligations to update any forward-looking
statements to reflect events or circumstances after the date of this Quarterly
Report. When considering such forward-looking statements, you should keep in
mind the risks referenced above and the other cautionary statements in this
Quarterly Report.

                                        3
<PAGE>
                         PART I - FINANCIAL INFORMATION



ITEM 1.  FINANCIAL STATEMENTS                                               PAGE
                                                                            ----

         Condensed Consolidated Balance Sheet as of
         June 30, 2005 (unaudited)                                             5

         Condensed Consolidated Statements of Operations for the
         three and six months ended June 30, 2005 and 2004 (unaudited)         6

         Condensed Consolidated Statements of Cash Flows for the
         six months ended June 30, 2005 and 2004 (unaudited)                   7

         Notes to Condensed Consolidated Financial Statements (unaudited)   8-24


                                        4
<PAGE>
                          ADSERO CORP. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                  June 30, 2005
                                   (unaudited)

                                     ASSETS
                                     ------
CURRENT ASSETS

   Cash .........................................................  $     57,612
   Accounts receivable, net .....................................     3,415,822
   Inventories ..................................................     3,212,493
   Income taxes receivable ......................................       146,123
   Prepaid expenses .............................................       742,802
   Deferred income taxes ........................................       338,645
                                                                   ------------

      TOTAL CURRENT ASSETS ......................................     7,913,497

   Property, plant and equipment, net ...........................     4,433,915
   Trademarks ...................................................       491,667
   Investment in prospective acquire ............................     1,001,000
   Goodwill .....................................................     7,143,519
   Other assets .................................................        50,612
                                                                   ------------

      Total Assets ..............................................  $ 21,034,210
                                                                   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
CURRENT LIABILITIES

   Line of credit obligation ....................................  $  2,544,198
   Installment loans.............................................       417,279
   Accounts payable .............................................     3,070,003
   Salaries and Benefits ........................................       656,313
   Warranties  and related Accruals .............................       293,635
   Accrued expenses .............................................     1,235,670
   Convertible Note  ............................................     1,001,000
   Liabilities of discontinued operation ........................     2,125,341
   Notes payable - Related Parties (including accrued interest
      of $66,495) ...............................................       172,988
   Redeemable preferred stock of subsidiary .....................     1,570,732
   Current portion of long-term debt ............................     2,256,854
                                                                   ------------
      TOTAL CURRENT LIABILITIES .................................    15,344,013

   Long-term debt, less current portion .........................        63,231
   Convertible promissory note ..................................     1,540,453
   Convertible note .............................................     1,000,000
   Deferred income taxes ........................................       264,403
                                                                   ------------
      Total Liabilities .........................................    18,212,100
                                                                   ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Common stock, $.001 par value, 100,000,000 shares authorized,
      17,241,975 shares issued and outstanding ..................        17,243
   Series I exchangeable shares of subsidiary, 6,500,000 shares
      outstanding, exchangeable one for one into common shares of
      the company ...............................................     3,250,000
   Preferred Stock, $.0001 par value, 20,000,000 shares
      authorized, 6,500,000 issued and outstanding ..............           650
   Additional paid-in-capital ...................................    11,206,746
   Accumulated other comprehensive income - Foreign currency
      translation adjustment.....................................        68,371
   Deferred compensation ........................................       (55,997)
   Accumulated deficit ..........................................   (11,664,903)
                                                                   ------------
      TOTAL STOCKHOLDERS' EQUITY ................................     2,822,110
                                                                   ------------

      Total Liabilities and Stockholders' Equity ................  $ 21,034,210
                                                                   ============

            See notes to condensed consolidated financial statements

                                        5
<PAGE>
<TABLE>
                                           ADSERO CORP. AND SUBSIDIARIES
                                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                    (unaudited)
<CAPTION>

                                              Three Months Ended                       Six Months Ended
                                              ------------------                       ----------------
                                       June 30, 2005       June 30, 2004       June 30, 2005       June 30, 2004
                                       -------------       -------------       -------------       -------------
                                                        (development stage)                     (development stage)
                                                        -------------------                     -------------------
<S>                                    <C>                 <C>                 <C>                 <C>
REVENUES .........................     $  6,328,742        $          -        $ 13,746,420        $          -

COST OF GOODS SOLD ...............        4,465,272                   -           9,896,151                   -
                                       ------------        ------------        ------------        ------------
   GROSS PROFIT ..................        1,863,470                   -           3,850,269                   -
                                       ------------        ------------        ------------        ------------

OPERATING EXPENSES
   Salaries (including stock based
     compensation) ...............          787,165                   -           1,577,247
   Selling and Administrative ....          767,015             231,091           1,354,426             286,114
   Conversion of debt ............                -                   -                   -             627,340
   Depreciation and amortization .          105,876                   -             236,753                   -
                                       ------------        ------------        ------------        ------------
   TOTAL OPERATING EXPENSES ......        1,660,056             231,091           3,168,426             913,454
                                       ------------        ------------        ------------        ------------

INCOME (LOSS) FROM OPERATIONS ....          203,414            (231,091)            681,843            (913,454)

   INTEREST EXPENSE ..............          173,175              14,050             288,981              27,860
                                       ------------        ------------        ------------        ------------

INCOME (LOSS) BEFORE INCOME TAXES            30,239            (245,141)            392,862            (941,314)

   INCOME TAXES ..................           11,188                   -              68,794                   -
                                       ------------        ------------        ------------        ------------

NET INCOME (LOSS) ................     $     19,051        $   (245,141)       $    324,068        $   (941,314)
                                       ============        ============        ============        ============

EARNINGS (LOSS) PER SHARE

NET INCOME (LOSS) PER SHARE,
   BASIC .........................     $       0.00        $      (0.02)       $       0.02        $      (0.12)
                                       ============        ============        ============        ============

WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING ............       17,241,975          10,925,755          16,366,308           7,699,421
                                       ============        ============        ============        ============

NET INCOME (LOSS) PER SHARE,
   DILUTED .......................     $       0.00        $      (0.02)       $       0.01        $      (0.12)
                                       ============        ============        ============        ============

WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING ............       27,582,428          10,925,755          26,706,751           7,699,421
                                       ============        ============        ============        ============

                              See notes to condensed consolidated financial statements

                                                         6
</TABLE>
<PAGE>
<TABLE>
                                           ADSERO CORP. AND SUBSIDIARIES
                                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (unaudited)
<CAPTION>

                                                                                       Six Months Ended
                                                                                       ----------------
                                                                               June 30, 2005       June 30, 2004
                                                                               -------------       -------------
                                                                                                (development stage)
                                                                                                -------------------
<S>                                                                            <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

      Net Income (Loss) ................................................       $    324,068        $   (941,314)
                                                                               ------------        ------------

   Adjustments to reconcile net income (loss) to net cash provided by
    (used in) operating activities:
      Depreciation and amortization ....................................            228,337                   -
      Bad debt expenses  ...............................................             46,113                   -
      Inventory reserve.................................................            155,051                   -
      Deferred income taxes............................... .............             (1,494)                  -
      Stock based compensation .........................................             55,997                   -
      Non-cash interest expense ........................................                  -              25,125
      Conversion expense re notes payable ..............................                  -             627,340
   Changes in operating assets and liabilities:
      Accounts receivable ..............................................            359,297                   -
      Inventories ......................................................           (38,629)                   -
      Prepaid expenses and other assets ................................           (646,048)                  -
      Accounts payable and accrued expenses ............................           (933,476)               (608)
      Income taxes receivable ..........................................            639,374                   -
                                                                               ------------        ------------
         Total Adjustments .............................................           (135,478)            651,857
                                                                               ------------        ------------

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ....................            188,590            (289,457)
                                                                               ------------        ------------

CASH FLOWS USED IN INVESTING ACTIVITIES

      Investment in prospective acquire ................................         (1,001,000)                  -
      Acquisition of business, net of cash received ....................         (3,131,860)                  -
      Purchase of fixed assets .........................................            (26,236)                  -
      Deferred acquisition costs .......................................            (32,451)                  -
                                                                               ------------        ------------
NET CASH FROM INVESTING FINANCING ACTIVITIES ...........................         (4,191,547)                  -
                                                                               ------------        ------------

CASH FLOWS FROM FINANCING ACTIVITIES

      Repayment of notes payable to related parties ....................            (76,079)                  -
      Long term debt ...................................................           (270,652)                  -
      Bank loan ........................................................           (124,075)                  -
      Common stock issued for cash, net of offering expenses ...........          1,231,000                   -
      Proceeds from issuance of convertible notes ......................          2,540,453              70,075
      Proceeds from issuance of notes payable ..........................          1,001,000             205,000
      Proceeds (repayments) of loan payable ............................           (275,000)             52,500
                                                                               ------------        ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES ..............................          4,026,647             327,575
                                                                               ------------        ------------

EFFECT OF EXCHANGE RATE ON CASH ........................................           (127,778)                  -

NET INCREASE (DECREASE) IN CASH ........................................           (104,088)             38,118

CASH AT BEGINNING OF PERIOD ............................................            161,700                 444
                                                                               ------------        ------------

CASH AT END OF PERIOD ..................................................       $     57,612        $     38,562
                                                                               ============        ============

SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES

      ACQUISITION OF BUSINESS

      Assets acquired ..................................................       $ 13,095,479                   -
      Costs in excess of net assets acquired ...........................          7,643,519                   -
      Liabilities assumed ..............................................        (12,364,346)                  -
      Stock based purchase consideration ...............................         (3,250,000)                  -
      Redeemable preferred stock issued as purchase consideration ......         (1,570,732)                  -
      Non cash expenses ................................................           (383,712)                  -
      Cash received at closing .........................................            (38,348)                  -
                                                                               ------------        ------------

      Net cash paid for acquisition of business ........................       $  3,131,860                   -
                                                                               ============        ============

                              See notes to condensed consolidated financial statements

                                                         7
</TABLE>
<PAGE>
                          ADSERO CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                                   (unaudited)

1. BASIS OF INTERIM FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared by the Company in conformity with accounting principles generally
accepted in the United States of America and the instructions of Form 10-QSB. It
is management's opinion that these statements include all adjustments,
consisting of only normal recurring adjustments considered necessary to make the
financial position, results of operations, and cash flows not misleading as of
June 30, 2005 and for all periods presented.

Certain information and footnote disclosures normally included in the annual
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. These
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto as of December 31, 2004
and for the year ended December 31, 2003, which are included in the Company's
Annual Report on Form 10KSB for the year ended December 31, 2004 filed with the
Securities and Exchange Commission.

2. ORGANIZATION

Adsero Corp. ("Adsero"), formerly known as Reink Corp., was incorporated in
Delaware on March 6, 1999. Adsero Corp, is the parent of wholly owned
subsidiaries Teckn-O-Laser Global Company, Teckn-O-Laser Inc. and Teckn-O-Laser
USA Ltd. (collectively the "Tecknolaser Group") which acquisitions were
completed effective January 2, 2005 as described in Note 13.

Adsero and the Tecknolaser Group (collectively the "Company") manufactures and
distributes remanufactured toner cartridges and inkjet cartridges. These
products are sold through a variety of channels such as distributors and retail
office supply stores, both domestically and internationally.

Development Stage Operations
----------------------------

Effective January 1, 2004, the Company suspended its operations following the
involuntary bankruptcy and loss of control of former wholly owned subsidiary
Reink Imaging USA, Ltd. ("Reink USA"). Accordingly the Company had previously
reported its results as a Development Stage Enterprise in accordance with
Statement of Financial Accounting Standard ("SFAS") No.7 "Accounting and
Reporting by Development Stage Enterprises".

As described below, the Company completed its acquisition of the Tecknolaser
group effective January 2, 2005, which investee has a marketable product and
established revenue and customer bases. Accordingly, the Company no longer
considers itself to be a development stage enterprise effective January 2, 2005.

Completion of Private Placement Transactions and Acquisition of a Business
--------------------------------------------------------------------------

As described in Note 12, the Company raised $1,165,000 through sales of its
equity securities and $1.7 million through the issuance of subordinated debt
during the quarter ended March 31, 2005. The Company also completed its
acquisition of the Tecknolaser Group effective January 2, 2005.

3. GOING CONCERN

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business.

At June 30, 2005, the Company had a working capital deficiency of $7,430,516
and was not in compliance with certain covenants under its line of credit
obligation described in Note 9 and certain of its term loans. The lender under
these obligation has the right to demand immediate repayment of the loans due to
this event of default. The exercise of this right and the requirement to
immediately repay the outstanding balance, which amounts to an aggregate of
$2,961,477 at June 30, 2005, would have a material adverse effect on the
business. There can be no assurance that the lender under these obligation will
provide the Company with a waiver of this breach of covenant.

Management also believes that the Company will still require substantial
additional capital to fund its operations and integrate the Tecknolaser Group
into its existing business. The Company's ability to recover its assets and
continue its operations is dependent upon its ability to raise additional
capital and generate revenue and operating cash flow through the execution of
its business plan. There can be no assurance that

                                        8
<PAGE>

the Company will be successful in its efforts to operate the Tecknolaser Group
or any other prospective acquiree businesses profitably. The Company can also
not provide any assurance that it will obtain the financing it needs to sustain
the business until such time that it is able to generate sufficient revenue and
operating cash flow through the operations of the Tecknolaser Group or other
prospective acquiree businesses. These matters raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments relating to the recovery of the recorded assets or
the classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation
---------------------------

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant inter-company transactions have
been eliminated.

Revenue Recognition
-------------------

The Company applies the revenue recognition principles set forth in Securities
and Exchange Commission Staff Accounting Bulletin ("SAB") 104 "Revenue
Recognition" with respect to all of its revenue. Accordingly, the Company
records revenue when (i) persuasive evidence of an arrangement exists, (ii)
delivery has occurred, (iii) the vendor's fee is fixed or determinable, and (iv)
collectability is probable. The Company requires all of its product sales to be
supported by evidence of a sale transaction that clearly indicates the selling
price to the customer, shipping terms, payment terms (generally 30 days) and
refund policy, if any. Selling prices of the products are fixed at the time the
sale is consummated. The Company recognizes revenue at the time in which it
receives a confirmation that the goods were either tendered at their destination
when shipped "FOB destination," or transferred to a shipping agent when "FOB
shipping point."

Cash and Cash Equivalents
-------------------------

The Company considers all highly liquid securities purchased with original
maturities of three months or less to be cash equivalents.

Accounts Receivable
-------------------

The Company has a policy of reserving for uncollectible accounts based on its
best estimate of the amount of probable credit losses in its existing accounts
receivable. The Company periodically reviews its accounts receivable to
determine whether an allowance is necessary based on an analysis of past due
accounts and other factors that may indicate that the realization of an account
may be in doubt. Account balances deemed to be uncollectible are charged to the
allowance after all means of collection have been exhausted and the potential
for recovery is considered remote. As of June 30, 2005, the Company has had a
low occurrence of credit losses and based on a review of balances outstanding
has determined that an allowance for doubtful accounts of $46,113 is necessary.

Inventories
-----------

The Company's inventories, which consists of raw material and finished goods are
stated at the lower of cost (first in first out method) or market.

Property, Plant and Equipment
-----------------------------

Property, Plant and Equipment and Equipment are stated at cost less accumulated
depreciation and amortization, Depreciation and amortization are calculated
using the straight line methods over the estimated useful lives, which generally
range from 3 to 40 years.

Goodwill
--------

Goodwill represents the excess of purchase considerations and related
transaction expenses that are incurred in connection with completing
acquisitions of businesses accounted for in accordance with SFAS 141 "Business
Combinations." SFAS 142, "Goodwill and Other Intangible Assets," requires that
goodwill be tested for impairment at the reporting unit level (operating segment
or one level below an operating segment) on an annual basis and between annual
tests in certain circumstances. Application of the goodwill impairment test
requires judgment, including the identification of reporting units, assigning
assets and liabilities to reporting units, assigning goodwill to reporting
units, and determining the fair value. Significant judgments required to
estimate the fair value of reporting units include estimating future cash flows,
determining appropriate discount rates and other assumptions.

                                        9
<PAGE>

The Company did not experience any events or changes in circumstances during the
quarter ended June 30, 2005 that would indicate that the recoverability of its
goodwill is in doubt.

Long Lived Assets
-----------------

The Company periodically reviews the carrying values of its long lived assets in
accordance with SFAS 144 "Long Lived Assets" when events or changes in
circumstances would indicate that it is more likely than not that their carrying
values may exceed their realizable values and records impairment charges when
considered necessary. The Company has determined that no impairment charges are
necessary during the quarter ended June 30, 2005.

Use of Estimates
----------------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments
-----------------------------------

The carrying amounts reported in the balance sheet for cash, accounts
receivable, accounts payable and accrued expenses and preferred stock redeemable
during the next year approximate fair value based on the short-term maturity of
these instruments. The carrying amounts of the Company's line of credit
obligation, and other long term obligations approximate fair value as such
instruments feature contractual interest rates that are consistent with current
market rates of interest or have effective yields that are consistent with
instruments of similar risk, when taken together with equity instruments issued
to the holder.

Common Stock Purchase Warrants Issued in Private Placement Transactions
-----------------------------------------------------------------------

The Company accounts for the issuance of common stock purchase warrants issued
in connection with sales of its common stock in accordance with the provisions
of EITF 00-19 "Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company's Own Stock".

Based on the provisions of EITF 00-19, the Company classifies as equity any
contracts that (i) require physical settlement or net-share settlement or (ii)
gives the company a choice of net-cash settlement or settlement in its own
shares (physical settlement or net-share settlement). The Company classifies as
assets or liabilities any contracts that (i) require net-cash settlement
(including a requirement to net cash settle the contract if an event occurs and
if that event is outside the control of the company) (ii) give the counterparty
a choice of net-cash settlement or settlement in shares (physical settlement or
net-share settlement).

Stock Based Compensation
------------------------

As permitted under SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure", which amended SFAS No. 123 ("SFAS
123"), "Accounting for Stock-Based Compensation", the Company has elected to
continue to follow the intrinsic value method in accounting for its stock-based
employee compensation arrangements as defined by Accounting Principles Board
Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees", and related
interpretations including "Financial Accounting Standards Board Interpretation
No. 44, Accounting for Certain Transactions Involving Stock Compensation", an
interpretation of APB No. 25. No stock-based employee compensation cost is
reflected in net income, as all options that the Company granted had exercise
prices equal to the fair market value of the underlying common stock, on their
dates of grant.

As described in Note 12, the Company granted 244,500 stock options, to certain
employees of Tecknolaser Group and 110,000 to the three independent members of
its board of directors during the quarter ended March 31, 2005.

The following table illustrates what the Company's net income and earnings per
share would have been if the Company had used the fair value based method of
accounting for its employee stock option plans, as prescribed by SFAS No. 123:

                                       10
<PAGE>

                                   For the Three Months    For the Six Months
                                      Ended June 30,          Ended June 30,
                                  ---------------------   ---------------------
                                     2005        2004        2005        2004
                                  ---------   ---------   ---------   ---------

Net Income (loss), as reported .  $  19,051   $(245,141)  $ 324,068   $(941,314)

Incremental amount of stock
based employee compensation
expense determined under the
fair value method ..............    (51,080)     (3,125)    (81,781)     (3,125)
                                  ---------   ---------   ---------   ---------

Net Income (Loss), proforma ....  $ (32,029)  $(248,266)  $ 242,287   $(944,439)
                                  =========   =========   =========   =========

Income (Loss) per share:

  Basic and diluted, as reported  $    0.00   $   (0.02)  $    0.01   $   (0.12)
                                  =========   =========   =========   =========
  Basic and Diluted, proforma ..  $    0.00   $   (0.02)  $    0.01   $   (0.12)
                                  =========   =========   =========   =========

Non-Employee Stock Based Compensation
-------------------------------------

The Company accounts for the cost of stock based compensation awards issued to
non-employees for services at either the fair value of the services rendered or
the instruments issued in exchange for such services, whichever is more readily
determinable, using the measurement date guidelines enumerated in Emerging
Issues Task Force Issue ("EITF") 96-18, "Accounting for Equity Instruments That
Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services."

Research and Development
------------------------

Research and development costs are expensed as incurred.

Income Taxes
------------

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes ("SFAS No. 109"). SFAS No. 109
requires the recognition of deferred tax assets and liabilities for both the
expected impact of differences between the financial statements and tax basis of
assets and liabilities and for the expected future tax benefit to be derived
from tax loss and tax credit carry forwards. SFAS No. 109 additionally requires
the establishment of a valuation allowance to reflect the likelihood of
realization of deferred tax assets.

Net Income (Loss) Per Share
---------------------------

Pursuant to SFAS No. 128, Earnings per Share, the Company is required to provide
a dual presentation of "basic" and "diluted" earnings (loss) per share (EPS) for
the quarter ended June 30, 2005. Basic EPS amounts are based upon the weighted
average number of common shares outstanding. Diluted EPS amounts are based upon
the weighted average number of common and potential common shares outstanding.
Potential common shares include stock options using the treasury stock method,
and convertible notes and exchangeable shares using the "if converted" method.
Potential common shares are excluded from the calculation of diluted EPS in loss
periods, as the impact is antidilutive.

The following table provides a summary of all potentially dilutive securities
for the quarters ended June 30, 2005 and 2004, of which the amounts presented
for the quarter ended June 30, 2004 have been excluded from the computation of
the loss per share as their effect would be anti-dilutive:

                                                       June 30,
                                                  2005          2004
                                               ----------    ----------

         Options ..........................       784,500       337,500
         Warrants .........................     6,575,430       281,430
         Series I exchangeable shares .....     6,500,000             -
         Convertible debentures ...........     3,540,435        70,000
                                               ----------    ----------
         Total ............................    17,400,383       688,930
                                               ==========    ==========

                                       11
<PAGE>

Foreign currency translation
----------------------------

The consolidated financial statements are presented in United States dollars in
accordance with SFAS No. 52, "Foreign Currency Translation". The functional
currency of the Tecknolaser Group is the Canadian dollar. Foreign denominated
monetary assets are translated to United States dollars using foreign exchange
rates in effect at the balance sheet date. Revenues and expenses are translated
at the average rate of exchange during the period. Gain or losses arising on
foreign currency transactions are included in the determination of operating
results for the period.

Recently Issued Accounting Pronouncements
-----------------------------------------

In January 2003, Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
This interpretation of Accounting Research Bulletin No. 51, "Consolidated
Financial Statements," provides guidance for identifying a controlling interest
in a variable interest entity ("VIE") established by means other than voting
interest. FIN 46 also required consolidation of a VIE by an enterprise that
holds such controlling interest. In December 2003, the FASB completed its
deliberations regarding the proposed modifications to FIN No., 46 and issued
Interpretation Number 46R, "Consolidation of Variable Interest Entities - an
Interpretation of ARB 51" ("FIN No. 46 R"). The decisions reached included a
deferral of the effective date and provisions for additional scope exceptions
for certain types of variable interests. Application of FIN No. 46R is required
in financial statements of public entities that have interests in VIEs or
potential VIEs commonly referred to as special-purpose entities for periods
ending after December 15, 2003. Application by public issuers' entities is
required in all interim and annual financial statements for periods ending after
December 15, 2004. The adoption of this pronouncement did not have a material
effect on the Company's financial statements.

In December 2004, the FASB issued SFAS No. 123R "Share Based Payment". This
statement is a revision of SFAS Statement No. 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, Accounting for Stock Issued to
Employees, and its related implementation guidance. SFAS 123R addresses all
forms of share based payment ("SBP") awards including shares issued under
employee stock purchase plans, stock options, restricted stock and stock
appreciation rights. Under SFAS 123R, SBP awards result in a cost that will be
measured at fair value on the awards' grant date, based on the estimated number
of awards that are expected to vest and will result in a charge to operations
for stock-based compensation expense. SFAS 123R is effective for public entities
that file as small business issuers--as of the beginning of the first annual
reporting period of the fiscal year that begins after December 15, 2005.

The Company is currently in the process of evaluating the effect that the
adoption of this pronouncement will have on its financial statements.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets". SFAS 153 amends APB Opinion No. 29 to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. The provisions of SFAS 153 are effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005. Earlier
application is permitted for nonmonetary asset exchanges occurring in fiscal
periods beginning after December 16, 2004. The provisions of this Statement are
intended be applied prospectively. The adoption of this pronouncement did not
have material effect on the Company's financial statements.

EITF Issue No. 04-8, "The Effect of Contingently Convertible Instruments on
Diluted Earnings per Share." The EITF reached a consensus that contingently
convertible instruments, such as contingently convertible debt, contingently
convertible preferred stock, and other such securities should be included in
diluted earnings per share (if dilutive) regardless of whether the market price
trigger has been met. The consensus became effective for reporting periods
ending after December 15, 2004. The adoption of this pronouncement did not have
material effect on the Company's financial statements.

                                       12
<PAGE>

5. INVENTORY

Inventory consists of the following at June 30, 2005:

         Raw materials ...............................       $1,950,215
         Finished goods ..............................        1,417,329
                                                             ----------
                                                              3,367,544

         Less reserves ...............................         (155,051)
                                                             ----------
                                                             $3,212,493
                                                             ==========

6. PREPAID EXPENSES

The Company paid a $358,367 deposit for purchases from China.  Under various
terms, the company will pay the remaining balance of $251,128 during the end
of August and beginning of September 2005.

7. PROPERTY AND EQUIPMENT

Property and Equipment consists of the following at June 30, 2005:

         Land ........................................       $  314,444
         Building and Improvements ...................        2,216,681
         Machinery and Equipment .....................          773,333
         Furniture and Fixtures ......................          141,488
         Computer Equipment ..........................        1,207,973
                                                             ----------
                                                              4,653,919

         Less Accumulated Depreciation ...............         (220,004)
                                                             ----------
                                                             $4,433,915
                                                             ==========

8. LONG TERM DEBT

                            Obligation                                 Balance
                            ----------                                 -------

Mortgage loan, secured by land and building, at Canadian bank
prime rate plus 0.25% (4.5% at June 30, 2005), payable in monthly
installments of $13,960 (CDN$16,750), maturing May 2006 ............  $2,214,379

Equipment financing, with interest ranging from 6.52% and 10%,
payable monthly, maturing at various dates until April 2009 ........      74,145

Term loans, payable in monthly installments of $1,600(CDN$1,921),
without interest, maturing at various dates through August 2008 ....      31,561
                                                                      ----------

Total long term debt ...............................................   2,320,085
Less amounts due within one year ...................................   2,256,854
                                                                      ----------

                                                                         $63,231
                                                                      ==========

The Company was previously not in compliance with certain covenants under the
terms of its mortgage loan with respect to maintaining a certain minimum level
of cash flow and ratio of debt to equity. The lender under this obligation has
provided the Company with an exemption from these requirements through May 2006,
at which time the amount of the balance will be due on demand. The Company is in
the process of trying to find alternative financing arrangements, but has not
secured any firm commitments for new financings.

9. BANK LINE OF CREDIT AND TERM LOANS DUE ON DEMAND

Bank Line of Credit
-------------------

That Company has a credit facility with a Canadian bank that provides for
aggregate borrowings of up to approximately $2.9 million (CDN$3.5 million),
including an exchange line of credit for an amount of US$250,000. The loan is
secured by a first ranking lien for an amount of approximately $4.2 million
(CDN$5 million) on all accounts receivable and inventories. Interest is at the
Bank's Canadian prime rate plus 1% (5.25% as at June 30, 2005) and is renewable
annually.

The Company is required to comply with certain financial ratios under the terms
of the bank loan. As of June 30, 2005, and

                                       13
<PAGE>

subsequent thereto, the Company is not in compliance with these financial
ratios. The Company anticipates being able to cure the aforementioned default,
however; the Company cannot provide any assurance that the lender will waive the
violation. The lender currently has the ability to demand immediate repayment of
the loan which demand would have a material adverse affect on the Company's
financial position.

Term Loans
----------

The Company has the following outstanding term loans, under which it is required
to comply with certain financial ratios. As of June 30, 2005, and subsequent
thereto, the Company is not in compliance with these financial ratios. For this
reason, a 12.5% penalty is charged by the bank. The contractual terms of the
loans, notwithstanding the Company's event of default are as follows:

Term loan, Secured by automotive equipment, 6.65%, payable in
monthly installments of $1,250(CDN$1,500), maturing in November
2006 (1) ..........................................................   $   94,255

Term loan, secured by a lien on all present and future furniture,
fixtures and equipment, Canadian bank prime rate plus 1% (5.25%
as at June 30, 2005), payable in monthly installments of
$17,360(CDN$20,833), maturing January 2007 (1) ....................      323,024
                                                                      ----------
                                                                      $  417,279
                                                                      ==========

The Company is continuing making the installment payments as the lender has not
exercised its right to demand payment. However, the lender under these
obligations has not provided the Company with a written waiver of the violation
and therefore has the ability to exercise its right to demand payment at
anytime. Accordingly, the Company has classified the outstanding balance of
these loans as a current liability in the accompanying balance sheet.

BG Capital
----------

On January 1, 2004 the Company issued a 10%, $250,000 promissory note to BG
Capital Group Bahamas Ltd., which was repaid during the first quarter.

                                       14
<PAGE>

10. NOTES PAYABLE AND LONG TERM DEBT

Westminster Capital Inc. Convertible Promissory Note
----------------------------------------------------

On January 7, 2005 the Company issued a $1,000,000 convertible promissory note
(the "Note") paying interest at the rate of 3.9% per annum to Westminster
Capital Inc. ("Westminster") in consideration of $1,000,000. Interest and
principal in the Note are due January 1, 2008 subject to prepayment or
conversion commencing on or after July 1, 2005. Interest and principal due on
the Note are convertible into shares of common stock at a price of $.50 per
share. For each share acquired upon conversion, the holder will also receive one
common stock purchase warrant to purchase one share of common stock at a price
of $1.50 per share at any time prior to July 1, 2008. If prior to July 1, 2005
the Company issue any stock, options, or warrants, other then certain
specifically excluded securities issuances, at a price or exercise price of less
than $.50 per share, the per share conversion price under the Note will be
reduced to the price at which such other securities were sold. Additionally, the
Note conversion price is subject to adjustment to give effect to any stock
splits, stock dividends, or corporate reorganizations prior to conversion or
repayment of the Note.

Barrington Bank International Limited
-------------------------------------

Effective January 26, 2005 the Company entered into a CDN$2,000,000
(approximately US$1,666,666) convertible loan agreement (the "Loan Agreement")
with Barrington Bank International Limited ("Barrington Bank") with interest
payable quarterly at 12% per annum during the first 12 months and 20% per annum
thereafter. This obligation is subordinated to the Bank of Line of Credit and is
secured by substantially all the Company's assets.

The Loan Agreement provides for a prepayment penalty which specifies that in the
event the Company prepays the obligation prior to its one year anniversary date,
it will be obligated to pay a fee equal to the amount of additional interest
that it would have paid had the obligation remained outstanding through the 1
year anniversary date. Commencing on the 6 month anniversary of the loan,
Barrington Bank has the right to convert the remaining principal balance into
shares of the Company's common stock at a conversion price of US$1.00 per share.
The Company also issued 200,000 shares of common stock to the Lender and has
agreed to register these shares within the next registration statement filed by
the Company. The Company accounted for the issuance of the shares as a debt
discount, which is being amortized over the term of the loan.

Manchester Consolidated Corp. Convertible Promissory Note
---------------------------------------------------------

In April 2004, the Company issued a convertible promissory note in the amount of
$70,000 bearing interest at 10% per annum to Manchester Consolidated Corp. (a
related party) that was repaid in February 2005.

Loewen, Ondaatje, McCutcheon Limited
------------------------------------

Effective June 22, 2005 the Company entered into an agreement with Loewen,
Ondaatje, McCutcheon Limited ("LOM"), an investment banking firm. Pursuant to
the Agreement, LOM loaned the Company $1,001,000 on June 22, 2005 for the
specific purpose of allowing the Company to purchase issued and outstanding
shares of Turbon AG. The term of the loan is for a one year period that
commenced on June 22, 2005. Interest accrues on the outstanding amount of the
loan at the rate of 10% compounded semi-annually, and is payable quarterly
commencing September 1, 2005. As partial consideration for entering into the
Agreement, the Company issued 100,000 common stock purchase warrants to LOM,
each exercisable for the purchase of one share of the Company's common stock at
a price of $1.50 per share during the 30 month period following issuance. The
original terms of the loan also provides LOM with the right to convert the loan
into shares of the Company's common stock on or after August 15, 2005 under
certain circumstances.

As described in Note 18, this loan was repaid from the proceeds of the equity
securities sold on July 21, 2005 pursuant to the Agency Agreement between LOM
and the Company.

11. REDEEMABLE PREFERRED STOCK OF SUBSIDIARY

As described in Note 13, the Company issued 1,932,000 shares of preferred stock
in a wholly owned subsidiary as partial purchase consideration to the sellers of
the Tecknolaser Group. The aforementioned

                                       15
<PAGE>

shares are mandatorily redeemable at CDN$1.00 per share (US$0.83) at certain
times through March 31, 2006 and contains certain provisions that would enable
the holders to obtain up to 2.5 Series II Exchangeable Shares in the event of
the Company's failure to make the cash payment. Each Series II Exchangeable
shares would be convertible into the Company's common stock at the option of the
holder, which could result in a substantial dilution of stockholders equity in
the event of a default in addition to one share of the Company Series A Special
Preferred Voting Stock.

12. COMMITMENTS AND CONTINGENCIES

Litigation with Former Officers
-------------------------------

The Company is involved in ongoing litigation as both a plaintiff and as a
defendant against three former officers of Reink that arose in connection with
the involuntary bankruptcy and loss of control of that former business unit. In
this action the Company is seeking damages and other relief in the amount of
$1,000,000. The prior officers filed a counter-suit against the Company for back
wages and other costs. The Company considers the former officers claims to be
without merit and is vigorously contesting their claim, however; the Company is
presently unable to determine the outcome or possible range of loss, if any,
with respect to this matters at the current time.

Other Litigation
----------------

On May 21, 2004, John Calzaretto instituted an action against the Company in the
Superior Court of New Jersey, Law Division, Burlington County (Docket No.:
BUR-L-001259-04) seeking $25,768.50 together with interest, attorney's fees and
costs of suit based upon a claim for payment for legal services rendered. The
Company settled the matter for $15,000 in January 2005.

On June 25, 2004 the Company entered into a non-binding letter agreement with
Dancap Private Equity Inc. ("Dancap") respecting the proposed sale of $2,000,000
of a 5 year, 12% secured subordinated debenture to Dancap. The proposed
transaction involved the sale to Dancap of 800,000 shares of redeemable,
convertible preferred stock for nominal consideration. The agreement was
conditioned on the execution of a formal agreement between the parties and
several other conditions. Dancap has instituted an action against the Company in
Ontario Superior Court related to a break-up fee which was within the agreement.
The Company considers Dancap's claim to be without merit and is vigorously
contesting their claim, however; the Company is presently unable to determine
the outcome or possible range of loss, if any, with respect to this matter at
the current time.

Bankruptcy of Reink USA and Liabilities of Discontinued Operations
------------------------------------------------------------------

In January, 2003 the three largest creditors (the "Petitioners") of Reink USA
("Reink") filed a petition to force Reink into Chapter 7 under the US Federal
Bankruptcy Act. The Company believes that certain of the Petitioners and
officers of this former business unit formed a new business that became a direct
competitor of the Company.

In March 2003, Reink filed a motion to convert its case to a voluntary Chapter
11, which motion was accepted by the District of New Jersey, Federal Bankruptcy
Court. However, as the case was subsequently converted from Chapter 11
"Reorganization" into Chapter 7 "Liquidation" on July 10, 2003, and a Bankruptcy
Trustee was appointed to administer the estate. As a result, the Company lost
control of Reink.

Reink's remaining liabilities, which consist of $2,125,341 of accounts payable
and accrued expenses, are presented in the accompanying balance sheet as
liabilities of discontinued operations until such time that the bankruptcy is
adjudicated. The Company is unaware of any changes in the status of the
Bankruptcy proceedings.

Employment Agreements
---------------------

Concurrent with the acquisition of the Tecknolaser Group, the Company's
President and Chief Executive Officer resigned from his position. The vacancy in
this position was immediately filled by Yvon Leveille, a former shareholder of
the acquiree.

The Company entered into renewable 3 year employment agreements with each of
Yvon Leveille and Alain Lachambre. The initial base annual salaries payable to
Messrs. Leveille and Lachambre under their employment agreements are CDN$175,000
(approximately US$146,000) and CDN$166,000 (approximately US$139,000),
respectively. The employment agreements further provide for the payment of

                                       16
<PAGE>

performance based bonuses of up to 100% of salary at the discretion of the
compensation committee of the board of directors.

Consulting Agreements
---------------------

The Company entered into a series of consulting agreement with certain related
and unrelated parties that are more fully described in Note 15.

Strategic Supply Agreement
--------------------------

Effective June 22, 2005, the Company entered into a Strategic Supply Agreement
with Turbon AG, ("Turbon") a leading global imaging supply company specializing
in the remanufacture of laser cartridges. Pursuant to the Agreement, Turbon will
become a strategic supplier of remanufactured laser toner cartridges for the
Company at prices that will be competitive in the market place for such products
and that will be lower than prices offered by Turbon to other third party
customers for similar products under similar conditions. In consideration
thereof, the Company will give preferred vendor status to Turbon and will give
preference to ordering products from Turbon over competitive products of third
parties as long as Turbon's product quality meets our specifications.

As described in Note 16, the Company made a tender offer to acquire all of the
outstanding capital stock of Turbon in a proposed purchase business combination,
which is still subject to completion.

13. STOCKHOLDERS' EQUITY

Private Placement of Equity Securities
--------------------------------------

In January 2005 the Company sold an aggregate of 2,530,000 units to 11
accredited investors (as defined under Securities Act Rule 144) at $.50 per unit
or net proceeds of $1,121,000 ($1,265,000 less cash fees charged as reduction of
the offering proceeds). Each unit consists of one share of common stock (the
"Unit Shares") and one common stock purchase warrant. Each warrant entitles the
holder to purchase one share of common stock at a price of $1.50 per share at
any time during the three year period commencing on January 31, 2005.

The Company issued 68,000 shares of its common stock and 68,000 common stock
purchase warrants. Each warrant entitles the holder to purchase one share of
common stock at a price of $1.50 per share at any time during the three year
period commencing on January 31, 2005. In addition, the Company paid $44,000 in
cash to DGM Bank & Trust Inc., the placement agent, as fees for representing the
Company in the aforementioned financing transaction.

Issuance of Common Stock in Connection with Debt Financing
----------------------------------------------------------

As described in Note 10, the Company issued 200,000 shares of common stock with
registration rights to Barrington Bank in accordance with the Loan Agreement.

Issuance of Common Stock as a Fee to Related Party Transaction Advisor
----------------------------------------------------------------------

In March 2005, the Company issued an aggregate of 698,500 shares of common stock
to Manchester Consolidated Corp. ("Manchester") and its designees as part of the
financing fee payable to Manchester for its role in arranging the acquisition of
the Tecknolaser Group.

Issuance of Unit Shares in Settlement of Fees to Placement Agent
----------------------------------------------------------------

In March 2005, the Company issued 50,000 shares of common stock and 150,000
common stock purchase warrants to DGM Bank and Trust Inc. ("DGM") in
satisfaction and settlement of all sums due to DGM under the June 22, 2004
Agency Agreement with DGM with respect to equity sales made by the Company
during the term of the Agency Agreement that were not generated by or through
DGM.

Issuance of Shares Committed in 2004
------------------------------------

In March 2005, the Company issued an aggregate of 500,000 shares of its common
stock pursuant to a commitment to issue such shares to certain consultants who
rendered services to the Company in 2004. The Company also issued 205,000 Units
Shares to certain investors who funded their purchases during 2004. The Company
accounted for the issuance of these shares as a reduction of Common Stock to be
Issued.

                                       17
<PAGE>

Common Stock Purchase Warrants
------------------------------

The Company issued all warrants under the Unit Shares with registration rights
agreements which stipulate that the Company will file a registration statement
to register the underlying shares. The Company is not precluded from delivering
restricted stock to the holders of these warrants in the event such holder elect
to exercise their warrants prior to the Company causing a registration statement
to be declared effective under the Securities Act. In addition, there are no
provision under which the Company would be required to net cash settle any of
the aforementioned instruments. Accordingly, the Company has classified the
warrants as equity securities in accordance with EITF 00-19.

Adjustment to Previously Issued Unit Shares
-------------------------------------------

The Company, following the sale of Unit Shares that it consummated in January
2005, agreed to issue an additional 852,500 units to certain investors, or their
designees, at no additional cost, to bring their unit cost down to $.50 per
unit.

The Company has agreed to register for resale on behalf of the subscribers in
this offering and DGM, the Unit Shares and Warrant Shares, including the
additional Unit Shares and the Warrant Shares underlying the additional warrants
issued in March 2005, and the Work Fee Shares.

Issuance of Series A Preferred Special Voting Stock
---------------------------------------------------

As described in note 14, the Company issued 6,500,000 shares of Series A Special
Voting Preferred Stock as partial purchase consideration to the former
shareholders of the Tecknolaser Group. The Series A Preferred Voting Preferred
Stock is non-participating and the holder's rights allow them only to vote.

Issuance of Exchangeable Shares
-------------------------------

As described in note 13, the Company issued 6,500,000 Series I Exchangeable
Shares of 3091503 Nova Scotia Company, an indirect subsidiary, as partial
purchase consideration to the former shareholders of the Tecknolaser Group. Each
Series I Exchangeable Share is convertible into one share of the Company's
common stock at the option of the holder at any time. Upon issuance of any
common shares of the Company, the corresponding number of Series A Preferred
Special Voting will be cancelled.

Non-Employee Stock Based Compensation
-------------------------------------

In February 2005, the Company issued 100,000 stock options with an exercise
price of $1.55 per share to Agora Investor Relations Corp. ("Agora") pursuant to
our February 1, 2005 Investor Relations Agreement with Agora. The options are
exercisable, upon vesting, during the two year period commencing February 1,
2006. The Company is recording a charge of $111,993 equally over the 4 quarters
($27,998 each quarter) to amortize the cost of the options under the contract.

Grants of Stock Options to Employees and Directors
--------------------------------------------------

Pursuant to the Share Purchase Agreement described in Note 14, the Company
agreed to issue an aggregate of 300,000 non-statutory stock options under its
2000 Stock Option Plan to certain employees of the Tecknolaser group. The
options granted to each employee have a maximum term of 10 years and vest in
equal amounts, each equal to 1/3 of the total number of options granted to the
employee, on each of the first, second and third anniversaries of the date of
grant.

The Company granted 244,500 and 110,000 stock options, exercisable at $1.57 and
$1.06 per share, respectively (the quoted market prices) during the quarter
ended March 31, 2005. Such grants include 244,500 options to certain employees
of Tecknolaser Group, and 110,000 to the three independent members of the board
of directors. The options vest over a period of three years.

Equity Purchase Commitment
--------------------------

On January 6, 2005 the Company obtained an equity purchase commitment from
Trisan Equitable Corporation ("Trisan") pursuant to which Trisan has committed
to purchase an aggregate of $1,600,000 of the Company's common shares valued at
$.50 per share in stated amounts at stated times. Pursuant thereto, Trisan has
agreed to purchase 1,250,000 shares for $625,000 on September 1, 2005; 740,000
shares for $370,000 on September 30, 2005; 740,000 shares for $370,000 on
December 31, 2005; and 470,000 shares for $235,000 on March 31, 2006. On each
share purchase date, for each share purchased by Trisan, the Company has also
agreed to issue one common stock purchase warrant, each to purchase one share of
the Company's common stock at $1.50 per share at any time during the 3 year
period commencing on issuance.

                                       18
<PAGE>

The warrants will contain anti-dilution and cashless exercise provisions. The
Company has agreed to register the shares to be purchased by Trisan under the
commitment on behalf of Trisan.

14. ACQUISITION OF THE TECKNOLASER GROUP

Description of Transaction
--------------------------

Effective January 2, 2005, the Company entered into a Share Purchase Agreement
(the "Share Purchase Agreement") among Adsero Corp, YAC Corp. ("YAC"),
Teckn-O-Laser Company ("TOL Canada"), 3091503 Nova Scotia Company ("Acquiror"),
and Teckn-O-Laser Global Company ("Acquiree"), 3091732 Nova Scotia Company
("Callco"), and the shareholders of Acquiree (the "Acquiree Shareholders"). TOL
Canada is a wholly owned subsidiary of Acquiree. YAC is a wholly owned
subsidiary of the Company. Callco is a wholly owned subsidiary of YAC. Acquiror
is a wholly owned subsidiary of Callco.

Pursuant to the Share Purchase Agreement, The Company acquired through its
subsidiary Acquiror, all of the issued and outstanding capital stock of
Acquiree, effectively the Tecknolaser Group. The Teckn-O-Laser group
manufacturers and distributes imaging products, including remanufactured toner
cartridges and remanufactured inkjet cartridges.

The Company acquired the Tecknolaser Group to establish a platform that would
enable it to penetrate the imaging consumables market and to position itself to
acquire other high potential businesses in the same market segment. The
accompanying statement of operations for the period ended June 30, 2005 includes
the results of the Technolaser Group.

The aggregate purchase price that the Company paid for its acquisition of the
Tecknolaser Group amounted to $8,374,652, including cash of $1,894,598,
6,500,000 Acquiror Series I Exchangeable Shares in the Acquiror Subsidiary with
a fair value of $3,250,000, 1,932,000 shares of preferred stock in the Acquiror
Subsidiary which are mandatorily redeemable for $1,570,732 (Note 10) and
transaction fees amounting to $1,659,322.

The cash component of the purchase consideration includes a $1,265,656
(contractual amount of CDN$1,500,000) advance that the Company made to the
Acquiree shareholders for them to acquire certain shares of stock from a third
party so that at closing, the Acquiree Shareholders would own all the capital
stock of Acquiree. The advance, which was not required to be repaid upon
closing, became part of the purchase consideration that the Company paid to the
Acquiree shareholders.

Pursuant to a Lock-Up Agreement dated as of January 2, 2005, 6,000,000 of the
Series I Exchangeable Shares are subject to provisions that restrict the
subsequent sale, transfer, or disposal of a corresponding number of the
Company's common shares that will be issued to the holders of the Acquiror
Series I Exchangeable Shares upon exchange thereof.

In addition, the Company issued 6,500,000 shares of its newly created Series A
Preferred Special Voting Stock (the "Series A Preferred Stock") for each
Acquiror Series I Exchangeable Share owned. Shares of The Company's Series A
Preferred Stock have the right to vote on all matters submitted to the vote of
The Company's common shareholders on the basis of one vote for each share held.

Transaction fees include an aggregate of $640,800 in cash and common stock paid
to Manchester Consolidated Corp., a related party pursuant to a consulting
services agreement. The cash portion of the fee amounted to $291,550 and the
stock portion includes 698,500 shares with an aggregate fair value amounting to
$349,250.

A summary of the allocation of the purchase price to the fair value of assets
acquired and liabilities assumed, in accordance with SFAS 141 "Business
Combinations", is as follows:

                                       19
<PAGE>

Cash .............................................................   $    38,348
Other current assets .............................................     8,194,656
Property, plant and equipment ....................................     4,627,685
Other assets .....................................................       234,790
                                                                     -----------

   Fair value of assets acquired .................................    13,095,479
                                                                     -----------

Accounts payable and accrued expenses ............................     6,189,468
Secured obligations and long term debt ...........................     6,174,877
                                                                     -----------

   Fair value of liabilities assumed .............................    12,364,345
                                                                     -----------

   Fair value of identifiable net tangible assets acquired .......       731,133

Trademarks (estimated life of 15 years, amortized on a straight
 line basis) .....................................................       500,000

Goodwill .........................................................     7,143,519
                                                                     -----------

     Total Purchase Price ........................................   $ 8,374,652
                                                                     ===========

The allocation of the purchase price is preliminary and was prepared by
management using estimates and assumptions that management believes are
reasonable in the circumstances. The Company intends to commission a formal
valuation study, which study could result in changes to the allocation of the
purchase price and the determination of the fair value of the assets acquired
and liabilities assumed and the amount of any excess that could be assigned to
amortizable intangibles.

The Share Purchase Agreement also provides for the Company to pay the following
additional consideration (the "Contingent Consideration") to the Acquiree
shareholder at future dates, contingent upon the attainment of certain
performance targets described below.

              Date                              Amount
              ----                              ------
         March 26, 2006        $2,182,000 (approximately US $1,817,606)
         March 31, 2007        $1,000,000 (approximately US$833,333)
         March 31, 2008        $1,000,000 (approximately US$833,333)

Notwithstanding the forgoing, the 2006 Payment is not due and payable in the
event that Acquiree's Earnings Before Interest Taxes Depreciation and
Amortization ("EBITDA") for the year ending December 31, 2005, is less than
CDN$1,000,000. The 2007 Payment is not due and payable in the event that
Acquiree's EBITDA for the year ending December 31, 2006 is less than
CDN$1,500,000. The 2008 Payment is not due and payable in the event that
Acquiree's EBITDA for the year ending December 31, 2007 is less than
CDN$2,000,000.

The following table provides unaudited pro-forma results of operations and loss
per share data for the 3 and 6 months ended June 30, 2004 as if the Tecknolaser
Group had been acquired on January 1, 2004.

                                       20
<PAGE>

                                            3 months ended      6 months ended
                                             June 30, 2004       June 30, 2004
                                            ---------------     ---------------

Revenues .............................       $  7,654,146        $ 14,840,146
   Cost of good sold .................          5,877,649          11,695,649
                                             ------------        ------------
Gross profit .........................          1,776,497           3,144,497
Operating expenses
   Selling General & Administration ..          1,724,325           3,034,348
   Conversion of debt expense ........                  -             627,340
   Depreciation and amortization .....            184,774             393,774
                                             ------------        ------------

   Total operating expenses ..........          1,909,099           4,055,462
                                             ------------        ------------

Loss from operations .................           (132,602)           (910,965)
   Interest expense ..................            185,170             369,980
                                             ------------        ------------

Loss before income taxes .............           (317,772)         (1,280,945)
   Income taxes (benefit) ............            (27,533)            (93,533)
                                             ------------        ------------

Net Loss .............................       $   (290,239)       $ (1,187,412)
                                             ------------        ------------

Net Loss per share - basic ...........              (0.02)       $      (0.45)
Net Loss per share - diluted .........              (0.02)       $      (0.45)


Share Voting, Support and Exchange Agreements
---------------------------------------------

Series I Exchangeable Share Voting, Support and Exchange Agreement
------------------------------------------------------------------

Subject to the terms of a Series I Exchangeable Share Voting, Support and
Exchange Agreement, dated as of January 2, 2005 (the "Series I Support
Agreement"), among us, YAC, Callco, Acquiror and the Acquiree Shareholders
holding Series I Exchangeable Shares of Acquiror (the "Holders"), the holders of
Acquiror Series I Exchangeable Shares have the option of converting any Post
Closing Payments due to them into Acquiror Series I Exchangeable Shares at a
conversion rate calculated by dividing the dollar amount of any converted
payments by an amount representing the greater of:

US$1.00 converted to CDN dollars; or 80% of the average closing price of the
Company's common stock converted to CDN dollars for the twenty trading days
immediately preceding the date on which an Acquiree Shareholder provides a
notice of conversion to Acquiree.

All Holders of Acquiror Series I Exchangeable Shares were issued one share of
The Company's newly created Series A Preferred Special Voting Stock (the "Series
A Preferred Stock") for each Acquiror Series I Exchangeable Share owned. Shares
of The Company's Series A Preferred Stock have the right to vote on all matters
submitted to the vote of The Company's common shareholders on the basis of one
vote for each share held. The Series A Preferred Stock is non-transferable,
other than upon sale or exchange on disposition of the corresponding Acquiror
Series I Exchangeable Shares, which triggers a requirement for the holder to
deliver a like number of shares of Series A Preferred Stock to us for
cancellation. The Series I Support Agreement also contains provisions that grant
Callco the right, exercisable upon the occurrence of certain events, including
the proposed dissolution or liquidation of Acquiror or a prior retraction
request by the Holder, to require the Holders to sell their Series I
Exchangeable Shares to Callco. Similarly, the Series I Support Agreement grants
the Holder the right to require Callco to purchase from the Holder all or any
part of the holder's Acquiror Series I Exchangeable Shares upon certain events
including the institution by Acquiror of any proceeding to be adjudicated a
bankrupt or insolvent or to be dissolved or wound up. The Series I Support
Agreement further provides for automatic exchange upon the sale of all or
substantially all of the Company's assets, or upon the Company's liquidation or
dissolution. The Series I Support Agreement further provides that so long as any
Acquiror Series I Exchangeable Shares are issued and outstanding, that the
Company and its subsidiaries cannot declare or pay a dividend on the Company's
respective common stocks unless an equivalent dividends is declared or paid, as
the case may be, on the Series I Exchangeable Shares.

                                       21
<PAGE>

Preferred Share Purchase and Support Agreement
----------------------------------------------

Subject to the terms of a Preferred Share Purchase and Support Agreement, dated
as of January 2, 2005 (the "Preferred Share Support Agreement"), among us, YAC,
Callco, Acquiror and the Acquiree Shareholders holding Acquiror Preferred
Shares, and subject to Callco's right (the "Retraction Call Right"), exercisable
upon the occurrence of certain events to require the Holders of Acquiror
Preferred Shares to sell such shares to Callco, the Acquiree Shareholders, as
Holders of Acquiror Preferred Shares, have the rights set forth in Schedule A of
the Preferred Share Support Agreement. Dividends are not payable on the Acquiror
Preferred Shares but as long as they are outstanding, Acquiror cannot, without
the approval of the holders of the Acquiror Preferred Shares, pay any dividends
on Acquiror's common shares or redeem or purchase or make any capital
distributions in respect of any Acquiror common shares. Holders of Acquiror
Preferred Shares are entitled to a specially designated right, subject to the
exercise of the Retraction Call Right by Callco and compliance with other terms
of the Preferred Share Support Agreement, to require Acquiror to redeem their
Acquiror Preferred Shares at a price of CDN$1.00 per share at specified times.
The times at which holders of Acquiror Preferred Shares may make such requests
are as follows:

September 1, 2005:         750,000 Acquiror Preferred Shares;
September 30, 2005:        443,250 Acquiror Preferred Shares;
December 31, 2005:         443,250 Acquiror Preferred Shares; and
March 31, 2006:            295,500 Acquiror Preferred Shares.

In the event Acquiror fails or neglects to redeem the Acquiror Preferred Shares
for CDN$1.00 as required by the Preferred Share Support Agreement, Acquiror
shall redeem such Acquiror Preferred Shares by issuing to the Holders thereof
2.5 Series II Exchangeable Shares of Acquiror for each Acquiror Preferred Shares
so redeemed.

Series II Exchangeable Share Voting, Support and Exchange Agreement
-------------------------------------------------------------------

Subject to the terms of a Series II Exchangeable Share Voting, Support and
Exchange Agreement, dated as of January 2, 2005 (the "Series II Support
Agreement") among the Company, YAC, Callco, Acquiror and the Acquiree
stockholders holding Series II Exchangeable Shares of Acquiror (the "Acquiror
Series II Exchangeable Shares"), the Holders of the Acquiror Series II
Exchangeable Shares have the option ( subject to the right of Callco (the
"Retraction Call Right") exercisable upon the occurrence of certain events to
require the Holders to sell their Acquiror Series II Exchangeable Shares to
Callco) to require Acquiror to redeem any or all of the Holders's Acquiror
Series II Exchangeable Shares at a price equal to:

the then current market price for one share of the Company's common stock which
is payable by the delivery of one (1) share of the Company's common stock; plus
the amount of all cash dividends declared and unpaid by us on the Company's
common stock at the effective time of such action; plus the amount of all
declared and unpaid non-cash dividends or other distributions by us on the
Company's common stock at the effective time of such action.

Notwithstanding the forgoing, during the first ninety days following the
issuance of any Series II Exchangeable Shares, the Holders can only require the
Acquiror to redeem half of their Series II Exchangeable Shares.

All Holders of Acquiror Series II Exchangeable Shares receive one share of the
Company's Series A Preferred Stock for each of their Acquiror Series II
Exchangeable Shares. Contemporaneously with the completion of any transaction
pursuant to which any Acquiror Series II Exchangeable Shares held by a Holder is
retracted, redeemed, purchased or exchanged, such Holder(s) shall surrender to
us a like number of shares of Series A Preferred Stock for cancellation. Holders
of Acquiror Series II Exchangeable Shares are entitled to receive dividends on
such shares at the times and in the amounts of any dividends declared by us on
the Company's common stock. The Series II Support Agreement also places
limitations on Acquiror's ability to pay dividends on its common stock while
shares of Acquiror Series II Exchangeable Shares are issued and outstanding. The
Series II Support Agreement grants the Holders the right to require Callco to
purchase from the Holders all or any part of the Holder's Acquiror Series II
Exchangeable Shares upon certain events including the institution by Acquiror of
any proceeding to be adjudicated a bankrupt or insolvent or to be dissolved or
wound up. The Series II Support Agreement further provides for automatic
exchange upon the Company's liquidation or dissolution or upon the sale of all
or substantially all of the Company's assets.

                                       22
<PAGE>

15. CONSULTING AGREEMENTS

Westminster Capital Corp.
-------------------------

In January 2005, the Company entered into a 3 year consulting agreement with
Westminster Capital Inc., a shareholder, to provide various services to the
Company. The Company issued 300,000 shares in exchange for the services.

Gregory Belzberg
----------------

In January 2005, the Company entered into a 3 year consulting agreement with
Gregory Belzberg, a shareholder, to provide various services to the Company. The
Company issued 50,000 shares in exchange for the services.

6327214 Canada Inc. (A Related Party)
-------------------------------------

In January 2005, the Company executed a consulting agreement with 6327214 Canada
Inc., a company owned by William Smith, the Company's CFO, to provide consulting
services to the Company. 6327214 Canada Inc. is paid approximately $11,500 per
month based on invoicing to the Company. In addition, the Company covers all
business related expenses incurred by 6327214 Canada Inc. while delivering the
consulting services. This agreement continues until terminated and can be
terminated by the Company upon 10 months written notice. At the same time the
existing agreement with Manchester Administrative Services providing consulting
services was terminated. No expense was charged during the quarter related to
this contract.

Agora Investor Relations Corp.
------------------------------

Effective February 1, 2005 the Company entered into a 1 year Investor Relations
Agreement with Agora Investor Relations Corp., an Ontario, Canada corporation
("Agora") pursuant to which Agora provides shareholder relation services and,
subject to compliance with applicable laws, rules and regulation, other services
intended to raise public awareness of the Company's business. Compensation under
this arrangement includes monthly cash payments amounting to CDN$2,750
(approximately US$2,300) and 100,000 stock options with an exercise price of
$1.55 per share issued at the inception of the agreement (Note 12).

The options are exercisable, upon vesting, during the period February 1, 2006
through February 1, 2008. 25,000 of the options vest on each of May 1, 2005;
August 1, 2005; November 1, 2005; and February 1, 2006. The agreement is
renewable at the Company's option, for an additional 1 year term on similar
terms. The Company also has the option of terminating the Agreement for on two
days notice commencing August 1, 2005, which would immediately terminate all
non-vested options.

Stockgroup Media Inc.
---------------------

Effective February 1, 2005 the Company entered into a 1 year Investor Relations
Agreement with Stockgroup Media Inc., a Canadian corporation ("Stockgroup")
pursuant to which Stockgroup provides shareholder relation services and, subject
to compliance with applicable laws, rules and regulations, other services
intended to raise public awareness of the Company's business. In consideration
of such services, the Company is paying Stockgroup monthly compensation of
CDN$2,250 (approximately US$1,920).

16. PROPOSED ACQUISITION OF TURBON AG

In April 2005, the Company made a tentative offer to the management of Turbon to
acquire all the outstanding shares of Turbon, a leading global imaging supply
company publicly traded on the Frankfurt stock exchange. The aggregate offering
price pursuant to the offer, as amended, amounts to approximately US$50.8
million in cash. The Turbon Executive Board has agreed to meet with us to
discuss the details of our offer as well as the planned role and significance of
Turbon within the combined entity in the event the acquisition is accomplished.
If amenable to our offer, Turbon's Executive Board will provide its
recommendation to Turbon's shareholders. The completion and closing of this
transaction is subject to certain conditions, including but not limited to,
completing due diligence, raising the necessary funds to close the transaction,
and obtaining the approval of Turbon's shareholders. The Company cannot provide
any assurance that it will complete this proposed acquisition or that the terms
of the transaction if completed will not be materially different from the terms
that are currently proposed.

                                       23
<PAGE>

On June 21, 2005 and June 22, 2005 the Company entered into stock purchase
agreements with each of NCR Corporation, Holger Brueckmann - Turbon and Gothaer
Lebensversicherung AG (the "Selling Shareholders"). Pursuant to the Agreements,
the Selling Shareholders have agreed to sell to the Company an aggregate of
2,509,000 shares of Turbon capital stock owned by them in the event the Company
submits a public offer for the acquisition of the such shares in accordance with
the terms of the Securities Acquisition and Takeover Act, to which Turbon is
subject, by September 30, 2005. The purchase price for the Vendor Shares, which
is payable in cash or a combination of cash and stock, will be made for at least
$14 per share. Under the Agreements, the Company is not required to submit an
offer to purchase the Vendor Shares or any other Turbon shares.

Effective June 22, 2005 the Company entered into a Share Purchase Agreement with
Turbon pursuant to which it agreed to purchase 400,000 Turbon shares from
Turbon's treasury at a purchase price of $14 per share or an aggregate of
$5,600,000 (the "Purchase Price"). On June 23, 2005 the Company paid Turbon
$1,001,000 of the Purchase Price which represents 71,500 shares. Such funds were
obtained under the loan facility with LOM described in Note 9. The $4,599,000
balance of the Purchase Price was due on or before July 21, 2005, however; the
parties have agreed to extend the due date to August 31, 2005. The Company
classified its investment in these securities as investment in prospective
acquiree in the accompanying balance sheet pending its completion of the
transaction.

17. MAJOR CUSTOMERS AND FOREIGN AND DOMESTIC SALES

During the six months ended June 30, 2005, ten customers represented 49% of our
total sales and one customer represented appreciatively 18% of our total sales.
Sales to customers in the United States represented 57% of total sales and sales
to customers outside the United States represented 43% of total sales.

18. SUBSEQUENT EVENTS

On July 21, 2005 pursuant to the Agency Agreement with LOM the Company offered
and sold through LOM, as placement agent, 1,707,000 subscription receipts at a
price of $.75 per Subscription Receipt or $1,280,250 in the aggregate. Each
Subscription Receipt will be automatically exercised, without payment of any
additional consideration, at the Automatic Exercise Date into, subject to
adjustment, a unit consisting of one share of the Company's common stock and one
common stock purchase warrant. Each Unit Warrant entitles the holder to purchase
an additional share of the Company's common stock at a price of $1.25 per share
during the 30 month period that commenced on July 21, 2005. Pursuant to the
Agency Agreement, the Company paid the Agent a commission of $89,618 which is
equal to 7% of the gross aggregate offering proceeds and issued to the Agent
119,490 warrants which is equal to 7% of the number of Subscription Receipts
sold. Each warrants provides for the purchase of Unit at a price of $.75 per
Unit during the 30 month period that commenced July 21, 2005.

                                       24
<PAGE>

ITEM 2.  PLAN OF OPERATION

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and the notes thereto appearing elsewhere in
this Report.

In January 2005 we purchased Teckn-O-Laser Global Company, a remanufacturer of
laser toner and inkjet print cartridges. Prior to the acquisition, we had no
operations. Accordingly, no comparison of prior period results is contained
herein.

As of June 30, 2005, we had a working capital deficiency of approximately
$7,430,516 (including approximately $2,125,000 related to the discontinued
operation leaving a net working capital deficiency of approximately $5,305,516).
We are also in violation of certain covenants with respect to a line of credit
arrangement and certain installment obligations in the aggregate amount of
approximately $2.9 million for which we have not obtained waivers. Although the
lender under these obligations has exercised its right to accelerate the loans,
they do have the ability to demand immediate repayment and we cannot provide any
assurance that such right will not be exercised at anytime. These matters raise
substantial doubt about our ability to continue as a going concern.

Subsequent to year end we have raised $2,465,000 additional equity and entered
into a loan agreement for CDN$2 million with Barrington Bank International
Limited. These financings allowed us to acquire Teckn-O-Laser Global Company in
January 2005. In April 2005 we announced our intention to launch a formal
takeover offer for 100% of the shares of Turbon AG, a German public company
operating in the same business. We are in the process of raising the financing
related to the acquisition of Turbon AG. We have already acquired 71,500 shares
of Turbon AG.

Except as provided herein, we have no present commitment that is likely to
result in our liquidity increasing or decreasing in any material way. In
addition, except as noted herein, we know of no trend, additional demand, event
or uncertainty that will result in, or that are reasonably likely to result in,
our liquidity increasing or decreasing in any material way. We have no material
commitments for capital expenditures. We know of no material trends, favorable
or unfavorable, in our capital resources. As a result of the Teckn-O-Laser
Global Company acquisition we own plant and equipment related to the
remanufacture of laser toner printer cartridges in Sainte Julie, Quebec. We also
conduct product research and development at this location. During its 2003 and
2004 fiscal years ended April 30, 2003 and April 30, 2004, respectively,
Teckn-O-Laser Global Company spent approximately $395,833 (approximately
CDN$475,0000) and $280,000 (approximately CDN$336,000) on research and
development. We anticipate spending approximately $350,000 on research and
development during 2005. We have 232 employees as a result of the acquisition.
We presently have sufficient cash available together with anticipated cash flow
from operations to cover our anticipated cash requirements for our existing
operations for the next 12 months. We anticipate however, that we will need
approximately $1.5 million in financing through a combination of debt and equity
to finance our growth plans during the next 12 months. Further, we will also
require additional financing during the next 12 months with respect to our
intended acquisition of Turbon and any other acquisitions that we may decide to
engage in.

                                       25
<PAGE>

ITEM 3.  CONTROLS AND PROCEDURES

EVALUATION OF OUR DISCLOSURE CONTROLS AND INTERNAL CONTROLS

As of the end of the period covered by this Quarterly Report, we carried out an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Exchange Act Rule 13-d-15(e) and
15d-15(e)). Based upon that evaluation, our Chief Executive Officer ("CEO") and
Chief Financial Officer ("CFO") concluded that as of the end of the period
covered by this Quarterly Report on Form 10-QSB our disclosure controls and
procedures were adequate to enable us to record, process, summarize and report
information required to be included in our periodic SEC filings within the
required time period.

OFFICERS' CERTIFICATIONS

Appearing as exhibits to this Quarterly Report are "Certifications" of the CEO
and the CEO. The Certifications are required pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (the "Section 302 Certifications"). This section of
the Quarterly Report contains information concerning the Controls Evaluation
referred to in the Section 302 Certifications and this information should be
read in conjunction with the Section 302 Certifications for a more complete
understanding of the topics presented.

DISCLOSURE CONTROLS AND INTERNAL CONTROLS

Disclosure Controls are procedures that are designed with the objective of
ensuring that information required to be disclosed in our reports filed under
the Securities Exchange Act of 1934 ("Exchange Act"), such as this Quarterly
Report, is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. Disclosure Controls are also designed
with the objective of ensuring that such information is accumulated and
communicated to our management, including the CEO and CFO, as appropriate to
allow timely decisions regarding required disclosure. Internal Controls are
procedures which are designed with the objective of providing reasonable
assurance that (1) our transactions are properly authorized, recorded and
reported; and (2) our assets are safeguarded against unauthorized or improper
use, to permit the preparation of our financial statements in conformity with
generally accepted accounting principles.

Our company is not an accelerated filer (as defined in the Securities Exchange
Act) and is not required to deliver management's report on control over our
financial reporting until our fiscal year ended December 31, 2006.

There were no changes in our internal controls over financial reporting that
occurred during the quarter ended June 30, 2005 that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

On December 31, 2002, our CEO and VP of Finance resigned. On the same date, one
of the production chemists from our R&D facility also resigned. Prior to
resigning these three officers dismissed all the employees of Reink USA, which
left us with no employees. On May 7, 2003 we commenced legal proceedings against
these three former

                                       26
<PAGE>

officers in the United States Bankruptcy Court for the District of New Jersey
(Case Number 03-11053 (JHW)) for actions we believe to be in violation of
non-competition and confidentiality clauses within their employment contracts.
In this action we are seeking damages and other relief in the amount of
$1,000,000. The prior officers filed a counter-suit against us for back wages
and other costs. We consider the counter-claim to be without merit. On September
7, 2003 we filed a defense against the counter-claim. We are presently unable to
determine the probable outcome of these matters.

In January, 2003 the three largest creditors of Reink USA filed a petition to
force Reink into Chapter 7 under the US Federal Bankruptcy Act. We believe that
some of the creditors involved with the petition assisted the new business which
competed directly against us and was founded by our former CEO and VP of
Finance. Reink USA filed a motion to have the petition thrown out since the
third creditor withdrew from the filing and also since the counsel for the
petitioners withdrew. Subsequently the remaining two creditors provided a new
third creditor and amended the filing. This new third creditor also subsequently
withdrew and the two remaining creditors found two other creditors and filed an
amendment. During March 2003, Reink USA's motion to convert to a voluntary
Chapter 11 was accepted by the District of New Jersey, Federal Bankruptcy Court.
As a result of failed negotiations with our largest suppliers, on July 10, 2003,
Reink USA was moved from Chapter 11 "Reorganization" into Chapter 7
"Liquidation" and a Bankruptcy Trustee was appointed to administer the estate.
As a result, we lost control of Reink USA and Reink USA is presented for all
periods as a discontinued operation. The Company is unaware of any changes in
the status of the Bankruptcy proceedings.

In June 2005, we were served with a Statement of Claim by Dancap Private Equity
Inc. ("Dancap"). The Statement of Claim alleges that we are in breach of certain
obligations under a letter agreement between us and Dancap, dated June 25, 2004,
with respect to a possible investment in us by Dancap. The Statement of Claim
relates to a break fee provision contained in the letter agreement and seeks
CDN$107,000 in damages together with interest and costs. We filed a Statement of
Defense and Counterclaim on July 29, 2005 claiming bad faith, gross
misrepresentation, and damages of CDN$1,000,000. The Counterclaim also seeks
return of a CDN$42,800 work fee and paid by us to Dancap. We consider the Dancap
claim to be without merit but cannot predict the outcome of this matter at this
time.

No other material legal proceedings are pending to which we or any of our
property are subject, nor to our knowledge are any such proceedings threatened.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

In January 2005 we sold an aggregate of 2,330,000 units to 10 persons at $.50
per unit or $1,165,000 on an aggregate basis. Each unit consists of one share of
our common stock (the "Unit Shares") and one common stock purchase warrant. Each
warrant entitles the holder to purchase one share of our common stock at a price
of $1.50 per share at any time during the three year period commencing on
January 31, 2005. In connection with these sales we were also obligated to issue
68,000 units to DGM Bank & Trust Inc. as a commission with respect to sales of
680,000 units made through them in the offering (the "DGM Units"). 2,210,000 of
the Unit Shares and 56,000 shares comprising part of the

                                       27
<PAGE>

DGM Units were issued in March 2005. The remaining 120,000 Unit Shares and
12,000 shares comprising part of the DGM Units were issued in May 2005.

In January 2005 we sold 200,000 units to 1 person at $.50 per unit or $100,000
on an aggregate basis. Each unit consists of one share of our common stock and
one common stock purchase warrant. Each warrant entitles the holder to purchase
one share of our common stock at a price of $1.50 per share at any time during
the three year period commencing on January, 2005. The shares comprising part of
the units were issued in May 2005.

In June 2005 we issued 100,000 common stock purchase warrants to Loewen,
Ondaatje, McCutcheon Limited. Each warrant is exercisable for the purchase of
one share of our common stock at a price of $1.50 per share during the 30 month
period following issuance.

All of the forgoing issuances were made in reliance on Section 4(2) or
Regulation S of the Securities Act of 1933, as amended.

Subsequent to the period covered by this Report, in July 2005, we sold 1,707,000
subscription receipts at a price of $.75 per subscription receipt. See Item 5 -
Other Information.

ITEM 5.  OTHER INFORMATION

Effective April 19, 2005 we executed a Guarantee Agreement with National Bank of
Canada in which we guaranteed the payment of all present and future obligations
of our subsidiary, Teckn-O-Laser Company, to National Bank of Canada in the form
of principal, interest, and costs, up to a maximum amount of CDN$ 5,000,000.00.

In April 2005, we made a tentative offer to management of Turbon AG ("Turbon"),
to acquire all the outstanding shares of Turbon, a leading global imaging supply
company publicly traded on the Frankfurt stock exchange. The aggregate offering
price, pursuant to the offer, as revised, is approximately US$50.8 million in
cash. The completion and closing of this transaction is subject to certain
conditions, including but not limited to, raising of the necessary funds to
close the transaction and obtaining the approval of Turbon's shareholders. No
assurance can be given that the acquisition will be completed or, if completed,
the actual terms thereof.

Effective June 22, 2005 we entered into a Share Purchase Agreement (the
"Agreement") with Turbon pursuant to which we agreed to purchase 400,000 Turbon
shares from Turbon's treasury at a purchase price of $14 per share or an
aggregate of $5,600,000 (the "Purchase Price"). On June 23, 2005 we paid Turbon
$1,001,000 of the Purchase Price. The $4,599,000 balance of the Purchase Price
is due on or before August 31, 2005. The Agreement further provides that prior
to the $4,599,000 payment, the parties will obtain irrevocable agreements from
Turbon's three largest shareholders, with aggregate holdings of 2,509,000 Turbon
shares, in which each of the shareholder's will agree to sell all of the Turbon
shares owned by them or affiliated entities to us, upon a formal takeover offer
by us, at a price of $14 per share in cash or a combination of cash and stock.
As discussed below, the required agreements have been obtained. The 400,000
shares represent 9.928% of Turbon's outstanding share capital consisting of
4,029,000 shares. The Share

                                       28
<PAGE>

Purchase Agreement is part of our larger plan to acquire all or a majority of
Turbon's outstanding shares. The closing and completion of any such transaction
will be subject to certain conditions including but not limited to, raising of
necessary funds to close the transaction and obtaining the approval of Turbon's
shareholders.

On June 21, 2005 and June 22, 2005 we entered into stock purchase agreements
(the "Agreements") with each of NCR Corporation, Holger Brueckmann - Turbon and
Gothaer Lebensversicherung AG (collectively the "Vendors"). Pursuant to the
Agreements, the Vendors have agreed to sell to us an aggregate of 2,509,000
shares of Turbon AG capital stock owned by them (the "Vendor Shares") in the
event we submit a public offer for the acquisition of the Vendor Shares in
accordance with the terms of the Securities Acquisition and Takeover Act, to
which Turbon is subject, by September 30, 2005. The purchase price for the
Vendor Shares, which is payable in cash or a combination of cash and stock, will
have a value of at least $14 per vendor share. Under the Agreements, we are not
required to submit an offer to purchase the Vendor Shares or any other Turbon
shares.

Effective June 22, 2005 we entered into an agreement (the "Agreement") with
Loewen, Ondaatje, McCutcheon Limited ("LOM"), an investment banking firm.
Pursuant to the Agreement, LOM loaned us $1,001,000 on June 22, 2005 for the
specific purpose of allowing us to purchase issued and outstanding shares of
Turbon AG. The term of the loan is the one year period that commenced on June
22, 2005. Interest accrues on the outstanding amount of the loan at the rate of
10% compounded semi-annually, and is payable quarterly commencing September 1,
2005. As partial consideration for entering into the Agreement, we issued
100,000 common stock purchase warrants to LOM, each exercisable for the purchase
of one share of our common stock at a price of $1.50 per share during the 30
month period following issuance.

                                       29
<PAGE>

On July 21, 2005 pursuant to the Agency Agreement with LOM we offered and sold
through LOM, as placement agent, (the "Agent") 1,707,000 subscription receipts
(the "Subscription Receipts") at a price of $.75 per Subscription Receipt or
$1,280,250 in the aggregate. The Company repaid the LOAM loan of $1,001,000 in
full. The offering was made to non-US persons in reliance on Regulation S under
the Securities Act of 1933 as amended. Each Subscription Receipt will be
automatically exercised, without payment of any additional consideration, at the
Automatic Exercise Date, as defined below, into, subject to adjustment, a unit
(the "Units") consisting of one share of our common stock (the "Unit Shares")
and one common stock purchase warrant (the "Unit Warrants"). Each Unit Warrant
entitles the holder to purchase an additional share of our common stock (the
"Warrant Shares") at a price of $1.25 per share during the 30 month period that
commenced on July 21, 2005.

The offer of the Subscription Receipts was made subject to satisfaction of
certain conditions (the "Qualification Conditions"). Failure to meet the
Qualification Conditions by the Qualification Date, as defined below, results in
each Subscription Receipt being exercised into 1.5 Units. The Qualification Date
is defined as the earlier of (i) December 31, 2005; or (ii) the date ten
business days following the date by which both (a) a receipt (the "Receipt") for
the final prospectus of ours that qualifies the Units and Agent's Warrants, as
such term is defined below, for issuance in Canada has been obtained by us from
the securities commissions or securities regulatory authorities in those
Canadian provinces where purchasers of the Subscription Receipts reside and (b)
a registration statement under the Securities Act of 1933, as amended, (the
Registration Statement") has become effective for registering the resale of the
Unit Shares, Unit Warrants (including those underlying the Agent's Warrants, as
defined below), and the Warrant Shares issuable upon exercise of the Unit
Warrants.

The Qualification Conditions are defined in the Agency Agreement as (i) our
having obtained a Receipt for the Prospectus, and the Registration Statement
having become effective for registering the resale of the Unit Shares, Unit
Warrants (including those underlying the Agent's Warrants, as defined below) and
the Warrant Shares issuable upon exercise of the Unit Warrants; and (ii) the
shares of our common stock having been listed for trading on the Toronto Stock
Exchange.

Pursuant to the Agency Agreement, we paid the Agent a commission of $89,618
which is equal to 7% of the gross aggregate offering proceeds and issued to the
Agent 119,490 broker warrants (the "Broker Warrants") which is equal to 7% of
the number of Subscription Receipts sold. Each Broker Warrant will be
automatically exercised, without payment of any consideration, at the Automatic
Exercise Date, as defined below, into, subject to adjustment, one agent's
warrant (the Agent's Warrant"). Each Agent's Warrant entitles the holder,
subject to adjustment and the terms and condition set forth in

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the Agent's Warrant certificate, to purchase from us one Unit at a price of $.75
per Unit during the 30 month period that commenced July 21, 2005. If the
Qualification Conditions haven't been satisfied by the Automatic Exercise Date,
as defined below, then each Broker Warrant will be automatically exercised at
the Automatic Exercise Date into 1.5 Agent's Warrants.

For purposes of the Agency Agreement, the Automatic Exercise Date means the
earlier of (i) December 31, 2005; (ii) the closing date in respect of the
Prospectus and the Registration Statement; and (iii) the Qualification Date.

Pursuant to the Agency Agreement, our officers and directors entered into 180
day lock up agreements whereby they agreed not to directly or indirectly, offer,
sell, contract to sell, pledge, grant any option to purchase, make any short
sale or otherwise dispose of any shares of our common stock, or any financial
instruments or securities convertible into, exercisable or exchangeable for, or
that represent the right to receive shares of our common stock or similar
securities now owned directly or indirectly by them or under their control or
direction or with respect to which they have beneficial ownership, or enter into
any swap, forward or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of their securities or agree
to do any of the forgoing or publicly announce any intention to do the
forgoing. Pursuant to the Agency Agreement, Manchester Consolidated Corp., a
principal shareholder, entered into a 30 day lock up agreement on similar terms
to those discussed above.

ITEM 6.  EXHIBITS.

Exhibits

The following exhibits are filed as a part of this report on Form 10-QSB:

EXHIBIT NO.                        DESCRIPTION

31.1              Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal
                  Executive Officer

31.2              Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal
                  Financial Officer

32.1              Rule 1350 Certification of Chief Executive Officer

32.2              Rule 1350 Certification of Chief Financial Officer


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                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-QSB to be
signed on its behalf by the undersigned, thereunto duly authorized.

Dated: August 24, 2005                  Adsero Corporation

                                        By: /s/ William Smith
                                            -----------------
                                        William Smith
                                        Secretary, Treasurer, Chief Financial
                                        Officer


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