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

                                    FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the Fiscal Year ended:  December 31, 2008
     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 No. 333-120688

                            AMERICAN TONERSERV CORP.
                 ----------------------------------------------
                (Name of registrant as specified in its charter)

            Delaware                                       33-0686105
-------------------------------                    -----------------------
(State or Other Jurisdiction of                    (I.R.S. Employer Identi-
Incorporation or Organization)                         fication No.)

               420 Aviation Blvd. Suite 103, Santa Rosa, Ca 95403
          ------------------------------------------------------------
          (Address of Principal Executive Offices, Including Zip Code)

                    Issuer's Telephone Number: (800) 736-3515

Securities Registered Pursuant to Section 12(b) of the Act:  None.

Securities Registered Pursuant to Section 12(g) of the Act:  None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ] Yes    [X] No

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d)
of the Act.  [ ] Yes    [X] No

Note - Checking the box above will not relieve any registrant required to file
reports pursuant to Section 13 or 15(d) of the Exchange Act from their
obligations under those Sections.

Indicate by check mark 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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]    No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]


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Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or smaller reporting company. See
definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]              Accelerated filer [ ]
Non-accelerated filer [ ]        Smaller reporting company [X]


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

As of June 30, 2008, the aggregate market value of voting stock held by
non-affiliates of the registrant was approximately $8,967,000, based on the
closing price of the Common Stock on the OTC Bulletin Board of $0.27 per share.
As of March 2, 2009, 77,045,994 shares of the registrant's common stock were
outstanding.

Documents incorporated by reference: None.







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                                    PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

Available Information

     We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). You may
read and copy any document we file with the SEC at the SEC's public reference
room at 100 F Street, NW, Washington, DC 20549. Please call the SEC at
1-800-SEC-0330 for information on the public reference room. The SEC maintains
an internet site that contains annual, quarterly and current reports, proxy and
information statements and other information that issuers file electronically
with the SEC. The SEC's internet site is www.sec.gov.

     Our internet address is www.americantonerserv.com. You can access our
Investor Relations webpage through our internet site, www.americantonerserv.com,
by clicking on the "Investor Relations" link at the top of the page. We make
available free of charge, through our Investor Relations webpage, our proxy
statements, Annual Reports on Form 10-KSB or 10-K, Quarterly Reports on Form
10-QSB or 10-Q, Current Reports on Form 8-K and any amendments to those reports
filed or furnished pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as soon as reasonably practicable after such material is
electronically filed with, or furnished to, the SEC. The reference to our
website address does not constitute incorporation by reference of the
information contained in the website and should not be considered part of this
document. You can request a printed copy of these documents, excluding exhibits,
at no cost, by contacting Investor Relations at 800-736-3515, 420 Aviation
Blvd., Suite 103, Santa Rosa, CA 95403, Attention: Ryan Vice, Chief Financial
Officer.

OVERVIEW

     American TonerServ Corp. (the "Company," "ATS," "we," or "us") is building
a nationwide brand serving the printing needs of small- and medium-sized
businesses by consolidating leading independent companies in the $6 billion
compatible cartridge and printer services industry, providing customers with
economical, top-quality, environmentally-friendly recycled laser printer
cartridges, print management, printer and other office equipment service,
printers and other office equipment and supplies through local service teams.

     We intend to leverage nationwide buying power of recycled "compatible"
toner cartridges from re-manufacturers through volume discounts. We also
remanufacture compatible cartridges in our own facilities. ATS companies collect
spent toner cartridges and recycle them by delivering them to re-manufacturers
or our own facilities. Additionally, upon request, we provide our customers
Original Equipment Manufactured ("OEM") cartridge products.

     We plan to grow primarily through acquisitions of businesses and customer
lists of compatible toner cartridge distributors and by hiring independent sales
representatives in the largest 30 metropolitan areas of the United States.
Additionally, we expect to achieve organic growth of at least 15% annually by
being a sales driven organization. Our in-house Mergers and Acquisitions Team
seeks to acquire businesses that meet our acquisition criteria. Our in-house
Integration Team supports the management and personnel of acquired companies to
become integrated into American TonerServ, including adapting their processes,
systems and culture to match our own. We provide acquired companies with
corporate buying power, improved logistics, and management and systems support
intended to improve operational profitability.


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     We have a scalable web-based platform for order taking, fulfillment,
billing, collections, payments and customer service to bring efficiencies to the
marketplace. We have established a nationwide independent service network to
provide service on printers outside of our local service areas. This independent
service network is known as our Preferred Provider Network, and we have been
servicing printers and other office equipment through this Network for over ten
years. We have established a network of office equipment service and supply
dealers through which we provide customers with time and material programs or
full service maintenance on their printers. Additionally, we have a relationship
with several third party vendors to provide our customers with a print
management program. The print management program allows the customer to pay for
their printers on a cost per page basis, which we believe is a competitive
advantage for ATS and for our customers.

Additional Information

     ATS was founded as a Delaware corporation in 1995 and is headquartered in
Santa Rosa, California. We were originally incorporated under the name "Manage
Maintenance Systems, Inc." and on November 13, 1995 we amended our Certificate
of Incorporation to change our name to "Q MATRIX, Inc." On January 3, 2005, we
amended our certificate of incorporation to change our name to "American
TonerServ Corp."

     After our incorporation in 1995, we merged with Critical Systems
Management, Inc. (CSMI) in December 1995. CSMI was in the business of repairing
and maintaining office equipment. After the merger, we commenced operating in
the office equipment and repair business in Phoenix, Arizona. We began by
offering agreements to small- and mid-sized businesses to provide service for
their office equipment for specific periods of time.

     On August 12, 2005, we became a reporting company under the federal
securities laws. On February 14, 2006 our common stock was accepted for
quotation on the OTC Bulletin Board. Our trading symbol is currently "ASVP."

     On July 5, 2006, the Company acquired the customer list of Computech
Printer Solutions, Inc ("Computech"). Computech has been engaged in the
distribution of remanufactured laser toner cartridges, primarily to business
customers. The Company is using the customer list to solicit sales of
remanufactured toner cartridges to increase the company's sales of such
products.

     On August 26, 2006, the Company entered into a Customer List Purchase
Agreement with Laser Cartridge Recharge Systems, Inc. in which the Company
acquired Laser Cartridge Recharge Systems' list of customers and related
information.

      On December 20, 2006, the Company entered into a Customer List Purchase
Agreement ("Agreement") with Brody Enterprises, which had been doing business as
"Sun Products," pursuant to which the Company acquired Brody Enterprises' list
of customers and related information. Brody Enterprises has been engaged in the
distribution of remanufactured laser toner cartridges, primarily to business
customers.

     On April 1, 2007 the Company purchased certain assets of Optima
Technologies, Inc. ("Optima"). Optima Technologies has been engaged in the
business of print management, printing supplies and repair service since 1987.
Optima's business model is consistent with the Company's stated acquisition
targets.

     On December 28, 2007 the Company purchased certain assets of Tonertype of
Florida, LLC ("Tonertype"}. Tonertype has been engaged in the business of print
management, printing supplies and repair service since 1995. Tonertype's


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business model is consistent with the Company's stated acquisition targets.

     On March 3, 2008, the Company established NC TonerServ, LLC, a wholly-owned
subsidiary of ATS, in Morrisville, North Carolina.

     On October 31, 2008 the Company purchased certain assets of iPrint
Technologies, Inc. ("iPrint"}. iPrint has been engaged in the business of print
management, printing supplies and repair service since 2005. iPrint's business
model is consistent with the Company's stated acquisition targets.

BUSINESS

     American TonerServ purchases re-manufactured toner cartridges from a number
of selected re-manufacturers and re-manufactures some cartridges in our own
facilities. The products cover a wide base of laser printers, including all
major makes and models and monochrome and color. Historically, re-manufacturers
have provided us with base pricing that is at or below current distributor
pricing. Upon placing an order with the re-manufacturer, the product is either
dropped shipped to the end user or sent to an ATS warehouse. This enables
American TonerServ to minimize the need for inventory warehousing. Products are
private labeled and packaged per our instructions. We do not rely on any one or
a selected number of re-manufacturers nor do we have long-term contractual
arrangements with these re-manufacturers. Management believes that there are a
significant number of companies that can provide high quality laser toner
compatible products at competitive prices and that our operations would not be
impacted by the loss of any one supplier or suppliers.

     As we market re-manufactured toner products, we believe that we will have
the opportunity to develop an expanded relationship with our customers. Based on
customers' needs, we can provide additional service and maintenance for all
makes and models of office equipment. We have the expertise in the service areas
of copiers, faxes, computers, plotters, printers and some brands of phone
equipment. In addition, we can provide service for Regional and National
accounts via our Preferred Service Provider network.

SERVICE AND MAINTENANCE PROGRAMS - Our maintenance programs offer the advantages
of maximizing productivity through less equipment downtime, reduced
administrative costs, controlled repair costs and simplified management, all
through a competitively priced service program.

PRINT MANAGEMENT - Our print management program allows us to track the actual
usage on our customer's network printers by using specialized software. This
program allows us to provide customers with a cost per printed page program
covering supplies and repairs for their printers. We can remotely manage network
printers from our offices to provide a quicker and more efficient response.

PREFERRED PROVIDER NETWORK - Our nationwide Preferred Provider Network includes
partnerships with companies that provide guaranteed response times, quality
service and depth of expertise. We believe that the ability to service and


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support customers on a nationwide basis for all makes and models of printers on
a cost effective basis sets us apart from our competitors. We generally employ
our own service technicians in our hub cities and outsource elsewhere. There are
no formal written agreements between American TonerServ and the Preferred
Service Providers (PSPs). There is a mutual understanding as to service levels,
response times and costs to be billed to us by our network.

AXON TECHNOLOGIES, INC. - In connection with the acquisition of Optima
Technologies, the Company entered into a Management Agreement with Axon
Technologies, Inc. ("Axon"), a non-profit organization that employs persons with
disabilities. Axon distributes its products to state agencies in Florida. Under
this Management Agreement, Optima will provide management services for Axon and
will receive a management fee equal to 90% of the amounts received by Axon for
its products.

CORPORATE STRATEGY

     Key components of our business strategy are: (1) Maintenance of high
product quality through establishment and use of defined standards for the
re-manufacturer suppliers; (2) Maintenance of competitive product pricing; (3)
Differentiating our toner product from the competitors by offering the
innovative solution of combining service and toner; (4) Maintaining our
distinctive competitive edge by offering both office equipment supplies and
service nationally by utilizing and expanding our existing network of service
providers; and (5) implementing a strategic marketing plan to access and
increase revenue through existing distribution channels.

     Management is working to position American TonerServ to become a
significant nationwide re-manufactured toner cartridge distribution company
based on the following characteristics of our business:

  *  QUALITY OF CARTRIDGES - Our products are lab-tested and guaranteed to be
100% compatible with the machine for which they were engineered. ATS has
selectively partnered with the top compatible cartridge manufacturers in the
world. Our compatible toner cartridges are made in factories certified under the
International Organization for Standardization ("ISO") 9001-2000, ISO 14001, and
ISTA2 Quality Systems.

  *  VOLUME DISCOUNTS ON CARTRIDGES - We have established strategic
relationships with several large toner re-manufacturing companies that allow us
to acquire toner cartridges at very competitive pricing. Due to volume
discounts, our cost to acquire re-manufactured cartridges is often less than the
cost for the small independent companies to produce them. ATS volume discounts
help to improve the gross margin on the businesses that we acquire.
Additionally, ATS has acquired businesses that manufacture their own compatible
cartridges. However, the majority of the compatible cartridges are acquired from
our strategic vendors American TonerServ packages service offerings with
competitively priced toner cartridges with the intention of maximizing revenue.

  * CENTRALIZED PROCESSING - We have developed a web-based, centralized process
that enables us to cost effectively process toner and service orders on a
scalable basis. We handle order taking, fulfillment, billing, collections,
payments and customer service calls from our National Service Center. We track
all product and service orders to assure timely fulfillment.

  * PREFERRED PROVIDER NETWORK - Many of the small local and regional toner
cartridge companies serving business customers today are limited in their
ability to service their customers outside of their geographic marketplace.
American TonerServ currently offers national service capabilities through a
proprietary database of service providers on all makes and models of office
equipment. The Company is not currently using a vast majority of these service


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providers, but management believes working relationships can be reactivated as
demand increases. This capability should allow significant incremental sales
opportunities to existing customers with multiple locations requiring service.
Management believes that American TonerServ's ability to provide access to our
nationwide service to its customers will be an attractive strategic benefit to
small local and regional toner cartridge companies that we target for
acquisition. Our service offerings will afford the opportunity to generate
additional revenues per existing client and offset marketing costs. Additional
benefits include the ability to open up new markets for toner cartridge sales to
larger, multi-site customers who require service as a condition for buying toner
cartridges.

  *  OTHER SERVICE OFFERINGS - We also provide service on a time and materials
basis and service agreements on all makes and models of printers.

ACQUISITION STRATEGY

     Management believes that the compatible toner cartridge market is mature
and prime for consolidation and integration. As the market continues to mature,
a number of re-manufacturers and distributors will be pressured to expand their
revenue and enhance profitability, leading some to consider partnering with or
selling to a larger national brand. American TonerServ will offer its service
capabilities, national network and service and maintenance expertise to attract
partners seeking to transition their businesses.

     We are primarily targeting businesses that have $2.0 to $20.0 million in
annual sales where the owner of the business would like to remain with the
business and grow it after our acquisition. These businesses must be currently
marketing compatible toner and ink cartridges primarily to businesses. If we
locate businesses fitting our targeted profiles in the top 30 major metropolitan
markets in United States, we will pursue them. Our plans call for 6 to 10
acquisitions within the next 18 months. We anticipate using a combination of
cash, notes, earn-outs and stock to make the acquisitions. The acquisitions may
include only the acquisition of the customer lists of such companies.

CHALLENGES FOR INDEPENDENT TONER COMPANIES - As the market continues to develop
and mature, management believes that it is becoming increasingly difficult for
smaller re-manufacturers to maintain profitable operations. These companies are
challenged to provide all of the makes and models necessary to supply the
current broad printer base. Smaller re-manufacturers have also faced significant
problems with increasing cartridge design complexity. As a result, management
believes that many smaller re-manufacturers are unable or unwilling to continue
to invest the capital and research necessary to maintain production levels and
stay current with technology changes.

PROVIDING AN EXIT STRATEGY - Our strategic market evaluation indicated that a
number of the distributors have reached "burn out" as small independent
distributors and would entertain a strategic business partnership or sale to a
strategic buyer. Management believes that it can provide tangible benefits to
these business owners and an eventual exit strategy that will be financially
attractive to them. Being able to provide a gradual exit strategy through an
acquisition and utilizing the Company's national service network and back office
capabilities would provide tangible strategic benefit to the selling
shareholders of these companies

PROFILE OF A TYPICAL DISTRIBUTOR/RE-MANUFACTURER CANDIDATE - Since 2006, the
Company has focused on target acquisition candidates with revenue in the range
of $250,000 to $1.5 million of annually. In 2007, the Company focused on target
acquisition candidates with revenue in the range of $3.0 to $5.0 million. Going
forward, the Company plans to target candidates in the $2.0 to $20.0 million
annual revenue range. Our research indicates that these companies generally
produce operating income on the range of 15% to 20% of revenue. They typically
have been in business for up to 10 years and have fewer than 50 employees. They


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generally provide service on a local or regional basis. They generally have a
national account base but are unable to provide service to their customers
nationally. We believe that many of them are looking for an exit or merger.
Additionally, ATS will focus on purchasing customer lists in the markets where
we have an established base of business with existing annual revenues in the
range of $500,000 to $1.5 million. This business will be rolled into the local
ATS hub business with large expected synergies.

EXPECTED PROFILE OF A TYPICAL DISTRIBUTOR/RE-MANUFACTURER AFTER ACQUISITION -
After we acquire a distributor or re-manufacturer, we believe that the acquired
entity would phase out of the re-manufacturing process as a result of our buying
power. When possible, the products are drop shipped directly from our
manufacturer to the end-user to permit for low inventory expenses and
elimination of delivery issues. Service is available to their national and
regional accounts to provide incremental revenue growth. The product quality is
usually improved by acquiring products from re-manufacturers with whom ATS has
established relationships and standards. We believe that acquired companies will
see significant economies of scale by turning over the administration and
accounting functions to our corporate operation. The end result is expected to
be an opportunity for the prior owner/team to concentrate primarily on selling
and customer relations. It is through these benefits of consolidation that there
is an increase in the profitability of the acquired entity.

THE MARKET FOR TONER AND INKJET CARTRIDGES

     Based on a review of available market research, management estimates that
the North American market size for toner and inkjet cartridges is more than
$21.0 billion and that more than 12 million desktop laser printers were shipped
in 2005. Industry estimates indicate that re-manufactured compatible cartridges
account for approximately $6.0 billion of total cartridge sales. Additionally,
the industry expects growth in the sale of color laser toner supplies at an
accelerated rate over the next five years.

     Historically, printer manufacturers such as Hewlett-Packard ("HP"),
Lexmark, Canon and Epson, have coupled low priced laser printers with
high-priced disposable cartridges. These manufacturer's branded replacement
toner cartridges are priced at roughly one and one-half times compatible
re-manufactured cartridge product prices. Printers are sold at minimal operating
margins and manufacturers have profited significantly by selling disposable
cartridges. It is estimated that HP has 65% of the U.S. market share of toner
and ink cartridges. It appears that HP's strategy is to introduce numerous new
printer models into the market annually. This allows HP the ability to sell
their OEM cartridges to make higher margins. It takes the remanufacturers
anywhere from 6 to 18 months to be able to offer to the market place a
high-quality competitive compatible cartridge. The remanufacturers need to
reverse engineer the cartridges and collect an adequate supply of the original
cores to produce the compatible cartridges.

     Management believes, based on their own industry research, that there are
more than 2,000 cartridge re-manufacture companies in the United States.

  *  GROWING MARKET SHARE FOR RE-MANUFACTURED CARTRIDGES - Management believes
that while re-manufacturers have been steadily increasing market share during
the past 10 years, a large majority of buyers for small- and medium-sized
businesses are still purchasing new cartridges from the printer manufacturers.
As a result, management believes that there is substantial opportunity to
further penetrate this market. According to the magazine Imaging Spectrum,
compatible cartridges account from approximately 25% of the market and expect to
grow to 35% by the year 2010.

  *  PRICING ADVANTAGE - The competition in the laser cartridge market has
increased as independent companies started refilling and rebuilding toner and


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ink cartridges and selling them for approximately half the price of new
cartridges. This has allowed re-manufacturers to gain market share at the
expense of the OEM cartridge providers. There has been significant consolidation
of the cartridge remanufacturers over the past five years. The major players are
Clover Technologies, MSE, NuKote, Print Rite and West Point Products.

  *  THE GREEN FACTOR / ECO-FRIENDLY - The growing pro-environment or "green"
focus by consumers and government agencies could help accelerate growth in
market share for re-manufacturers because cartridge components are diverted from
being treated as waste by re-manufacturing processes. Laser printer cartridges,
inkjet printer cartridges, copier cartridges and fax cartridges - along with
used cell phones (collectively called "e-waste") have been somewhat overlooked
as recyclable since they are relatively new products. E-waste, however, is
having an increased impact on our environment.

     ATS products help to reduce landfills, save energy, reduce long-term waste
matter as a result of the following factors:

  *  100% of our compatible toner/ink cartridges are by definition recycled
cartridges vs. OEM cartridges.

  *  Every compatible cartridge we sell keeps approximately one half pound of
waste out of landfills.

  *  Our compatible cartridges use approximately 97% recycled parts.

  *  QUALITY FACTORS - The recent creation of re-manufactured product quality
standards, as well as maturation of the industry segment, is expected to
diminish customer concerns that re-manufactured toner cartridges are inferior to
OEM products.

  *  REDUCED PRINTER MANUFACTURER RESISTANCE - The biggest challenge to
re-manufacturers is competing against the original equipment manufacturers. The
gain of market share for the re-manufacturers has been subject to OEM
resistance, including use of unfair tactics such as microchips which disable
equipment or voidable warranties if non-OEM replacement cartridges are used.
Both the United States and the European Union have taken legislative action
against these non-competitive tactics, which creates an even playing field for
re-manufacturers and distributors like ATS. Additionally, printer manufacturers
focus attention on introducing new printer models on a 12- to 18-month cycle.
Consequently, customers with older printers look to realize maximum value out of
their capital expenditure (printers) and continue to purchase compatible
supplies and request repair service.

MAJOR CUSTOMERS

     During the year ended December 31, 2008 one customer accounted for
approximately $2,421,478 of our revenues, representing approximately 19% of our
revenues. During 2007, the Company, through Axon, selling products to state
agencies in Florida, accounted for approximately $431,549 of our revenues,
representing approximately 12% of our revenue.

     We had no other customers accounting for more than 10% of our revenue.
Other customers include small and medium-sized businesses with one or more work
sites operating printers, and include medical facilities, service businesses,
retail establishments, government offices, and small manufacturing companies,
among others.


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COMPETITION

     The competition for re-manufacturers includes re-manufacturers who sell
under a national brand or by a superstore retailer. These include Staples,
Office Depot, Office Max and Corporate Express, among others. We believe that
sales from this channel represent about one-third of the market. The rest of the
market is represented by local and regional suppliers. We estimate that there
are approximately 2,000 companies in the local and regional supplier
marketplace. As a result, the market is highly fragmented with no company having
a dominant market position. The competition for our service and maintenance
business includes equipment manufacturers and local independent dealers for
numerous makes and models of office equipment. Given the large number of
companies that service the office equipment industry, American TonerServ
competes primarily on the basis of price and service. Currently, we are not a
significant competitor in this market.

     Management believes that there are two segments of the toner re-
manufactured marketplace. The first segment consists of companies selling over
2,000 cartridges per month, representing about 22% of the market. The second
segment consists of companies that sell less than 2,000 cartridges a month,
which represents about 78% of the market.

     American TonerServ has one of the most extensive networks of owned and
partnered distributors and service providers in the re-manufactured cartridge
and service sector in North America, to management's knowledge. Management
believes there are no other companies attempting to implement a roll-up strategy
in the toner cartridge market in the United States.

     The competition in the service and maintenance area is as follows:

  *  EQUIPMENT MANUFACTURERS Equipment manufacturers such as HP, Xerox, Canon,
and others provide a high quality of service but do so at prices well in excess
of American TonerServ. Additionally, manufacturers are typically focused only on
their own product lines and cannot promote single source solutions without
changing their focus or aligning with a company similar to American TonerServ.

  *  REGIONAL SERVICE PROVIDERS These companies service a larger range of
products than equipment manufacturers. However, we believe that regional
providers lack customer management capabilities and cannot provide service to
customers outside of a limited geographic region.

  *  RESELLERS AND DISTRIBUTORS These types of providers sell many types of
equipment and brands. They typically do not have a large service and support
capability. If they do provide extended support, it is often out-sourced to
other service providers.

     INTELLECTUAL PROPERTY

     We do not have any patents, trademarks or any other intellectual property
rights.

     RESEARCH AND DEVELOPMENT

     We have not had any expenditures for research and development activities
during the last two fiscal years.

EMPLOYEES

     We currently have 85 full time employees and 2 part time employees.

ITEM 1A.  RISK FACTORS.

     An investment in our securities involves a high degree of risk. Investors
should consider carefully all of the material risks described below and all


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other information contained in this report before deciding to invest in our
securities. All forward-looking statements are inherently uncertain as they are
based on current expectations and assumptions concerning future events or future
performance of, or related to, our Company.

WE HAVE OPERATED AT A LOSS FOR MOST OF OUR HISTORY AND HAVE A SUBSTANTIAL
ACCUMULATED DEFICIT AND IF WE CONTINUE TO INCUR LOSSES WE MAY HAVE TO FILE FOR
BANKRUPTCY.

     During our thirteen-year operating history, we have experienced significant
operating losses. Additionally, we are currently operating at a loss and are
dependent on additional financing in order to continue to operate. During the
years ended December 31, 2008 and 2007, we had net losses of $4,640,996 and
$4,832,325, respectively. As of December 31, 2008, we had an accumulated deficit
of $22,219,836. We believe that we can achieve profitability through an
aggressive organic growth plan to increase sales and by aggressively reducing
costs. We have already begun implementing parts of our organic growth plan and
cost reductions, however, we do not know the overall impact that these efforts
may have on the business.

WE MAY BE UNABLE TO MAKE ACQUISITIONS IN THE TONER RE-MANUFACTURER MARKET WHICH
COULD FORCE THE COMPANY TO DECLARE BANKRUPTCY.

     Our business plan assumes that additional compatible toner re-manufacturing
providers will be interested in partnering with us. In order for this strategy
to be effective, we must be able to acquire additional companies at a reasonable
valuation. Additionally, our business plan is based on the assumption that we
will be able to improve gross margins and reduce the back office and other
overhead and related expenses of an acquired company by at least 10% by
utilizing our existing back office, systems and service capabilities. Further,
we expect that future acquisitions will be for a combination of cash, promissory
notes and stock consideration over a time period of as much as three years and
we will depend on retaining the customers and revenues of the acquired company.
There is no assurance that we will be able to make additional acquisitions under
these terms. If we are unable to fully implement our business plan, we will have
to consider filing for bankruptcy which could result in our shareholders losing
all of their investment in our stock.

WE MAY BE UNABLE TO RAISE NECESSARY FUNDING TO CONTINUE TO OPERATE THE BUSINESS
WHICH MAY LEAD TO BANKRUPTCY.

     We have encountered difficulty in obtaining funding for our operations and
implementing our strategic business plan. If we are unable to raise additional
funding during the next six months, we may have to consider bankruptcy. In
addition, if unexpected adverse conditions such as losses of customers or
judgments against us increase our cash requirements, we may not be able to
continue to operate. We are currently spending approximating $50,000 more cash
per month than we bring in. Delays in obtaining additional financing could force
us to cease operations and declare bankruptcy which could result in our
shareholders losing all of their investments in our stock. If we are unable to
implement our business plan, management expects that we will require
approximately $4,600,000 of outside financing over the next 12 months to conduct
our business as it is currently operated, which includes $4,000,000 for current
notes payable.

CHANGES IN MARKET CONDITIONS COULD FORCE US TO REDUCE PRICES OR REQUIRE
RETOOLING WHICH WOULD REDUCE OR ELIMINATE THE OPPORTUNITIES FOR US TO MAKE A
PROFIT.

     The toner cartridge market is currently dominated by a few, very large
manufacturers such as Hewlett Packard and Canon. Significant adjustments in
their strategies, such as significant price reductions for new toner cartridges,


                                       11
<PAGE>

implementation of new toner technologies that render re-manufacturing obsolete
or require costly retooling or if they were to decide to offer private label
toner products, would have a negative impact on our business strategy and cause
our expected gross margins to decline. Ultimately, this could force us to
declare bankruptcy which could result in our shareholders losing all of their
investments in our stock.

TONER CARTRIDGE RE-MANUFACTURERS MAY BE UNABLE TO ADAPT TO NEW TECHNOLOGIES
WHICH WOULD LEAD TO LOST REVENUES.

     Our strategic business plans rely on the ability of other companies'
ability to continue to develop, package and supply re-manufactured toner
cartridges. As printer technologies continue to evolve and change, it may be
possible that a much smaller percentage of the current re-manufacturers will be
able to keep pace with the printer manufacturer and make the necessary capital
investments to produce quality toner replacements in a cost effective manner.
Consolidation in the re-manufacturer supplier business sector and higher costs
to manufacture replacement toner cartridges could cause an increase in planned
costs and a decline in revenue.

WE MAY BE UNABLE TO REACTIVATE OUR PREFERRED PROVIDER NETWORK WHICH WOULD IMPAIR
OUR ABILITY TO PROVIDE REPAIR SERVICE TO CUSTOMERS WHICH WOULD LEAD TO LOST
REVENUES.

     Our strategic business plan includes our ability to provide printer repair
and maintenance service on a nationwide basis. American TonerServ offers
national service capabilities through our network of independent service
providers. We are not currently using a vast majority of those service
providers. If we fail to reactivate our service network as demand increases, we
will not be able to provide service and lose revenues.

WE MAY BE UNABLE TO ATTRACT ENOUGH ACQUISITION CANDIDATES WHICH WOULD HAVE A
NEGATIVE IMPACT ON OUR BUSINESS PLAN.

     Our strategic business plan is based upon our ability to forge strategic
business relationships with compatible toner distributors. This will require us
to identify structure and close business partnerships and acquisitions with
companies with which we have no affiliation today. Our strategic business plan
requires that we strictly adhere to financial and customer retention
requirements in order to make the transactions attractive to our potential
partners or acquisition candidates. Although we have completed three small
acquisitions of customer lists and two asset purchase agreements with companies
engaged in the business of print management, printing supplies and repair
service, we will need to make additional acquisitions to fully implement our
business plan. We have not entered into any new letters of intent with any
potential acquisition candidates, and have not specifically identified terms and
conditions that would be acceptable to possible acquisition candidates. If we
fail to attract and acquire additional suitable businesses, we will not achieve
profitability and will be unable to continue in business.

WE MAY BE UNABLE TO SUCCESSFULLY OPERATE COMPANIES THAT WE MAY ACQUIRE WHICH
COULD CAUSE US TO HAVE ADDITIONAL LOSSES.

     Our future revenues are expected to be derived from businesses and customer
lists that we acquire. In general, the acquisition of any business, and the
subsequent integration of operations and customers, is a difficult task with
inherent risks. Failure to successfully integrate acquisition companies could
result in unanticipated costs and a loss of expected revenues, leading to
incurring additional losses. The primary asset that will be acquired through our
planned acquisitions is the underlying customer base of the business. We
anticipate that in most cases the acquisitions will be privately held companies
wherein the customer relationships are very closely tied to the existing
ownership and management of that particular business. If we fail to successfully


                                       12
<PAGE>

transition and integrate these relationships into our Company post acquisition,
customers may elect not to continue with our Company and we may fail to meet our
planned revenue and profit objectives relative to the purchase price paid for
the acquisitions.

THERE IS CURRENTLY ONLY A VERY LIMITED MARKET FOR OUR STOCK AND THE MARKET PRICE
FOR OUR COMMON STOCK MAY BE VOLATILE.

     There is currently only a very limited trading market for our common stock.
We cannot assure you that a trading market for our common stock will be
available in the future.

     Quotations for our common stock have only recently become available on the
OTC Bulletin Board, and trading has been sporadic. The OTC Bulletin Board is
generally considered to be a less efficient market than national exchanges or
the Nasdaq Stock Market, and trading volumes for stocks quoted on the OTC
Bulletin Board are often small. Consequently, the liquidity of our securities
could be impaired, not only in the volume of securities which could be bought
and sold, but also through delays in the timing of transactions, difficulties in
obtaining price quotations, reduction in security analysts' and media coverage
of our business, if any, and lower prices for our common stock than might
otherwise be attained. This could have an adverse effect on the ability of an
investor to sell shares of our common stock as well as on the selling price for
such shares. In addition, the market price of our common stock could fluctuate
widely due to various factors including, but not limited to, the following:

     *  quarter-to-quarter variations in results of operations;

     *  loss of a major customer;

     *  changes in, or our failure to meet, the expectations of securities
        analysts;

     *  announcements of strategic relationships or strategic partnerships;
        or

     *  other events or factors that may be beyond our control.

     In addition, the securities markets in general have experienced extreme
price and trading volume volatility in the past. The trading prices of
securities of many companies at our stage of growth have fluctuated broadly,
often for reasons unrelated to the operating performance of the specific
companies. These general market and industry factors may adversely affect the
trading price of our common stock, regardless of our actual operating
performance. If our stock price is volatile, we could face securities class
action litigation, which could result in substantial costs and a diversion of
management's attention and resources and could cause our stock price to fall.

WE PLAN TO SELL ADDITIONAL COMMON TO RAISE CAPITAL WHICH WOULD HAVE A DILUTIVE
AFFECT TO EXISTING SHAREHOLDERS.

     We plan to raise additional funds through the issuance of common stock to
help finance our strategic business plan. If we are successful selling our
common stock the ownership interests of our existing shareholders would be
diluted, and shareholders could be adversely affected because the amount
available for dividends, if any, on each share would decrease; the relative
voting power of each previously outstanding share would be decreased; and the
market price of shares may decline.


                                       13
<PAGE>

OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAS SUBSTANTIAL DOUBT ABOUT
OUR ABILITY TO CONTINUE AS A GOING CONCERN.

     The report of our independent registered public accounting firm, with
respect to our consolidated financial statements and the related notes for the
years ended December 31, 2008 and 2007, states that the Company has suffered
recurring losses from operations resulting in an accumulated deficit of
$22,219,836. Current liabilities exceed its total current assets at December 31,
2008 by $4,973,473, which raises substantial doubt about our ability to continue
as a going concern. Our consolidated financial statements do not include any
adjustments that might result from this uncertainty.

WE HAVE NOT PAID CASH DIVIDENDS ON OUR COMMON STOCK AND IT IS UNLIKELY THAT WE
WILL PAY CASH DIVIDENDS ON OUR COMMON STOCK IN THE FORESEEABLE FUTURE.

     We plan to use all of our earnings, if any, that would be available for
dividends on our common stock to fund our operations. We do not plan to pay any
cash dividends on our common stock in the future in the foreseeable future. We
cannot guarantee that we will, at any time, generate sufficient surplus cash
that would be available for distribution as a dividend to the holders of our
common stock. You should not expect to receive cash dividends on our common
stock.

DELAWARE LAW AND OUR CORPORATE CHARTER AND BYLAWS CONTAIN ANTI-TAKEOVER
PROVISIONS THAT COULD DELAY OR DISCOURAGE TAKEOVER ATTEMPTS THAT STOCKHOLDERS
MAY CONSIDER FAVORABLE.

     Our certificate of incorporation, our bylaws and Delaware law contain
provisions that may inhibit changes in control that are not approved by our
board of directors. These provisions may have the effect of delaying, deferring
or preventing a change in control despite possible benefits to our stockholders,
may discourage bids at a premium over the market price of our common stock and
may adversely affect the market price of our common stock and the voting and
other rights of our stockholders.

THE APPLICABILITY OF "PENNY STOCK RULES" TO BROKER-DEALER SALES OF OUR COMMON
STOCK COULD HAVE A NEGATIVE EFFECT ON THE LIQUIDITY AND MARKET PRICE OF OUR
COMMON STOCK.

     Trading in our shares is subject to the "penny stock rules" adopted
pursuant to Rule 15g-9 of the Securities and Exchange Act of 1934, as amended,
which apply to non-Nasdaq companies whose common stock trades at less than $5.00
per share or which have a tangible net worth of less than $5,000,000 - or
$2,000,000 if a company has been operating for three or more years. The penny
stock rules impose additional sales practice requirements on broker-dealers
which sell such securities to persons other than established customers and
institutional accredited investors. For transactions covered by this rule, a
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. Consequently, the penny stock rules will affect the ability of
broker-dealers to sell shares of our common stock and may affect the ability of
shareholders to sell their shares in the secondary market, as compliance with
such rules may delay and/or preclude certain trading transactions. The penny
stock rules could have an adverse effect on the liquidity and/or market price of
our common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2.  PROPERTIES.

     The Company currently has four facilities. Our headquarters are located at
420 Aviation Blvd. Suite 103, Santa Rosa, CA 95403. The office space is
approximately 3,700 square feet. The current annual lease amount is $76,000 and
the lease expires November 30, 2012.

     Our Tonertype LLC subsidiary and our Optima Technologies, LLC subsidiary
have a facility located at 5313 Johns Road, Ste. 210 Tampa, FL. The office and
warehouse space is approximately 13,100 square feet, which includes a
manufacturing facility. The current annual lease amount is $80,000 and expires
in June of 2012.

                                       14
<PAGE>

     Our NC TonerServ, LLC subsidiary has a facility located at 1109 Copeland
Oaks Drive in Morrisville, NC. The office space is approximately 2,500 square
feet. The current annual lease amount is $24,750 and expires in February of
2010.

     Our iPrint Technologies, LLC subsidiary has a facility located at 9321 Eton
Avenue in Chatsworth, CA. The office and warehouse space is approximately 5,118
square feet. The current annual lease amount is $60,514 and expires January 31,
2011. iPrint has another facility located at 980 Magnolia Avenue in Larkspur, CA
94939. The office space is approximately 575 square feet. The current annual
lease amount is $18,600 and expires January 31, 2010.

     The Company believes that it has adequate insurance covering the leased
premises and its properties.

ITEM 3. LEGAL PROCEEDINGS

     On July 5, 2007, the Company was served with a notice of charge of
discrimination by a former independent sales representative (ISP) for alleged
acts by another ISP. The claimant is seeking total monetary damages in the
amount of $150,000. The Company is awaiting a response from the United States
Equal Opportunity Commission. The Company believes it has minimal or no
liability as the Company is protected by indemnification provisions within the
ISP agreements.

     In the past, we have been subject to claims arising in the ordinary course
of business, primarily vendor disputes.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

none
                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.

     There has been only a very limited market for our common stock. We cannot
assure you that a trading market for our shares will continue. Our common stock
is quoted on the OTC Bulletin Board under the trading symbol "ASVP." Quotations
were first entered on the OTC Bulletin Board on or about October 13, 2006. The
following table sets forth the high and low sale prices for the Company's Common
Stock as reported on the OTC Bulletin Board for the periods indicated:

     QUARTER ENDED                           HIGH       LOW
     -------------                          ------     ------

     December 31, 2006                      $ 0.51     $ 0.20

     March 30, 2007                           0.53       0.35
     June 30, 2007                            0.84       0.37
     September 30, 2007                       0.35       0.20
     December 31, 2007                        0.30       0.16

     March 31, 2008                           0.33       0.20
     June 30, 2008                            0.32       0.22
     September 30, 2008                       0.45       0.11
     December 31, 2008                        0.35       0.13



                                       15
<PAGE>


Approximate Number of Holder of Common Stock

     On March 2, 2009 there were approximately 300 holders of record of our
common stock.

Dividends

     We have not paid any cash dividends since our inception, and we do not have
any plans to pay any dividends on our common stock in the foreseeable future.

Recent Sales of Unregistered Securities

     There were no sales of unregistered securities that have not been reported
in the Company's reports on Form 8-K and 10-Q during the year ended December 31,
2008 except as set forth below.

     On December 4, 2008, the Company agreed to exchange stock for services
rendered to the Company. Strands Management Group received 250,000 shares of
common stock in exchange for compensation valued at $72,500. There are no
registration rights associated with these shares.

     On December 19, 2008, the Company agreed to exchange stock for services
rendered to the Company. Richard Cerkleski received 250,000 shares of common
stock in exchange for compensation valued at $72,500. There are no registration
rights associated with these shares.

     In connection with the issuance of the shares of common stock for services,
the Company relied upon the exemption provided by Section 4(2) of the Act. The
Company reasonably believes that each of these investors are "Accredited
Investors," as defined under the Act, who had access to complete information
concerning the Company. No advertising or other general solicitation was used in
connection with the offering. A restrictive legend was placed on the
certificates representing the securities issued.

     On October 3, 2008, an employee exercised options to purchase 135,714
shares common stock for $20,357.

     December 16, 2008, the Company sold a total of 3/4 of a unit, each unit
consisting of a $100,000 note and 50,000 shares of common stock to one
accredited investor for $75,000.

     During December 2008, the Company agreed to reduce the exercise price of
warrants held by a few investors from $0.30 per share to $0.15 per share. The
Company issued a total of 1,000,000 shares for $150,000 to 2 accredited
investors upon the exercise of warrants at the reduced exercise price.

     In connection with the sales of securities described above, the Company
relied upon the exemptions provided by Section 4(2) of the Securities Act of
1933 (the "Act"), and/or Rule 506 under the Act. The securities were sold to
persons who were already shareholders of the Company as well as persons with
whom Directors of the Company had a prior business relationship. The Company
reasonably believes that these investors are "Accredited Investors," as defined
under the Act, who had access to complete information concerning the Company.
Each investor was given a private placement memorandum that provided detailed
information about the Company and the securities to be issued, and investors
were given an opportunity to ask questions of management. No advertising or
other general solicitation was used in connection with the offering. The
investors signed subscription documents representing that they were acquiring
the securities for investment purposes only. A restrictive legend was placed on
the certificates representing the securities issued.


                                       16
<PAGE>

Issuer Repurchases of Equity Securities

None.

ITEM 6. SELECTED FINANCIAL DATA.

Not required.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     This Report contains statements that may contain forward-looking
statements, concerning the Company's future operations and planned future
acquisitions and other matters and the Company intends that such forward-looking
statements be subject to the safe harbors for such statements. Any statements
that involve discussions with respect to predictions, expectations, belief,
plans, projections, objectives, assumptions or future events or performance
(often, but not always, using phrases such as "expects", or "does not expect",
"is expected", "anticipates" or "does not anticipate", "plans", "estimates" or
"intends", or stating that certain actions, events or results "may", could",
"might", or "will" be taken to occur or be achieved) are not statements of
historical fact and may be "forward looking statements". These forward-looking
statements include statements relating to, among other things, the ability of
the Company to continue as a going concern.

     The Company cautions readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. Such
forward-looking statements are based on the beliefs and estimates of the
Company's management as well as on assumptions made by and information currently
available to the Company at the time such statements were made. Forward looking
statements are subject to a variety of risks and uncertainties which could cause
actual events or results to differ from those reflected in the forward looking
statements, including, without limitation, the failure to obtain adequate
financing on a timely basis. Actual results could differ materially from those
projected in the forward-looking statements, either as a result of the matters
set forth or incorporated in this Report generally and certain economic and
business factors, some of which may be beyond the control of the Company.
Additional risks and uncertainties that may affect forward-looking statements
about the Company's business and prospects include adverse economic conditions,
inadequate capital, unexpected costs, and other factors set forth under "Risk
Factors" in Item 1 - Description of Business of this report which could have an
immediate and material adverse effect. The Company disclaims any obligation
subsequently to revise any forward-looking statements to reflect events or
circumstances after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.

Critical Accounting Policies

     The Company based the following discussion and analysis of our financial
condition and results of operations on our consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported
amount of assets, liabilities, revenue and expenses and related disclosure of
contingent assets and liabilities.

     We base our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the circumstances, the
results of which form the basis on which we make judgments about the carrying
values of assets and liabilities that are not readily apparent from other
sources. Because this can vary in each situation, actual results may differ from
the estimates under different assumptions and conditions.


                                       17
<PAGE>

     We believe the following critical accounting policies require more
significant judgments and estimates in the preparation of our financial
statements:

     Revenue Recognition - Revenue is generated from sales of supplies and
maintenance agreements. Revenue from supplies sales is recognized upon shipment
of product. Revenue from maintenance is recognized as services are completed or
over the term of the maintenance agreements. The following is a detailed
description of each revenue activity and its revenue recognition policy:

     Time and Materials Maintenance Contracts - Revenue for equipment service
calls initiated by the customer. All work is billed based on actual time and
materials. The revenue is recognized (and billed) after the service work is
performed for the customer.

     Full Service Maintenance Contracts - Revenue for fixed fee equipment
service contracts (annual contracts for the first year of service; contracts are
billed quarterly thereafter with a ninety day cancellation provision). Revenues
are recognized straight-line over the life of the contract with the unearned
portion shown as deferred revenue in the Company's balance sheet.

     Remanufactured Toner Sales - Revenue for the resale of laser toner
cartridges. The revenue is recognized upon shipment of the toner cartridges to
the customer. In the case where the toner cartridge is sold as a bundled product
with equipment service included as part of the total purchase price, the
combined revenue is segregated between the value of the cartridge and the
service components. The cartridge portion is recognized after shipment at the
same price as a "cartridge only" sale. The service component is deferred and
recognized on the earlier of actual cartridge use when the cartridge is replaced
or ninety days (the maximum term of the service offering with each cartridge).

     Goodwill and Intangible Assets Acquired - The Company accounts for the
purchase of customer lists at cost, net of discounts, if any, less accumulated
amortization. These customer lists are amortized using the straight line method
over an estimated useful life of seven years. The Company did not enter into any
customer list purchase agreements during the year ended December 31, 2008. The
Company has entered into three asset purchase agreements to acquire certain
assets of two printer service companies. These acquisitions closed on April 1,
2007, December 28, 2007 and October 31, 2008, respectively. Goodwill is tested
for impairment annually. The significant estimates and assumptions used by
management in assessing the recoverability of goodwill and other intangible
assets are estimated future cash flows, present value discount rate, and other
factors. Any changes in these estimates or assumptions could result in an
impairment charge. The estimates of future cash flows, based on reasonable and
supportable assumptions and projections, require management's subjective
judgment. Depending on the assumptions and estimates used, the estimated future
cash flows projected in the evaluations of long-lived assets can vary within a
range of outcomes.

     Valuation Allowance - We maintain allowances for doubtful accounts for
estimated losses resulting from the inability of our customers to make required
payments. If the financial conditions of our customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances might be required.

     Stock-Based Compensation - In assessing the fair value of option and
warrant grants to employees and consultants, we have valued these instruments
based on the Black-Scholes-Merton model which requires estimates of the
volatility of our stock, estimates on forfeitures and the fair market value
price of our shares.

     The estimated fair value of equity-based awards is amortized over the
awards' vesting period on a straight-line basis. The Company calculates the


                                       18
<PAGE>

expected volatility for stock-based awards using the historical volatility of
its own stock since it began trading in October 2006. The risk free interest
rates were determined by the rates of the 5 and 7 year Treasury Bill on the
grant date of the options.

     The Company records the fair value of restricted stock and certain options
as deferred compensation at the date of issuance and recognizes compensation on
a straight-line basis over the service period of the restricted stock or
options. The compensation is adjusted for the change in fair market value at the
end of each period in the statement of operations.

     Warrants and Detachable Warrants - The estimated fair value of the warrants
at the date of issuance is recorded as a warrant liability or as a component of
equity on the balance sheet. The Company records the warrant liability at fair
value at the end of each reporting period with changes recorded in earnings. The
Company records the warrants as a component of equity at the date of issuance
only with no revaluation at the end of each reporting period. At the time the
detachable warrants are exercised, the liability is marked to fair value and
then reclassified to equity to reflect the increase in shares outstanding at
each balance sheet date. The Black-Scholes-Merton option pricing method is used
to value the warrants and detachable warrants upon the date of issuance and at
each balance sheet date for warrant liabilities.

     Income Taxes - The Company uses the asset and liability approach for
financial accounting and reporting for income taxes. Deferred income taxes are
provided for temporary differences in the bases of assets and liabilities as
reported for financial statement purposes and income tax purposes. We have
recorded a valuation allowance against all net deferred income tax assets. The
valuation allowance reduces deferred income tax assets to an amount that
represents management's best estimate of the amount of such deferred income tax
assets that more likely than not will be realized. Due to the significant
increase in common stock issued and outstanding in 2008 and 2007, Section 382 of
the Internal Revenue Code may provide significant limitations on the utilization
of net operating loss carryforwards of the Company. As a result of these
limitations, a portion of these loss and credit carryovers may expire without
being utilized. A valuation allowance has been recorded as a reduction against
the net operating loss carry forwards due to the uncertainty of the ultimate
realization of future benefits from these net operating losses.

     This following discussion and analysis of the results of operations and
financial condition of the Company should be read in conjunction with the
audited financial statements for the years ended December 31, 2008 and 2007, and
the related notes, contained in the Company's audited financial statements and
notes thereto appearing elsewhere in this Form 10-K.

Year Ended December 31, 2008 and 2007

     Revenue. Revenue for the year ended December 31, 2008 was $12,745,634 as
compared to $3,630,531 for the year ended December 31, 2007. The increase of
$9,115,103, or 251%, in revenue in the year ended December 31, 2008 was
primarily due to the asset purchase agreements with Tonertype LLC on December
28, 2007 and iPrint Technologies, LLC on October 31, 2008.

     Revenues from the sale of toner cartridges increased by $6,654,845 for 2008
as compared to 2007 due primarily to the asset purchase agreements of Tonertype
LLC and iPrint Technologies, LLC. Revenues from service increased by $2,460,258
primarily due to the acquisition of Tonertype LLC on December 28, 2007.


                                       19
<PAGE>

     Gross Profit (Revenue less Cost of Goods Sold). Gross profit for the year
ended December 31, 2008 was $4,492,823 as compared to $1,025,183 for the year
ended December 31, 2007. The gross profit margin in 2008 was 35% compared to a
gross profit margin for 2007 of 28%. The higher gross margin was primarily
attributable to the higher margins associated with the acquisition of Tonertype,
which sells primarily compatible cartridges, offset by the lower margins
associated with the acquisition of iPrint, which primarily sells OEM cartridges.

     Salaries and Wages. Salaries and Wages expenses were $2,958,862 and
$1,645,877 for the years ended December 31, 2008 and 2007, respectively. The
$1,312,985 increase was due primarily to the addition of 30 employees from
Tonertype on December 28, 2007, and the addition of 17 employees from iPrint on
October 31, 2008.

     During the year ended December 31, 2008, American TonerServ employed a
Chief Executive Officer, Chief Operating Officer, Senior Vice President of
Corporate Development and Strategy and a Senior Vice President of Sales and
Marketing. The Company also hired a Controller and a Director of Human Resources
during 2008 and currently employs a total of 87 employees located in its
headquarters, Florida operations, Optima Technologies, LLC and Tonertype LLC and
its iPrint operations. The Company anticipates that it will generate significant
new revenue as it continues to implement its new business strategy and plan.
However, there can be no assurance that the Company will raise sufficient
capital to pursue new business opportunities or to continue executing its
business plan.

     Professional Fees and Services. Professional Fees and Services expenses
were $1,416,084 and $1,346,706 for the years ended December 31, 2008 and 2007,
respectively. This $69,378 increase was primarily due to an increase in
accounting fees relating to the Company's year end audit.

     Sales and Marketing. Sales and marketing expenses were $1,008,034 and
$409,763 for the years ended December 31, 2008 and 2007, respectively. The
$598,271 increase was primarily due to the acquisitions of Tonertype and iPrint.
The Company also lost a sales salary reimbursement, due to economic conditions,
from the State of Florida through its relationship with Axon for the marketing
and selling of its products using disadvantaged employees. This reimbursement
had been approximately $85,000 per year.

     General and Administrative. General and Administrative expenses were
$1,756,826 and $1,334,711 for the years ended December 31, 2008 and 2007,
respectively. The $422,115 increase was primarily due to the acquisition of
Tonertype LLC. Management believes that this increase will allow the Company to
continue to execute its business strategies of an organic growth plan to
increase sales and the acquisition of additional companies.

     Amortization Expense. Amortization expenses were $646,136 and $338,173 for
the years ended December 31, 2008 and 2007, respectively. The $307,963 increase
was primarily due to the acquisition of certain assets of Tonertype in December
2007 and the acquisition of certain assets of iPrint on October 31, 2008.

     Net Loss. The net loss for the year ended December 31, 2008 and 2007 was
$4,640,996 and $4,832,325 respectively. The reduction in the net loss of
$191,329 was primarily attributable to the acquisition of iPrint Technologies,
LLC on October 31, 2008.

     The Company believes that it will continue to have net losses for the
foreseeable future.

     Income (Loss) per Share. Net loss per share in 2008 was $0.07 compared to a
net loss of $0.16 in 2007.

     EBITDA. EBITDA for the years ended December 31, 2008 and 2007 was
$(2,948,764) and $(4,201,235), respectively. The reduction in negative EBITDA
was primarily the result of the Tonertype and iPrint acquisitions and continued
operational efficiencies.


                                       20
<PAGE>

     Adjusted EBITDA. Adjusted EBITDA for the year ended December 31, 2008 and
2007 was $(1,317,032) and $(3,249,128), respectively. The reduction in negative
adjusted EBITDA was primarily the result of the Tonertype and iPrint
acquisitions and continued operational efficiencies.

Non-GAAP Measures:

     EBITDA and Adjusted EBITDA presented in this report are a supplemental
measure of our performance that is not required by or presented in accordance
with GAAP. These measures are not a measurement of our financial performance
under GAAP and should not be considered as alternatives to net income, income
from operations, or any other performance measures derived in accordance with
GAAP or as an alternative to cash flow from operating, investing or financing
activities as a measure of our liquidity.

     EBITDA represents net income before interest, taxes, depreciation and
amortization. Adjusted EBITDA represents net income before interest, taxes,
depreciation, amortization and other non-cash related expenditures. We present
EBITDA and Adjusted EBITDA because we consider them important supplemental
measures of our performance and liquidity. We believe investors may also find
these measures meaningful, given how our management makes use of them. The
following is a discussion of our use of these measures.

     We use EBITDA and Adjusted EBITDA to measure and compare the performance of
our Company. We also use EBITDA and Adjusted EBITDA to measure performance for
determining division-level compensation. We also use EBITDA and Adjusted EBITDA
as a measurement to manage cash flow from our divisions to the corporate level
and to determine the financial health of each division. We also use EBITDA and
Adjusted EBITDA to evaluate potential acquisitions and to evaluate whether to
incur capital expenditures.

     EBITDA and Adjusted EBITDA have limitations as an analytical tool, and you
should not consider them in isolation, or as a substitute for analysis of our
results as reported under GAAP. Some of these limitations are as follows:

     *    They do not reflect our cash expenditures, or future requirements for
capital expenditures and contractual commitments;

     *    They do not reflect changes in, or cash requirements for, our working
capital needs;

     *    They do not reflect the interest expense, or the cash requirements
necessary to service interest or principal payments on our debt;

     *    Although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be replaced in the
future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for
such replacements; and

     *    Other companies, including companies in our industry, may calculate
these measures differently than we do, limiting their usefulness as comparative
measures.

     Because of these limitations, EBITDA and Adjusted EBITDA should not be
considered as measures of discretionary cash available to us to invest in
business growth or to reduce our indebtedness. We compensate for these
limitations by relying primarily on our GAAP results and using EBITDA only as
supplements.

     We have presented adjusted net EBITDA and Adjusted EBITDA for the quarters
and years ended December 31, 2008 and 2007 to reflect the exclusion of all stock
related compensation and gain or loss recognized on the fair value of
convertible debt. This presentation facilitates a meaningful comparison of our
operating results for the quarters and years ended December 31, 2008 and 2007.


                                       21
<PAGE>
<TABLE>
<CAPTION>

     The following is a reconciliation of cash flows provided by operating
activities to EBIT, EBITDA, and net loss:

                                   Three Months Ended                Year Ended
                                      December 31,                  December 31,
                                  2008           2007           2008           2007
                              -----------    -----------    -----------    -----------
<S>                           <C>            <C>            <C>            <C>
Cash flows provided by
operating activities          $  (456,140)   $  (998,527)   $(2,163,406)   $(2,805,345)
Changes in operating
assets and liabilities            (44,298)      (107,286)       106,515       (102,871)
Non-cash (expenses) income,
including depreciation and
amortization                     (732,552)      (646,501)    (2,584,105)    (1,924,109)
Interest expense, net             288,969         69,218        901,641        260,267
                              -----------    -----------    -----------    -----------
EBIT                             (944,021)    (1,683,096)    (3,739,355)    (4,572,058)
Depreciation and
amortization                      227,656        222,996        790,591        370,823
                              -----------    -----------    -----------    -----------
EBITDA                           (716,365)    (1,460,100)    (2,948,764)    (4,201,235)
Interest expense                 (288,969)       (69,218)      (901,641)      (260,267)
Depreciation and
  amortization                   (227,656)      (222,996)      (790,591)      (370,823)
                              -----------    -----------    -----------    -----------
Net loss                      $(1,232,990)   $(1,752,314)   $(4,640,996)   $(4,832,325)
                              ===========    ===========    ===========    ===========

The following is a reconciliation of net loss to EBITDA:

                                   Three Months Ended                Year Ended
                                      December 31,                  December 31,
                                  2008           2007           2008           2007
                              -----------    -----------    -----------    -----------

Net loss                      $(1,232,990)   $(1,752,314)   $(4,640,996)   $(4,832,325)
Interest expense, net             288,969         69,218        901,641        260,267
                              -----------    -----------    -----------    -----------
EBIT                             (944,021)    (1,683,096)    (3,739,355)    (4,572,058)
Depreciation and
amortization                      227,656        222,996        790,591        370,823
                              -----------    -----------    -----------    -----------
EBITDA                        $  (716,365)   $(1,460,100)   $(2,948,764)   $(4,201,235)
                              ===========    ===========    ===========    ===========
</TABLE>

The following is a reconciliation of net EBITDA to Adjusted EBITDA; which
excludes all non-cash items; one time expenditures and stock related
compensation:


                                       22
<PAGE>


                            Three Months Ended               Year Ended
                               December 31,                  December 31,
                           2008           2007           2008           2007
                       -----------    -----------    -----------    -----------
EBITDA                 $  (716,365)   $(1,460,100)   $(2,948,764)   $(4,201,235)
Stock related
compensation               338,976        118,230        952,338        929,295

Fair value of
conversion feature of
convertible debt           (37,500)      (131,250)       293,750        (85,417)
Fair value of warrant
liabilities                 63,379         78,205        159,774         71,873
Bad debt allowance
for entities                 5,322         13,356         37,822         36,356

Other one-time
Expenses                   105,264           --          188,048
                       -----------    -----------    -----------    -----------
ADJUSTED EBITDA        $  (240,914)   $(1,381,559)   $(1,317,032)   $(3,249,128)
                       ===========    ===========    ===========    ===========


Liquidity and Capital Resources

     At December 31, 2008, the Company had a working capital deficit of
$4,973,437 including cash and equivalent balances of $4,033, up from a working
capital deficit balance of $2,121,624 at December 31, 2007, including cash and
equivalent balances of $60,196. The change in working capital, and cash and
equivalent balances was primarily affected by the Company's short-term loan
obligations.

     Accounts receivable increased by $1,426,554, from $1,326,891 at December
31, 2007 to $2,753,445 at December 31, 2008. This increase was due to the iPrint
acquisition and increased sales generated through its organic growth plan. This
increase in accounts receivable has increased the Company's borrowing capacity
on its line of credit to fund operations and other obligations as they come due.

     Accounts payable and accrued expenses, which consist primarily of amounts
due to third party service providers and toner suppliers, increased from
$1,767,997 at December 31, 2007 to $3,030,599 at December 31, 2008. This
increase was primarily due to the iPrint acquisition. Included in these balances
is $197,431 of long outstanding payables due to independent service providers.

     The Company has entered into no derivative financial instrument
arrangements at December 31, 2008, other than warrants issued in connection with
convertible notes payable, notes payable and a common stock offering.

     The Company has entered into certain transactions relating to its
Convertible Note Offering and its acquisitions of Optima and Tonertype which
contain financial instruments that are classified as derivative instruments.
During the quarter ended September 30, 2008, the convertible notes related to
the Optima and Tonertype acquisitions were converted into common stock and are
no longer classified as derivative instruments.

     During the year ended December 31, 2008, the Company raised a total of
$5,548,000 consisting of $1,400,000 in gross proceeds from a private offering of


                                       23
<PAGE>

Units consisting of a convertible note and warrants. Each Unit consists of a
$200,000 note that bears interest at ten percent per annum and 57.5% warrant
coverage. These notes are due one year from the date of issuance. The Company
raised $1,470,000 in gross proceeds from two private offerings consisting of
common stock and warrants. The common stock was priced at $0.25 to $0.30 per
share with warrant coverage of 100%. The Company raised $625,000 in gross
proceeds from a private offering of Units consisting of a note and either
warrants or common stock at the option of the investor. These notes bear
interest at ten percent per annum and were due 90 days from issuance. The
Company raised $1,915,000 in gross proceeds from a private offering of Units
consisting of a convertible note and warrants. Each Unit consisted of a $103,830
note with 125,000 warrants. The effective yield of the note was twelve percent
per annum.

     In December 2008, the Company raised $150,000 in common stock through a
discounted warrant offering. The Company offered to a limited number of warrant
holders the option to exercise their warrants at $0.15 per share, which
represented a 50% discount to the warrant strike price of $0.30 per share. Two
warrant holders elected to participate in this limited offering.

The Company currently has no external sources of liquidity.

     During the year ended December 31, 2008, the Company used $2,163,406 in
cash from operations. This represented a decrease of $641,939 from 2007, which
was attributed to the acquisitions of Tonertype and iPrint and continued
operational efficiencies. The cash flows were used primarily due to finance the
Company's continued losses from operations and ongoing costs incurred to
position the Company as a public entity which management anticipated.

     During the year ended December 31, 2008, the Company used $1,844,505 for
investing activities. The cash flows were used primarily for the iPrint
acquisition and to purchase property and equipment. Management will continue to
execute on its business strategy and anticipates investing activities to
continue.

     During the year ended December 31, 2008, the Company received $3,951,748
primarily from the issuance of $3,315,000 in convertible notes payable,
$1,458,000 from the issuance of common stock with detachable warrants,
$1,045,760 from the issuance of notes payable and $1,346,722 net draws from the
Company's revolving line of credit offset by $3,202,862 in repayment of notes
payable, customer list notes payable and convertible notes payable. Management
will continue to finance its business strategy with outside capital.

     During the year ended December 31, 2007, the Company used $2,805,345 in
cash from operations. The cash flows were used primarily to finance the
Company's continued losses from operations. The Company does not expect to
generate sufficient cash from operations to meet its capital requirements in the
short term, which makes the Company's ability to continue as a going concern
doubtful.

     During the year ended December 31, 2007, the Company used $2,554,943 in
cash from investing activities. The cash flows were used primarily to complete
the acquisitions of certain assets of two companies in the printer supplies and
service industry.

     During the year ended December 31, 2007, the Company received $5,308,075 in
cash from financing activities. These cash flows were primarily from $2,575,000
for the issuance of preferred stock, $2,171,840 from the issuance of common
stock, $755,000 from the issuance of notes and convertible notes and $645,000
from shareholder advances.


                                       24
<PAGE>
<TABLE>
<CAPTION>

      The following table discloses aggregate information about our contractual
obligations and the periods in which payments are due as of December 31, 2008.

                                               Less Than                             After
Contractual Obligations             Total       1 Year      1-3 Years   4-5 Years   5 Years
-----------------------          ----------   ----------   ----------   ---------   -------
<S>                              <C>          <C>          <C>          <C>         <C>
Notes Payable                    $3,010,707   $2,080,865   $  929,842   $    --     $  --
Convertible Notes Payable         4,832,770    1,906,246    2,619,828     306,696      --
Line of credit                    1,346,722    1,346,722         --          --        --
Facilities and Property Leases      681,196      254,722      426,474        --        --
                                 ----------   ----------   ----------   ---------   -------
Total Contractual Obligations    $9,871,395   $5,588,555   $3,976,144   $ 306,696   $  --
                                 ==========   ==========   ==========   =========   =======
</TABLE>

Subsequent Events

     On February 4, 2009, the board of directors named Chuck Mache CEO and
President, replacing Daniel J. Brinker in this capacity. On this same date, the
board of directors named Daniel J. Brinker Chairman of the Board, replacing
Chuck Mache in this capacity.

     On February 20, 2009, the Company amended its short term note obligations
with iPrint Technologies, Inc. These notes were combined into one Modified
Secured Promissory Note for $1,150,000. This note will be due in full on
December 31, 2010.

Business Outlook, Risks and Uncertainties

     Economic Uncertainties

     The current credit market environment, the economic recession, current
financial market conditions, and the political environment may affect the
Company's ability to raise financing. The Company will be required to raise
additional capital to service its existing debt and payoff certain notes as they
become due. The uncertainty about the Company's ability to raise financing makes
it difficult to predict the Company's results for the year ending December 31,
2009 and raises substantial doubt about the Company's ability to continue as a
going concern.

     Sufficiency of Working Capital

     As of December 31, 2008, the Company had a net working capital deficit of
$4,973,437. The Company has inadequate financial resources to sustain its
business activities as they currently are. We believe that we can achieve
profitability through an aggressive organic growth plan to increase sales,
increasing operational efficiencies and by aggressively reducing overhead costs.
We have already begun implementing parts of our organic growth plan and cost
reductions, however; we do not know the overall impact that these efforts may
have on the business.

     During 2008, the Company received $5,560,000 in proceeds from private
offerings, of which $3,315,000 came from convertible note offerings, $1,458,000
came from common stock and warrant offerings and $150,000 came from a discounted
warrant exercise. These proceeds were used for working capital and the
acquisition of iPrint Technologies, Inc.

     During the period from January 2009 to March 2009, the Company raised
$140,000 from two accredited investors related to the Company's convertible
notes and warrant offerings.

     The Company estimates that it will need to raise an additional $4,600,000
during the next 12 months to meet its minimum capital requirements, which
include approximately $4,000,000 in current notes payable due. There can be no
assurance that the Company will be successful in obtaining the required
financing. Thus, there is substantial doubt that the Company will be able to
continue as a going concern, absent raising additional financing.


                                       25
<PAGE>

     The financial statements have been prepared on a going concern basis, which
assumes that the Company will be able to realize its assets and discharge its
obligations in the normal course of business. If the Company were not to
continue as a going concern, it would likely not be able to realize on its
assets at values comparable to the carrying value or the fair value estimates
reflected in the balances set out in the preparation of the consolidated
financial statements.

     The Company does not use financial instruments for trading purposes and is
not a party to any leverage derivatives. To the extent that the Company has or
continues to issue debt obligations outside of the course of its normal
operations, the Company's business and results of operations may be materially
effected by changes in interest rates and certain other credit risk associated
with its operations.

     Convertible Notes and Notes Payable

     The Company has $9,190,199 in notes payable at December 31, 2008. The
Company has inadequate financial resources to meet the repayment terms of its
convertible notes payable. The Company does not use financial instruments for
trading purposes and is not a party to any leverage derivatives. To the extent
that the Company has or continues to issue debt obligations outside of the
course of its normal operations, the Company's business and results of
operations may be materially effected by changes in interest rates and certain
other credit risk associated with its operations.

     Other Matters

     In the event the Company experiences substantial growth in the future, the
Company's business and results of operations may be materially affected by
changes in interest rates and certain other credit risk associated with its
operations.

Off Balance Sheet Arrangements

     The Company has no off balance sheet financing arrangements that have or
are reasonably likely to have a current or future effect on the Company's
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to investors.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The financial statements are set forth on pages F-1 through F-34 hereto.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None

ITEM 9A.  CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures.

     The term "disclosure controls and procedures" is defined in Rules 13a-15(e)
and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange


                                       26
<PAGE>

Act"). This term refers to the controls and procedures of a company that are
designed to ensure that information required to be disclosed by a company in the
reports that it files under the Exchange Act is recorded, processed, summarized,
and reported within the required time periods. Our Chief Executive Officer and
Principal Financial Officer have evaluated the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this annual
report. They have concluded that, as of that date, our disclosure controls and
procedures were effective at ensuring that required information will be
disclosed on a timely basis in our reports filed under the Exchange Act.

Internal Control over Financial Reporting.

     Management's Report on Internal Control over Financial Reporting

     Our Company's management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act) for our company. Our Company's
internal control over financial reporting is designed to provide reasonable
assurance, not absolute assurance, regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles in the United States of
America. Internal control over financial reporting includes those policies and
procedures that: (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of our
Company's assets; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles in the United States of
America, and that our Company's receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and (iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.

     Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

     As required by Rule 13a-15(c) promulgated under the Exchange Act, our
management, with the participation of our Chief Executive Officer ("CEO") and
Chief Financial Officer ("CFO"), evaluated the effectiveness of our internal
control over financial reporting as of December 31, 2008. Management's
assessment took into consideration the size and complexity of the company and
was based on criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission in Internal Control over Financial Reporting -Guidance
for Smaller Public Companies. In performing the assessment, management has
concluded that our internal control over financial reporting was effective as of
December 31, 2008.

     This annual report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission ("SEC") that permit the Company to provide only
management's report in this annual report.


                                       27
<PAGE>

Evaluation of disclosure controls and procedures

Disclosure controls are controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the Exchange Act
is recorded, processed, summarized and reported, within the time periods
specified in the SEC's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by a Company in the reports that it files
or submits under the Exchange Act is accumulated and communicated to the
company's management, including its principal executive and principal financial
officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure. Our management carried out an
evaluation under the supervision and with the participation of our CEO and CFO,
of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, the Company's
CEO and CFO have concluded that the Company's disclosure controls and procedures
were effective as of December 31, 2008.

Changes in Internal Controls Over Financial Reporting

There has been no changes in the Company's internal control over financial
reporting for the year ended December 31, 2008 that materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.


ITEM 9B.  OTHER INFORMATION.

     None

                                  PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

     The Directors and Executive Officers of American TonerServ are as follows:

        Name             Age                Positions and Offices Held
--------------------     ---      ------------------------------------------

Chuck Mache              52       Director, President and Chief
                                  Executive Officer

Daniel J. Brinker        52       Chairman of the Board


William A. Robotham      67       Director

Thomas Hakel             49       Director and Secretary

Steven R. Jensen         47       Director

Aaron L. Brinker         33       Chief Operating Officer

Andrew A. Beaurline      57       Senior Vice President of Corporate
                                  Development and Strategy

Michael V. Ducey         57       Senior Vice President of Sales and
                                  Marketing

Ryan Vice                37       Chief Financial Officer



                                       28
<PAGE>

     Daniel J. Brinker is the father of Aaron L. Brinker. There are no other
family relationships between any of the Directors or Executive Officers of
American TonerServ.

     Our success will depend to a significant extent on the performance and
continued service of our officers, directors and key employees. None of our
employees have employment contracts. There can be no assurance that we will be
successful in attracting or retaining personnel needed to implement our
strategic business plan and expand our operations. We may experience increased
costs in order to attract and retain skilled employees. In addition, there can
be no assurance that we will have the resources to retain key employees. If we
fail to attract additional qualified employees or to retain the services of key
personnel, we may be unable to achieve our objectives.

     The following sets forth biographical information as to the business
experience of each Officer and Director for at least the last five years.

     CHUCK MACHE, DIRECTOR, PRESIDENT AND CHIEF EXECUTIVE OFFICER - Chuck Mache
was elected as a Director of the Company on November 29, 2007. On January 8,
2008 Mr. Mache was elected as Chairman of the Board. On February 2, 2009, he was
elected to serve as President and Chief Executive Officer of the Company. Mr.
Mache has spent a quarter-century selling, managing, building, and leading sales
organizations, with a specialty in highly competitive industries. He used his
breakthrough sales approach to lead the transition of Benchmark Lending Group
from a mortgage broker to a full mortgage bank, and dramatically increased both
the number and size of loans in a short period, turning the company into a
mid-size player in the California market. As Executive Vice President of Sales
for American Home Shield, Mache grew revenues from $6M to $100M in ten years,
formed strategic partnerships with other market leaders, such as Coldwell Banker
and Prudential, and restructured sales teams during acquisitions. Mr. Mache
earned a Bachelor of Science degree in Communications from California State
University, Chico in 1980.

     DANIEL J. BRINKER, CHAIRMAN OF THE BOARD- Mr. Brinker has been a Director
of American TonerServ since 1995 and served as Chairman of the Board from
November 2005 to January 2008. From November 2005 to February 2009, he served as
President and CEO of the Company. Since February 2, 2009, he has served as
Chairman of the Board. From 2002 to October 2005, he was a business consultant
and served as President of ASKM Enterprises, Inc., his consulting firm. Mr.
Brinker served as President of ATS from 1995 to 2002. He has over twenty years
of experience as a principal, operating officer and financier of financial and
other service businesses, and technology companies. Mr. Brinker has extensive
operational, financial and/or senior management experience with a number of
financial services companies including American Home Shield (a publicly traded
company) and Benchmark Lending Group. Mr. Brinker served as President of
American Home Shield (AHS), the nation's largest home warranty company, from
1987 to 1995. Mr. Brinker led a turnaround management team that engineered a
buyout of AHS by ServiceMaster and management in 1989. Mr. Brinker is a
Certified Public Accountant and earned a Bachelor of Science degree in
Accounting from Santa Clara University in 1979. Mr. Brinker has also completed
certain graduate courses at Stanford University.

     WILLIAM A. ROBOTHAM, DIRECTOR - Mr. Robotham became a Director in July
2006. William A. Robotham is a certified public accountant and the executive
partner for Pisenti & Brinker LLP. He has served as the partner-in-charge of the
Auditing and Accounting department, the Tax department and the Management
Advisory Services department. He joined the firm in 1966, became a partner in
1969 at twenty-seven years of age, managing partner in 1983 and executive
partner in 1996. Mr. Robotham currently works in tax, general practice and
management consulting for the firm. He is also a director of American River
Bankshares, a publicly-held company listed on NASDAQ. Mr. Robotham is Chairman
of the audit committee and is a member of other committees of American River
Bankshares. He also serves on the regional board of North Coast Bank and is
Chairman of the Board, President and CEO of Randal Nutritional Products, Inc.


                                       29
<PAGE>

Mr. Robotham is a member of the American Institute of Certified Public
Accountants and the California Society of Certified Public Accountants.

     THOMAS HAKEL, DIRECTOR - Mr. Hakel has been a Director of the Company since
2001, and as Secretary since November 2005. He has extensive experience in
corporate finance and business development. Since 1998, Mr. Hakel has been the
founder and manager of International Commerce Group, LLC, a business consultancy
organization working primarily with emerging stage technology companies. He also
served as the CEO of Accerra Corporation, a web based communications and
marketing service from 2003 to April 2004. From 1997 to 1999, Mr. Hakel was
co-founder of DTI Network Services, LLC and ICN/CommSource Network Services,
LLC, which bought international undersea network fiber optic cable capacity.
Prior to that, Mr. Hakel was Executive Vice President at World Change
Communications ("WXC"), a telecommunications company with over $400M in annual
revenues from 1996 to 1997. In both consulting and operational roles, Mr. Hakel
has assisted numerous companies with the development of strategic plans, debt
and equity financing and mergers and acquisitions, including transactions
involving companies in the software, telecom equipment, financial services and
internet industries. He is a Certified Public Accountant and received a
Bachelors of Science Degree in computer science from California State
University, Sonoma in 1985.

     STEVEN R. JENSEN, DIRECTOR - Mr. Jensen has been a Director of the Company
since August 13, 2007. He was the founder and CEO of Optima Technologies, LLC,
from which the Company purchased certain assets on April 1, 2007. Mr. Jensen
still serves as the managing member of Azaria Management Group, L.L.C. (the new
name for Optima Technologies, L.L.C.) which has been engaged in the business of
print management, printing supplies and repair service since 1987. Mr. Jensen
received a Bachelors Degree in Accounting from the University of Miami in 1985.
Mr. Jensen has extensive industry experience and knowledge as he has been in
print management & supplies industry for over 20 years. Mr. Jensen earned his
Bachelor of Science from Miami University in Ohio where he majored in both
Accounting and Finance. After college, Mr. Jensen completed pilot training in
the United States Air Force.

     AARON L. BRINKER, Chief Operating Officer - Mr. Brinker became Chief
Operating Officer of the Company in July 2006. Since 2004, Mr. Brinker has been
the founder and General Partner of MAS Enterprises, GP, which successfully
opened and manages two Fantastic Sams franchise hair salons in the East Bay area
of San Francisco. Fantastic Sams is the world's largest full service hair care
franchise with salons located throughout the United States, Canada, Singapore,
Taiwan and Japan. From 1998 to 2004, Mr. Brinker served as a Director of SVB
Capital. SVB Capital is the private equity arm of SVB Financial Group (Nasdaq:
SIVB), a $4 billion financial services firm serving companies in the technology,
life science, private equity and premium wine markets. Mr. Brinker helped raise,
invest, and manage SVB Capital's first two venture capital funds in excess of
$385 million. From 2002 to 2005, Mr. Brinker also served as Board Member and
Treasurer of Friends for Youth, a non-profit organization dedicated to providing
youth mentoring services. He also volunteers as a wish grantor for Make-A-Wish
Foundation, which grants the wishes of children with life-threatening medical
conditions. Mr. Brinker earned a Bachelor of Science degree in Finance from
Santa Clara University in 1998.

     ANDREW BEAURLINE, SENIOR VICE PRESIDENT - CORPORATE DEVELOPMENT AND
STRATEGY - Mr. Beaurline became Sr. Vice President of Corporate Development and
Strategy in September 2006. Mr. Beaurline had been advising the Company as a
consultant since February 2006. Mr. Beaurline has 31 years experience working
with middle market businesses including 21 years of investment banking and
venture capital experience. Since August 2004, Mr. Beaurline has served as Vice
President - Corporate Development for Central Garden & Pet ("Central"), a Nasdaq
National Market listed company which is one of the largest suppliers in the lawn
and garden and pet supplies industries. Mr. Beaurline will continue to consult
to Central through December 2006. Prior to 2005, Mr. Beaurline served as Senior
Vice President, Corporate Finance with Sucsy, Fischer & Co. (SFCo), an
investment-banking firm headquartered in Chicago. Mr. Beaurline served SFCo for


                                       30
<PAGE>

19 years and was involved with all aspects of developing and managing a
middle-market investment banking practice. Mr. Beaurline has extensive
experience providing all types of financial advisory services to privately held
companies. He has successfully completed corporate merger, sale, acquisition,
management buy-out, private equity placement and debt financing transactions. At
SFCo Mr. Beaurline was also responsible for the firm's valuation services
practice. He has significant experience providing formal valuation reports on
corporations, partnerships, and individual securities. Mr. Beaurline has also
provided fairness opinions and has served as an expert witness regarding
valuation issues. Mr. Beaurline also has operating experience serving as interim
CFO for clients when requested. Prior to joining SFCo, Mr. Beaurline was an
investment officer with First Chicago's Institutional Venture Capital Fund, and
a Senior Manager with Arthur Andersen & Co. (Minneapolis) in its tax and audit
divisions. Mr. Beaurline has served as a director for several companies
including Nserve Corporation, an extended warranty contract underwriter with
annual revenues of $125 million. Mr. Beaurline is a Certified Public Accountant
and earned a Masters in Business Administration from the University of Chicago
with a specialization in business economics and concentrations in marketing and
finance. He also earned a Bachelors of Science in Accountancy (with honors) from
the University of Illinois.

     MICHAEL V. DUCEY, SENIOR VICE PRESIDENT OF SALES AND MARKETING - Mr. Ducey
became Senior V.P. of Sales and Marketing on May 14, 2007. Mr. Ducey is an
Imaging Supply Industry veteran who has spent the last ten years in a variety of
Executive Sales Management positions at Nukote International. Over the last two
years, Mr. Ducey has served as Senior Vice President-Sales and New Business
Development, focusing his team in developing the Imaging Supply Reseller
Channel. Mr. Ducey was previously Vice President of the Imaging Solutions
Division, where he led his team in the management and development of Nukote's
OEM business. From 1974 -1997, Mr. Ducey held several management positions at
Standard Register, including Product Manager, National Account Manager, and
Regional Manager. His extensive experience at Standard Register included
training and leading sales organizations in the pursuit and closing of end-user
accounts and developing long term relationships. During this time at Standard
Register, he developed expertise selling into the Healthcare and Financial
markets. Mr. Ducey brings an extensive and knowledgeable background in the
Imaging Supply Reseller Channel and to the End-User. Mr. Ducey graduated from
Illinois State University in 1974 with a degree in Business Administration.

     RYAN VICE, Chief Financial Officer - On July 7, 2006, the Board of
Directors elected Ryan Vice to serve as Chief Financial Officer of the Company.
Mr. Vice has over 12 years of experience in corporate finance, accounting and
business development. From 1999 to 2006, Mr. Vice was the corporate controller
and primary financial officer for North Bay Corporation, a refuse and recycling
company, with over 20 subsidiaries and over 150,000 customers. Mr. Vice oversaw
all aspects of the accounting and finance functions of the company including
budgeting, forecasting and preparing the consolidated financial statements of
multiple operating companies. From October 1996 to April 1999, Mr. Vice
practiced public accounting with Pisenti & Brinker LLP. Mr. Vice is a Certified
Public Accountant also a Real Estate Broker licensed by the California
Department of Real Estate and a member of the National Association of Realtors.
Mr. Vice earned his Bachelor of Science in Finance from California State
University, Sacramento in 1995.

     Our Executive Officers hold office until the next annual meeting of the
Board of Directors. There are no known arrangements or understandings between
any Director or Executive Officer and any other person pursuant to which any of
the above-named Executive Officers or Directors was selected as an Executive
Officer or Director.


                                       31
<PAGE>

     The Company has determined that none of the directors are independent
directors as defined under the rules used by the NASDAQ Stock Market. The Board
of Directors currently has an audit committee and a compensation committee.
William Robotham and Thomas Hakel are the members of the audit committee.
William Robotham, Thomas Hakel and Chuck Mache are members of the compensation
committee. The audit committee is chaired by William Robotham and the
compensation committee is chaired by Thomas Hakel. The Board of Directors has
determined that William Robotham is an "audit committee financial expert" as
defined in Item 407(d)(5) of SEC Regulation S-K. Mr. Robotham is not
independent. The Company does not currently have charters for either of its
committees.

ADVISORS

     The following persons have agreed to assist the Company on an advisory
basis.

     GENE KLEIN, CHAIRMAN - Mr. Klein is the Chief Executive Officer of
BarkerBlue Digital Imaging, Inc. (BarkerBlue), a document management and print
company servicing the San Francisco Bay Area, where Mr. Klein has been since
1979. In 2000, BarkerBlue became the first reprographics company in Northern
California to successfully host an online blue print plan room for the Aluminum
Extruders Council industry. This changed the paradigm for Mr. Klein's peers in
the reprographics industry, as it forced them to expand their core competence
from printing to digital document management. Mr. Klein was instrumental in
developing the technology into a system-wide standard within ReproMAX, the
world's leading Network of wide-format technology experts, which allowed the
organization to become the first successful distribute-and-print network of
building plans and specifications. Mr. Klein is a past Chairman of ReproMAX and
is currently on its Board of Directors. Mr. Klein has been a member of the IRgA
(International Reprographic Association) since 1980 and a member of PIA
(Printing Association of America) since 1984. Mr. Klein is the immediate past
Chairman of the Board of the San Mateo Area Chamber of Commerce. Mr. Klein
graduated from Stanford University with a Bachelors of Arts degree in English
Literature in 1979.

     BRYAN THOMAS - Mr. Thomas is the President and Chief Executive Officer of
Thomas Reprographics, Inc. which provides construction document printing and
distribution management services for the architectural and construction
industry. In the nine years in his position, Mr. Thomas has led his company
through significant expansion. He has made over twenty acquisitions during this
time while maintaining a focus on organic growth.

     As a result, Thomas Reprographics has grown over 300% and is the second
largest reprographics company in North America. Thomas Reprographics currently
employs over 900 people in Arizona, Texas, Minnesota, and Florida. Mr. Thomas is
a past Chairman of ReproMAX, Inc. ("ReproMAX") and is a current Director of that
corporation. He is also the 2007-2008 President of the International
Reprographics Association and Past President of the Central Reprographics
Association. Mr. Thomas earned his Masters in Business Administration from
Southern Methodist University.

     RICK BOSWORTH - Mr. Bosworth has developed and successfully expanded
profitable reprographic companies over a 30+ year career. For the past four
years, Mr. Bosworth has lead and grown ReproMAX, the world's large reprographic
network with over 250 participating companies throughout the United States,
Canada and Western Europe. Mr. Bosworth's continuing goals are to assist and
accelerate the changing direction of the reprographic industry through
technology implementation and industry integrations. As President of Indox
Services Corporation from 1973 to 2003, Mr. Bosworth worked closely


                                       32
<PAGE>

within the architectural and construction communities to facilitate, manage and
improve information/document processes, and successfully integrating internal
information workflows, print, copy and related services for companies such as
MasterCard, Anheuser-Busch, Sara Lee, US Bank, and others. Mr. Bosworth served
as ReproMAX Chairman from 1999 to 2001. Mr. Bosworth has contributed to the
International Reprographics Association as a Board Member for 5 years, acting as
both Program and Convention Chair. Mr. Bosworth has also served as Board Member
and President of the Central Reprographics Association. Mr. Bosworth currently
serves the community as a Board Member for the St. Louis Area Foodbank. Mr.
Bosworth earned his degree from the University of Missouri with a Bachelors of
Arts in Economics.

     DAVID FERRARI - Mr. Ferrari is the President of One Workplace L. Ferrari,
LLC ("One Workplace"), a full service office furnishings dealership in the San
Francisco Bay Area where he has worked since 1973. One Workplace provides
workplace furnishings, architectural demountable walls, audio visual systems
integration, and interactive technology white board products for the work place.
In addition to its products, One Workplace provides complete asset management
storage services, re-furbishing and light re-manufacturing as well as
installation and delivery services. One Workplace represents Steelcase products
and 200 other manufacturers. Recent start up divisions in the company include
Health Care, Audio Visual, and On Site Facility Management Services. One
Workplace is the largest independent office furnishings dealer east of New York
City and is viewed as a leader in innovation for their industry. Mr. Ferrari is
on the Board of Directors of Lindsay-Ferrari, Facility Link LLC a nation wide
service organization, Proview Global an international off shore production
company providing Computer Automated Design services and benefits
administration, OFRA (office furniture rental alliance) a national office
furniture rental business, and various not for profit boards including Los Gatos
Little League. Mr. Ferrari graduated from the University of Santa Clara in 1974
with Bachelor of Science degrees in marketing and management.

     PAUL FRIDRICH - Mr. Fridrich is currently the President and CEO of
CyberCopy, a leading provider of document management and distribution in Ventura
County, California. Mr. Fridrich has held this position since he founded the
company in 1997. Prior to CyberCopy, Mr. Fridrich founded Westlake Graphics,
where the rapid growth he engineered resulted in the company's inclusion on the
"Inc. 500" list, signifying its place among the fastest growing privately owned
companies in the nation. He was educated in his native Slovakia in the field of
petro-chemical engineering. He also serves on the Board of Directors of
ReproMAX, the international network of independently owned reprographic
companies and is a member of PIA (Printing Industry Association) and IRgA
(International Reprographic Association).

SECTION 16(A) BENEFICIAL REPORTING COMPLIANCE

     Not Applicable.

CODE OF ETHICS

     The Company's Code of Ethics and Business conduct was filed as Exhibit 14
to the Company's Annual Report on Form 10-KSB for the year ended December 31,
2005. It is also available on our website at www.americantonerserv.com.



                                       33
<PAGE>
<TABLE>
<CAPTION>

ITEM 11.  EXECUTIVE COMPENSATION.

                                       SUMMARY COMPENSATION TABLE
------------------------------------------------------------------------------------------------------------------
                                                                                  Non-
                                                                      Non-Equity  qualified
                                                                      Incentive   Deferred
                                                                      Plan        Compen-     All Other
Name and                                          Stock     Option    Compensa-   sation      Compen-
Principal                               Bonus   Awards(1)  Awards(1)  tion        Earnings    sation       Total
Position            Year  Salary ($)     ($)       ($)        ($)        ($)                     ($)         ($)
------------------  ----  -----------  -------  ---------  ---------  ----------  ----------  ----------  --------
<S>                 <C>   <C>          <C>      <C>        <C>        <C>         <C>         <C>         <C>
Daniel J. Brinker,  2008  $180,000           -   $     -   $32,596(2)     -           -       $ 7,200(4)  $219,796
 CEO *              2007  $176,539           -   $     -   $21,187(3)     -           -       $ 7,200(4)  $204,926
                    2006  $ 30,000(5)        -   $90,517   $ 8,566        -           -       $     -     $129,083

Aaron L. Brinker,   2008  $140,000           -   $     -   $13,150        -           -       $ 9,000(4)  $162,150
 COO                2007  $137,308           -   $     -   $ 6,538        -           -       $ 9,000(4)  $152,846
                    2006  $ 23,333(5)        -   $72,414   $ 3,269        -           -       $12,000     $111,016

Ryan P. Vice, CFO   2008  $120,000           -   $ 3,750   $13,058        -           -       $ 4,200(4)  $141,008
                    2007  $ 95,192           -   $ 7,500   $ 4,704        -           -       $ 4,200(4)  $111,596
                    2006  $ 15,000(6)        -   $ 1,875   $ 2,352        -           -       $12,000     $ 31,227

Andrew Beaurline,   2008  $180,000     $60,150   $     -   $96,523        -           -       $ 7,200(4)  $283,723
 VP of Corporate    2007  $176,539           -   $     -   $93,026        -           -       $ 7,200(4)  $276,765
 Development        2006  $ 58,000           -   $     -   $31,009        -           -       $70,000(7)  $159,009

Michael V. Ducey,   2008  $150,000           -   $     -   $43,154        -           -       $     -     $193,154
 VP of Sales &      2007  $ 89,423           -   $     -   $20,417        -           -       $     -     $109,840
 Marketing          2006  $      -           -   $     -   $     -        -           -       $     -     $      -
------------------------------------------------------------------------------------------------------------------
</TABLE>

* Daniel J. Brinker served as President and Chief Executive Officer until
February 2, 2009.

(1) The value for Stock Awards and Option Awards in the table above represents
the dollar amount recognized for financial reporting purposes for 2008 in
accordance with Statement of Financial Accounting Standards No. 123R, Accounting
for Stock-Based Compensation, ("FAS 123R"). The fair value of the Stock Awards
on the grant date was $0.015 per share, as determined by the Board of Directors.
For Option Awards, the dollar amount for each individual varies depending on the
number of options held, the fair value of such options, and the vesting terms of
such options. See Note 2 of Notes to Audited Financial Statements for the year
ended December 31, 2008 for information on the assumptions used to calculate the
grant date fair value of Option Awards and the expense recognized under FAS
123R.

(2) Of the Option Awards to Daniel J. Brinker, $6,082 relates to his services as
a Director of the Company.

(3) Of the Option Awards to Daniel J. Brinker, $8,109 relates to his services as
a Director of the Company.

(4) All other compensation relates to monthly auto allowances.

(5) This amount had been accrued but not paid as of December 31, 2006. In
February 2007, this person agreed to accept shares of the Company's common stock
in lieu of cash for this amount.

(6) This amount had been accrued but not paid as of December 31, 2006. In
February 2007, Mr. Vice agreed to accept shares of the Company's common stock in
lieu of cash for $12,000 of this amount.


                                       34
<PAGE>

(7) Represents amounts paid to Andrew Beaurline for consulting services
performed from February 2006 to August 2006 prior to becoming the Company's
Senior Vice President of Corporate Development.

EMPLOYMENT ARRANGEMENTS

     We do not currently have any formal employment agreements with current or
proposed Executive Officers.

     Chuck Mache has served as our President and Chief Executive Officer since
February 2, 2009. For the first three months of his employment as President and
CEO, Mr. Mache will be paid a salary of $10,000 per month. At the end of that
period, it is anticipated that a complete compensation arrangement will be
offered to Mr. Mache.

     Daniel Brinker, our Chief Executive Officer and President until February 2,
2009, had a base compensation of $180,000 per year and a $600 monthly auto
allowance. On February 2, 2009, the Board of Directors elected Chuck Mache to
serve as President and Chief Executive Officer of the Company replacing Mr.
Brinker in the position of President. Mr. Brinker will now serve as the
Company's Chairman of the Board.

     Mr. Aaron L. Brinker, our Chief Operating Officer, has a compensation
package that provides for base compensation of $140,000 per year. Mr. Aaron
Brinker's salary will be reviewed annually thereafter by the Board of Director's
compensation committee. Mr. Aaron Brinker has an opportunity to achieve cash
bonus equal to 25% of his base salary and a $750 monthly auto allowance. The
bonus will be based upon criteria set by the Board of Director's compensation
committee.

     Andrew Beaurline, our Senior Vice President of Corporate Development and
Strategy until February 1, 2009, had a compensation package that provides for
base compensation of $180,000 per year and a $600 monthly auto allowance. On
February 12, 2009, the Company entered into a new compensation arrangement with
Mr. Beaurline effective February 1, 2009. Mr. Beaurline will receive an annual
salary of $24,000 and will receive deferred bonuses totaling $33,650 during
2009.

     Ryan Vice, our Chief Financial Officer, has a compensation package that
provides for base compensation of $120,000 per year. Mr. Vice's salary will be
reviewed annually thereafter by the Board of Director's compensation committee.
Mr. Vice has an opportunity to achieve cash bonus equal to 25% of his base
salary and a $350 monthly auto allowance. The bonus will be based upon criteria
set by the Board of Director's compensation committee.


                                       35
<PAGE>
<TABLE>
<CAPTION>

                         2008 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

-------------------------------------------------------------------------------------------------------------------------
                                       Option Awards                                       Stock Awards
                   ---------------------------------------------------------  -------------------------------------------
                                                                                                                Equity
                                                                                                                Incentive
                                                                                                    Equity      Plan
                                                                                                    Incentive   Awards:
                                             Equity                                                 Plan        Market or
                                             Incentive                                              Awards:     Payout
                                             Plan                                                   Number of   Value of
                                             Awards:                                     Market     Unearned    Unearned
                   Number       Number       Number                           Number     Value      Shares,     Shares,
                   of Securi-   of Securi-   of                               of Shares  of Shares  Units       Units
                   ties Under-  lying Un-    Securi-                          or Units   or Units   or Other    or Other
                   lying Un-    exercised    ties Un-                         of Stock   of Stock   Rights      Rights
                   exercised    Options (#)  lying Un-   Option    Option     That       That       That        That
                   Options (#)  -----------  exercised   Exercise  Expir-     Have Not   Have Not   Have Not    Have Not
                   -----------      Un-      Unearned    Price     ation      Vested     Vested     Vested      Vested
Name               Exercisable  exercisable  Options(#)  ($)       Date       ($)        ($)        (#)         ($)
----               -----------  -----------  ----------  --------  ---------  ---------  ---------  ---------   ---------
<S>                <C>          <C>          <C>         <C>       <C>        <C>        <C>        <C>         <C>
Daniel J. Brinker     462,857      900,000                $0.165    7/7/2016

Daniel J. Brinker     300,000      300,000                $0.165   10/2/2016

Daniel J. Brinker       -        1,000,000                $0.230    7/8/2018

Aaron L. Brinker      231,429      450,000                $0.165    7/7/2016

Aaron L. Brinker         -         200,000                $0.230    7/8/2018

Ryan P. Vice          154,286      300,000                $0.150    7/7/2016

Ryan P. Vice             -         500,000                $0.230    7/8/2018

Andrew Beaurline    2,095,238    4,000,000                $0.150   9/19/2016

Andrew Beaurline        -          200,000                $0.230    7/8/2018

Michael V. Ducey      166,667      500,000                $0.600   5/14/2017

Michael V. Ducey        -          750,000                $0.230    7/8/2018

-------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The market value of shares that have not vested was determined by the last
reported sale price of the common stock of $0.29 on December 31, 2008.


COMPENSATION OF DIRECTORS AND ADVISORS

     Members of the Board of Directors do not currently receive any cash
compensation for their services as Directors. However, some of our Directors
have received consulting fees from the Company and certain Directors have
received options to purchase shares of our Common Stock. To attract and keep
Board members the Company may grant options to Board members in the future.

     On February 9, 2007 the Board granted options to purchase 100,000 shares to
four individuals comprised of Bryan Thomas, Rick Bosworth, Gene Klein and David
Ferrari to serve on its Strategic Advisory Board. These options are exercisable
at $0.40 a share and will vest equally over the twelve month term. These
agreements are cancelable by either party without notice after 30 days.


                                       36
<PAGE>
<TABLE>
<CAPTION>

     On August 13, 2007, the Board of Directors granted options to Steven R.
Jensen, a director, to purchase 300,000 shares of common stock. The exercise
price of these options was $0.36 per share with a vesting period of 30 months.

     On November 28, 2007, the Board of Directors granted options to Chuck
Mache, a director, to purchase 300,000 shares of common stock. The exercise
price of these options was $0.20 per share with a vesting period of 24 months.

     On April 10, 2008, the Board of Directors granted options to Chuck Mache,
Chairman of the Board, to purchase 2,000,000 shares of common stock. The
exercise price of these options was $0.28 per share with a vesting period of 48
months.

     On July 8, 2008, the Board of Directors granted options to William A.
Robotham, director and Thomas Hakel, director, to purchase 300,000 shares of
common stock. The exercise price of these options was $0.23 per share with a
vesting period of 48 months.


---------------------------------------------------------------------------------------------
                               2008 DIRECTOR COMPENSATION TABLE

                                                                   Non-
                                                     Non-Equity  qualified
                      Fees                           Incentive   Deferred     All
                   Earned or                            Plan      Compen-    Other
                    Paid in      Stock     Option      Compen-    sation    Compen-
                      Cash     Awards(1)  Awards(1)    sation    Earnings   sation    Total
      Name            ($)         ($)       ($)          ($)        ($)       ($)      ($)
----------------  -----------  ---------  ---------  ----------  ---------  -------  --------
<S>               <C>          <C>        <C>        <C>         <C>        <C>      <C>
Chuck Mache       $ 60,000(6)  $       -  47,068(2)                                  $107,068

William Robotham  $  -0-               -  13,122(3)                                  $ 13,122

Thomas Hakel      $ 15,000(6)          -  13,122(4)                                  $ 28,122

Steven R. Jensen  $  -0-               -   3,068(5)                                  $  3,068
</TABLE>

(1) The value for Option Awards in the table above represents the dollar amount
recognized for financial reporting purposes for 2008 in accordance with FAS No.
123R. The dollar amount for each individual varies depending on the number of
options held, the fair value of such options, and the vesting terms of such
options. See Note 2 of Notes to Audited Financial Statements for the year ended
December 31, 2008 for information on the assumptions used to calculate the grant
date fair value of Option Awards and the expense recognized under FAS 123R.

(2) As of December 31, 2008, $187,118 of the Option Awards held by Mr. Mache
were unvested.

(3) As of December 31, 2008, $35,081 of the Option Awards held by Mr. Robotham
were unvested.

(4) As of December 31, 2008, $35,081 of the Option Awards held by Mr. Hakel were
unvested.


                                       37
<PAGE>

(5) As of December 31, 2008, $2,315 of the Option Awards held by Mr. Jensen were
unvested.

(6) Represents amounts paid for consulting services performed for the Company.

2005 STOCK INCENTIVE PLAN

     On December 15, 2005, the Board of Directors adopted a new Stock Incentive
Plan (the "2005 Plan"), which was approved by our shareholders in February 2006.
The 2005 Plan allows the Board of Directors to grant stock options from time to
time to employees, officers and directors of the Company and service providers
(consultants) to American TonerServ. The Board of Directors has the power to
determine at the time the option is granted whether the option will be an
Incentive Stock Option (an option that qualifies under Section 422 of the
Internal Revenue Code of 1986) or an option that is not an Incentive Stock
Option. However, Incentive Stock Options will only be granted to persons who are
employees or officers of American TonerServ. The Board of Directors determines
vesting provisions at the time options are granted. In July 2006, the
shareholders approved an increase in the total number of shares of Common Stock
subject to options under the 2005 Plan from 2,500,000 to 7,000,000 shares (after
giving effect to the ten for one (10 for 1) stock split), subject to adjustment
in the event of certain recapitalizations, reorganizations and so forth. On
September 29, 2006, the Board of Directors and our shareholders approved an
increase in the total number of shares of Common Stock subject to options under
the 2005 Plan from 7,000,000 to 8,400,000 shares, subject to adjustment in the
event of certain recapitalizations, reorganizations and so forth. On April 19,
2007, the Board of Directors authorized a 1,600,000 increase in the plan to
10,000,000 shares, which was approved by a majority of the stockholders. The
total number of shares authorized to be granted under the 2005 plan was
10,000,000 at December 31, 2008. The option price must be satisfied by the
payment of cash and will be no less than 100% of the fair market value of the
Common Stock on the date the option is granted for Incentive Stock Options and
85% of the market value for non-qualified options.

     During 2008, a total of 717,600 options to purchase shares of common stock
were granted under the 2005 Stock Incentive Plan, of which 350,000 options were
granted to non-employees and vest equally over a twelve to twenty-four month
period. The remaining 367,600 of options to purchase shares were granted to
directors, officers and employees of the Company. A total of 415,586 options to
purchase shares were forfeited due to termination of employment.

2008 STOCK INCENTIVE PLAN

     On April 10, 2008, the Board of Directors adopted a new Stock Incentive
Plan (the "2008 Plan"), which was approved by our shareholders in April 2008.
The 2008 Plan allows the Board of Directors to grant stock options from time to
time to employees, officers and directors of the Company and service providers
(consultants) to American TonerServ. The Board of Directors has the power to
determine at the time the option is granted whether the option will be an
Incentive Stock Option (an option that qualifies under Section 422 of the
Internal Revenue Code of 1986) or an option that is not an Incentive Stock
Option. However, Incentive Stock Options will only be granted to persons who are
employees or officers of American TonerServ. The Board of Directors determines
vesting provisions at the time options are granted.


                                       38
<PAGE>

     During 2008, a total of 5,800,000 options to purchase shares of common
stock were granted under the 2008 Stock Incentive Plan. All of these options to
purchase shares were granted to directors, officers and employees of the
Company. A total of 1,500,000 options to purchase shares have been reserved for,
but not issued to, iPrint Technologies, Inc. as part of the Company's asset
purchase agreement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

     The following table sets forth the number and percentage of shares of our
$.001 par value common stock and preferred shares owned beneficially, as of
March 2, 2009, by any person who is known by us to be the beneficial owner of 5%
or more of such common stock, by all Directors and Executive Officers
individually, and by all Directors and Executive Officers as a group.
Information as to beneficial ownership is based upon statements furnished to us
by such persons.

                                      Amount of
Name and Address                      Beneficial             Percentage
of Beneficial Owner                   Ownership               of Class
-------------------                  --------------          ----------
BRAM Enterprises (1)                  6,802,894 (1)             8.7%
3550 Round Barn Blvd, Suite 100
Santa Rosa, CA 95403

Daniel J. Brinker                     7,034,165 (2)             9.0%
420 Aviation Blvd., Suite 103
Santa Rosa, CA  95403

Aaron L. Brinker                      4,396,620 (3)             5.7%
729 Cumberland Ct.
Pleasant Hill, CA 94523

Thomas Hakel                          4,103,580 (4)             5.2%
1020 Blue Oak Pl.
Santa Rosa, CA 95404

William A. Robotham                   7,645,840 (5)             9.7%
3550 Round Barn Blvd, Suite 100
Santa Rosa, CA 95403

Lynn J. Brinker                       4,112,457 (6)             5.3%
77 875 Seminole Rd.
Indian Wells, CA 92210

James Laier                           8,413,315 (7)            10.6%
1080 Airport Blvd.
Santa Rosa, CA 95403

Chuck Mache                           3,150,647 (8)             4.0%
1004 Slate Drive
Santa Rosa, CA  95405


                                       39
<PAGE>


Ryan Vice                             1,214,952 (9)             1.6%
PO Box 1989
Santa Rosa, CA 95402

iPrint Technologies, Inc.             6,047,953 (10)            7.8%
980 Magnolia Ave., Ste. 5
Larkspur, CA  94939

Robert Stanley Colliss                7,500,000 (11)            9.3%
  2006 Family Trust
9100 Skyway
Paradise, CA  95969

Andrew Beaurline                      2,684,263 (12)            3.4%
2149 - 48th Avenue
San Francisco, CA 94116

Michael V. Ducey                        355,952 (13)            0.5%
148 Sontag Dr
Franklin TN 37064

Steve Jensen                          5,290,000 (14)            6.7%
6041 Siesta Lane
Port Richey, Florida 34668

All Directors and Officers           35,876,020                45.7%
as a group (7 persons)
---------------------

(1) Includes 5,928,387 common shares held directly by BRAM Enterprises, a
general partnership in which Lynn Brinker and William A. Robotham are equal
partners, 745,197 shares that are issuable under warrants held by BRAM
Enterprises.

(2) Includes 5,517,022 common shares held directly by Daniel J. Brinker; 892,143
shares issuable on exercise of options held by Daniel J. Brinker that are
exercisable within 60 days; and 625,000 shares that are issuable under warrants
held by Daniel J. Brinker.

(3) Includes 4,121,977 common shares held directly by Aaron L. Brinker and
274,643 shares issuable on exercise of options held by Aaron L. Brinker that are
exercisable within 60 days.

(4) Includes 2,775,455 common shares held directly by Thomas Hakel; 356,250
shares issuable upon exercise of options held by Thomas Hakel within 60 days;
and 971,875 shares that are issuable under warrants held by Mr. Hakel.

(5) Includes 2,800,643 common shares held by William A. Robotham; 356,250 shares
issuable on exercise of options held by Mr. Robotham within 60 days; 3,401,447
of the common shares held by BRAM Enterprises in which Mr. Robotham is a
partner; and 1,087,500 shares that are issuable under warrants held by Mr.
Robotham.

(6) Includes 711,010 common shares held by Lynn Brinker; and 3,401,447 of the
common shares held by BRAM Enterprises in which Mr. Lynn Brinker is a partner.


                                       40
<PAGE>


(7) Includes 5,634,891 common shares held by James Laier and 2,778,424 shares
that are issuable under warrants held by Mr. Laier.

(8) Includes 1,342,939 common shares held directly by Chuck Mache; 909,375
shares that are issuable under warrants held by Chuck Mache and 898,333 issuable
on exercise of options held by Mr. Mache that are exercisable within 60 days.

(9) Includes 1,005,667 common shares held directly by Ryan Vice and 209,285
issuable on exercise of options held by Mr. Vice that are exercisable within 60
days.

(10) Includes 5,847,953 common shares held by iPrint Technologies, Inc. and
200,000 shares that are issuable under warrants held by iPrint Technologies,
Inc..

(11) Includes 4,200,000 common shares held by The Robert Colliss 2006 Family
Trust and 3,300,000 shares that are issuable under warrants held by The Robert
Colliss 2006 Family Trust.

(12) Includes 245,922 common shares held directly by Andrew Beaurline and
2,395,238 issuable on exercise of options held by Mr. Beaurline that are
exercisable within 60 days.

(13) Includes 100,000 common shares held directly by Mr. Ducey; and 255,952
issuable on exercise of options held by Mr. Ducey that are exercisable within 60
days.

(14) Includes 3,300,000 common shares held directly by Steve Jensen; 190,000
issuable on exercise of options held by Mr. Jensen that are exercisable within
60 days; and 1,800,000 shares that are issuable under warrants held by Mr.
Jensen.



                                       41
<PAGE>
<TABLE>
<CAPTION>

EQUITY COMPENSATION PLAN INFORMATION

     The following table provides information about the Common Stock that may be
issued upon the exercise of options, warrants and rights under all of our
existing equity compensation plans as of December 31, 2008.


-------------------------------------------------------------------------------------
                                                                   Number of
                                                                   Securities Remain-
                                                                   ing Available for
                                                                   Future Issuance
                     Number of Secure-                             Under Equity
                     ties to be Issued      Weighted-Average       Compensation Plans
                     upon Exercise of       Exercise Price of      (excluding secure-
                     Outstanding Options,   Outstanding Options,   ties reflected
                     Warrants and Rights    Warrants and Rights    in column (a))
Plan Category             (a)                     (b)                    (c)
-------------------------------------------------------------------------------------
<S>                  <C>                    <C>                    <C>
Equity Compensation
Plans approved by       15,929,383               $0.210               1,700,000
Stockholders
-------------------------------------------------------------------------------------
Equity compensation
plans not approved         725,000               $0.244                    -
by Stockholders
-------------------------------------------------------------------------------------
</TABLE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


     On December 28, 2007, the Company sold six units of a note offering, each
unit consisting of a $25,000 promissory note and 50,000 redeemable warrants at a
purchase price of $25,000 per unit (the "Note Unit") to William Robotham,
Director, (three Note Units); Chuck Mache, Director (one Note Unit); Thomas
Hakel, Director, (one Note Unit); and Michael Ducey, Senior Vice President of
Sales and Marketing, (one Note Unit).

     On March 31, 2008, Chuck Mache, Director, Thomas Hakel, Director, and
Michael Ducey, Senior Vice President of Sales and Marketing, converted their one
Note Unit that was purchased on December 28, 2007, into the Company's common
stock and warrant offering.

     On April 8, 2008, William Robotham, director, converted $100,000 of an
advance to Company into one unit of the Company's convertible note offering.
Each unit consisted of a $100,000 note with 57,500 warrants and is convertible
into a future equity offering of the Company.

     At December 31, 2007, the Company had outstanding payables to Daniel
Brinker, President and Chief Executive Officer, of $61,095, Thomas Hakel,
Director, of $215,000 and William Robotham, Director of $155,000. Dan Brinker
was repaid $50,000 in January 2008. Thomas Hakel was repaid $35,000 in February
2008 and $100,000 in May of 2008. William Robotham converted $100,000 of his
advances into the Company's Convertible Note and Warrant offering.

     On August 8, 2008, the board of directors retroactively approved interest
from June 2007 forward of eight percent per annum on the advances made to the
Company by William Robotham and Thomas Hakel.

     At December 31, 2008, the Company had outstanding payables to Daniel
Brinker, President and Chief Executive Officer, of $3,595, Thomas Hakel,
Director, of $80,000 and accrued interest of $16,296 and William Robotham,


                                       42
<PAGE>


Director of $90,000 and accrued interest of $17,678. These payables related to
advances for operating capital to the Company during the Company's transition
into a public company and during the implementation of the Company's acquisition
strategy.

     In October of 2008, the Company extended its line of credit with a bank to
support Stand-By Letters of Credit for $835,000. The guaranties of Daniel J.
Brinker, William Robotham and Thomas Hakel, directors of the Company, continued
on this line of credit.

     During the period from October to December 2008, Daniel J. Brinker, William
Robotham, Thomas Hakel and Chuck Mache, directors the Company, guaranteed
convertible notes that were sold in a private offering. As compensation for
providing the guarantees, the directors received a total of 2,393,750 warrants
to purchase shares of the Company's common stock at $0.30 per share through
January 2012. The total compensation recorded during this period was $227,543.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

     The following table presents aggregate fees for professional services
rendered by Perry-Smith LLP for the audit of the Company's annual financial
statements for the fiscal years ended December 31, 2008 and December 31, 2007.
Fees billed for other services rendered by them during those periods are also
included.


                                   2008            2007
                                 ---------       ---------
Audit Fees (1)                   $ 181,000       $ 163,000
All Other Fees (2)               $  78,000       $    --
                                 ---------       ---------
     Total                       $ 259,000       $ 163,000
                                 ---------       ---------

(1) These are fees for professional services performed by Perry-Smith LLP for
the audit of the Company's annual financial statements included in the Company's
Annual Report on Forms 10-K and 10-KSB and the review of financial statements
included in the Company's reports on Forms 10-Q and 10-QSB and services that are
normally provided by the accountant in connection with statutory and regulatory
filings for those fiscal years.

(2) These are fees for professional services rendered for the audit of iPrint
Technologies, Inc.

AUDIT COMMITTEE PRE-APPROVAL POLICY

     The Company's independent accountants may not be engaged to provide
non-audit services that are prohibited by law or regulation to be provided by
it, nor may the Company's principal accountant be engaged to provide any other
non-audit service unless it is determined that the engagement of the principal
accountant provides a business benefit resulting from its inherent knowledge of
the Company while not impairing its independence. The Audit Committee must
pre-approve the engagement of the Company's principal accountant to provide both
audit and permissible non-audit services. No non-audit services were provided by
the independent accountants during the past two fiscal years.



                                       43
<PAGE>

                                     PART IV


ITEM 15.  EXHIBITS

EXHIBIT
NUMBER     DESCRIPTION
--------   -----------

2.1        Asset Purchase Agreement dated as of April 1, 2007, among
           Optima Technologies, LLC, a Delaware limited liability
           company, American TonerServ Corp., a Delaware corporation,
           Optima Technologies, L.L.C., a Nevada limited liability
           company ("seller"), and Steven R. Jensen. (11)

2.2        Asset Purchase Agreement dated as of December 19, 2007,
           Among TT Acquisition, LLC, a Delaware limited liability
           company, American Tonerserv Corp., a Delaware corporation,
           Tonertype of Florida, LLC, a Florida limited liability
           company, and David T. Shaver and Clyde C. Shaver (13)

2.3        Asset Purchase Agreement dated as of October 31, 2008, among
           American TonerServ Corp., iPrint Technologies, LLC, a Delaware
           limited liability company, iPrint Technologies, Inc., a California
           corporation, Chad Solter, Darrell Tso, and Scott Muckley. (17)


3.1        Certificate of Incorporation, as amended (1)

3.2        Bylaws (1)

3.3        Certificate of Amendment filed January 3, 2005 (1)

3.4        Certificate of Amendment filed March 16, 2006 (3)

3.5        Certificate of Amendment filed August 21, 2006 (4)

3.6        Certificate of Designations, Preferences and Rights of
           Series C Convertible Preferred Stock (5)

10.1       1995 Stock Incentive Plan, as amended (1)

10.2       Office Lease Agreement between Monroe Forsyth, Inc. and
           American TonerServ Corp. - Filed herewith electronically.

10.4       Customer List Purchase Agreement with Computech Print
           Solutions, Inc. (6)

10.5       Convertible Promissory Note issued to Computech Print
           Solutions, Inc. (6)

10.6       Stock Compensation Agreement with Daniel J. Brinker (7)

10.7       Stock Compensation Agreement with Thomas Hakel (7)

10.8       Stock Compensation Agreement with Aaron L. Brinker (7)


                                       44
<PAGE>


10.9       Stock Compensation Agreement with William A. Robotham (7)

10.10      Stock Compensation Agreement with Basilio Chen (7)

10.11      Employment Letter with Daniel J. Brinker (7)

10.12      Employment Letter with Aaron L. Brinker (7)

10.13      Employment Letter with Ryan Vice (7)

10.14      Stock Repurchase Right Agreement with Ryan Vice (7)

10.15      Corporate Development and Consulting Agreement with Fort
           Holdings Ltd. (7)

10.16      Employment Letter with Andrew A. Beaurline (8)

10.17      Form of 10% Convertible Note for 2006 Offering (8)

10.18      Form of Warrant to Purchase Common Stock for 2006
           Offering (8)

10.19      Form of Registration Rights Agreement for 2006 Offering (8)

10.20      Customer List Purchase Agreement with Brody Enterprises (9)

10.21      Promissory Note issued to Brody Enterprises (9)

10.22      Consulting Agreement with Arnold Brody (9)

10.23      Stock Compensation Agreement dated February 26, 2007 with
           Daniel J. Brinker (10)

10.24      Stock Compensation Agreement dated February 26, 2007 with
           Ryan Vice (10)

10.25      Stock Compensation Agreement dated February 26, 2007 with
           Aaron L. Brinker (10)

10.26      Stock Compensation Agreement dated February 26, 2007 with
           Andrew A. Beaurline (10)

10.27      Secured Promissory Note to Optima Technologies, L.L.C. (11)

10.28      Contingent Promissory Note to Optima Technologies,
           L.L.C. (11)

10.29      Convertible Promissory Note to Optima Technologies,
           L.L.C.  (11)

10.30      Management Agreement with Optima Technologies, L.L.C. and
           Steven R. Jensen. (11)

10.31      Management Agreement with Axon Technologies, Inc. (11)

10.32      Employment Letter with Michael V. Ducey (12)



                                       45
<PAGE>


10.33      Termination of Amended and Restated Management Agreement
           with Azaria Management Group, LLC (16)

10.34      Additional Convertible Note with Azaria Management Group,
           LLC (16)

10.35      Modified Convertible Note with Azaria Management Group,
           LLC (16)

10.36      Short-Term Promissory Note to Tonertype of Florida, LLC (13)

10.37      Installment Promissory Note to Tonertype of Florida,
           LLC (13)

10.38      Contingent Convertible Promissory Note to Tonertype of
           Florida, LLC (13)

10.39      Consulting Agreement with After Market Support, LLC (14)

10.40      Mutual Termination Agreement with After Market Support, LLC (15)

10.41      Consulting Agreement with Tom Hakel (16)

10.42      Coaching and Consulting Agreement with Chuck Mache (16)

10.43      2008 Nonqualified Stock Incentive Plan (17)

10.44      Asset Based Loan Agreement with Celtic Capital Corporation (18)

10.43      Promissory Note due November 30, 2008 to iPrint Technologies, Inc.
           (19)

10.44      Short-Term Promissory Note No. 1 to iPrint Technologies, Inc. (19)

10.45      Short-Term Promissory Note No. 2 to iPrint Technologies, Inc. (19)

10.46      Long-Term Promissory Note to iPrint Technologies, Inc. (19)

10.47      Security Agreement with iPrint Technologies, Inc. (19)

10.48      Modification of Secured Contingent Promissory Note No. 1,
           Secured Contingent Promissory Note No. 2 and Secured Convertible
           Contingent Promissory Note with iPrint Technologies, Inc. - Filed
           herewith electronically

10.49      Modified Secured Promissory Note with iPrint Technologies, Inc. -
           Filed herewith electronically

10.50      Engagement Agreement with Monarch Bay Associates, LLC, as amended -
           Filed herewith electronically

10.51      Compensation Plan effective February 1, 2009 with Andrew Beaurline
           (20)

10.52      Compensation Plan effective February 1, 2009 with Michael V. Ducey
           (20)

10.53      Letter agreement with Azaria Management Group and Steven Jensen to
           amend promissory note (21)


                                       46
<PAGE>

21         Subsidiaries of the Registrant - Filed herewith electronically

23.2       Consent of Perry-Smith LLP, Independent Registered Public Accounting
           Firm - Filed herewith electronically

14         Code of Ethics (2)

31.1       Certification of Chief Executive Officer Pursuant to Section 302 of
           the Sarbanes-Oxley Act of 2002 - Filed herewith electronically

31.2       Certification of Principal Financial Officer Pursuant to Section 302
           of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically

32.1       Certification of Chief Executive Officer Pursuant to Section 18
           U.S.C. Section 1350 - Filed herewith electronically

32.2       Certification Principal Financial Officer of Pursuant to Section 18
           U.S.C. Section 1350 - Filed herewith electronically

---------------
(1)  Incorporated by reference to the Company's Form SB-2 registration statement
     SEC File No. 333-120688.

(2)  Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the year ended December 31, 2005.

(3)  Incorporated by reference to the Company's Report on Form 8-K dated March
     16, 2006.

(4)  Incorporated by reference to the Company's Report on Form 8-K dated August
     21, 2006.

(5)  Incorporated by reference to the Company's Report on Form 8-K dated May 15,
     2006.

(6)  Incorporated by reference to he Company's Report on Form 8-K dated July 5,
     2006.

(7)  Incorporated by reference to the Company's Report on Form 8-K dated July 7,
     2006.

(8)  Incorporated by reference to the Company's Report on Form 8-K dated
     September 18, 2006.

(9)  Incorporated by reference to the Company's Report on Form 8-K dated
     December 20, 2006.

(10) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the year ended December 31, 2006.

(11) Incorporated by reference the Company's Report on Form 8-K dated March 31,
     2007.


                                       47
<PAGE>


(12) Incorporated by reference the Company's Report on Form 8-K dated May 14,
     2007.

(13) Incorporated by reference the Company's Report on Form 8-K dated December
     19, 2007.

(14) Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
     for the quarter ended September 30, 2007.

(15) Incorporated by reference the Company's Report on Form 8-K dated March 6,
     2008.

(16) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the year ended December 31, 2007.

(17) Incorporated by reference to the Company's Report on Form 8-K dated April
     10, 2008.

(18) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended June 30, 2008.

(19) Incorporated by reference the Company's Report on Form 8-K dated October
     31, 2008.

(20) Incorporated by reference the Company's Report on Form 8-K dated February
     12, 2009.

(21) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended March 31, 2008.




                                       48
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
American TonerServ Corp.
Santa Rosa, California

     We have audited the accompanying consolidated balance sheets of American
TonerServ Corp. and subsidiaries (the "Company") as of December 31, 2008 and
2007, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the two years in the period ended December
31, 2008. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

     We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
American TonerServ Corp. and subsidiaries as of December 31, 2008 and 2007, and
the consolidated results of their operations, stockholders' equity and their
cash flows for each of the two years in the period ended December 31, 2008, in
conformity with accounting principles generally accepted in the United States of
America.

     The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
17 to the consolidated financial statements, the Company has suffered recurring
losses from operations resulting in an accumulated deficit of $22,219,836.
Current liabilities exceed its total current assets at December 31, 2008 by
$4,973,437. This raises substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters is
described in Note 17. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



                                                     /s/ Perry-Smith LLP



Sacramento, California
March 31, 2009




<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Consolidated Balance Sheets

                                                  December 31,    December 31,
                                                      2008            2007
                                                  ------------    ------------
ASSETS
Current assets
 Cash and cash equivalents                        $      4,033    $     60,196
 Accounts receivable, net                            2,753,445       1,326,891
 Inventory                                             774,747         715,328
 Prepaid expenses and other current assets              75,716          33,127
 Deferred compensation                                  73,275         471,298
                                                  ------------    ------------
     Total current assets                            3,681,216       2,606,840
                                                  ------------    ------------
 Intangible assets, net                              4,058,036       4,002,862
 Goodwill                                            6,935,468       1,801,895
 Property and equipment, net                           644,477         394,745
 Other assets                                           80,044          29,959
                                                  ------------    ------------
     Total assets                                 $ 15,399,241    $  8,836,301
                                                  ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
 Cash overdraft                                   $     39,381    $       --
 Accounts payable and accrued expenses               3,030,599       1,767,997
 Shareholder advances                                  173,595         431,095
 Line of credit                                      1,346,722            --
 Notes payable - current portion
  (net of unamortized discount of $194,937
  and $223,120 at December 31, 2008 and
  December 31, 2007)                                 2,080,865       2,068,033
 Convertible notes payable, current portion
  (net of unamortized discount of $147,566
  and $0 at December 31, 2008 and
  December 31, 2007)                                 1,782,712         187,500
 Convertible notes payable, related parties -
  current portion (net of unamortized
  discount of $1,466)                                  123,534          31,250
 Notes payable, related parties -
  current portion                                         --           150,000
 Deferred revenue                                       77,245          92,589
                                                  ------------    ------------
     Total current liabilities                       8,654,653       4,728,464
                                                  ------------    ------------
Long-term Liabilities
 Notes payable (net of unamortized discount
   of $244,016 and $343,815 at December 31,
   2008 and December 31, 2007)                         929,842       1,281,400
 Convertible notes payable(net of unamortized
   Discount of $669,042 and $0 at
   December 31, 2008 and December 31, 2007)          2,926,524         925,000
 Warrant liabilities                                   639,193         119,700
                                                  ------------    ------------

                                      F-1
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Consolidated Balance Sheets (continued)



 Total long-term liabilities                         4,495,559       2,326,100
                                                  ------------    ------------
     Total liabilities                              13,150,212       7,054,564
                                                  ------------    ------------
 Commitments and contingencies

Stockholders' equity
 Common stock
  77,045,995 and 60,390,956 shares issued and
  outstanding at December 31, 2008 and
  December 31, 2007                                     77,046          60,391
 Additional paid-in capital                         24,391,819      19,300,186
 Accumulated deficit                               (22,219,836)    (17,578,840)
                                                  ------------    ------------
     Total stockholders' equity                      2,249,029       1,781,737
                                                  ------------    ------------
     Total liabilities and stockholders' equity   $ 15,399,241    $  8,836,301
                                                  ============    ============










See notes to the consolidated financial statements.

                                      F-2
<PAGE>


AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Consolidated Statements of Operations

                                               December 31,    December 31,
                                                   2008            2007
                                               ------------    ------------
Revenues
 Toner                                         $  9,858,739    $  3,203,894
 Service                                          2,886,895         426,637
                                               ------------    ------------
Total revenues                                   12,745,634       3,630,531
                                               ------------    ------------
Cost of sales
 Toner                                            7,222,704       2,116,802
 Service                                          1,030,107         420,046
 Inventory write-down                                  --            68,500
                                               ------------    ------------
Total cost of sales                               8,252,811       2,605,348
                                               ------------    ------------
Gross profit                                      4,492,823       1,025,183

Operating Expenses
 Salaries and wages                               2,958,862       1,645,877
 Professional fees and services                   1,416,084       1,346,706
 Sales and marketing                              1,008,034         409,763
 General and administrative                       1,756,826       1,334,711
 Amortization of intangible assets                  646,136         338,173
                                               ------------    ------------
Total operating expenses                          7,785,942       5,075,230
                                               ------------    ------------
Loss from operations                             (3,293,119)     (4,050,047)
                                               ------------    ------------
Other Income (Expense)
 Fair value of convertible debt                    (293,750)         85,417
 Termination of management agreement                   --          (550,000)
 Interest expense                                  (901,641)       (260,267)
 Change in fair value of warrant liabilities       (159,774)        (71,873)
 Other income                                         7,288          14,445
                                               ------------    ------------
Net loss                                       $ (4,640,996)   $ (4,832,325)
                                               ============    ============
Net loss per share
 Basic and diluted                             $      (0.07)   $      (0.16)
                                               ============    ============

Weighted average shares
 Basic and diluted                               66,464,308      29,373,589
                                               ============    ============



See notes to the consolidated financial statements.

                                      F-3
<PAGE>
<TABLE>
<CAPTION>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
Years Ended December 31, 2008 and 2007

                                                         Preferred                  Additional
                             Common Stock                  Stock                     Paid-in        Accumulated
                                Shares        Amount       Shares       Amount        Amount          Deficit         Total
                             ------------    --------    ----------    --------    ------------    ------------    -----------
<S>                          <C>             <C>         <C>           <C>         <C>             <C>             <C>
January 1, 2007                22,781,880    $ 22,782     1,117,884    $  1,118    $ 11,859,471    $(12,746,515)   $  (863,144)

Issuance of common stock        9,710,000       9,710          --          --         2,417,790            --        2,427,500
 with warrants valued at
 $477,227

Issuance of common stock        1,071,847       1,071          --          --           406,354            --          407,425

Issuance of common stock-
 restricted                     3,000,000       3,000          --          --              --              --            3,000

Exchange of notes and
 interest for common stock      4,298,669       4,299          --          --         1,070,369            --        1,074,668
 with warrants valued at
 $210,155

Sale of preferred c shares           --          --         834,971         835       2,587,412            --        2,588,247

Conversion of preferred
 shares into common stock      19,528,560      19,529    (1,952,855)     (1,953)        (17,576)           --             --

Stock compensation from
 options                             --          --            --          --           281,615            --          281,615

Stock compensation from
 restricted stock                    --          --            --          --           694,751            --          694,751

Net loss                             --          --            --          --              --        (4,832,325)    (4,832,325)
                             ------------    --------    ----------    --------    ------------    ------------    -----------
December 31, 2007              60,390,956      60,391          --          --        19,300,186     (17,578,840)     1,781,737


Issuance of common stock
 with warrants valued at
 $213,489                       7,163,333       7,163          --          --         1,837,837            --        1,845,000

Issuance of common stock-
 related to iPrint
 acquisition                    6,097,953       6,098          --          --         1,566,402            --        1,572,500

Issuance of common stock-
 exchanged for convertible
 notes                          3,645,922       3,646          --          --           796,354            --          800,000

Common stock issued for
 services                         510,000         510          --          --           130,490            --          131,000

Issuance of common stock          169,484         170          --          --            50,446            --           50,616

Warrants issued as
 compensation                        --          --            --          --           296,137            --          296,137

Stock compensation from
 options                             --          --            --          --           434,693            --          434,693

Warrants exercised              1,000,000       1,000          --          --           149,000            --          150,000

Stock options exercised           135,714         136          --          --            20,221            --           20,357

Shares cancelled               (3,050,000)     (3,050)         --          --          (448,200)           --         (451,250)

Stock compensation from
 restricted stock                 982,633         982          --          --           258,253            --          259,235

Net loss                             --          --            --          --              --        (4,640,996)    (4,640,996)
                             ------------    --------    ----------    --------    ------------    ------------    -----------
December 31, 2008              77,045,995    $ 77,046          --          --      $ 24,391,819    $(22,219,836)   $ 2,249,029
                             ============    ========    ==========    ========    ============    ============    ===========
</TABLE>

See notes to the consolidated financial statements

                                      F-4
<PAGE>


AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
                                                     Years Ended December 31,
                                                       2008          2007
                                                   -----------    -----------
Cash flows from operating activities
 Net loss                                          $(4,640,996)   $(4,832,325)

Adjustments to reconcile net loss to net
 cash used in operating activities
  Depreciation                                         144,455         32,650
  Amortization                                         646,136        338,173
  Accretion of notes discount                          357,118         97,124
  Change in fair value of warrant liability            159,774         71,873
  Fair value of convertible debt                       293,750        (85,417)
  Gain on sale of property and equipment                (7,222)          --
  Gain on claims settlement                                (66)       (14,445)
  Stock based compensation                             952,338        929,295
  Termination of mgmt agreement settled in stock          --          450,000
  Inventory write-down                                    --           68,500
  Provision for doubtful accounts                       37,822         36,356

Changes in operating assets and liabilities
  (Increase) decrease in assets
  Accounts receivable                                 (266,884)      (709,032)
  Inventory                                           (216,573)      (166,497)
  Prepaid expenses and other current assets             (9,209)       (37,582)
  Other assets                                         (32,232)          --
  Deposits                                                --            7,110
 Increase (decrease) in liabilities
  Accounts payable and accrued expenses                433,727        918,265
  Deferred revenue                                     (15,344)        90,607
                                                   -----------    -----------
     Net cash used in operating activities          (2,163,406)    (2,805,345)
                                                   -----------    -----------
Cash flows from investing activities
 Acquisitions, net of cash acquired                 (1,665,077)    (2,522,990)
 Purchase of property and equipment                   (187,820)       (31,953)
 Proceeds from sale of assets                            8,392           --
                                                   -----------    -----------
     Net cash used in investing activities          (1,844,505)    (2,554,943)
                                                   -----------    -----------
Cash flows from financing activities
 Bank overdraft                                         39,381         58,811
 Proceeds from issuance of preferred stock                --        2,575,000
 Proceeds from issuance of common stock              1,458,000      2,171,840
 Issuance of notes payable                           1,045,760        355,000
 Proceeds from issuance of convertible notes
  payable                                            3,315,000        400,000
 Proceeds from shareholder advances                    251,345        645,000
 Payment of shareholder advances                      (408,845)          --
 Payment of convertible notes                         (100,000)       (50,000)
 Payment of notes payable                           (3,162,972)      (847,576)
 Exercise of warrants and options                      170,357           --
 Net proceeds from revolving line of credit          1,343,722           --
                                                   -----------    -----------
     Net cash provided by financing activities       3,951,748      5,308,075
                                                   -----------    -----------
     Net decrease in cash                              (56,163)       (52,213)
                                                   -----------    -----------
Cash and cash equivalents, beginning of period          60,196        171,220
                                                   -----------    -----------
Cash and cash equivalents, end of period           $     4,033    $    60,196
                                                   ===========    ===========


                                      F-5
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)

                                                    Years Ended December 31,
                                                      2008           2007
                                                  ------------   ------------
Supplementary information:
 Interest paid                                    $    611,000   $    163,222
                                                  ============   ============

Income taxes paid                                 $       --     $        800
                                                  ============   ============

Supplemental schedule of non-cash investing and
 financing activities:

Common stock issued on conversion of advances,
 notes payable and interest                       $       --     $  1,374,667
                                                  ============   ============

Issuance of notes payable and warrants
 for acquisitions                                 $  2,922,227   $  3,866,559
                                                  ============   ============

Deferred compensation on restricted stock and
 option grants to (returns from )
 non-employees                                    $   (435,750)  $    397,922
                                                  ============   ============

Issuance of common stock to settle accounts
 payable                                          $     14,247   $    177,000
                                                  ============   ============

Issuance of preferred stock to settle accounts
 payable                                          $       --     $     13,248
                                                  ============   ============

Reduction of purchase price of customer lists     $       --     $    225,705
                                                  ============   ============

Issuance of common stock in exchange
 for consulting services                          $    131,000   $       --
                                                  ============   ============

Conversion of notes payable into common
 stock                                            $    175,000   $       --
                                                  ============   ============

Conversion of convertible notes payable
 into common stock                                $  1,025,000   $       --
                                                  ============   ============
Conversion of shareholder advance
 into convertible note with warrants              $    100,000   $       --
                                                  ============   ============


See notes to the consolidated financial statements.

                                      F-6
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)

                                                    Years Ended December 31,
                                                      2008           2007
                                                  ------------   ------------

Issuance of common stock for iPrint               $  1,572,500   $       --
                                                  ============   ============

Issuance of commons stock with note offering      $     36,370   $       --
                                                  ============   ============















See notes to the consolidated financial statements.

                                      F-7
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

1.   The Company

Organization and Business Activity:

     Managed Maintenance Systems, Inc. was incorporated in the state of Delaware
on May 30, 1995. During 1995 the Company changed its name to "Q MATRIX, Inc." In
January 2005, the Company changed its name to AMERICAN TONERSERV CORP. (the
"Company"). The Company is a national distributor of compatible printer toner
cartridges. The Company services printers and other office equipment through its
Preferred Provider Network. The Company is headquartered in Santa Rosa,
California.

2.   Summary of Significant Accounting Policies

Principles of Consolidation:

     The consolidated financial statements include the accounts of American
TonerServ Corp. and its wholly-owned subsidiaries, Optima Technologies, LLC,
Tonertype, LLC, NC TonerServ, LLC and iPrint Technologies, LLC (collectively
referred to as the "Company"). American TonerServ Corp. is the sole member of
Optima Technologies, LLC, Tonertype, LLC, NC TonerServ, LLC and iPrint
Technologies, LLC which are Delaware Limited Liability Companies. Intercompany
transactions and balances have been eliminated in consolidation.

Fair Value of Financial Instruments:

     For certain of the Company's financial instruments, including accounts
receivable, accounts payable and accrued expenses, the carrying amounts
approximate fair value due to the short-term nature of these items. The amounts
owed on notes payable also approximate fair value, because the interest rates
and terms are offered to the Company at current market rates. On long term debt
that is interest free or with below market interest rates an imputed interest
rate is used to discount the liabilities.

     The Black-Scholes-Merton model is used to value warrants and options. The
conversion option, included as a component of convertible debt, is valued using
an estimated Private Investment in a Public Entity ("PIPE") price equal to a 20%
discount off the fair market value of the stock. The convertible notes
associated with the acquisition of iPrint are carried at face value as this was
not "in-the-money" at inception.



                                      F-8
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

2.   Summary of Significant Accounting Policies (Continued)

Cash and Cash Equivalents:

     Cash and cash equivalents consist principally of bank deposits. Cash
balances are maintained in bank accounts that are insured by the Federal Deposit
Insurance Corporation ("FDIC") up to a maximum of $250,000. At December 31, 2008
and 2007, respectively, the Company did not have cash deposits in excess of FDIC
insurance limits.

Accounts Receivable:

     Accounts receivable are shown net of allowance for doubtful accounts. In
determining the allowance for doubtful accounts, the Company uses specific
identification, which includes a reserve on older balances that are disputed or
in cases where the Company has knowledge of a potential customer payment issue.
A summary of the changes in the allowance for doubtful accounts is as follows:


                                          2008          2007
                                       ----------    ----------
Balance at beginning of year           $   35,224    $   12,614
Provision for uncollectible accounts       37,822        36,356
Provision from iPrint                      34,852          --
Write-offs                                 (9,209)      (13,746)
Recoveries                                 12,188          --
                                       ----------    ----------
Allowance for doubtful accounts        $  110,877    $   35,224
                                       ==========    ==========

Property and Equipment:

     Property and equipment is stated at cost less accumulated depreciation.
Property and equipment is depreciated using the straight line method over
estimated useful lives, which range from one to seven years. Leasehold
improvements are depreciated on a straight line basis over the lesser of the
lease term or estimated useful life.

Long-Lived Assets:

     The Company evaluates the carrying value of its long-lived assets when
events or circumstance indicate the existence of a possible impairment, based on
projected undiscounted cash flows, and recognizes impairment when such cash
flows will be less than the carrying values. Measurement of the amounts of
impairments, if any, is based upon the difference between carrying value and
fair value of the long lived assets. At December 31, 2008, management determined
that its long-lived assets were not impaired.

Revenue Recognition:

         The following is a detailed description of each revenue activity and
its revenue recognition policy:

                                      F-9
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

2.   Summary of Significant Accounting Policies (Continued)

     Remanufactured Toner Sales - Revenue for the resale of laser toner
cartridges is recognized upon shipment of the toner cartridges to the customer.
In the case where the toner cartridge is sold as a bundled product with
equipment service included as part of the total purchase price, the combined
revenue is segregated between the value of the cartridge and the service
components. The cartridge portion is recognized after shipment at the same price
as a "cartridge only" sale. The service component is deferred and recognized on
the earlier of actual cartridge use when it is replaced or ninety days (the
maximum term of the service offering with each cartridge).

     Time and Materials Maintenance Contracts - Revenue for equipment service
calls initiated by the customer is billed based on actual time and materials.
The revenue is recognized as the service is provided.

     Full Service Maintenance Contracts - Revenue for fixed fee equipment
service contracts are recognized on a straight-line basis over the life of the
contract.

Deferred Revenue:

     Contract revenue for full-service contracts is recognized by the straight
line method over the life of the contract with the unearned portion shown as
deferred revenue in the accompanying balance sheet. Deferred revenue is also
recorded due to the Company's government customers prepaying for toner orders
before they are shipped.

Deferred Income Taxes:

     The Company uses the asset and liability approach for financial accounting
and reporting for income taxes. Deferred income taxes are provided for temporary
differences in the bases of assets and liabilities as reported for financial
statement purposes and income tax purposes. We have recorded a valuation
allowance against all net deferred income tax assets. The valuation allowance
reduces deferred income tax assets to an amount that represents management's
best estimate of the amount of such deferred income tax assets that more likely
than not will be realized.

Stock Based Compensation:

     The Company has one stock incentive plan (the "Plan"), administered by the
Board of Directors, which provide for the granting of options and shares of
common stock to employees, officers, directors and other service providers of
the Company. Options can no longer be granted from the 1995 and 2005 Plans.
Options granted under the 2008 Plan generally are granted with an exercise price
equal to the market value of a common share at the date of grant and typically
vest over four years from the date of grant. The total number of shares
authorized to be granted under the 2008 Plan at December 31, 2008 and 2007, was
7,500,000 and zero, respectively.


                                      F-10
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

2.   Summary of Significant Accounting Policies (Continued)

Stock Based Compensation (Continued):

     The 1995 Stock Option Plan has expired but all options outstanding at that
time continue in accordance with their respective terms. No new options will be
granted under the 1995 Plan and at December 31, 2008 and 2007, there were 32,883
and 35,133 options outstanding under the 1995 Plan, respectively.

     The total number of shares authorized to be granted under the 2005 Plan was
10,000,000 at December 31, 2008 and 2007. As of December 31, 2008, there will be
no new options granted out of the 2005 Plan, however, all options outstanding
will continue in accordance with their respective terms. Options outstanding
under the 2005 Plan at December 31, 2008 and 2007, were 9,488,900 and 9,722,600,
respectively.

     The total number of options granted and outstanding outside of the
Company's plans for the years ended December 31, 2008 and 2007, was 325,000 and
400,000, respectively.

     The estimated fair value of equity-based awards is amortized over the
awards' vesting period on a straight-line basis. Share-based compensation
expense recognized in the consolidated statements of operations relating to
stock options for the years ended December 31, 2008 and 2007 was $378,215 and
$188,975 respectively. We have not recorded income tax benefits related to
equity-based compensation expense as deferred tax assets are fully offset by a
valuation allowance.

     In calculating compensation related to stock option grants, the fair value
of each stock option is estimated on the date of grant using the
Black-Scholes-Merton option-pricing model and the following weighted average
assumptions:

                                     Year Ended              Year Ended
                                 December 31, 2008       December 31, 2007
                                 -----------------       -----------------

Dividend yield                          None                   None
Expected volatility                   35.0-61.5%               35.0%
Risk-free interest rate               2.5%-5.1%              3.4%-5.1%
Expected terms (years)                 5.5-6.3                5.7-6.3


     In the past, the Company has calculated the expected volatility for
stock-based awards using the historical volatility for its peer group public
companies which has been 35.0%, because sufficient historical data did not yet
exist for the Company's stock. As of October 1, 2008, the Company now calculates
the expected volatility for stock-based awards using the historical volatility
of its own stock which has been trading since October 2006. The risk free
interest rates were determined by the rates of the 5 and 7 year treasury bills
on the grant date of the options.


                                      F-11
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

2.   Summary of Significant Accounting Policies (Continued)

Stock Based Compensation (Continued):

     The Company accounts for restricted stock and options granted to
non-employees as deferred compensation at the date of issuance. The Company
recognizes compensation expense on a straight-line basis over the service period
of the restricted stock or options. The compensation is adjusted for the change
in fair market value at the end of each period in the statement of operations.

Net Loss per Share:

     Net loss per share has been calculated using the weighted average number of
shares outstanding during the period. Dilutive loss per share is the same as
basic loss per share in all periods, since the impact of outstanding options and
warrants is antidilutive.

     All numbers of shares and per share amounts in these financial statements
and notes have been adjusted to give effect to the reverse and forward splits,
unless otherwise stated.

     The following securities, which include options, warrants, convertible
debt, preferred stock and notes related to acquisitions, could potentially
dilute basic earnings per share in the future:

                                              December 31,   December 31,
                                                  2008           2007
                                              ------------   ------------

     Potential equivalent shares excluded       60,343,909     30,223,054
                                              ============   ============






                                      F-12
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

2.   Summary of Significant Accounting Policies (Continued)

Warrants and Detachable Warrants:

     The Black-Scholes-Merton option pricing method was used to value the
warrants and detachable warrants. A per share price of $0.29 was attached to the
warrants which represents the fair value of common stock at December 31, 2008, a
58.24% volatility and a risk free interest rate ranging from 0.37% to 1.55%
based on the estimated lives ranging from 0.50 to 4.75 years, based on an
estimated Private Investment in a Public Entity ("PIPE") occurring in the third
quarter of 2009. At December 31, 2007, a $0.20 per share value was attached to
the warrants, a 35% volatility and risk free interest rates ranging from 3.05% -
3.45% based on the estimated lives ranging from 1.25 to 5 years, based on an
estimated PIPE occurring in the third quarter of 2008.

     As the warrant contracts must be settled by the delivery of registered
shares and the delivery of the registered shares are not controlled by the
Company and the number of warrants is unknown, at December 31, 2008, the
estimated fair value of the warrants at the date of issuance was recorded as a
warrant liability on the balance sheet.

Segment:

     Based on the Company's integration and management strategies, the Company
operates in a single business segment. For the years ended December 31, 2008 and
December 31, 2007, all material revenues have been derived from domestic
operations.

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 disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.

Concentration of Revenue and Credit Risk:

     During the year ended December 31, 2008, one customer, accounted for
approximately $2,420,000 of our revenues, representing approximately 19% of our
revenues. During 2007, the Company, through Axon, selling products to state
agencies in Florida, accounted for approximately $430,000 of revenues,
representing approximately 12% of our revenues. At December 31, 2008 and
December 31, 2007, the Company did not have any significant customers relating
to accounts receivable.

Reclassifications:

         Certain reclassifications have been made to prior period amounts to
conform to classifications adopted in the current year.


                                      F-13
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

3.   Recent Accounting Pronouncements

     In December 2006, the FASB issued SFAS No. 157, "Fair Value Measurements".
This statement defines fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. SFAS No. 157 applies
under other accounting pronouncements that require or permit fair value
measurements and is intended to increase consistency and comparability. SFAS No.
157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007. The adoption of SFAS No. 157 did not have a material
impact on our financial position, results of operations or cash flows.

     In June 2008, the FASB ratified EITF Issue No. 07-5, "Determining Whether
an Instrument (or Embedded Feature) is Indexed to an Entity's Own Stock". EITF
07-5 provides a two-step approach for determining whether an equity-linked
financial instrument (or embedded feature) is indexed to an entity's own stock.
EITF 07-5 is effective for our fiscal year beginning January 1, 2009. We do not
anticipate EITF 07-5 will have a material impact on our consolidated financial
statements upon adoption.

     On October 10, 2008, the FASB issued SFAS No. 157-3, Determining the Fair
Value of a Financial Asset When the Market for That Asset is Not Active. SFAS
No. 157-3 clarifies the application of SFAS No. 157, Fair Value Measurements, in
a market that is not active and provides an example to illustrate key
considerations in determining the fair value of a financial asset when the
market for that financial asset is not active. SFAS No. 157-3 is effective
immediately, and includes prior period financial statements that have not yet
been issued, and therefore the company was subject to the provision of the FSP
effective September 30, 2008. The implementation of SFAS No. 157-3 did not
affect the Company's fair value measurement as of December 31, 2008.

     In April 2007, the FASB issued SFAS No. 159, "Fair Value Option for
Financial Assets and Financial Liabilities". This statement permits entities to
choose to measure many financial instruments and certain other items at fair
value that are not currently required to be measured at fair value. Any
unrealized gains and losses associated with the instruments or other balances
for which the fair value option has been elected are reported in earnings at
each subsequent reporting date. SFAS No. 159 is effective for financial
statements issued for fiscal years beginning after November 15, 2007. We did not
elect to record any of our financial assets or liabilities at fair value.



                                      F-14
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

3.   Recent Accounting Pronouncements (continued)

     In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations". Under this statement an entity is required to recognize the
assets acquired, liabilities assumed, contractual contingencies, and contingent
consideration at their fair value on the acquisition date. It further requires
that acquisition-related costs be recognized separately from the acquisition and
expensed as incurred, restructuring costs generally be expensed in periods
subsequent to the acquisition date, and changes in accounting for deferred tax
asset valuation allowances and acquired income tax uncertainties after the
measurement period impact income tax expense. In addition, acquired in-process
research and development (IPR&D) is capitalized as an intangible asset and
amortized over its estimated useful life. The adoption of SFAS No. 141(R) will
change our accounting treatment for business combinations on a prospective basis
beginning in the first quarter of fiscal year 2009.

     In April 2008, the FASB issued Financial Staff Position ("FSP") No. FAS
142-3, Determination of the Useful Life of Intangible Assets. FSP No FAS 142-3
amends the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset
under SFAS No. 142. "Goodwill and Other Intangible Assets." The intent of the
position is to improve the consistency between the useful life of a recognized
intangible asset under SFAS No. 142 and the period of expected cash flows used
to measure the fair value of the asset under SFAS No. 141R, and other U.S.
generally accepted accounting principles. The provisions of FSP No. FAS 142-3
are effective for fiscal years beginning after December 15, 2008. FSP No. FAS
142-3 is effective for our fiscal year beginning January 1, 2009. We do not
anticipate FSP No. FAS 142-3 will have a material impact on our consolidated
financial statements upon adoption.








                                      F-15
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

4.  Inventory and Inventory Reserve

    Inventory consists of finished goods and raw materials which is primarily
toner cartridges and service parts and is stated at the lower of cost or market
determined by the first-in, first-out (FIFO) method.

                                      December 31, 2008   December 31, 2007
                                      -----------------   -----------------

                  Finished Goods          $ 709,960           $ 681,994
                  Raw Materials              64,787             101,834
                  Inventory Reserve               -             (68,500)
                                          ---------           ---------
                  Total Inventory         $ 774,747           $ 715,328
                                          =========           =========

5.   Intangible assets

     Intangible assets as of December 31, 2008 and 2007, respectively, were as
follows:

                                                    2008            2007
                                                 ----------      ----------
                Customer lists                   $4,854,096      $4,367,976
                Less accumulated amortization      (796,060)       (365,114)
                                                 ----------      ----------
                                                 $4,058,036      $4,002,862
                                                 ==========      ==========

         Amortization expense for the years ended December 31, 2008 and 2007
totaled $646,136 and $338,173, respectively.

         Based on identified intangible assets recorded as of December 31, 2008,
and assuming that the underlying assets will not be impaired in the future, we
expect amortization expenses for each period to be as follows:

Intangibles       2010      2011      2012      2013      2014    Thereafter
--------------  --------  --------  --------  --------  --------  ----------
Customer Lists  $625,774  $625,774  $625,774  $625,774  $620,332  $  934,607
Non-competes       7,000     7,000     7,000     5,500     2,500           -
                --------  --------  --------  --------   -------  ----------
Total expense   $632,774  $632,774  $632,774  $631,274  $622,832  $  934,607
                ========  ========  ========  ========  ========  ==========


                                      F-16
<PAGE>


AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

6.   Property and Equipment

     A summary of property and equipment as of December 31, 2008 and 2007,
respectively, is as follows:

                                                      2008          2007
                                                   ----------    ----------
                Leasehold improvements             $  109,741    $        -
                Computer hardware                     119,731        11,083
                Furniture and fixtures                117,186        36,693
                Vehicles and equipment                425,999       381,490
                Computer software                      61,465        11,300
                                                   ----------    ----------
                                                      834,122       440,566
                Less accumulated depreciation        (189,645)      (45,821)
                                                   ----------    ----------
                Total net assets                   $  644,477    $  394,745
                                                   ==========    ==========

     Depreciation for the years ended December 31, 2008 and 2007, totaled
$144,455 and $32,650, respectively.

7.   Accounts Payable and Accrued Expenses

     Accounts payable and accrued expenses as of December 31, 2008 and 2007,
respectively, are comprised of the following:


                                            2008          2007
                                         ----------    ----------
   Accounts payable                      $2,384,363    $1,459,286
   Accrued payroll                          356,465       131,614
   Sales taxes payable                      110,440        62,159
   Accrued interest payable                  73,076         6,599
   Other accrued expenses                   106,255       108,339
                                         ----------    ----------
   Total accounts payable
     and accrued expenses                $3,030,599    $1,767,997
                                         ==========    ==========


                                      F-17
<PAGE>
<TABLE>
<CAPTION>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

8.  Lines of Credit:

     The Company currently has a facility in place to provide standby letters of
credit ("SBLC's") to secure standard terms from certain vendors. The amount
available for SBLC's is $835,000. This line is personally guaranteed by certain
officers and directors of the Company. Draws on the letter of credit will accrue
interest at 5 percent over the prime rate. The line of credit has an interest
rate of 7.5% and is due and payable on June 30, 2009.

     In April 2008, the Company entered into a $2,000,000 revolving line of
credit secured by all of the assets of the Company. The availability of the line
is determined by the accounts receivables of the Company. The interest rate on
the outstanding balance was nine percent per annum as of December 31, 2008.

9.   Notes Payable and Convertible Notes Payable

     As of December 31, 2008 and 2007, convertible notes payable were as
follows:


                                              2008                          2007
                                   --------------------------    --------------------------
                                      Third         Related         Third         Related
                                     Parties        Parties        Parties        Parties
                                   -----------    -----------    -----------    -----------
<S>                                <C>            <C>            <C>            <C>
  Convertible notes payable        $ 3,338,344    $   100,000    $   250,000    $    25,000

  Fair value of convertible debt       337,500         25,000         62,500          6,250
  Convertible notes payable -
    acquisitions                     1,850,000           --          500,000        300,000
  Unamortized discount                (816,608)        (1,466)          --             --
                                   -----------    -----------    -----------    -----------
  Subtotal                           4,709,236        123,534        812,500        331,250
  Less current portion              (1,782,712)      (123,534)      (187,500)       (31,250)
                                   -----------    -----------    -----------    -----------
  Total long term portion          $ 2,926,524           --      $   625,000    $   300,000
                                   ===========    ===========    ===========    ===========
</TABLE>

     Interest expense related to accretion of the convertible notes payable
discount for the years ended December 31, 2008 and 2007, was $81,850 and $7,000,
respectively





                                      F-18
<PAGE>
<TABLE>
<CAPTION>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

9.   Notes Payable and Convertible Notes Payable (continued)

As of December 31, 2008 and 2007, notes payable were as follows:


                                              2008            2007
                                           -----------     -----------
                  Gross Notes Payable      $ 3,449,661     $ 3,916,368
                  Unamortized discount        (438,953)       (566,935)
                                           -----------     -----------

                  Subtotal                   3,010,708       3,349,433
                  Less: current portion     (2,080,865)     (2,068,033)
                                           -----------     -----------
                  Total long term debt     $   929,842     $ 1,281,400
                                           ===========     ===========

     Interest expense related to accretion of the notes payable discount the
years ended December 31, 2008 and 2007, was $275,278 and $90,124, respectively.

     The following table shows the minimum future principal note payments due
within the next five years.

                                             Years Ended December 31,
Notes Due                      2009        2010        2011        2012        2013
-------------------------   ----------  ----------  ----------  ----------  ----------
<S>                         <C>         <C>         <C>         <C>         <C>
Notes Payable               $2,080,865  $  397,356  $  532,486           -  $        -
Convertible Notes Payable    1,906,246   1,204,163   1,062,355  $  353,310     306,696
                            ----------   ---------  ----------  ----------  ----------
Total Notes Due             $3,987,111  $1,601,519  $1,594,841  $  353,310  $  306,696
                            ==========  ==========  ==========  ==========  ==========
</TABLE>
     The Company has issued convertible debt securities with non-detachable
conversion features. The Company accounts for such securities on the balance
sheet as a component of the overall fair value of the host securities. The
Company estimates fair value based on the intrinsic value of common stock by
determining the difference between the total shares converted at fair value and
the total shares converted at a 20% discount, which is the estimated discount of
a PIPE offering.

     Through August 2007, $800,000 of 10% convertible notes payable were issued
with a detachable warrant to purchase shares of the Company's Common Stock (the
"Warrants"). The Notes may be converted, at the option of the holder, into
shares of Common Stock upon the sale and issuance of Common Stock by the Company
in a PIPE offering resulting in gross proceeds of not less than $3,000,000. The
conversion term will expire six months after the Company completes a $3 Million
Qualified Offering. The Notes will be automatically converted into shares of
common stock upon the sale and issuance of common stock by the Company in a PIPE
offering resulting in gross proceeds of not less than $5,000,000. The price at
which the Notes may be converted into Common Stock will be the average price at
which the first $1.0 million of Common Stock is sold in a $3 Million or $5
Million Qualified Offering, whichever may occur.

                                      F-19
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

9.   Notes Payable and Convertible Notes Payable (continued)

     In 2007, $525,000 of these convertible notes, along with accrued interest
of $24,667 was exchanged for common stock and warrants as part of a private
equity offering. The balance of these convertible notes at December 31, 2008 and
2007, was $150,000 and $275,000, respectively.

     The remaining Notes also contain detachable warrants equal to 30-40% of the
face value of the Note. In assessing the fair value of the warrant grants, the
Company recorded the fair value of these instruments based on the
Black-Scholes-Merton model which requires estimates of the volatility of our
stock and the market price of our shares at the date of grant (see Note 2).

     In 2008, $1,450,000 of 10% convertible notes payable were issued with a
detachable warrant to purchase shares of the Company's Common Stock (the
"Warrants"). The Notes may be converted, at the option of the holder, into
shares of Common Stock upon the sale and issuance of Common Stock. At the option
of the Holder, the entire outstanding principal amount of this Note may be
converted into securities offered on behalf of the Company in an offering
resulting in gross proceeds of not less than $5,000,000.

     This option to convert will expire upon the funding of a $5 Million
Qualified Offering. The price at which the Notes may be converted into Common
Stock will be the price of the $5 Million Qualified Offering. The balance of
these convertible notes at December 31, 2008 was $1,200,000.

     Also in 2008, $1,988,345 of 10% convertible notes payable were issued with
and a detachable warrant to purchase shares of the Company's Common Stock (the
"Warrants"). The notes are interest only during the first twelve months and then
principle and interest is amortized over the next twenty four months. The Notes
may be converted, at the option of the holder, into shares of Common Stock at
$0.30 per share during the first twelve months of the note.

10.  Warrant Liabilities

     In conjunction with raising capital through the sale of convertible notes
payable (Note 9), the Company issued various warrants to purchase shares of
common stock. As the contracts must be settled by the delivery of registered
shares and delivery of the registered shares are not controlled by the Company,
the fair value of the warrants at the date of issuance was recorded as warrant
liabilities on the balance sheet. The fair value of the warrant liabilities at
December 31, 2008 and 2007, was $639,193 and $119,700, respectively. The Company
recorded the change in fair value of warrant liabilities of $159,774 and $71,873
in the statement of operations for the years ended December 31, 2008 and 2007,
respectively.


                                      F-20
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

11.  Stockholder's Equity

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

     Warrants outstanding as of December 31, 2008, are as follows:

                                                                       Exercise
                                                           Amount       Price
                                                         ----------    --------

             Warrants issued in Convertible
               Debt Offerings - 2004 to 2007              1,519,397     $0.28
             Warrants issued in Debt
               Offering - 2007                              655,000      0.30
             Warrants issued in Common Stock
               Offerings in 2007 and 2008                20,630,336      0.35
             Warrants issued to Dinosaur Securities         750,000      0.30
             Warrants issued in Debt
               Offerings - 2008                           1,262,500      0.30
             Warrants issued in iPrint Debt
               Offering - 2008                            2,393,750      0.30
             Warrants issued to iPrint offering
               Guarantors - 2008                          2,393,750      0.30
             Warrants issued to iPrint
               Technologies, Inc.                           200,000      0.30

             Exercised in 2008                           (1,000,000)     0.15
                                                         ----------
             Balance at December 31, 2008                28,804,733
                                                         ==========

Stock-based Compensation
------------------------

     On March 6, 2008, the Company granted 750,000 warrants to Dinosaur
Securities valued at $68,594 and was recognized as compensation during the three
months ended March 31, 2008.

     On March 25, 2008, the Company entered into an agreement with Merriman
Curhan Ford & Co ("MFC") to represent the Company to act as its exclusive
financial advisor to assist in capital raising efforts and general investment
banking services. As compensation for MFC's services, they received 1,965,265
shares of the Company's common stock valued at $500,000. Fifty percent of these
shares were immediately vested and $255,484 was recognized as compensation
during the three months ended March 31, 2008. No additional compensation was
recognized during the period from April through November 2008. On December 3,
2008, the Company formally terminated their agreement with MFC and 982,633
shares of unearned shares were returned to the Company.


                                      F-21
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

11.  Stockholder's Equity (continued)

Stock-based Compensation (continued)
------------------------------------

     On April 2, 2008, the Company entered into an agreement with a consultant
to provide Investor Relations support to the company. In exchange for these
services the company paid $5,000 per month plus 30,000 shares at $0.25 per
share. Stock compensation expense of $7,500 was recorded during the three months
ended June 30, 2008 for these services. This contract was renewed on August 11,
2008 for $2,500 per month plus an additional 30,000 shares. Stock compensation
expense of $7,500 was recorded during the three months ended September 30, 2008
for these services.

     On April 15, 2008, the Company entered into an agreement to compensate a
consultant for work performed during the first quarter of 2008 in stock valued
at $25,000 instead of paying cash. The consultant received 100,000 shares valued
at $0.25 per share.

     On April 25, 2008, the Company entered into an agreement to pay Workplace
L. Ferrari, LLC in stock to pay for furniture that was recorded by the Company
in December of 2007 as a payable when they received the furniture. Mr. Ferrari's
company received 56,984 shares to satisfy this payable in the amount of $14,247.

     On August 8, 2008, the Company entered into an agreement with a consultant
for investor and public relations for 30,000 shares of common stock. The stock
was valued at $7,500.

     On August 11, 2008, the Company entered into an agreement with a consultant
to provide investor relations and develop business strategies for the Company.
The consultant was paid $25,000 in cash and 100,000 shares of common stock to
perform these services. The stock was valued at $25,000. The consultant returned
50,000 of these shares back to the Company on November 17, 2008.

     During the period from October 2008 to December 2008, certain directors of
the Company received warrants as compensation for personally guaranteeing notes
through the Company's convertible note and warrant offering. The total warrants
issued were 2,393,750 and $227,543 was recorded as compensation expense.

     On December 4, 2008, the Company entered into an agreement with Monarch Bay
Associates ("MBA") to act as its exclusive financial advisor. In connection with
this agreement MBA received 750,000 shares of restricted stock. This restricted
stock will vest as follows; 33.33% upon the closing of the subsequent financing
of no less than $2,000,000, and 33.34% upon the closing of and an additional
subsequent financing of no less than $2,000,000. All 750,000 shares will be
vested if MBA closes financing of no less than $4,000,000 by the end of the term
of the Engagement Letter.


                                      F-22
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

11.  Stockholder's Equity (continued)

Stock-based Compensation (continued)
------------------------------------

     On December 19, 2008, the Company issued 250,000 shares to Rick Cerkleski
for full consideration for his referral to iPrint Technologies, Inc. This stock
was valued at $0.29 per share for a total value of $72,500. This amount was
capitalized as a cost of the acquisition of iPrint.

Preferred Stock
---------------

     In October 2007, the holders of a majority of the shares of Series C shares
voted to by majority consent to convert such preferred stock into shares of our
Common Stock. As a result, there were no shares of preferred stock outstanding
as of December 31, 2008 and 2007.

Restricted Stock
----------------

     On September 30, 2007, the Company entered into an exclusive investor
relations consultant agreement with After Market Support, LLC (AMS), under which
AMS was to provide various services as outlined in the agreement to help the
Company achieve a NASDAQ listing within a twelve month period. As compensation
for these services, AMS received 3,000,000 shares of the Company's Common Stock
for $3,000.

     The fair value of this stock when granted was $0.22 per share. Restricted
shares totaling 2,000,000 shares were to vest over the next 12 months based on
performance conditions, as defined in the agreement. On March 6, 2008 the
Company and AMS mutually terminated its relationship. As part of the termination
AMS has returned 3,000,000 common shares that it purchased as part of the deal
in exchange for $3,000. Restricted shares totaling 1,000,000 shares previously
granted to an employee were fully vested at June 30, 2008. Restricted shares
have the same voting and dividend rights as the Company's unrestricted common
shares.



                                      F-23
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007


11.  Stockholder's Equity (continued)

Restricted Stock (continued)
----------------------------

     A summary of the changes in restricted stock outstanding during the years
ended December 31, 2008 and 2007, respectively is presented below:

                                                          Weighted
                                                          Average
                                                          Grant Date
                                            Shares        Fair Value
                                          ----------      ----------
 Non-vested shares
       at January 1, 2007                  2,500,000             -
         Granted                           2,000,000        $0.220
         Vested                           (1,750,000)       $0.040
     Forfeited/Expired                             -             -
                                          ----------        ------
     Non-vested shares
       at December 31, 2007                2,750,000        $0.150
                                          ==========        ======

Non-vested shares
       at January 1, 2008                  2,750,000        $0.150
         Granted                           1,732,633        $0.267
         Vested                           (1,000,000)       $0.015
     Forfeited/Expired                    (2,732,633)       $0.091
                                          ----------        ------
     Non-vested shares
       at December 31, 2008                  750,000        $0.290
                                          ==========        ======


     The amount of expense for the years ended December 31, 2008 and 2007,
related to restricted stock that would have been included in the consolidated
statements of operations under the provisions of Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees was $3,750 ($0.015 per
share) and $7,500 ($0.015 per share), respectively. The amount of expense for
the year ended December 31, 2008 and 2007, related to restricted stock for
non-employees was $255,484 and $374,000, respectively. We have not recorded
income tax benefits related to the expense for restricted stock issued to non-
employees as deferred tax assets are fully offset by a valuation allowance.

     As of December 31, 2007, there was $439,500 of total unrecognized
compensation cost related to restricted stock, of which $435,750 was recorded as
deferred compensation. The weighted average vesting period remaining for the
restricted stock was approximately 8 months. As of December 31, 2008 there was
no unrecognized compensation cost related to restricted stock and there was no
estimated vesting period as they were performance based shares which could not
be reasonably estimated when this would occur.


                                      F-24
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

11.  Stockholder's Equity (continued)

Stock Option Plan
-----------------

     A summary of the changes in stock options outstanding under our
equity-based compensation plans during the years ended December 31, 2008 and
2007, are presented below:
                                                        Weighted
                                                        Average
                                             Weighted   Remaining
                                             Average    Contractual   Aggregate
                                             Exercise   Term          Intrinsic
                                  Shares     Price      (Years)       Value
                                ----------   --------   -----------   ----------
Outstanding at January 1, 2007   7,442,640     $0.17        9.67      $2,386,274
                                                                      ==========
Granted                          2,332,600     $0.39           -          33,000
Exercised                                -         -           -      ==========
Forfeited/Expired                  (17,507)    $1.74           -
                                ----------     -----        ----
Outstanding at December 31,
2007                             9,757,733     $0.22        8.51      $  725,750
                                ==========     =====        ====      ==========
Exercisable at December 31,
2007                             2,933,833     $0.22        8.70      $  235,090
                                ==========     =====        ====      ==========

Outstanding at January 1, 2008   9,757,733     $0.22        8.51      $  725,750
                                                                      ==========
 Granted                         6,842,600     $0.25        9.44         266,200
 Exercised                        (135,714)    $0.15          -       ==========
 Forfeited/Expired                (417,836)    $0.32          -
                                ----------     -----        ----
Outstanding at December 31,
  2008                          16,046,783     $0.23        8.52      $1,286,650
                                ==========     =====        ====      ==========
Exercisable at December 31,
  2008                           6,396,266     $0.25        8.00      $  647,088
                                ==========     =====        ====      ==========


     As of December 31, 2007, there was $490,462 of total unrecognized
compensation cost related to non-vested options granted under the plans, which
is expected to be recognized over a weighted average period of 2.28 years, of
which $35,548 is recorded as deferred compensation. The total fair value of
options vested was $550,612 at December 31, 2007.

     As of December 31, 2008, there was $883,895 of total unrecognized
compensation cost related to non-vested options granted under the plans, which
is expected to be recognized over a weighted average period of 2.34 years, of
which $73,275 is recorded as deferred compensation. The total fair value of
options vested was $1,854,917 at December 31, 2008.


                                      F-25
<PAGE>


AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

12.  General and Administrative Expenses

     During the years ended December 31, 2008 and 2007 General and
Administrative expenses were comprised as follows:

                                                  2008            2007
                                               ----------      ----------
Office lease                                   $  258,968      $  148,710
Telephone                                         117,225          60,543
Insurance                                          84,330         132,303
Depreciation                                      144,455          32,650
Management fees                                         -         354,818
Automobile expense                                390,832         120,543
Travel expenses                                   169,190          69,150
Other                                             591,826         415,994
                                               ----------        --------
Total general and administrative expenses      $1,756,826      $1,334,711
                                               ==========      ==========

13.  Income Taxes

     The Company has no taxable income and a full valuation allowance on
deferred income tax assets. Accordingly, there was no provision for federal and
state income taxes for the years ended December 31, 2008 and 2007.

     A reconciliation of the statutory federal rate and the Company's effective
tax rate for the year ended December 31, 2007 and 2006, is as follows:

                                                     2008     2007
                                                     -----    -----
     Statutory federal income tax rate               (34)%    (34)%
     State income taxes net of federal benefit        (6)%     (6)%
     Valuation allowance on deferred income tax
       assets                                         40 %     40 %
                                                     -----    -----
       Effective tax rate                              0 %      0 %
                                                     ======  ======




                                      F-26
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

13.  Income Taxes (continued)

     Significant components of the Company's deferred tax assets and liabilities
as of December 31, 2008 and 2007, are as follows:


                                                       2008          2007
                                                    ----------    ----------
     Deferred tax assets and liabilities:
       Net operating loss carryforwards             $6,068,000    $5,445,000
     Stock compensation                                884,000       652,000
     Warrant liabilities                               106,000        43,000
     Fair value of convertible notes payable           163,000        46,000
     Amortization                                     (325,000)     (118,000)

                                                    ----------    ----------
       Total deferred tax asset                      6,896,000     6,068,000
       Less valuation allowance                     (6,896,000)   (6,068,000)
                                                    ----------    ----------
         Net deferred tax asset                     $        -    $        -
                                                    ==========    ==========

     Net operating loss carryforwards of approximately $18,587,816 for federal
and $9,719,694 for state are available as of December 31, 2008, to be applied
against future taxable income. The net operating loss carryforwards expire in
tax years 2015 through 2028 for federal purposes and in tax years 2012 through
2028 for state purposes. In 2008 and 2007 no operating losses expired for
federal or state tax purposes.

     Due to the significant increase in common stock issued and outstanding in
2007 and 2008, Section 382 of the Internal Revenue Code may provide significant
limitations on the utilization of net operating loss carryforwards of the
Company. As a result of these limitations, a portion of these loss and credit
carryovers may expire without being utilized. A valuation allowance has been
recorded as a reduction against the net operating loss carry forwards due to the
uncertainty of the ultimate realization of future benefits from these net
operating losses. The change in valuation allowance for the year ended December
31, 2008 and 2007, was $828,000 and $623,000, respectively.



                                      F-27
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

14.  Related Party Balances and Transactions

     During 2007, the Company advanced $26,500 to Andrew Beaurline, Senior Vice
President of Corporate Development and Strategy. During 2008, this advance was
recognized as compensation.

     At December 31, 2007, the Company had outstanding payables to Dan Brinker,
President and Chief Executive Officer, of $61,095 Thomas Hakel, Director, of
$215,000 and William Robotham, Director, of $155,000. These payables related to
advances for operating capital to the Company during the Company's transition
into a public company and the execution of the Company's acquisition strategy,
and do not necessarily represent all amounts owed to these individuals.

     At December 31, 2008, the Company had outstanding payables to Thomas Hakel,
Director, of $80,000 and accrued interest of $16,296 and William Robotham,
Director, of $90,000 and accrued interest of $17,678. These payables related to
advances for operating capital to the Company during the Company's transition
into a public company and the execution of the Company's acquisition strategy,
and do not necessarily represent all amounts owed to these individuals.

15. Acquisitions

iPrint Technologies, Inc.
-------------------------

     On October 31, 2008, the Company entered into an Asset Purchase Agreement
(the "Agreement") with iPrint Technologies, LLC, a Delaware limited liability
company and a newly formed, wholly-owned subsidiary of the Company
("Subsidiary"), iPrint Technologies, Inc., a California corporation ("iPrint"),
and Chad Solter, Darrell Tso, and Scott Muckley (the "Selling Shareholders"),
who own all of the stock of iPrint, relating to the purchase of all of the
assets of iPrint's retail business of providing printing supplies and service to
a variety of companies. The closing of the Agreement also occurred on October
31, 2008.

     The purchase price for the acquisition consisted of $1,500,000 in cash;
$3,500,000 in the form of four promissory notes; 5,847,953 shares of common
stock valued at $1,500,000; and warrants to purchase 200,000 shares of the
Company's common stock at $0.30 per share.

     One of the promissory notes, in the amount of $500,000, and interest at the
rate of 10% per annum and was paid in full on November 26, 2008.


                                      F-28
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

15. Acquisitions (continued)

     Two of the promissory notes (the "Short-Term Notes"), which are each in the
amount of $575,000, bear interest at the rate of 5% per annum. One of the
Short-Term Notes is due within 120 days after the closing date. The other
Short-Term Note is due in full on the earlier of (i) forty-five (45) days
following the end of the second full calendar quarter (i.e., January through
March, April through June, July through September, or October through December,
as applicable) following the Closing Date in which the earnings before interest,
taxes, depreciation and amortization ("EBITDA") of the Subsidiary for such
period meets or exceeds $250,000; (ii) if not paid at the end of the second such
quarter, then forty-five (45) days following the end of the first full three
consecutive calendar months thereafter in which EBITDA of the Subsidiary for
such period meets or exceeds an amount equal to $250,000; or (iii) if not paid
before, on the one (1) year anniversary of the closing date. On February 20,
2009, the Company amended its short term note obligations with iPrint
Technologies, Inc. These notes were combined into one Modified Secured
Promissory Note for $1,150,000. This note will be due in full on December 31,
2010.

     One of the promissory notes (the "Long-Term Note"), in the amount of
$1,850,000, bears interest at the rate of 5% per annum and due and payable in
forty-eight (48) equal monthly installments, commencing on the thirteenth (13)
month following the closing date. At the option of the holder, all or a portion
of the outstanding principal and unpaid accrued interest of the Long-term Note
may be converted into shares of common stock of the Company at a conversion
price of (i) $0.50 per share if the conversion occurs on or before the
thirteenth (13) month following the closing date, or (ii) $1.00 per share if the
conversion occurs after the date that is thirteenth (13) months following the
closing date.

     The promissory notes are secured by the assets purchased from iPrint other
than inventory and accounts receivable.

     The Long-Term Note is subject to reduction in the event that the amount of
EBITDA of the Subsidiary for the 12 months following the closing date is less
than $1,000,000.

     The 5,847,953 shares of the Company's common stock issued in the
transaction are being held in escrow pursuant to an escrow agreement until 24
months after the closing date, at which time it will be delivered to iPrint,
Inc. The common stock shall be subject to offset in an amount equal to any
damages for which the Company or the Subsidiary is entitled to be indemnified
pursuant to the Agreement, but only if and to the extent that the principal
balance of the Long-term Note has been reduced to zero as a result of the
possible adjustments described above.


                                      F-29
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

15. Acquisitions (continued)

     The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition.


                  Equipment and improvements   $  207,537
                  Inventory                        73,462
                  Customer list                 1,584,863
                  Accounts receivable           1,197,492
                  Goodwill                      4,013,404
                  Other assets                     42,233
                  Covenant not to compete          15,000
                                               ----------
                  Total assets acquired         7,133,991
                                               ----------
                  Liabilities assumed            (974,187)
                                               ----------
                  Net assets acquired          $6,159,804
                                               ==========

The unaudited pro forma combined statements of operations for the years ended
December 31, 2008 and 2007 presented below assumes that the acquisition of
certain assets of iPrint Technologies, Inc. were completed on January 1, 2008
and 2007, respectively:

                                       December 31,
                                   2008           2007
                               ------------   ------------
Revenues
  Toner                        $ 20,792,888   $ 19,303,878
  Service                         2,886,895      1,229,811
                               ------------   ------------
Total revenues                   23,679,783     20,533,689
                               ------------   ------------
Cost of sales
  Toner                          15,726,167     13,787,217
  Service                         1,030,107        978,408
  Inventory write-down                    -         68,500
                               ------------   ------------
Total cost of sales              16,756,274     14,834,125
                               ------------   ------------
Gross profit                      6,923,509      5,699,564
                               ------------   ------------
Operating expenses
  Salaries and wages              3,448,905      3,572,059
  Professional fees and
   services                       1,477,212      1,378,399
  Sales and marketing             1,441,882        490,001
  General and administrative      2,112,628      2,445,973
  Amortization of
   customer lists                   834,810        950,659
                               ------------   ------------


                                      F-30
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

15. Acquisitions (continued)

Total operating expenses         9,325,437       8,837,091
                              ------------    ------------
Loss from operations            (2,401,928)     (3,137,527)
                              ------------    ------------
Other income (expense)
  Fair value of convertible
   debt                           (293,750)         85,417
  Interest expense              (1,205,951)       (742,634)
  Change in fair value of
   warrant liability              (159,774)        (71,873)
  Termination of
   management agreement               --          (550,000)
  Other income                       7,288          14,445
  Other expense                       --              (800)
                              ------------    ------------
Net Loss                      $ (4,054,126)   $ (4,402,172)
                              ============    ============
Net loss per share
  Basic and diluted           $      (0.06)   $      (0.12)
                              ============    ============

Weighted average shares
  Basic and diluted             69,576,713      35,471,542
                              ============    ============

     The adjustments and methodology used in allocating the purchase
consideration for iPrint and in the preparation of these unaudited pro forma
combined statements of operations are based on estimates, available information
and certain assumptions. The pro forma financial data do not purport to
represent what the Company's combined results of operations would actually have
been if such acquisition had in fact occurred at the beginning of the periods,
and are not necessarily representative of the Company's results of operations
for any future period since the companies were not under common management or
control during the periods presented.







                                      F-31
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

16.  Commitments and Contingencies

Operating leases:

      The Company leases five different facilities located in Santa Rosa, CA,
Larkspur, CA, Chatsworth, CA, Tampa, FL and Morrisville, NC. All of these leases
are non-cancelable with various expiration dates ranging from January 2009
through November 2012. The lease payments are subject to annual increases per
the lease agreement.

     The following table sets forth future minimum rental payments required
under these leases over the next five years.

                                  Years Ended December 31,
Facility              Total      2009       2010       2011       2012
----------------    --------   --------   --------   --------   --------
Santa Rosa, CA      $350,653   $ 85,733   $ 88,305   $ 90,954   $ 85,661
Larkspur, CA           1,570      1,570          -         -          -
Chatsworth, CA       123,574     57,802     60,694     5,078          -
Tampa, FL            173,470     81,978     84,438     7,054          -
Morrisville, NC       31,929     27,639      4,290         -          -
                    --------   --------   --------   --------   --------
Total rent due      $681,196   $254,722   $237,727   $103,086   $ 85,661
                    ========   ========   ========   ========   ========

      Total rent expense for the years ended December 31, 2008, and 2007,
totaled $258,968 and $148,710, respectively.

Litigation:
-----------

     The Company has been named in various lawsuits during the ordinary course
of business. The Company believes it has minimal or no liability. It is
management's opinion that none of these lawsuits will have a material future
financial impact on the Company.




                                      F-32
<PAGE>

AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

17.  Going concern

     The financial statements have been prepared on a going concern basis, which
assumes that the Company will be able to realize its assets and discharge its
obligations in the normal course of business.

     The Company incurred a net loss of $4,640,996 and had negative cash flows
from operations of $2,163,406 for the year ended December 31, 2008, an
accumulated deficit of $22,219,836 and a working capital deficit of $4,973,437
at December 31, 2008. Cash flows from operations are insufficient to sustain the
current level of operations. Thus, the Company has insufficient funds to meet
its financial obligations as they become due.

     Management believes it will be successful in financing its operations for
the next twelve months. During the years ended December 31, 2008 and 2007, the
Company raised through private offerings $5,560,000 and $6,315,414,
respectively. However, until such time as financing is obtained, there can be no
assurance that sufficient funds will be available to finance its operations.
This raises substantial doubt about the Company's ability to continue as a going
concern.

     The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts and
classification of liabilities that might be necessary should the Company be
unable to continue in existence. Although the Company will continue to seek
additional cash resources through equity issuances in order to position the
Company for possible future opportunities, there can be no assurance that funds
will be available on an economic basis to the Company.





                                      F-33
<PAGE>


AMERICAN TONERSERV CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2008 and 2007

18.  Subsequent Events (Unaudited)

     On June 25, 2008, the Company entered into a nonbinding Letter of Intent
("LOI") to purchase certain assets of Mid-America Environmental dba Alpha Laser
and Alpha Imaging. As of December 31, 2008, this LOI had expired. However, on
March 6, 2009, the Company re-entered into a non-binding LOI under different
terms.








                                      F-34
<PAGE>

                                   SIGNATURES

     In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                      AMERICAN TONERSERV CORP.



Date:  March 31, 2009                 By: /s/ Chuck Mache
                                          -------------------------------
                                          Chuck Mache
                                          President and Chief Executive
                                          Officer


                                      By: /s/ Ryan Vice
                                          -------------------------------
                                          Ryan Vice
                                          Chief Financial Officer and
                                          Principal Accounting Officer


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


/s/ Daniel J. Brinker                                 March 31, 2009
-------------------------------
Daniel J. Brinker, Director



/s/ Thomas Hakel                                      March 31, 2009
-------------------------------
Thomas Hakel, Director



/s/ William A. Robotham                               March 31, 2009
-------------------------------
William A. Robotham, Director



/s/ Chuck Mache                                       March 31, 2009
-------------------------------
Chuck Mache, Director


/s/ Steven R. Jensen                                  March 31, 2009
-------------------------------
Steven R. Jensen, Director