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

                                  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, 2006

                                       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 CORP.
             (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 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 [ ]

         Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act) Yes [ ] No [X]

         The number of shares of the Registrant's common stock outstanding at
May 17, 2006, was 34,051,930.

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

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

<PAGE>

                                  ADSERO CORP.
                 MARCH 31, 2006 QUARTERLY REPORT ON FORM 10-QSB
                                TABLE OF CONTENTS

                                                                            PAGE

         Special Note Regarding Forward Looking Information.................   3


                         PART I - FINANCIAL INFORMATION

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

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations..........................................  24

Item 3.  Controls and Procedures............................................  27


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings..................................................  27

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds........  27

Item 3.  Defaults Upon Senior Securities....................................  28

Item 5.  Other Information..................................................  29

Item 6.  Exhibits...........................................................  29


                                        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, 2006, 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 "Management's Discussion and Analysis of Financial Condition and
Results of Operations".

         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, 2006
         (unaudited) .......................................................   5

         Condensed Consolidated Statements of Operations for the
         three months ended March 31, 2006 and 2005 (unaudited) ............   6

         Condensed Consolidated Statements of Cash Flows for the
         three months ended March 31, 2006 and 2005 (unaudited) ............   7

         Notes to Condensed Consolidated Financial Statements
         (unaudited) .......................................................   8


                                        4
<PAGE>

                          ADSERO CORP. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2006
                                   (unaudited)

                                     ASSETS
                                     ------
CURRENT ASSETS

  Cash ..........................................................  $    150,802
  Accounts receivable, net ......................................     4,115,785
  Inventories ...................................................     4,045,199
  Prepaid expenses and other assets .............................       288,137
                                                                   ------------

    TOTAL CURRENT ASSETS ........................................     8,599,923

  Property and equipment,net ....................................     1,992,693
  Investment in Turbon AG .......................................     6,398,774
  Goodwill ......................................................     2,388,298
  Intangible assets, net ........................................     3,715,667
  Other assets ..................................................        40,958
                                                                   ------------

        Total Assets ............................................  $ 23,136,313
                                                                   ============

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

  Line of credit obligation .....................................  $  2,140,386
  Installment loans .............................................       265,901
  Finished goods purchasing line of credit ......................     2,799,995
  Accounts payable ..............................................     3,738,018
  Accrued compensation ..........................................       697,549
  Warranties and related accruals ...............................       346,000
  Accrued expenses ..............................................     1,287,440
  Liabilities of discontinued operation .........................     2,125,341
  Notes payable - stockholders ..................................       600,000
  Note payable - former officer (including accrued interest
    of $66,495) .................................................       172,988
  Current portion of equipment financing obligations ............        53,617
                                                                   ------------
    TOTAL CURRENT LIABILITIES ...................................    14,227,235

  Equipment financing obligations, net of current portion .......       109,171
  Stock purchase loan ...........................................     2,800,000
  Acquisition debt ..............................................     2,290,678
  Convertible promissory note ...................................     1,269,859
                                                                   ------------
        Total Liabilities .......................................    20,696,943
                                                                   ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
  Common stock, $.001 par value, 100,000,000 shares authorized,
    34,051,930 shares issued and outstanding ....................        34,052
  Series I exchangeable shares of subsidiary, 6,500,000 shares
    outstanding, exchangeable one for one into common shares of
    the company .................................................     3,250,000
  Series A Preferred Special Voting Stock, $.0001 par value,
    20,000,000 shares authorized,  6,500,000 issued and
    outstanding .................................................           650
  Additional paid-In-capital ....................................    19,461,021
  Accumulated other comprehensive loss - foreign currency
    translation adjustment ......................................      (224,975)
  Accumulated deficit ...........................................   (20,081,378)
                                                                   ------------
    TOTAL STOCKHOLDERS' EQUITY ..................................     2,439,370
                                                                   ------------

        Total Liabilities and Stockholders' Equity ..............  $ 23,136,313
                                                                   ============

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                        5
<PAGE>

                          ADSERO CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

                                                    FOR THE THREE MONTHS ENDED
                                                             MARCH 31,
                                                   -----------------------------
                                                       2006              2005
                                                   ------------      -----------

REVENUES .....................................     $  7,416,849      $ 7,417,678

COST OF GOODS SOLD ...........................        5,712,401        5,156,292
                                                   ------------      -----------
  GROSS PROFIT ...............................        1,704,448        2,261,386
                                                   ------------      -----------

OPERATING EXPENSES
  Salaries and compensation ..................          886,908          790,081
  Sales and administrative ...................        1,328,067          861,997
  Depreciation and amortization ..............          349,092          130,877
                                                   ------------      -----------
  TOTAL OPERATING EXPENSES ...................        2,564,067        1,782,955
                                                   ------------      -----------

(LOSS) INCOME FROM OPERATIONS ................         (859,619)         478,431
GAIN ON EXTINGIUSHMENT OF DEBT ...............          460,693                -
  INTEREST EXPENSE ...........................          306,050          115,806
                                                   ------------      -----------

(LOSS) INCOME BEFORE INCOME TAXES ............         (704,976)         362,625

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

NET LOSS .....................................     $   (704,976)     $   236,465
                                                   ============      ===========


NET (LOSS) INCOME PER SHARE, BASIC ...........     $      (0.02)     $      0.01
                                                   ============      ===========

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING        40,551,930       21,990,642
                                                   ============      ===========

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

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                         32,400,818
                                                                     ===========

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                        6
<PAGE>

                          ADSERO CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                                      FOR THE THREE MONTHS ENDED
                                                              MARCH 31,
                                                      --------------------------
                                                         2006           2005
                                                      -----------   -----------
CASH FLOWS FROM OPERATING ACTIVITIES:

    Net (Loss) Income ..............................  $  (704,976)  $   236,465
                                                      -----------   -----------

  Adjustments to reconcile net (loss)income to net
   cash (used in)provided by operating activities:
    Depreciation and amortization ..................      349,092       130,877
    Stock based compensation .......................       97,973        27,998
    Gain on debt extinguishment of debt ............     (460,693)            -
    Non-cash interest expense ......................       85,863             -
  Changes in operating assets and liabilities:
    Accounts receivable ............................      771,959       136,133
    Inventories ....................................     (343,323)      208,691
    Prepaid expenses and other assets ..............      (43,497)      461,192
    Accounts payable and accrued expenses ..........     (618,906)      283,656
    Income taxes receivable ........................      227,730             -
                                                      -----------   -----------
          Total Adjustments ........................       66,198     1,248,547
                                                      -----------   -----------

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES      (638,778)    1,485,012
                                                      -----------   -----------

CASH FLOWS PROVIDED BY (USED IN) INVESTING
 ACTIVITIES:

    Acquisition of business, net of cash received ..            -    (3,131,860)
    Sales of fixed assets ..........................        1,859        17,817
                                                      -----------   -----------
NET CASH PROVIDED BY(USED IN) INVESTING ACTIVITIES .        1,859    (3,114,043)
                                                      -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

    Repayment on notes payable to related parties ..            -       (76,079)
    Principal payments on long term debt ...........      (14,926)     (612,396)
    Repayment on Bank loan .........................     (501,937)     (937,806)
    Proceeds from issuances of common stock ........            -     1,231,000
    Proceeds from issuances of convertible notes ...            -     2,610,176
    Proceeds (repayments) of loan payable ..........            -      (275,000)
                                                      -----------   -----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES      (516,863)    1,939,895
                                                      -----------   -----------

EFFECT OF EXCHANGE RATE ON CASH ....................        2,290             -

NET (DECREASE)INCREASE IN CASH .....................   (1,151,492)      310,864

CASH AT BEGINNING OF PERIOD ........................    1,302,294       161,700
                                                      -----------   -----------

CASH AT END OF PERIOD ..............................  $   150,802   $   472,564
                                                      ===========   ===========

Supplemental information
------------------------
Interest paid ......................................  $   220,187   $   115,806
Income taxes paid ..................................  $         -   $         -

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                        7
<PAGE>

                          ADSERO CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006

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 to
     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, 2006 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, 2005 and for the year ended December
     31, 2004, which are included in the Company's Annual Report on Form 10KSB
     for the year ended December 31, 2005 filed with the Securities and Exchange
     Commission.

2.   ORGANIZATION

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

     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.

3.   LIQUIDITY AND FINANCIAL CONDITION

     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, 2006, the Company had a working capital deficiency of $
     5,627,311 ($3,501,970 excluding liabilities from discontinued operations)
     and was not in compliance with certain covenants under its line of credit
     obligation and certain of its term loans described in Note 9. The lender
     under these obligations has the right to demand immediate repayment of
     these loans due to an event of default. Subsequent to March 31, 2006, the
     Company and the lender entered into a standstill agreement intended to
     provide the Company with additional time to source a new lender; however,
     this agreement only provides the Company with temporary relief from a
     possible demand for payment and includes various restrictions that do not
     alleviate the Company's immediate liquidity constraints. On May 1, 2006,
     the Company obtained an extension to the standstill agreement until July
     31, 2006 (Note 22). The lender's exercise of these rights and possible
     demand for immediate repayment of the outstanding balances, which amount to
     an aggregate of $2,406,287 at March 31, 2006, would have a material adverse
     effect on the business. The Company cannot provide any assurance that the
     lender under these obligations will waive its violation of such covenants
     nor can the Company provide any assurance that the lender will not exercise
     its right to demand immediate repayment.

                                        8
<PAGE>

     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 also cannot 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.

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

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

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

     The Company applies the revenue recognition principles set forth in
     Securities and Exchange Commission Staff Accounting Bulletin ("SAB") 104
     "Revenue Recognition" with respect to all of its revenue. Accordingly, the
     Company records revenue when (i) persuasive evidence of an arrangement
     exists, (ii) delivery has occurred, (iii) the vendor's fee is fixed or
     determinable, and (iv) collectability of the sale is reasonable assured.

     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." In addition, the Company evaluates the
     creditworthiness of new customers and monitors the creditworthiness of its
     existing customers to determine whether events or changes in their
     financial circumstances would raise doubt as to the collectibility of sales
     transactions.

     The Company has also made approximately $2,316,422 of product sales as a
     distributor of goods under a strategic supply arrangement with Turbon AG
     during the three months ended March 31, 2006. With respect to these sales,
     the Company takes title to the products and bears the risks and rewards of
     ownership, including the risk of loss for collection, delivery or returns.

     Accordingly, the Company has determined, in accordance with EITF 99-19
     "Reporting Revenue Gross as a Principal versus Net as an Agent," that it
     acts as a principal in these transactions and therefore records such
     revenue on a gross basis.

                                        9
<PAGE>

     The Company provides its customers with warranty coverage on its products
     as described in Note 17. Provisions for estimated expenses related to
     product warranties are made at the time products are sold. These estimates
     are established using historical information on the nature, frequency, and
     average cost of warranty claims. Management actively studies trends of
     warranty claims and takes action to improve product quality and minimize
     warranty claims.

     The Company has entered into individually negotiated volume rebate
     arrangements with several of its customers. In addition, the Company issues
     sales discounts on product purchases made by customers who participate in
     its Reflexions Private Label Program (Note 17). Sales discounts under the
     Reflexions Private Label Program range from 0% to 10% based on volumes of
     products purchased during semi-annual measurement periods. All volume
     rebates and sales discounts are accrued and accounted for as a reduction of
     revenue based on actual rebates and discounts earned. Aggregate volume
     rebates and sales discounts amounted to $325,166 and $214,007 for the
     quarters ended March 31, 2006 and 2005, respectively. The 2006 amount
     includes $23,771 included in accrued expenses in the accompanying balance
     sheet.

     The Company periodically permits its customers to return unused goods for a
     restocking fee of 15%. Returns of unused goods amounted to $116,508 and $
     56,457 for the quarters ended March 31, 2006 and 2005, respectively. The
     2006 amount includes $119,416 included in accrued expenses in the
     accompanying balance sheet.

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

     The Company has a policy of reserving for uncollectible accounts based on
     its best estimate of the amount of probable credit losses in its existing
     accounts receivable. The Company periodically reviews its accounts
     receivable to determine whether an allowance is necessary based on an
     analysis of past due accounts and other factors that may indicate that the
     realization of an account may be in doubt. Account balances deemed to be
     uncollectible are charged to the allowance after all means of collection
     have been exhausted and the potential for recovery is considered remote. As
     of March 31, 2006, the Company has had a low occurrence of credit losses
     and based on a review of balances outstanding has determined that an
     allowance for doubtful accounts of $148,164 is necessary.

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

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

     Property and Equipment
     ----------------------

     Property 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 10 years.

     Goodwill
     --------

     Goodwill represents the excess of purchase consideration and related
     transaction expenses that are incurred in connection with completing
     acquisitions of businesses accounted for in accordance with SFAS 141

                                       10
<PAGE>

     "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 three-month period ended March 31, 2006 that would indicate that
     the recoverability of its goodwill is in doubt. The amount of goodwill that
     appears in the accompanying balance sheet, which is presented net of an
     impairment charge recorded in 2005, originated in connection with the
     Company's acquisition of the Tecknolaser Group in effective January 2,
     2005.

     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 quarters ended March
     31, 2006 and March 31, 2005.

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

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

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

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

     Convertible Notes
     -----------------

     The Company accounts for conversion options embedded in convertible notes
     in accordance with Statement of Financial Accounting Standard ("SFAS) No.
     133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
     133") and EITF 00-19 "Accounting for Derivative Financial Instruments
     Indexed to, and Potentially Settled in, a Company's Own Stock" ("EITF
     00-19"). SFAS 133 generally requires Companies to bifurcate conversion
     options embedded in convertible notes from their host instruments and to

                                       11
<PAGE>

     account for them as free standing derivative financial instruments in
     accordance with EITF 00-19. SFAS 133 provides for an exception to this rule
     when convertible notes, as host instruments, are deemed to be conventional
     as that term is described in the implementation guidance under Appendix A
     to SFAS 133 and further clarified in EITF 05-2 "The Meaning of
     "Conventional Convertible Debt Instrument" in Issue No. 00-19.

     The Company accounts for convertible notes (deemed conventional) in
     accordance with the provisions of Emerging Issues Task Force Issue ("EITF")
     98-5 "Accounting for Convertible Securities with Beneficial Conversion
     Features," ("EITF 98-5"), EITF 00-27 "Application of EITF 98-5 to Certain
     Convertible Instruments," Accordingly, the Company records, as a discount
     to convertible notes, the intrinsic value of such conversion options based
     upon the differences between the fair value of the underlying common stock
     at the commitment date of the note transaction and the effective conversion
     price embedded in the note. Debt discounts under these arrangements are
     amortized over the term of the related debt to their earliest date of
     redemption.

     The Company convertible notes do not host embedded conversion options that
     are deemed to be free standing derivatives financial instruments or
     beneficial conversion features the commitment date fair value of the
     underlying common stock.

     Common Stock Purchase Warrants and Other Derivative Financial Instruments
     -------------------------------------------------------------------------

     The Company accounts for the issuance of common stock purchase warrants
     issued and other free standing derivative financial instruments in
     accordance with the provisions of EITF 00-19. 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
     ------------------------

     Prior to January 1, 2006, the Company accounted for employee stock
     transactions in accordance with Accounting Principle Board, APB Opinion No.
     25 "Accounting for Stock Issued to Employees." The Company has adopted the
     pro forma disclosure requirements of Statement of Financial Accounting
     Standards No. 123, "Accounting For Stock-Based Compensation."

     Effective January 1, 2006, the Company adopted FASB Statement of Financial
     Accounting Standard ("SFAS") No. 123R "Share Based Payment". This statement
     is a revision of SFAS Statement No. 123, and supersedes APB Opinion No. 25,
     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 that will result in a charge to
     operations. Consequently, during the quarter ended March 31, 2006, the
     Company recorded a $34,137 stock based compensation charge, which
     represents amortization of the fair value of the unvested portion of stock
     options that the Company awarded through December 31, 2005.

                                       12
<PAGE>

     For the quarter ended March 31, 2005, the Company had applied APB Opinion
     No. 25, "Accounting for Stock Issued to Employees." As required under SFAS
     No. 148, "Accounting for Stock-based Compensation - Transition and
     Disclosure," the following table presents pro- forma net income and basic
     and diluted loss per share as if the fair value-based method had been
     applied to all awards during that period.

                                                            For the Three Months
                                                            Ended March 31, 2005
                                                            --------------------
     Net income, as reported ...............................     $ 236,465
     Incremental amount of stock based compensation expense
      determined under the fair value method ...............        (3,125)
                                                                 ---------
     Net loss, pro-forma ...................................       233,340
                                                                 =========
     Income loss per share:
     Basic and diluted, as reported ........................          0.01
                                                                 =========
     Basic and Diluted, pro-forma ..........................          0.01
                                                                 =========

     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."

     In February 2006 the Company issued an aggregate of 60,000 stock options to
     four sales consultants. Each option is exercisable at a price of $1.20 per
     share for a period of ten years from issuance. All options vest
     immediately. The Company expensed $63,836 as compensation expense during
     the quarter ended March 31, 2006.

     Warrants and options issued to non-employees for services in which
     performance by the counterparty is complete, are accounted for as free
     standing derivative financial instruments in accordance with EITF 00-19.

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

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

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

     The Company presents net income (loss) per share ("EPS") in accordance with
     SFAS No. 128, "Earnings per Share." Accordingly, the Company computes basic
     EPS based upon the weighted average number of common shares outstanding.
     Diluted EPS, when presented is computing using the weighted average number

                                       13
<PAGE>

     of common and potential common shares outstanding. Potential common shares
     would 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 anti-dilutive.

     As described in Note 4, the Company issued, as purchase consideration,
     6,500,000 of its Series I Exchangeable shares to the sellers of the
     Tecknolaser Group. The same stockholders also hold all 6,500,000 shares of
     the Company' Series A Preferred Special Voting Stock. In accordance with
     the provisions of Issue No. 5 of EITF 03-6 "Participating Securities and
     the Two-Class Method under FASB Statement No. 128," the Company has
     included the Series I Exchangeable shares in its determination of basic
     loss per share for the quarter ended March 31, 2006 because the features of
     these securities, taken together, provide its holders with rights identical
     to those of the Company's stockholders.

     The following table provides a summary of all potentially dilutive
     securities for the quarter ended March 31, 2006 that have been excluded
     from the computation of basic loss per share as their effect would be
     anti-dilutive:

                                                               March 31, 2006
                                                               --------------
     Stock options .....................................            648,500
     Common stock purchase warrants ....................         17,065,313
     Convertible debentures ............................          3,293,966
                                                                 ----------
     Total .............................................         21,007,779
                                                                 ==========

     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.

     Reclassifications
     -----------------

     Certain amounts presented in the statement of operations for the quarter
     ended March 31, 2005 have been reclassified to conform to the presentation
     used for the quarter ended March 31, 2006.

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

     In February 2006, the FASB issued SFAS No. 155 "Accounting for Certain
     Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and
     140" ("FAS 155"). FAS 155 addresses the following: a) permits fair value
     remeasurement for any hybrid financial instrument that contains an embedded
     derivative that otherwise would require bifurcation; b) clarifies which
     interest-only strips and principal-only strips are not subject to the
     requirements of Statement 133; c) establishes a requirement to evaluate
     interests in securitized financial assets to identify interests that are
     freestanding derivatives or that are hybrid financial instruments that
     contain an embedded derivative requiring bifurcation; d) clarifies that
     concentrations of credit risk in the form of subordination are not embedded
     derivatives; and e) amends Statement 140 to eliminate the prohibition on a
     qualifying special-purpose entity from holding a derivative financial
     instrument that pertains to a beneficial interest other than another

                                       14
<PAGE>

     derivative financial instrument. FAS 155 is effective for all financial
     instruments acquired or issued after the beginning of an entity's first
     fiscal year that begins after September 15, 2006. The Company is currently
     evaluating the requirements of FAS 155, but does not expect that the
     adoption will have a material effect on its financial statements.

     In March 2006, the FASB issued SFAS 156 - "Accounting for Servicing of
     Financial Assets - an amendment of FASB Statement No. 140" ("SFAS 156").
     SFAS 156 is effective for the first fiscal year beginning after September
     15, 2006. SFAS 156 changes the way entities account for servicing assets
     and obligations associated with financial assets acquired or disposed of.
     The Company has not yet completed its evaluation of the impact of adopting
     SFAS 156 on its results of operations or financial position, but does not
     expect that the adoption of SFAS 156 will have a material impact.

     Other accounting standards that have been issued or proposed by the FASB or
     other standards-setting bodies that do not require adoption until a future
     date are not expected to have a material impact on the consolidated
     financial statements upon adoption.

5.   INVENTORIES

     Inventories consist of the following at March 31, 2006:

     Raw materials ........................       746,094
     Finished goods .......................     3,324,810
                                              -----------
                                                4,070,904
     Less reserves ........................       (25,705)
                                              -----------
                                              $ 4,045,199
                                              ===========

6.   PREPAID EXPENSES

     Prepaid expenses consist of the following at March 31, 2006:

     Deposit - Barrington Bank ............        51,410
     Insurance ............................        87,044
     Rent .................................        30,114
     Industry trade shows .................        21,515
     Deposit - Summit .....................        64,262
     Other ................................        33,792
                                                 --------
                                                 $288,137
                                                 ========

7.   PROPERTY AND EQUIPMENT

     Property and Equipment consists of the following at March 31, 2006:

     Leasehold improvements ...............   $   138,041
     Machinery and Equipment ..............       680,609
     Furniture and Fixtures ...............       382,007
     Computer Equipment ...................     1,313,339
                                              -----------
                                                2,513,996
     Less Accumulated Depreciation ........      (521,303)
                                              -----------
                                              $ 1,992,693
                                              ===========

                                       15
<PAGE>

     Depreciation expense for the three months ended March 31, 2006 and 2005
     amounted to $125,759 and $129,411, respectively.

8.   INTANGIBLE ASSETS

     Intangible assets consists of the following at March 31, 2006:

     Intellectual Property ................   $ 2,740,000
     Customer Relationships ...............     1,540,000
     Trademarks ...........................       540,000
                                              -----------
                                                4,820,000
     Less amortization ....................    (1,104,333)
                                              -----------
                                              $ 3,715,667
                                              ===========

     These amounts are amortized on a straight-line basis over a 5 year period.
     Amortization expense for the three months ended March 31, 2006 and 2005
     amounted to $223,333 and $0, respectively.

9.   LINE OF CREDIT AND INSTALLMENT LOANS

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

     That Company has a credit facility with a Canadian bank that provides for
     aggregate borrowings of up to approximately $3.0 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 $4.3
     million (CDN$5 million) on all accounts receivable and inventories.
     Interest is at the Bank's Canadian prime rate plus 2% (7% as at March 31,
     2006) and was renewable annually.

     The Company is required to comply with certain financial ratios under the
     terms of the bank loan. As of March 31, 2006, and subsequent thereto, the
     Company is not in compliance with one of these financial ratios. As
     described in Note 22, the Company entered into a standstill agreement with
     the lender under this obligation in which the lender temporarily agreed to
     suspend their rights under the loan agreement, subject to certain
     conditions. The Company cannot provide any assurance that the lender under
     this obligation will not demand its immediate repayment. A demand for
     immediate repayment would have a material adverse affect on the Company
     ability to sustain its operations.

     Interest expense under these obligations amounted to $42,009 and $24,080,
     for the three months ended March 31, 2006 and 2005, respectively.

     Installment Loans
     -----------------

     The Company has the following outstanding term loans, under which it is
     required to comply with certain financial ratios. As of March 31, 2006, and
     subsequent thereto, the Company is not in compliance with these financial
     ratios. The contractual terms of the loans are as follows:

                                       16
<PAGE>

                                  Obligation                            Balance
                                  ----------                            -------
     Term loan, Secured by automotive equipment, 6.65%, payable
      in monthly instalments of 1,250(CDN$1,500), maturing in
      November 2006 (1) ...........................................    $  87,396

     Term loan, secured by a lien on all present and future
      furniture, fixtures and equipment, Canadian bank prime
      rate plus 1% (6% as at March 31, 2006), payable in
      monthly instalments of $17,360(CDN$20,833), maturing
      January 2007 (1) ............................................      178,505
                                                                       ---------
                                                                       $ 265,901
                                                                       =========

     The Company is continuing making the instalment payments in accordance with
     the terms of these obligations. The lender has not, as of this time,
     exercised its right to demand immediate payment. However, the lender under
     these obligations has not provided the Company with a written waiver of the
     violation and therefore has the ability to exercise its right to demand
     payment at anytime. The Company cannot provide any assurance that the
     lender will not demand immediate payment. Accordingly, the Company has
     classified the outstanding balance of these loans as a current liability in
     the accompanying balance sheet.

     Interest expense under these obligations amounted to $4,777 and $6,770, for
     the three months ended March 31, 2006 and 2005, respectively.

10.  LIABILITIES OF DISCONTINUED OPERATION

     In January, 2003 the three largest creditors (the "Petitioners") of Reink
     Imaging USA, Ltd. ("Reink"), a former subsidiary operating business, 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. On July 10, 2003 the case was converted from
     Chapter 11 "Reorganization" into Chapter 7 "Liquidation", 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 Bankruptcy Trustee has commenced filings to
     wind up the bankruptcy case and move for adjudication, however; the Company
     has not received any definitive indication as to when these legal
     proceedings are likely to conclude. The Company anticipates that the
     conclusion of the bankruptcy proceedings will result in a complete
     discharge of these liabilities, however; the Company cannot determine their
     ultimate disposition in the absence of a court ruling.

11.  TERM LOAN AND STRATEGIC SUPPLY AGREEMENTS WITH TURBON AG

     On November 4, 2005 the Company entered into a $2,800,000 Loan Agreement
     (the "Turbon Loan Agreement") with Turbon International Inc., ("Turbon
     International"), a wholly owned subsidiary of Turbon AG. Proceeds from the
     term loan were utilized to purchase certain Turbon AG shares. In
     consideration of the $2,800,000 term loan, the Company issued a 5%
     promissory note to Turbon International. Interest is payable quarterly on
     each of January 31, April 30, July 31 and October 31 during the term of the
     loan commencing January 31, 2006. Principal, and accrued but unpaid
     interest are due October 31, 2008 subject to acceleration upon an event of
     default. The loan can be prepaid at any time prior to maturity without
     penalty. Upon an event of default the interest rate will be increased from
     5% to 9% until the default is cured. The term loan is secured by a first
     priority lien on the 400,000 shares of common stock of Turbon AG.

                                       17
<PAGE>

     Interest expense under this obligations amounted to $34,770 and $0, for the
     three months ended March 31, 2006 and 2005, respectively.

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

     As of November 4, 2005 the Company entered into a Loan Agreement (the "Loan
     Agreement") with Turbon International Inc., ("Turbon International"), a
     wholly subsidiary of Turbon AG, and Teckn-O-Laser Global Company, a wholly
     owned subsidiary of the Company ("Teckn-O-Laser"). Pursuant to the Loan
     Agreement, Turbon International extended a line of credit for up to
     $2,800,000. The line of credit may only be used for the purpose of
     purchasing products from Turbon International and certain affiliated
     entities. Interest is at 5% per annum on all sums advanced under the line
     of credit, and is due and payable on the last day of each quarter starting
     with the quarter ending November 30, 2005. Principal and accrued but unpaid
     interest under the line of credit are due October 31, 2006 subject to
     acceleration upon an event of default. All advances under the line of
     credit will be evidenced by promissory notes. Amounts borrowed under the
     line of credit may be repaid at any time prior to maturity without penalty
     and may be re-borrowed. Upon an event of default under the line of credit
     the interest rate payable under the applicable notes will be increased from
     5% to 9% until cured.

     The Company's indebtedness to Turbon International under both the line of
     credit and term loan facilities is secured by a first priority lien on the
     400,000 shares of common stock of Turbon AG.

     Interest expense under this obligations amounted to $34,442 and $0, for the
     three months ended March 31, 2006 and 2005, respectively.

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

     Effective June 22, 2005, the Company entered into a Strategic Supply
     Agreement with Turbon AG, ("Turbon") a leading global imaging supply
     company specializing in the remanufacture of laser cartridges. Pursuant to
     the Agreement, Turbon became a strategic supplier of remanufactured laser
     toner cartridges to the Company. In consideration thereof, the Company has
     given preferred vendor status to Turbon with respect to ordering products
     from Turbon (as opposed to third parties) providing Turbon's product
     quality meets the Company's specifications.

     As described in Note 19, the Company made a tender offer to acquire all of
     the outstanding capital stock of Turbon in a proposed purchase business
     combination, which is still subject to completion.

12.  LONG TERM DEBT

     The Company is under the following equipment financing obligations as of
     March 31, 2006:


     Equipment financing, with interest ranging from 6.52% and 10%,
      payable monthly, maturing at various dates until April 2009 .    $144,461

     Term loans, payable in monthly instalments of $1,600
      (CDN$1,921) without interest, maturing at various dates
      through August 2008 .........................................      18,327
                                                                       --------
                                                                        162,788
     Less current portion .........................................     (53,617)
                                                                       --------
     Total long term debt .........................................    $109,171
                                                                       ========

                                       18
<PAGE>

     Interest expense under these obligations amounted to $3,889 and $1,590, for
     the three months ended March 31, 2006 and 2005, respectively.

13.  NOTES PAYABLE - FORMER OFFICER

     The Company has a note payable to a former CEO and Director of the Company
     in the principal amount of $112,500 that bears interest at 18% per annum.
     The Company commenced and continues to pursue litigation with the former
     officer with the respect to his alleged violations of non-competition and
     confidentiality agreements within his employment contract. The aggregate
     balance of the note, including accrued interest of $60,488 amounted to
     $172,988 at March 31, 2006. The Company is presently unable to determine
     the outcome or possible range of loss, if any, with respect to this matter
     at the current time.

14.  NOTES PAYABLE - STOCKHOLDERS

     On November 4, 2005 the Company received aggregate loans of $600,000 from
     three shareholders. In consideration thereof, the Company issued 5%
     convertible promissory notes due December 31, 2006 (the "Maturity Date") to
     Alain Lachambre ($136,198), Yvon Leveille ($328,113) and Manchester
     Consolidated Corp. ($135,689). Interest and principal on the notes are due
     on the Maturity Date. The notes can be prepaid at any time. If all
     principal and interest due on the notes are not paid in full on the
     Maturity Date, the respective holders may, at their sole option, convert
     the total amount of unpaid principal and interest into shares of common
     stock at the rate of $0.50 per share. The issuance of the notes was made in
     reliance on Section 4(2) of the Securities Act of 1933, as amended. The
     loan proceeds were utilized to purchase certain Turbon shares.

     Interest expense under these obligations amounted to $ 7,315 and $0, for
     the three months ended March 31, 2006 and 2005, respectively.

15.  CONVERTIBLE PROMISSORY NOTE

     Effective January 26, 2005 the Company entered into a 5 year $1,713,649
     (approximately Cdn$2,000,000) 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.

     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 $1.00 per share. The
     Company also issued 200,000 shares of common stock to the Lender and 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
     deferred financing cost, which was being amortized over the term of the
     loan. Effective February 1, 2006 the interest rate has been decreased to 8%
     for the period February 1, 2006 to July 31, 2006. In addition the
     conversion price was adjusted to $0.50 per share.

     The Company accounted for the modification of this debt instrument in
     accordance with the provisions of EITF 96-19 "Debtors Accounting for a
     Modification or Exchange of Debt Instruments" and EITF 05-07 "Accounting
     for Modifications to Conversion Options Embedded in Debt instruments and
     Related Issues." Under the guidelines of these pronouncements, debtors
     include the fair value of the changes made to the embedded conversion
     options in a comparative analysis of the carrying values of the debt
     instrument immediately before and after the modification. When the change
     in the value under this analysis is deemed substantial, as defined, the
     modification is considered to have been accomplished through an exchange of
     instruments that results in the extinguishment of the debt prior to
     modification.

                                       19
<PAGE>

     The Company performed its analysis of the debt under the guidelines of
     these pronouncements and determined that the modification resulting from
     the change in conversion price and interest rate was substantial.
     Accordingly, the Company recorded a gain on the extinguishment of the debt
     prior to the modification in the amount of $460,693. The difference between
     the carrying value of the modified instrument and its mandatory redemption
     amount is being accreted as interest expenses over the remaining term of
     the loan. Accretion of the discount amounted to $19,196 during the quarter
     ended March 31, 2006 and is included as a component of interest expense in
     the accompanying statement of operations. In addition the Company wrote off
     deferred financing costs of $66,667 during the quarter ended March 31,
     2006. Contractual interest amounted to $40,580 and $32,258, for the three
     months ended March 31, 2006 and 2005, respectively.

16.  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 matter at the current
     time.

     Operating Lease Agreement
     -------------------------

     The lease is being accounted for as an operating lease, which calls for
     equal monthly installments. The base rent is $299,346 (CDN$345,775) per
     annum for the first five years, and $329,280 (CDN$380,352) per annum for
     the next five years. The lease provides for two renewal options to extend
     the term of the lease each by a period of five years.

     Union Collective Bargaining Agreement
     -------------------------------------

     On November 30, 2004, the United Steel Workers Union, local section 9414,
     affiliated with the FTQ (Federation des travailleurs du Quebec) was
     accredited to represent the production employees of Teckn-O-Laser at the
     Sainte Julie location. The accreditation certificate covers production
     employees, excluding office and administrative employees and all other
     excluded by law. On January 9, 2005, representatives were elected and
     negotiations commenced February 17, 2005. The first union contract was
     completed and signed on November 5, 2005. The Union has negotiated salary
     increases for the next 2 years at 2% in year 1 and 2.5% in year 2. All
     other conditions remain similar to prior to the Union contract being
     implemented.

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

     The Company is a party to certain consulting agreements with certain
     related and unrelated parties that are more fully described in Note 20.

                                       20
<PAGE>

17.  WARRANTY, REBATE, AND VOLUME DISCOUNT ARRANGEMENTS

     Warranty
     --------

     The Company maintains a product warranty program whereby defective products
     can be returned any time for a period of 2 years from the date of purchase.
     The Company provides for the estimated cost of product warranties at the
     time it recognizes revenue. The Company engages in ongoing product quality
     programs and processes, including looking at the quality of suppliers
     components, but ongoing product failure rates, material usage and service
     delivery costs incurred in correcting product failure, may affect the
     estimated warranty obligation. If actual product failure rates, material
     usage or service delivery costs differ from estimates, revisions to the
     estimated warranty liability would be required. Based on past experience
     the Company reviews the prior approximately 6- 8 months of sales and
     applies an historical rate of approximately 2% - 2.4% depending on the
     different product categories. The Company reviews both the percentage and
     the historical return rates on a quarterly basis in order to adjust the
     provision for warranty expense.

     Reflexion program
     -----------------

     The Company offers a program whereby it agrees to pay to a customer a
     combination of cash and Adsero stock, provided the customer turns over the
     majority of their manufacturing business into Adsero's system for
     manufacturing. The package consists of a combination of cash payments and
     shares in Adsero payable over the life of the contract, which is 3 years,
     and is dependent on volume levels. As part of the program the Company
     offers the Reflexion brand name along with economies of scale, and numerous
     advertising and volume discount incentives in order to help grow the
     business. The Reflexion member then continues to manage its customer base
     and grow sales with the additional tools provided by the Company. The
     Company has reviewed the existing contracts and has determined no further
     accrual is needed in the current income statement to reflect the remaining
     liability over the duration of these contracts. As payments are made the
     amounts will be reduced.

18.  STOCKHOLDERS' EQUITY

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

     Effective January 31, 2006, the Company issued 2,400,000 shares of its
     common stock (the "Shares") and warrants (the "Warrants") to purchase
     2,400,000 shares of common stock to the holder of the November 4, 2005
     subscription receipts upon the automatic exercise of such subscription
     receipts on such date. No additional consideration was payable to the
     Company upon the exercise and the shares and warrants were already included
     as outstanding for share calculations as at December 31, 2005,therefore
     there was no effect during the quarter ended March 31, 2006. Each Warrant
     entitles the holder to purchase, subject to adjustment, one share of common
     stock at an exercise price of $1.25 per share through May 3, 2008.

19.  PROPOSED ACQUISITION OF TURBON AG

     In April 2005, the Company expressed its interest to management of Turbon
     AG ("Turbon"), in acquiring 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 expression of
     interest, as revised, was approximately US$56.6 million in cash. Effective

                                       21
<PAGE>

     November 4, 2005 the Company completed the purchase of 400,000 shares of
     Turbon. The completion and closing of an acquisition of the remaining
     outstanding shares of Turbon will be subject to several conditions,
     including but not limited to, raising of the necessary funds to close the
     transaction, obtaining the approval of Turbon's shareholders, and the
     submission of a public offering to acquire all of Turbon's outstanding
     shares in accordance with the applicable regulations to which the Company
     and Turbon are subject. The Company cannot provide any assurance that it
     will complete this proposed acquisition or that the terms of the
     transaction if completed will not be materially different from the terms
     that are currently proposed. At the present time, the Company has no
     agreements in place with Turbon, Turbon's shareholders or any lenders.

     The $14 per share purchase price for the investment in Turbon includes a
     control premium of approximately 35% over the trading price of Turbon's
     common stock, however; management of the Company believes that the quoted
     market price of Turbon's common stock may not necessarily be indicative of
     its actual fair value due to its low trading volume. In addition, the
     amount paid for these shares is consistent with the Company's previously
     announced proposal to purchase all 4,042,000 shares of Turbon's outstanding
     common stock at an aggregate purchase price of approximately $56,600,000.
     The Company is restricted from transferring these shares during the term of
     its credit agreements with Turbon. Turbon, in the event of the Company's
     default under either of these agreements, has the right to demand the
     return of any or all of its shares.

     The Company accounted for its investment, which represents approximately
     9.9% of Turbon, at cost because such investment (a) was made in
     contemplation of the proposed acquisition of Turbon (described above), (b)
     is not held for trading purposes, (c) serves as collateral for a loan, and
     (d) is not significant with respect to influencing the affairs or business
     of Turbon.

20.  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. No fees were paid to Westminster during the quarter ended March
     31, 2006 or March 31, 2005.

     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. No
     fees were paid to Mr. Belzberg during the quarter ended March 31, 2006 or
     March 31, 2005.

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

     In January 2005, the Company executed a consulting agreement with 6327214
     Canada Inc., a company owned by William Smith, the Company's CFO, to
     provide consulting services to the Company. 6327214 Canada Inc. is paid
     approximately $11,500 per month based on invoicing to the Company. In
     addition, the Company covers all business related expenses incurred by
     6327214 Canada Inc. while delivering the consulting services. This
     agreement continues until terminated and can be terminated by the Company
     upon 10 months written notice. The Company paid a total of $39,018 during
     the quarter ended March 31, 2006 compared to nil for the same period last
     year.

                                       22
<PAGE>

21.  MAJOR CUSTOMERS AND FOREIGN AND DOMESTIC OPERATIONS

     During the three months ended March 31, 2006, the Company had no customer
     who represented more than 10% of its sales. Sales to customers in the
     United States represented 55% of total sales and sales to customers outside
     the United States represented 45% of total sales.

     During the three months ended March 31, 2005, one customer represented
     approximately 18% of our total sales. Sales to customers in the United
     States represented 59% of total sales and sales to customers outside the
     United States represented 41% of total sales.

22.  SUBSEQUENT EVENTS

     Bank Credit Standstill Agreement
     --------------------------------

     Through our Teckn-O-Laser entities, the Company has outstanding loans with
     National Bank of Canada (the "Bank"). As of January 26, 2006, the Company
     owed the Bank approximately CDN$3,676,216 (approximately US$3,196,705) in
     principal and interest under such loans. The loans are secured by a first
     ranking lien on the assets of our Teckn-O-Laser entities and are guaranteed
     by the Company. The Company is required to comply with certain financial
     ratios under the terms of the loans. As of December 31, 2005 and subsequent
     periods including the present, the Company has not been in compliance with
     one of those ratios. On January 31, 2006 the Company entered into a
     Standstill Agreement (the "Agreement") with the Bank whereby the Bank has
     agreed to suspend its rights under the loans until April 30, 2006 subject
     to our compliance with certain conditions. These conditions included our
     payment of US$500,000 within two business days of the Agreement to reduce
     the outstanding principal and interest balance due under the credit
     facility; to pay a postponement fee to the Bank of CDN$35,000
     (approximately US$30,435); and to pay penalty fees of CDN$20,000 per month
     for the period January 1, 2006 through April 30, 2006 or an aggregate of
     CDN$80,000 (approximately US$69,565). The US$500,000 payment was made as
     required. Other conditions of the Agreement include (i) protection of the
     Teckn-O-Laser assets subject to the Bank's lien; (ii) not suffering a
     material adverse change in our operations or assets which puts the Bank at
     risk; (iii) not declaring bankruptcy or becoming the object of receivership
     proceedings; (iv) not making any assignments for the benefit of creditors
     without the written consent of the Bank; (v) fully cooperating with the
     Bank or its representatives with respect to any information request,
     evaluation, examination, visit or other procedure undertaken by the Bank
     with respect to our assets or business; (vi) raising the interest rate on
     the outstanding loans to Canadian prime plus 2.5%; and (vii) obtaining a
     financial commitment from another financial institution by April 15, 2006
     which will enable the Company to pay off the balance of the loans by April
     30, 2006.

     On May 1, 2006, the Company signed an extension to the standstill agreement
     under the same terms as the original agreement extending to July 31, 2006.
     The extension is granted provided the Company obtains a letter of interest
     from another financial institution on or before May 10, 2006. This
     condition has been met by the Company. In addition the Company must obtain
     a letter of offer from another financial institution on or before May 31,
     2006. On July 31, 2006 or sooner, if the Company does not fully comply with
     the conditions set forth in the Agreement, the Bank will again have the
     right to demand immediate repayment of the loans. In the event the Bank
     were to make such demand, it would have a material adverse effect on the
     Company.

                                       23
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

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

THREE  MONTHS ENDED MARCH 31, 2006 AS
COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2005

REVENUES - Total revenues decreased to $7,416,849 for the three months ended
March 31, 2006, compared to $7,417,678 for the same period last year. This
decrease was due to a general price decline of approximately 6% which was
largely offset by a change in the product mix of the different toner printer
cartridges sold and an increase in the quantities of the toner printer
cartridges sold during the period. The average revenue per cartridge declined to
approximately $61 per cartridge compared to approximately $65 per cartridge in
the same period last year. We continue to see price pressure within the industry
and have no reason to believe this pressure will not continue in the foreseeable
future. As a result we are focused on our cost structure and are in the process
of making the changes needed to compete within the industry.

GROSS PROFIT - Gross profit decreased to $1,704,448 for the three months ended
March 31, 2006, compared to $2,261,386 for the same period last year. In
addition, the gross profit margin decreased over the same period from 30.5% to
23.0%. This was due to the increased pricing pressure within the industry as
outlined above in the decline in average revenue per cartridge declining from
$65 to $61 for the current period. In addition we continue to experience extra
costs as we continue the shift of production to outside suppliers. With the
changes already executed, and currently being made, management believes that the
costs will be decreased thereby helping us to maintain our margin. While we have
reduced the number of cartridges we produce in our own facilities, we still need
to reduce our overhead costs to reflect this reduction in production, since this
was delayed to ensure we had adequate supply in order to service our customers.
Steps were taken in December 2005 and at the end of March 2006, through layoffs
and other changes, to reduce our costs. We will continue to reduce our costs to
match with the level of production being completed internally. During the
quarter we made approximately $2,316,422 of product sales as a distributor of
goods under a strategic supply arrangement with Turbon AG (note 11).

OPERATING EXPENSES - Operating expenses increased to $2,564,067 for the three
months ended March 31, 2006, compared to $1,782,955 for the same period last
year. Salaries and compensation increased $96,827 compared with the prior years
quarter which is largely the result of a charge taken related to stock options
which equated to $97,973. Sales and administrative expenses increased $466,070
over the same period last year. The increase arose from an increase in outgoing
freight of approximately $278,000, and an increase in legal and professional
fees of approximately $142,304, combined with the change in the exchange rate
from US$ into CDN$ of from 1.24 to 1.16. Sales and administrative costs are
expected to be reduced due to changes in the way we handle freight costs (some
customers will be charged on smaller orders) and as a result of our cost
restructuring discussed above. Depreciation and amortization increased $218,215
over the same period last year. This is due to having allocated a portion of the
purchase price of Tecknolaser for the amortizable intangible assets of $223,333
which was nil for the same period last year. At present we have no material
commitments for capital expenditures.

                                       24
<PAGE>

EXTINGUISHMENT OF DEBT - We performed our analysis of the convertible debt, from
Barrington Bank, under the guidelines of the applicable accounting
pronouncements and determined that the modification resulting from the change in
conversion price and interest rate was substantial. Accordingly, we recorded a
gain on the extinguishment of the debt prior to the modification in the amount
of $460,693. The difference between the carrying value of the modified
instrument and its mandatory redemption amount is being accreted as interest
expenses over the remaining term of the loan. Accretion of the discount amounted
to $19,196 during the quarter ended March 31, 2006 and is included as a
component of interest expense in the accompanying statement of operations. In
addition, interest expense also includes $66,667 of deferred financing costs
written off as part of the extinguishment of the debt.

NET INCOME - As a result of the above, the Company recorded a net loss of
$704,976(including the gain of $460,693 discussed above) for the three months
ended March 31, 2006, compared with net income of $236,465 for the same period
last year.

LIQUIDITY AND FINANCIAL CONDITION

At March 31, 2006, we had a working capital deficiency of $ 5,627,311
($3,501,970 excluding liabilities from discontinued operations) and we were not
in compliance with certain covenants under our line of credit obligation and
certain of our term loans described in Note 9 to our March 31, 2006 condensed
consolidated financial statements. The lender under these obligations has the
right to demand immediate repayment of these loans due to the event of default.
Subsequent to December 31, 2005, we and the lender entered into a standstill
agreement intended to provide us with additional time to source a new lender,
however; this agreement only provides us with temporary relief from a possible
demand for payment and includes various restrictions that do not alleviate our
immediate liquidity constraints. The lender's exercise of these rights and
possible demand for immediate repayment of the outstanding balances, which
amount to an aggregate of $2,406,287 at March 31, 2006, would have a material
adverse effect on our business. We cannot provide any assurance that the lender
under these obligations will waive its violation of such covenants nor can we
provide any assurance that the lender will not exercise its right to demand
immediate repayment.

Our ability to recover our assets and continue our operations is dependent upon
our ability to raise additional capital and generate revenue and operating cash
flow through the execution of our business plan. There can be no assurance that
we will be successful in our efforts to operate the Tecknolaser Group or any
other prospective acquiree businesses profitably. We also cannot provide any
assurance that we will obtain the financing we need to sustain the business
until such time that we are 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 our 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 we be unable to
continue as a going concern.

CRITICAL ACCOUNTING POLICIES

We prepare our condensed consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure 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.

We have identified the following as critical accounting policies based on the
significant judgment and estimates used in determining the amounts reported in
our condensed consolidated financial statements:

                                       25
<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.

Provision for Doubtful Accounts

Periodically, we review the adequacy of our provision for doubtful accounts
based on historical bad debt expense results and current economic conditions
using factors based on the aging of our accounts receivable. In addition, from
time-to-time we estimate specific additional allowances based on indications
that a specific customer may be experiencing financial difficulties. Actual bad
debt results could differ materially from these estimates.

Impairment of Long-Lived Assets

When facts and circumstances indicate that the carrying values of long-lived
assets, including fixed assets, investments in other companies and intangibles,
may be impaired, an evaluation of recoverability is performed by comparing the
carrying value of the assets to projected future cash flows in addition to other
quantitative and qualitative analyses. Upon indication that the carrying value
of such assets may not be recoverable, we recognize an impairment loss as a
charge against current operations. Long-lived assets to be disposed of are
reported at the lower of the carrying amount or fair value, less estimated costs
to sell. Judgments we make related to the expected useful lives of long-lived
assets and our ability to realize undiscounted cash flows in excess of the
carrying amounts of such assets are affected by factors such as the ongoing
maintenance and improvements of the assets, changes in economic conditions, and
changes in operating performance. As we assess the ongoing expected cash flows
and carrying amounts of our long-lived assets, these factors could cause us to
realize a material impairment charge.

Income Taxes

We utilize the asset and liability method of accounting for income taxes, as set
forth in Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS 109"). SFAS 109 requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of temporary
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates in effect for the year in which
those temporary differences are expected to be recovered or settled.

                                       26
<PAGE>

Stock based compensation

We adopted Statement of Financial Accounting Standards No. 123 (revised 2004)
Share-Based Payments ("FAS123(R)") at the beginning of our first fiscal quarter
of 2006. FAS123(R) establishes standards for the accounting for transactions in
which an entity exchanges its equity instruments for goods or services.
FAS123(R) requires us to measure the cost of employee services received in
exchange for an award of equity instruments (usually stock options) based on the
grant-date fair value of the award. That cost is recognized over the period
during which an employee is required to provide service in exchange for the
award - the requisite service period (usually the vesting period).

ITEM 3.  CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. Under the supervision and
with the participation of our chief executive officer and chief financial
officer, we conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended,
as of the end of the period covered by this report (the "Evaluation Date").
Based on this evaluation, our chief executive officer and chief financial
officer conclude as of the Evaluation Date that our disclosure controls and
procedures were effective such that the information relating to us, including
our consolidated subsidiaries, required to be disclosed in our Securities and
Exchange Commission ("SEC") reports (i) is recorded, processed, summarized and
reported within the time periods specified in SEC rules and forms, and (ii) is
accumulated and communicated to our management, including our chief executive
officer and chief financial officer, as appropriate to allow timely decisions
regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting. There were no changes
in our internal control over financial reporting that occurred during the period
covered by this report 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

There were no material developments with respect to any of our outstanding legal
proceedings during the quarter ended March 31, 2006 or subsequent thereto. For a
discussion of our outstanding legal proceedings reference is made to Item 3 of
our Form 10-KSB for the year ended December 31, 2005.

ITEM 2.  UNREGISTERED SALES OF EQIUTY SECURITIES AND USE OF PROCEEDS

Effective January 31, 2006, we issued 2,400,000 shares of our common stock (the
"Shares") and warrants (the "Warrants") to purchase 2,400,000 shares of our
common stock to the holder of our November 4, 2005 subscription receipts upon
the automatic exercise of such subscription receipts on such date. No additional
consideration was payable to us upon the exercise and the shares and warrants
were already included as outstanding for share calculations as at December 31,
2005. The issuance of the subscription receipts was previously reported in our

                                       27
<PAGE>

Current Report on Form 8-K dated November 4, 2005. Each Warrant entitles the
holder to purchase, subject to adjustment, one share of our common stock at a
price of $1.25 per share at any time prior to 5:00 p.m. (Toronto time) on May 3,
2008. The Shares and the Warrants were issued in reliance upon Section 3(a)(9)
of the Securities Act of 1933, as amended.

In February 2006 we issued an aggregate of 60,000 stock options to four sales
consultants. Each option is exercisable at a price of $1.20 per share for a
period of ten years from issuance. The options were issued in reliance on
Section 4(2) of the Securities Act of 1933, as amended.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Through our Techn-O-Laser entities, we have outstanding loans with National Bank
of Canada (the "Bank"). As of January 26, 2006, we owed the Bank approximately
CDN$3,676,216 (approximately US$3,196,705) in principal and interest under such
loans. The loans are secured by a first ranking lien on the assets of our
Techn-O-Laser entities and are guaranteed by us. We are required to comply with
certain financial ratios under the terms of the loans. As of September 30, 2005
and subsequent periods including the present, we have not been in compliance
with one of those ratios. On January 31, 2006 we entered into a Standstill
Agreement (the "Agreement") with the Bank whereby the Bank agreed to suspend its
rights under the loans until April 30, 2006 subject to our compliance with
certain conditions. These conditions included our payment of US$500,000 within
two business days of the Agreement to reduce the outstanding principal and
interest balance due under the credit facility; to pay a postponement fee to the
Bank of CDN$35,000 (approximately US$30,435); and to pay penalty fees of
CDN$20,000 per month for the period January 1, 2006 through April 30, 2006 or an
aggregate of CDN$80,000 (approximately US$69,565). All required payments were
made by us. Other conditions of the Agreement included (i) our protection of the
Techn-O-Laser assets subject to the Bank's lien; (ii) our not suffering a
material adverse change in our operations or assets which puts the Bank at risk;
(iii) our not declaring bankruptcy or becoming the object of receivership
proceedings; (iv) our not making any assignments for the benefit of creditors
without the written consent of the Bank; (v) our fully cooperating with the Bank
or its representatives with respect to any information request, evaluation,
examination, visit or other procedure undertaken by the Bank with respect to our
assets or business; (vi) our raising the interest rate on the outstanding loans
to Canadian prime plus 2.5%; and (vii) our obtaining a financial commitment from
another financial institution by April 15, 2006 which will enable us to pay off
the balance of the loans by April 30, 2006. By letter agreement dated April 28,
2006 and executed on May 1, 2006 as further amended on May 1, 2006, the Bank
agreed to continue the Standstill Agreement in effect until July 31, 2006
subject to our compliance with certain conditions. These conditions include our
payment of additional postponement fees to the Bank of an aggregate of
CDN$15,000 payable CDN$5,000 per month starting May 1, 2006. Notwithstanding the
foregoing, in the event the loans are paid in full on or before June 30, 2006,
we will have no obligation to make the CDN$5,000 payment otherwise due on July
1, 2006. Another condition is the continued payment by us to the Bank of penalty
fees in the amount of CDN$20,000 per month. The final new condition is our
obtaining on or before May 10, 2006 a letter of interest from another financial
institution (which condition has been met) and our obtaining on or before May
31, 2006 a letter of offer from another financial institution that will allow us
to pay off the Bank loans by June 30, 2006.

                                       28
<PAGE>

On July 31, 2006 or sooner, if we do not fully comply with the conditions set
forth in the Agreement, as amended, the Bank will again have the right to demand
immediate repayment of the loans. In the event the Bank were to make such
demand, it would have a material adverse effect on us.

ITEM 5.  OTHER INFORMATION

In February 2006 we entered into a consulting agreement with four persons in
connection with our sales activities. The consultants agreed to assist us with
our selling operations in consideration of our grant to them of an aggregate of
60,000 stock options exercisable upon issuance for a period of up to 10 years at
an exercise price of $1.20 per share. We further agreed to pay the consultants,
on a joint basis, commissions equal to 1.5% of our net sales that are directly
derived from accounts which were introduced to us by the consultants.

Effective February 1, 2006 the interest rate on our CDN $2,000,000 convertible
note issued to Barrington Bank International Ltd. was reduced from 20% to 8% for
the period February 1, 2006 through July 31, 2006. In consideration thereof, the
conversion price on the note was reduced from $1.00 to $0.50 per share. As a
result of the modification of the debt we recorded a gain on the extinguishment
of $460,693 (note 15).

ITEM 6.  EXHIBITS

Exhibits

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

Exhibit No.                        Description
-----------                        -----------

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

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

32.1           Rule 1350 Certification of Chief Executive Officer

32.2           Rule 1350 Certification of Chief Financial Officer


                                       29
<PAGE>

                                   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 22, 2006                   Adsero Corp.

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


                                       30