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

                                  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 March 31, 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
May 19, 2005, was 17,241,975.

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

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

<PAGE>
                               ADSERO CORPORATION
                 MARCH 31, 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....................................................29

Item 3   Controls and Procedures..............................................33


                            PART II OTHER INFORMATION

Item 1.  Legal Proceedings....................................................34

Item 2.  Changes in Securities and Use of Proceeds............................35

Item 5.  Other Information....................................................37

Item 6.  Exhibits and Reports on Form 8-K.....................................38


                                        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 March 31, 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

                                                                            PAGE
                                                                            ----

ITEM 1.  FINANCIAL STATEMENTS


         Condensed Consolidated Balance Sheet as of
         March 31, 2005 (unaudited)                                            5

         Condensed Consolidated Statements of Operations for the
         three months ended March 31, 2005 and 2004 (unaudited)                6

         Condensed Consolidated Statement of Stockholders'
         (Deficiency) Equity (unaudited)                                    7A-B

         Condensed Consolidated Statements of Cash Flows for the
         three months ended March 31, 2005 and 2004 (unaudited)                8

         Notes to Condensed Consolidated Financial Statements (unaudited)   9-28


                                        4
<PAGE>
                          ADSERO CORP. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                 March 31, 2005
                                   (unaudited)

                                     ASSETS
                                     ------
CURRENT ASSETS
  Cash ..........................................................  $    472,564
  Accounts receivable,net .......................................     3,685,099
  Inventories ...................................................     3,120,224
  Income taxes receivable .......................................       268,813
  Prepaid expenses ..............................................       191,335
  Deferred income taxes .........................................       116,526
                                                                   ------------

       TOTAL CURRENT ASSETS .....................................     7,854,561

  Property, plant and equipment,net .............................     4,478,991
  Trademarks ....................................................       500,000
  Goodwill ......................................................     7,058,577
  Other assets ..................................................       238,930
                                                                   ------------

    Total Assets ................................................  $ 20,131,059
                                                                   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
CURRENT LIABILITIES
  Line of credit obligation .....................................  $  1,730,468
  Accounts payable ..............................................     6,112,480
  Accrued expenses ..............................................       102,500
  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 .............................       427,759
                                                                   ------------
       TOTAL CURRENT LIABILITIES ................................    12,242,268

  Long-term debt, less current portion ..........................     2,473,745
  Convertible promissory note ...................................     1,510,176
  Convertible note ..............................................     1,000,000
  Deferred income taxes .........................................       266,733
                                                                   ------------
    Total Liabilities ...........................................    17,492,922
                                                                   ------------
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
  Deferred compensation .........................................       (83,995)
  Accumulated deficit ...........................................   (11,752,507)
                                                                   ------------
       TOTAL STOCKHOLDERS' EQUITY ...............................     2,638,138
                                                                   ------------

    Total Liabilities and Stockholders' Equity ..................  $ 20,131,059
                                                                   ============

                 See notes to consolidated financial statements

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

                                          THREE MONTHS ENDED
                                            March 31, 2005        MARCH 31, 2004
                                            --------------        --------------

REVENUES ............................        $ 7,417,678                     -

COST OF GOODS SOLD ..................          5,430,878                     -
                                             -----------           -----------
  GROSS PROFIT ......................          1,986,800                     -
                                             -----------           -----------

OPERATING EXPENSES
  Selling, general and administrative          1,349,494                55,023
  Conversion of debt expense ........                  -               627,340
  Stock based on compensation .......             27,998                     -
  Depreciation and amortization .....            130,877                     -
                                             -----------           -----------
  TOTAL OPERATING EXPENSES ..........          1,508,369               682,363
                                             -----------           -----------

INCOME (LOSS) FROM OPERATIONS .......            478,431              (682,363)

  INTEREST EXPENSE ..................            115,806                13,810
                                             -----------           -----------

INCOME (LOSS) BEFORE INCOME TAXES ...            362,625           $  (696,173)

  INCOME TAXES ......................            126,160                     -
                                             -----------           -----------

NET INCOME (LOSS) ...................        $   236,465           $  (696,173)
                                             ===========           ===========

EARNINGS (LOSS) PER SHARE

NET INCOME (LOSS) PER SHARE,
  BASIC .............................        $      0.02           $     (0.16)
                                             ===========           ===========

WEIGHTED AVERAGE NUMBER OF
  SHARES USED IN  COMPUTATION .......         15,490,642             4,473,086
                                             ===========           ===========

NET INCOME (LOSS) PER SHARE,
  DILUTED ...........................        $      0.01           $     (0.16)
                                             ===========           ===========

WEIGHTED AVERAGE NUMBER OF
  SHARES USED IN  COMPUTATION .......         25,900,818             4,473,086
                                             ===========           ===========

            See notes to condensed consolidated financial statements

                                        6
<PAGE>
<TABLE>
                                     ADSERO CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIENCY) EQUITY
                                              (unaudited)

<CAPTION>
                                             Series I Exchangeable
                         Common Stock        Shares in Subsidiary      Preferred Stock       Deferred
                     --------------------    ---------------------    -----------------    Compensation
                       Shares     Amount       Shares     Amount        Shares   Amount       Costs
                     ----------  --------    ---------  ----------    ---------  ------    ------------
<S>                  <C>         <C>         <C>        <C>           <C>        <C>        <C>
Balance -
December 31, 2004    11,987,975  $ 11,988                                     -      -              -

  Common stock
  issued in
  private
  placements          2,530,000     2,530

  Common stock
  issued to
  placement agent       218,000       218

  Common stock
  issued in
  connection with
  debt financing        200,000       200                                                           -

  Common stock
  issued under
  share issuance
  commitments           755,000       755

  Common stock
  issued under
  price
  adjustment            852,500       853

  Preferred stock
  issued as
  purchase
  consideration               -                      -           -    6,500,000    650

  Series I
  exchangeable
  shares issued
  as purchase
  consideration               -              6,500,000   3,250,000

  Deferred
  compensation
  costs                       -                                                              (111,993)

  Deferred
  compensation
  costs amortized
  during quarter              -                                                                27,998

  Common stock
  issued to
  transaction
  advisor               698,500       699

  Net Income                  -         -

                     ----------------------------------------------------------------------------------

Balance -
March 31, 2005       17,241,975  $ 17,243    6,500,000  $3,250,000    6,500,000  $ 650      $ (83,995)
                     ==================================================================================
                                                                                          (continued)
                        See notes to condensed consolidated financial statements

                                                   7A
</TABLE>
<PAGE>
<TABLE>
                                     ADSERO CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIENCY) EQUITY
                                              (unaudited)
                                              (continued)
<CAPTION>

                      Additional        Shares         Shares          Value of              Total
                       Paid-In          to be           to be        Accumulated         Stockholders'
                       Capital          Issued         Issued          Deficit         (Deficit) Equity
                     -----------       --------       --------       ------------      ----------------
<S>                  <C>               <C>            <C>            <C>               <C>
Balance -
December 31, 2004    $ 8,965,823        755,000        454,585       $(11,988,972)     $(2,556,576)

  Common stock
  issued in
  private
  placements           1,228,470              -              -                           1,231,000

  Common stock
  issued to
  placement agent           (218)                                                                -

  Common stock
  issued in
  connection with
  debt financing          99,800              -              -                             100,000

  Common stock
  issued under
  share issuance
  commitments            453,830       (755,000)      (454,585)                                  -

  Common stock
  issued under
  price
  adjustment                (853)                                                                -

  Preferred stock
  issued as
  purchase
  consideration             (650)             -              -                                   -

  Series I
  exchangeable
  shares issued
  as purchase
  consideration                                                                          3,250,000

  Deferred
  compensation
  costs                  111,993                                                                 -

  Deferred
  compensation
  costs amortized
  during quarter               -                                                            27,998

  Common stock
  issued to
  transaction
  advisor                348,551              -              -                             349,250

  Net Income                   -              -              -            236,465          236,465

                     ----------------------------------------------------------------------------------

Balance -
March 31, 2005       $11,206,746              -              0       $(11,752,507)     $ 2,638,138
                     ==================================================================================

                        See notes to condensed consolidated financial statements

                                                   7B
</TABLE>
<PAGE>
<TABLE>
                                       ADSERO CORP. AND SUBSIDIARIES
                              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                (UNAUDITED)
<CAPTION>
                                                                     THREE MONTHS ENDED
                                                                       MARCH 31, 2005     MARCH 31, 2004
                                                                       --------------     --------------
<S>                                                                     <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Income (Loss) ...............................................   $    236,465      $   (696,173)
                                                                        ------------      ------------

  Adjustments to reconcile net income (loss) to net cash
   provided by (used in) operating activities:
    Depreciation and amortization ...................................        130,877                 -
    Stock based compensation ........................................         27,998                 -
    Accrued Interest on notes payable ...............................              -            13,810
    Conversion expense re notes payable .............................              -           627,340
  Changes in operating assets and liabilities:
    Accounts receivable .............................................        136,133                 -
    Inventories .....................................................        208,691                 -
    Prepaid expenses and other assets ...............................        461,192                 -
    Accounts payable and accrued expenses ...........................        283,656           (25,376)
                                                                        ------------      ------------
          Total Adjustments .........................................      1,248,547           615,774
                                                                        ------------      ------------

NET CASH USED IN OPERATING ACTIVITIES ...............................      1,485,012           (80,399)
                                                                        ------------      ------------

CASH FLOWS USED IN INVESTING ACTIVITIES:
    Acquisition of business, net of cash received ...................     (3,131,860)                -
    Puchase of fixed assets .........................................         17,817                 -
                                                                        ------------      ------------
NET CASH USED IN INVESTING FINANCING ACTIVITIES .....................     (3,114,043)                -
                                                                        ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Repayment on notes payable to related parties ...................        (76,079)                -
    Long term debt ..................................................       (612,396)                -
    Bank loan .......................................................       (937,806)                -
    Common stock issuedfor cash, net of offering expenses ...........      1,231,000                 -
    Proceeds from issuance of convertible notes .....................      2,610,176                 -
    Proceeds from issuance of notes payable .........................              -            30,000
    Proceeds (repayments) of loan payable ...........................       (275,000)           50,000
                                                                        ------------      ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES ...........................      1,939,895            80,000
                                                                        ------------      ------------

NET INCREASE (DECREASE) IN CASH .....................................        310,864              (399)

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

CASH AT END OF PERIOD ...............................................   $    472,564      $         45
                                                                        ============      ============

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES

    ACQUISITION OF BUSINESS

    Assets acquired .................................................   $ 13,095,479
    Costs in excess of net assets acquired ..........................      7,558,577
    Liabilities assumed .............................................    (12,279,404)
    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

                                                     8
</TABLE>
<PAGE>
                          ADSERO CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

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
March 31, 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".

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

                                        9
<PAGE>

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 March 31, 2005, the Company had a working capital deficiency of $ 4,387,706
and was not in compliance with certain covenants under its line of credit
obligation described in Note 8. The Company is in the process of requesting
waivers with respect to its breach of such covenants. The lender under this
obligation has the right to demand immediate repayment of the loan due to this
event of default. The exercise of this right and the requirement to immediately
repay the outstanding balance, which amounts $1,730,468 at March 31, 2005, would
have a material adverse effect on the business There can be no assurance that
the lender under this 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 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 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.

                                       10
<PAGE>

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."

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.

The Company did not experience any events or changes in circumstances during the
quarter ended March 31, 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 March 31, 2005.

                                       11
<PAGE>

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.

                                       12
<PAGE>

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:

                                                        For the Three Months
                                                            Ended March 31,
                                                         2005            2004
                                                         ----            ----

Net Income, as reported ..........................   $  236,465      $ (696,173)

Incremental amount of stock based employee
  compensation expense determined under the
  fair value method ..............................       (3,125)            -0-

                                                     ----------      ----------
Net Income(Loss), proforma .......................   $  233,340      $ (696,173)
                                                     ==========      ==========

Income (Loss) per share:

  Basic and diluted, as reported .................   $     0.02      $   (0.16)
                                                     ==========      ==========

  Basic and Diluted, proforma ....................   $     0.02      $   (0.16)
                                                     ==========      ==========

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.

                                       13
<PAGE>

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 March 31, 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 March 31, 2005 and 2004, of which the amounts presented
for the quarter ended March 31, 2004 have been excluded from the computation of
the loss per share as their effect would be anti-dilutive:

                                                       March 31,
                                                  2005          2004
                                                  ----          ----

         Options ..........................       792,000        37,500
         Warrants .........................     4,575,430        76,430
         Series I exchangeable shares .....     6,500,000             -
         Convertible debentures ...........     3,610,176             -
                                               ----------    ----------
         Total ............................    15,477,606       113,930
                                               ==========    ==========

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

                                       14
<PAGE>

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 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 interim or
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 is not
expected to 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 is not
expected to have material effect on the Company's financial statements.

                                       15
<PAGE>

5. INVENTORY

Inventory consists of the following at March 31, 2005:

         Raw materials ..........................          $ 1,789,231
         Finished goods .........................            1,520,945
                                                           -----------
                                                             3,310,176
         Less reserves ..........................             (189,952)
                                                           -----------
                                                           $ 3,120,224
                                                           ===========

6. PROPERTY AND EQUIPMENT

Property and Equipment consists of the following at March 31, 2005:

         Land ...................................          $   317,214
         Building and Improvements ..............            2,229,880
         Machinery and Equipment ................              724,192
         Furniture and Fixtures .................              144,719
         Computer Equipment .....................            1,193,863
                                                           -----------
                                                             4,609,868

         Less Accumulated Depreciation ..........              130,877
                                                           -----------
                                                           $ 4,478,991

7. LONG TERM DEBT

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

Mortgage loan, secured by land and building, at Canadian bank
prime rate plus 0.25% (6.5% at March 31, 2005), payable in
monthly installments of $13,960(CDN$16,750), maturing May 2006 .....  $2,311,573

Term Loan, Secured by automotive equipment, 6.65%, payable in
monthly installments of $1,250(CDN$1,500), maturing in November
2006 ...............................................................      98,790

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 March 31, 2005), payable in monthly installments of
$17,360(CDN$20,833), maturing January 2007 .........................     377,322

Equipment financing, with interest ranging from 6.52% and 10%,
payable monthly, maturing at various dates until April 2009 ........      78,817

Term loans, payable in monthly installments of $1,600(CDN$1,921),
without interest, maturing at various dates through August 2008 ....      35,002
                                                                      ----------
Total long term debt ...............................................   2,901,504

Less amounts due within one year ...................................     427,759
                                                                      ----------
                                                                      $2,473,745
                                                                      ==========
                                       16
<PAGE>

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 quarter.

8. BANK LINE OF CREDIT

This credit facility provides for aggregate borrowing 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 present and future book
debts and inventories. Interest is at the Bank's Canadian prime rate plus 1%
(5.25% as at March 31, 2005) and is renewable annually. The Company is required
to comply with certain financial ratios under the terms of the bank loan and the
term loans. As at March 31, 2005, the Company is not in compliance with one of
these financial ratios. The Company is in the process of requesting a waiver
form the lender, which waiver has not been provided to date. The Company
anticipates being able to cure the aforementioned default, however; the Company
cannot provide any assurance that the lender will waive the violation in which
case, the lender would have the ability to demand immediate repayment of the
loan.

9. 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

                                       17
<PAGE>

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.

10. 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 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.

11. 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.

                                       18
<PAGE>

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.

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
(approximatelyUS$146,000) and CDN$166,000 (approximately US$139,000),
respectively. The employment agreements further provide for the payment of
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 14.

                                       19
<PAGE>

12. STOCKHOLDERS' (DEFICIENCY) 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 9, 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.

                                       20
<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 instrument. 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 and note 15, 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 14 and note 15, 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.

                                       21

<PAGE>

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. 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.

13. 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 if operations for the quarter ended March 31, 2005
includes the results of the Technolaser Group for the period of January 2, 2005
through March 31, 2005.

                                       22
<PAGE>

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:

         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 ..........     6,097,230
         Secured obligations and long term debt .........     6,182,174
                                                            -----------

            Fair value of liabilities assumed ...........    12,279,404
                                                            -----------
               Fair value of identifiable net tangible
               assets acquired ..........................       816,075

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

         Goodwill .......................................     7,058,577
                                                            -----------

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

                                       23
<PAGE>

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 quarter ended March 31, 2004 as if the Tecknolaser Group
had been acquired on January 1, 2004.

         Revenues ....................................     $ 7,186,000
             Cost of goods sold ......................       5,818,000
                                                           -----------
         Gross profit ................................       1,368,000
         Operating expenses
             Selling General & Administration ........       1,310,023
             Conversion of debt expense ..............         627,340
             Depreciation and amortization ...........         209,000
                                                           -----------
             Total operating expenses ................       2,146,363
                                                           -----------
         Loss from operations ........................        (778,363)
             Interest expense ........................         184,810
                                                           -----------
         Loss before income taxes ....................        (963,173)
             Income taxes ............................         (66,000)
                                                           -----------
         Net Loss ....................................     $  (897,173)
                                                           -----------
         Net Loss per share - basic ..................     $     (0.19)
         Net Loss per share - diluted ................     $     (0.19)

                                       24
<PAGE>

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.

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

                                       25
<PAGE>

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
ShareHolders 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

                                       26
<PAGE>

any Acquiror Series II Exchageable 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 Holders'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.

14. 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 Companies 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 services and, subject to
compliance with applicable laws, rules and regulation, other services intended
to raise public awareness of the Company's business. In consideration of such
services, the Company are paying Agora monthly compensation of CDN$2,750
(approximately US$2,300) and have issued to Agora 100,000 stock options, each to
purchase one share of the Company's common stock, at a price of $1.55 per share.

                                       27
<PAGE>

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 have the option to terminate the Agreement for a two day
period commencing August 1, 2005. If the Company do so, all non-vested options
will be forfeited and cancelled and the Company will have no further payment
obligations to Agora.

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 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 are paying Stockgroup monthly compensation of CDN$2,250
(approximately US$1,920).

15. PROPOSED FINANCING AND ACQUISITION TRANSACTIONS

Proposed Private Placement of Subordinated Notes
------------------------------------------------

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 also involves the sale to Dancap of 800,000 shares of redeemable,
convertible preferred stock for nominal consideration. The sales are conditioned
on the execution of a formal agreement between the parties and several other
conditions. No assurance can be given that the Company will enter into a formal
agreement with Dancap or, if entered into, it will be on terms presently
contemplated.

Proposed Acquisition
--------------------

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, is 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 will be subject to
certain conditions, including but not limited to, completion of due diligence,
raising of the necessary funds to close the transaction, and the approval of
Turbon's shareholders. No assurance can be given that the acquisition will be
completed or, if completed, the actual terms thereof.

                                       28
<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.

As of March 31, 2005, we had a working capital deficiency of approximately
$4,400,000 (including approximately $2,100,000 related to the discontinued
operation leaving a net working capital deficiency of approximately $2,300,000).

The independent registered public accounting firm's report on our financial
statements for the year ended December 31, 2004 contains an explanatory
paragraph that expresses doubt about our ability to continue as a going concern.
Subsequent to year end we raised $1,165,000 additional equity and entered into a
loan agreement for CDN$2 million with Barrington Bank International Limited.
These financings allowed us, in January 2005, to acquire 100% of an existing
business ("Teckn-O-Laser") within the imaging consumables segment which
remanufactures laser toner printer cartridges .

Teckn-O-Laser Share Purchase Agreement
--------------------------------------

On January 31, 2005 we executed and closed a Share Purchase Agreement (the
"Share Purchase Agreement") dated and effective as of January 2, 2005 among us,
YAC Corp. ("YAC"), Teckn-O-Laser Company ("TOL Canada"), 3091503 Nova Scotia
Company ("Acquiror"), 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 ours. Callco is a wholly owned subsidiary of YAC.
Acquiror is a wholly owned subsidiary of Callco.

Prior to closing, we advanced CDN$1,500,000 (approximately US$1,250,000) to the
Acquiree Shareholders for the purpose of having them acquire certain shares of
Acquiree capital 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 we paid to the Acquiree Shareholders.

Pursuant to the Share Purchase Agreement, we acquired through our subsidiary,
Acquiror, all of the issued and outstanding capital stock of Acquiree in
exchange for certain payments to be made at closing (the "Closing Payments") and
subsequent to closing (the "Post-Closing Payments").

The Closing Payments consisted of:

      o  the issuance to the Acquiree Shareholders of 6,500,000 Acquiror Series
         I Exchangeable Shares, 6,000,000 of which were issued subject to a Lock
         Up Agreement dated as of January 2, 2005 that restricts the subsequent
         sale, transfer, or disposal of a corresponding number of our common
         shares that will be issued to the holders of the Acquiror Series I
         Exchangeable Shares upon exchange thereof;

                                       29
<PAGE>

      o  the issuance to the Acquiror Shareholders of 1,932,000 Acquiror
         Preferred Shares; and

      o  the payment to the Acquiree Shareholders of CDN$750,000 (approximately
         US$624,975).

The Post-Closing Payments consist of:

      o  a cash payment to the Acquiree Shareholders of CDN$2,182,000
         (approximately US$1,817,606) due March 26, 2006 (the "2006 Payment");

      o  a cash payment to the Acquiree Shareholders of CDN$1,000,000
         (approximately US$833,333) due March 31, 2007 (the "2007 Payment"); and

      o  a cash payment to the Acquiree Shareholders of CDN$1,000,000
         (approximately US$833,333) due March 31, 2008 (the "2008 Payment").

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.

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
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:

      o  US$1.00 converted to CDN dollars; or

      o  80% of the average closing price of our 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 also received one share of
our newly created Series A Preferred Special Voting Stock (the "Series A
Preferred Stock") for each Acquiror Series I Exchangeable Share owned. Shares of
our Series A Preferred Stock have the right to vote on all matters submitted to
the vote of our 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

                                       30
<PAGE>

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 our assets, or upon our 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 we and
our subsidiaries cannot declare or pay a dividend on our respective common
stocks unless an equivalent dividends is declared or paid, as the case may be,
on the Series I Exchangeable Shares.

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, 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:

o September 1, 2005: 750,000 Acquiror Preferred Shares;
o September 30, 2005: 443,250 Acquiror Preferred Shares;
o December 31, 2005: 443,250 Acquiror Preferred Shares; and
o 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.

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 us, YAC, Callco, Acquiror and the Acquiree Shareholders (the
"Holders") 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, further 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 Holder's Acquiror Series
II Exchangeable Shares at a price equal to:

                                       31
<PAGE>

      o  the then current market price for one share of our common stock which
         is payable by the delivery of one (1) share of our common stock; plus

      o  the amount of all cash dividends declared and unpaid by us on our
         common stock at the effective time of such action; plus

      o  the amount of all declared and unpaid non-cash dividends or other
         distributions by us on our 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 Holder 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 our
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 are retracted,
redeemed, purchased or exchanged, such Holder 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 our
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 Holders' 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 our
liquidation or dissolution or upon the sale of all or substantially all of our
assets.

Pursuant to the Share Purchase Agreement, we also agreed to issue an aggregate
of 300,000 non-statutory stock options pursuant to our 2000 Stock Option Plan to
employees of TOL Canada and Teckn-O-Laser USA, Inc. ("TOL USA"). 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. Non-vested options terminate upon the employee's death, permanent
disability or termination of employment. Vested options terminate 60 days after
an employee's death, permanent disability or termination of employment except in
cases where termination is for cause, in which event they terminate at the time
of termination of employment. Effective January 31, 2004 we granted an aggregate
of 244,500 options to 12 persons with an exercise price of US$1.57 per share,
which was the closing market price for our common stock on January 31, 2005.

We plan on continuing to build on the operations of the recently completed
acquisition and look at further acquisition opportunities within the imaging
segment.

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, is 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

                                       32
<PAGE>

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 will be subject to certain conditions, including but not limited to,
completion of due diligence, raising of the necessary funds to close the
transaction, and the approval of Turbon's shareholders. No assurance can be
given that the acquisition will be completed or, if completed, the actual terms
thereof.

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 acquisition we own
plant and equipment related to the re-manufacture 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 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 anticipate we will need approximately $3 million in additional
financing through a combination of debt and equity to finance our growth plans
during the next 12 months. In the event, we reach an agreement with Turbon AG
and its shareholders for us to acquire Turbon AG, our financing requirements
will be significantly higher.

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 and the material weakness described
below, 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.

                                       33
<PAGE>

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 internal control over
our financial reporting until our fiscal year ended December 31, 2006.
Nevertheless, we identified a certain matter during our evaluation of controls
during the fourth quarter of 2005 that would constitute material weakness (as
such term is defined under the Public Company Accounting Oversight Board
Auditing Standard No.2) in our internal controls over financial reporting which
we believe has been remediated.

The material weakness we identified during the fourth quarter of 2004 related to
our limited segregation of duties, which at the time was attributable to the
small number of employees who had principal responsibility for processing
financial information. In January 2005 we completed our acquisition of
Techn-O-Laser, which has a more formalized reporting structure. We believe that
the acquisition enabled us to take corrective action by transferring all of our
financial reporting processes to Tecknolaser's finance department.

Except as described above, there were no significant changes in our internal
controls over financial reporting that occurred during the quarter ended March
31, 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 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.

                                       34
<PAGE>

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.

On May 21, 2004, John Calzaretto instituted an action against us 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. We
settled the matter for $15,000 in January 2005.

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

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

In May and June 2004 we sold an aggregate of 205,000 units to 3 persons at $1.00
per unit or $205,000 in the aggregate. Each unit consists of one share of our
common stock and one common stock purchase warrant. Each warrant, as amended,
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 that commenced on the
subscription date. In January 2005 in connection with a related unit offering,
the proceeds of which were also to be utilized towards the funding of the
acquisition, it became apparent that our unit pricing was too high and that our
units of the type sold in May and June 2004 should be sold at $.50 per unit
rather than $1.00 per unit. Consequently, in January 2005 we agreed to issue an
additional 205,000 units to the investors, at no additional cost, to bring their
unit cost down to $.50 per unit. Both the original 205,000 units and the
additional units were issued in March 2005.

During the period July 2004 through October 2004 we sold an aggregate of 647,500
Special Warrants to 18 persons at $1.00 per unit or $647,500 on an aggregate
basis. In connection with the offering, we also issued 64,750 Special Warrants
to the placement agent. Each Special Warrant was exercisable without additional
consideration to receive a Class A unit consisting of one share of our common
stock and one common stock purchase warrant. Each of these warrants, as amended,
entitles the holder to purchase one share of our common stock at $1.50 per share
at any time during the three year period that commenced on September 27, 2004.
Effective October 27, 2004, all of the Special Warrants were exercised resulting
in our issuance of 712,250 shares and 712,250

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warrants. Pursuant to the offering we were also obligated to pay a 100,000 share
work fee to the placement agent, which was paid in March 2005. In January 2005,
in connection with a related unit offering, the proceeds of which were also to
be utilized for the funding of the acquisition, it became apparent that our unit
pricing was too high and that our units of the type underlying the Special
Warrants sold in this offering should be sold at $.50 per unit rather than $1.00
per unit. Consequently, in January 2005 we agreed to issue an additional 647,500
units to the offering subscribers, or their designees, at no additional cost, to
bring their unit cost down to $.50 per unit. The additional units were issued in
March 2005.

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 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.

On January 7, 2005 we 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 our 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 our common stock at a price of $1.50 per share
at any time prior to July 1, 2008. If prior to July 1, 2005 we 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 by us prior to conversion or repayment of the Note.

Effective January 31, 2005 in connection with the Teckn-O-Laser acquisition,
3091503 Nova Scotia Company, an indirect subsidiary of ours, issued an aggregate
of 6,500,000 Series I Exchangeable Shares to the former shareholders of
Teckn-O-Laser , each of which is convertible into one share of our common stock.
In the same transaction, we issued an aggregate of 6,500,000 shares of our
Series A Special Voting Preferred Stock to the holders of the Series I
Exchangeable Shares.

Effective January 31, 2005, in connection with the Teckn-O-Laser acquisition we
issued an aggregate of 244,500 options to 12 Teckn-O-Laser employees with an
exercise price of $1.57 per share.

Effective January 31, 2005 in connection with the Barrington Bank International
Limited Loan Agreement we issued 200,000 shares of our common stock to
Barrington Bank International Limited ("Barrington").

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In March 2005 we issued an aggregate of 698,500 shares of our 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 Teckn-O-Laser
acquisition. 538,500 of these shares were issued directly to Manchester.

In February 2005, we 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.

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

In March 2005 we issued an aggregate of 500,000 shares our common stock to 2
persons in connection with financial consulting services provided to us
principally during the fourth quarter of 2004.

On March 30, 2005 we granted an aggregate of 110,000 stock options, each with an
exercise price of $1.06 per share, to our non-employee directors.

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.

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

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.

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ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a) 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

(b) Reports on Form 8-K

On February 4, 2005 we filed a Current Report on Form 8-K dated January 31,
2005. In Item 2.01 "Completion of Acquisition or Disposition of Assets" we
discussed our acquisition of Teckn-O-Laser Global Company. In Item 5.02
"Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers" we discussed changes in Executive Officers
and Directors related to the acquisition. In Item 9.01(c) "Exhibits" we provided
documents related to the acquisition.

No other reports on Form 8K were filed by us during the quarter ended March 31,
2005.

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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: May 24, 2005            Adsero Corporation

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


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