U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                                   (Mark One)
            [X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                    For Fiscal Year Ended: December 31, 2005

                                       OR

            [ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

        For the transition period from _______________ to _______________

                         Commission file number: 0-31040

                                  ADSERO CORP.
   --------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

               DELAWARE                                65-0602729
   ---------------------------------        ---------------------------------
    (State or other jurisdiction of         (IRS Employer Identification No.)
    incorporation or organization)

     2101 NOBEL STREET, SAINTE JULIE, QUEBEC                    J3E 1Z8
   --------------------------------------------           -------------------
     (Address of principal executive offices)                (Postal Code)

Issuer's telephone number: (450) 922-5689

Securities registered under Section 12(b) of the Act: NONE

Securities registered under Section 12(g) of the Act: COMMON STOCK, PAR VALUE
                                                      $0.001 PER SHARE

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [ ]

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

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

State issuer's revenues for its most recent fiscal year: $27,841,164

As of March 31, 2006, there were 34,051,930 shares of the issuer's common stock,
par value $0.001, issued and outstanding. Of these, 21,267,531 shares are held
by non-affiliates of the issuer. The market value of securities held by
non-affiliates is approximately $25,733,712 based on the closing price of $1.21
for the issuer's common stock on March 31, 2006.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

                       DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe them
and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933, as amended ("Securities Act").

Not Applicable.

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                                TABLE OF CONTENTS


Item Number and Caption                                                     Page
-----------------------                                                     ----

Forward-Looking Statements .................................................   1

PART I .....................................................................   1

1.    Description Of Business ..............................................   1

2.    Description Of Property ..............................................  23

3.    Legal Proceedings ....................................................  23

4.    Submission Of Matters To A Vote Of Security Holders ..................  24

PART II ....................................................................  24

5.    Market For Common Equity, Related Stockholder Matters And Small
       Business Issuer Purchases Of Equity Securities ......................  24

6.    Plan Of Operation ....................................................  32

7.    Financial Statements .................................................  34

8.    Changes In And Disagreements With Accountants On Accounting,
       And Financial Disclosure ............................................  34

8a.   Controls And Procedures ..............................................  35

8b.   Other Information ....................................................  35

PART III ...................................................................  35

9.    Directors, Executive Officers, Promoters And Control Persons;
       Compliance With Section 16(A) Of The Exchange Act ...................  35

10.   Executive Compensation ...............................................  39

11.   Security Ownership Of Certain Beneficial Owners And Management
      And Related Stockholder Matters ......................................  43

12.   Certain Relationships And Related Transactions .......................  48

13.   Exhibits .............................................................  52

14.   Principal Accountant Fees And Services ...............................  59

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                           FORWARD-LOOKING STATEMENTS

Except for historical information, this report contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such forward-looking
statements involve risks and uncertainties, including, among other things,
statements regarding our business strategy, future revenues and anticipated
costs and expenses. Such forward-looking statements include, among others, those
statements including the words "expects," "anticipates," "intends," "believes"
and similar language. Our actual results may differ significantly from those
projected in the forward-looking statements. Factors that might cause or
contribute to such differences include, but are not limited to, those discussed
in the section "Plan of Operation". You should carefully review the risks
described in other documents we file from time to time with the Securities and
Exchange Commission. You are cautioned not to place undue reliance on the
forward-looking statements, which speak only as of the date of this report. We
undertake no obligation to publicly release any revisions to the forward-looking
statements or reflect events or circumstances after the date of this document.

                                     PART I

                         ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

During the year ended December 31, 2004 we were not engaged in any revenue
producing business activities. We did however, engage in financing activities
and also engaged in discussions, from time to time, with operating businesses
within the imaging consumables segment with respect to possible mergers,
acquisitions and other types of business combinations. In connection therewith,
on May 3, 2004 we entered into two related, non-binding letters of intent to
purchase, through a subsidiary to be formed, all of the issued and outstanding
stock of Teckn-O-Laser Global, Inc. (presently known as Teckn-O-Laser Global
Company). The letters of intent were subsequently amended on each of September
17, 2004 and December 10, 2004. As discussed below under "Teckn-O-Laser Share
Purchase Agreement", on January 31, 2005 we completed this acquisition.

Effective March 22, 2004 we effected a 1:20 reverse stock split. All references
to shares in this prospectus have been adjusted to reflect this stock split.

Prior to the cessation of our operations in or about July 2003, we were a
manufacturer and marketer of environmentally conscious quality aftermarket ink
products for the imaging consumables market. Our products included ink jet and
remanufactured laser toner cartridges, inkjet refill kits, remanufactured inkjet
cartridges, thermal printer film, bulk ink, and a wide range of specialty inks
for industrial printer applications. We generated no sales during 2003 or 2002
from continuing operations due to our main operating subsidiary, Reink Imaging
USA Ltd., filing for Chapter 7 Bankruptcy on July 10, 2003, and its subsequent
treatment as a discontinued operation for financial reporting purposes.

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Previously, we had three (3) wholly-owned subsidiaries: Reink Imaging USA, Ltd.
("Reink USA"), Brittany L.L.C. ("Brittany"), and Reink Canada Corp.("Reink CA").
Reink USA was headquartered in Mississauga, Ontario where we maintained our
principal administrative offices. Reink USA also operated out of a facility in
Cookeville, Tennessee that remanufactured inkjet cartridges, produced bulk ink,
and conducted research and development. Brittany was a limited liability company
located in Pennsauken, New Jersey which owned the real property upon which Reink
USA operations were formerly located. All operations were removed from this
location at the beginning of 2003. Reink CA is a Canadian corporation with
minimal operations formed to handle Canadian sales of our ink products.

We were incorporated in Delaware in March 1999 under the name Reink Corp.
("Reink"). On April 9, 1999 we acquired the stock of Renewable Resources, Inc.
On May 19, 1999, Reink was acquired by Newmarket Strategic Development Corp.
("Newmarket") for 11,850,000 shares of Newmarket stock pursuant to a Plan of
Merger between Reink and Newmarket. Newmarket then changed its name to Reink
Corp. On September 30, 1999, Reink, through its wholly owned subsidiary, Reink
USA, Ltd purchased all of the assets and assumed all of the liabilities of
Assembly Services Unlimited, Inc. ("Assembly") and all of the issued and
outstanding membership certificates of Brittany L.L.C. ("Brittany"), the entity
owning the real property upon which Assembly conducted its operations. Effective
March 22, 2004 Reink changed its name to Adsero Corp.

On December 31, 2002, our Chief Executive Officer, Vice President of Finance and
a production chemist who was employed in our former research and development
facility (collectively the "Former Officers") resigned from their positions with
the Company. Prior to resigning, the Former Officers dismissed all employees of
Reink USA. We commenced and continue to pursue legal proceedings against these
Former Officers for actions that we believe violated non-competition and
confidentiality clauses within their employment contracts. See "Legal
Proceedings".

In January 2003 the three largest creditors of Reink USA filed a petition to
force Reink USA into Chapter 7 under the US Federal Bankruptcy Code (the
"Bankruptcy Code"). In March 2003, the Federal Bankruptcy Court for the District
of New Jersey accepted Reink USA's motion to convert the case into a voluntary
bankruptcy under Chapter 11 of the Bankruptcy Code. On July 10, 2003 the case
was converted back from Chapter 11 "Reorganization" into Chapter 7 "Liquidation"
and a Bankruptcy Trustee was appointed to administer the estate. As a result, we
lost control of Reink USA which is presented as a discontinued operation for all
periods.

TECKN-O-LASER SHARE PURCHASE AGREEMENT

On January 31, 2005 we executed and closed a Share Purchase Agreement (the
"Share Purchase Agreement") dated and effective as of January 2, 2005 among us,
YAC Corp. ("YAC"), Teckn-O-Laser Company ("TOL Canada"), 3091503 Nova Scotia
Company ("Acquiror"), Teckn-O-Laser Global Company ("Acquiree"), 3091732 Nova
Scotia Company ("Callco"), and the shareholders of Acquiree, 9144-6773 Quebec
Inc. and 9144-6906 Quebec Inc. (the "Acquiree Shareholders"). TOL Canada is a
wholly owned subsidiary of Acquiree. YAC is a wholly owned

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subsidiary of ours. Callco is a wholly owned subsidiary of YAC. Acquiror is a
wholly owned subsidiary of Callco. We accounted for the acquisition using the
purchase method of accounting.

Prior to closing, we advanced CDN$1,500,000 (approximately US$1,250,000) to the
Acquiree Shareholders for the purpose of having them acquire certain shares of
Acquiree capital stock from a third party so that at closing, the Acquiree
Shareholders would own all the capital stock of Acquiree. The advance, which was
not required to be repaid upon closing, became part of the purchase
consideration that we paid to the Acquiree Shareholders.

On November 4, 2005 we entered into an agreement with 9144-6773 Quebec Inc. and
9144-6906 Quebec Inc., to restructure certain obligations of ours to these
corporations pursuant to the Share Purchase Agreement.

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

The Closing Payments consisted of:

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

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

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

The Post-Closing Payments consisted of:

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

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

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

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

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Acquiree's EBITDA for the year ending December 31, 2006 was less than
CDN$1,500,000. The 2008 Payment was not due and payable in the event that
Acquiree's EBITDA for the year ending December 31, 2007 was less than
CDN$2,000,000.

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

         o  US$1.00 converted to CDN dollars; or

         o  80% of the average closing price of our common stock converted to
            CDN dollars for the twenty trading days immediately preceding the
            date on which an Acquiree Shareholder provides a notice of
            conversion to Acquiree.

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

Dividends were not payable on the Acquiror Preferred Shares but as long as they
were outstanding, Acquiror could not, without the approval of the holders of the
Acquiror Preferred Shares, pay any dividends on Acquiror's common shares or
redeem or purchase or make any capital distributions in respect of any Acquiror
common shares. Holders of Acquiror Preferred Shares were entitled, subject to
the exercise of the Retraction Call Right by Callco and compliance with other
terms of the Preferred Share Support Agreement, to require Acquiror to redeem
their Acquiror Preferred Shares at a price of CDN$1.00 per share at specified
times.

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The times at which holders of Acquiror Preferred Shares could make such requests
were as follows:

         o  September 15, 2005 : 750,000 Acquiror Preferred Shares;

         o  September 30, 2005 ; 443,250 Acquiror Preferred Shares;

         o  December 31, 2005 : 443,250 Acquiror Preferred Shares; and

         o  March 31, 2006 : 295,500 Acquiror Preferred Shares.

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

The restructuring transaction was effected to improve our liquidity and
facilitate our purchase of treasury shares of Turbon AG. Pursuant to the
restructuring, our obligation to make the 2006 Payment, 2007 Payment and 2008
Payment to the Acquiree Shareholders was terminated, and the 1,932,000 Acquiror
Preferred Shares were cancelled as was our obligation to redeem such Preferred
Shares. In consideration thereof, we agreed to pay $600,000 to the Acquiree
Shareholders, agreed to issue 3,272,397 common shares to the Acquiree
Shareholders at a valuation of $.70 per share or $2,290,678, and agreed to pay
to Acquiree Shareholders additional aggregate cash payments of $2,290,678
payable in six equal installments of $381,780 each on March 31, 2007; June 30,
2007; September 30, 2007; December 31, 2007; March 31, 2008 and June 30, 2008.

Pursuant to the Share Purchase Agreement, we also agreed to issue an aggregate
of 300,000 non-statutory stock options pursuant to our 2000 Stock Option Plan to
employees of TOL Canada and Teckn-O-Laser USA, Inc. ("TOL USA"). The options
granted to each employee have a maximum term of 10 years and vest in equal
amounts, each equal to 1/3 of the total number of options granted to the
employee, on each of the first, second and third anniversaries of the date of
grant. Non-vested options terminate upon the employee's death, permanent
disability or termination of employment. Vested options terminate 60 days after
an employee's death, permanent disability or termination of employment except in
cases where termination is for cause, in which event they terminate at the time
of termination of employment. Effective January 31, 2005 we granted an aggregate
of 244,500 options to 12 persons with an exercise price of US$1.57 per share,
which was the closing market price for our common stock on January 31, 2005.

Pursuant to the Share Purchase Agreement, Wayne Maddever resigned from his
positions as our President and Chief Executive Officer effective January 28,
2005 and the vacancy thereby created was filled at closing by Yvon Leveille. At
closing we also appointed Alain Lachambre as our Vice President of Sales and
Marketing. In connection therewith, we entered into renewable 3 year employment
agreements with each of Yvon Leveille and Alain Lachambre. Messrs. Leveille and
Lachambre were also appointed at that time to our board of directors although

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Mr. Lachambre subsequently determined effective February 4, 2005 that he did not
wish to serve as a director and resigned. The initial base annual salaries
payable to Messrs. Leveille and Lachambre under their employment agreements are
CDN$175,000 (approximately US$145,900) and CDN$166,000 (approximately
US$138,400), respectively. The employment agreements further provide for the
payment of performance based bonuses of up to 100% of salary at the discretion
of the Compensation Committee of the Board of Directors.

In connection with the Share Purchase Agreement and pursuant to our financing
agreement with Manchester Consolidated Corp. ("Manchester") we paid Manchester a
financing fee for its role in arranging the transaction equal to 5% of the
transaction value. The transaction value was CDN$15,382,000 (approximately
US$12,813,206), 5% of which is CDN$769,100 (approximately US$640,660). Pursuant
to the forgoing we have paid Manchester CDN$350,000 in cash (approximately
US$291,550) and paid the CDN$419,100 balance through the issuance of 698,500
shares of our common stock valued at US$.50 per share to Manchester and its
designees.

In a related transaction to the Share Purchase Agreement, effective January 1,
2005 we acquired TOL USA from Teckn-O-Laser Global Inc. pursuant to a Share
Purchase Agreement for $1,000 in cash. TOL USA is the US arm of the
Teckn-O-Laser group of affiliated companies. Teckn-O-Laser Global Company,
Teckn-O-Laser Company, and Teckn-O-Laser USA, Inc. are sometimes hereinafter
singly and collectively referred to as Teckn-O-Laser.

Teckn-O-Laser manufacturers and distributes imaging products, including
remanufactured toner cartridges and remanufactured inkjet cartridges. These
products are sold, directly and indirectly, to original equipment manufacturers,
wholesale distributors, and retail office suppliers, both domestically and
internationally. All such products are designed to reduce environmental waste
while producing significant cost savings for the end consumer and businesses.

Teckn-O-Laser was founded in 1988 and is Canada's largest supplier of name brand
compatible print cartridges. On average, Teckn-O-Laser's remanufactured
cartridges are 30-40% less expensive than those manufactured by original
equipment manufacturers. In 1996 Teckn-O-Laser became the first Canadian toner
cartridge remanufacturer to attain 1SO 9002 certification. Teckn-O-Laser
presently has ISO 9001:2000 certification, the successor standard to ISO 9002.
ISO standards are quality management standards published by the International
Organization for Standardization which is an organization consisting of members
from approximately 150 countries. The goal of the International Organization for
Standardization is to establish uniform international standards for products and
services. The widespread adoption of international standards means that
manufacturers and suppliers can base the development of their products and
services on specifications that have wide acceptance in their sectors.
Businesses using their standards are increasingly able to more readily compete
in many more markets around the world. ISO 9001:2000 has become an international
reference for quality requirements in business and business dealings. It is a
generic management system standard concerned with quality management. Its focus
is on that which an organization does to enhance customer satisfaction by
meeting customer and applicable regulatory requirements and to continually
improve its performance in this regard.

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Teckn-O-Laser currently sells its products, which are various types of
remanufactured toner cartridge and inkjet cartridges in the United States and
Canada. Approximately 60% of its products are sold in the United States with the
40% balance being sold in Canada. Toner cartridge sales presently account for
approximately 98% of all product sales while inkjet cartridge sales presently
account for 2% of product sales. The products are principally manufactured in
our plant in Sainte Julie, Quebec. We also utilize, on occasion, the services of
a contract manufacturer in the United States.

GUARANTEE AGREEMENT WITH NATIONAL BANK OF CANADA

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

STANDSTILL AGREEMENT WITH NATIONAL BANK OF CANADA

Through our Techn-O-Laser entities, we have outstanding loans with National Bank
of Canada (the "Bank"). As of January 26, 2006, we owed the Bank approximately
CDN$3,676,216 (approximately US$3,196,705) in principal and interest under such
loans. The loans are secured by a first ranking lien on the assets of our
Techn-O-Laser entities and are guaranteed by us. We are required to comply with
certain financial ratios under the terms of the loans. As of September 30, 2005
and subsequent periods including the present, we have not been in compliance
with one of those ratios. On January 31, 2006 we entered into a Standstill
Agreement (the "Agreement") with the Bank whereby the Bank agreed to suspend its
rights under the loans until April 30, 2006 subject to our compliance with
certain conditions. These conditions included our payment of US$500,000 within
two business days of the Agreement to reduce the outstanding principal and
interest balance due under the credit facility; to pay a postponement fee to the
Bank of CDN$35,000 (approximately US$30,435); and to pay penalty fees of
CDN$20,000 per month for the period January 1, 2006 through April 30, 2006 or an
aggregate of CDN$80,000 (approximately US$69,565). All required payments were
made by us. Other conditions of the Agreement included (i) our protection of the
Techn-O-Laser assets subject to the Bank's lien; (ii) our not suffering a
material adverse change in our operations or assets which puts the Bank at risk;
(iii) our not declaring bankruptcy or becoming the object of receivership
proceedings; (iv) our not making any assignments for the benefit of creditors
without the written consent of the Bank; (v) our fully cooperating with the Bank
or its representatives with respect to any information request, evaluation,
examination, visit or other procedure undertaken by the Bank with respect to our
assets or business; (vi) our raising the interest rate on the outstanding loans
to Canadian prime plus 2.5%; and (vii) our obtaining a financial commitment from
another financial institution by April 15, 2006 which will enable us to pay off
the balance of the loans by April 30, 2006. By letter agreement dated April 28,
2006 and executed on May 1, 2006 as further amended on May 1, 2006, the Bank
agreed to continue the Standstill Agreement in effect until July 31, 2006
subject to our compliance with certain conditions. These conditions include our
payment of additional postponement fees to the Bank of an aggregate of
CDN$15,000 payable CDN$5,000 per month starting May 1, 2006. Notwithstanding the
foregoing, in the event the loans are paid in full on or before June 30, 2006,

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we will have no obligation to make the CDN$5,000 payment otherwise due on July
1, 2006. Another condition is the continued payment by us to the Bank of penalty
fees in the amount of CDN$20,000 per month. The final new condition is our
obtaining on or before May 10, 2006 a letter of interest from another financial
institution (which condition has been met) and our obtaining on or before May
31, 2006 a letter of offer from another financial institution that will allow us
to pay off the Bank loans by June 30, 2006.

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

BARRINGTON LOAN AGREEMENT

In conjunction with the Share Purchase Agreement, we entered into a Loan
Agreement (the "Loan Agreement") dated as of January 26, 2005 with Teckn-O-Laser
Company (the "Borrower"), YAC Corp. ("YAC"), 3091732 Nova Scotia Company
("Callco"), 3091503 Nova Scotia Company ("TAC"), Teckn-O-Laser Global Company
("TOLG"), Teckn-O-Laser USA Inc. ("TOL USA") and Barrington Bank International
Limited ("Lender"). Pursuant to the Loan Agreement, on January 31, 2005 Lender
loaned CDN$2,000,000 (approximately US$1,666,666) to Borrower which facilitated
our ability to meet our obligations under the Share Purchase Agreement. The
loan, which is secured by all of our assets, is guaranteed by each of us, YAC,
Callco, TAC, TOLG and TOL USA. It has a maximum term of 10 years subject to
acceleration upon default or to earlier payment. Interest of 12% per annum is
due on the loan during the first 12 months of the term and interest of 20% per
annum is due on the loan thereafter. The loan can be prepaid by Borrower in
whole or in part. However, in the event prepayment occurs prior to the 1 year
anniversary of the loan, Borrower is obligated to pay a prepayment fee equal to
the amount of additional interest that Borrower would have paid on the loan from
the date of prepayment through the date of the 1 year anniversary of the loan.
Commencing on the 6 month anniversary of the loan, Lender has the right to
convert the remaining principal balance of the loan into shares of our common
stock at a conversion price of US$1.00 per share. As further consideration for
the loan, we issued 200,000 shares of our common stock to Lender and agreed to
register such shares in a prospectus. In connection with the loan, we, the
Borrower, the Lender and the Guarantors have entered into a series of related
agreements principally designed to protect the interests of the Lender in making
the loan.

SHARE PURCHASE AGREEMENT WITH TURBON AG

Effective June 22, 2005 we entered into a Share Purchase Agreement (the
"Agreement") with Turbon AG ("Turbon") pursuant to which we agreed to purchase
400,000 Turbon shares from Turbon's treasury at a purchase price of $14 per
share or an aggregate of $5,600,000 (the "Purchase Price"). On June 23, 2005 we
paid Turbon $1,001,000 of the Purchase Price and acquired 71,500 of the 400,000
Turbon shares. On November 4, 2005 we paid Turbon an additional $4,599,000 and
acquired the remaining 328,500 of the 400,000 Turbon shares. In connection with
the Agreement, Manchester Consolidated Corp. became entitled to acquisition fees
equal to $642,000. The acquisition fees were paid in a combination of cash
($82,000) and 1,160,000 shares of our common stock. For such purposes, the
common stock was valued at $.50 per share.

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LOAN AGREEMENT WITH TURBON INTERNATIONAL INC.

As of November 4, 2005 we entered into a Loan Agreement (the "Loan Agreement")
with Turbon International Inc., ("Turbon International"), a wholly subsidiary of
Turbon AG, and Teckn-O-Laser Global Company, a wholly owned subsidiary of ours
("Teckn-O-Laser"). Pursuant to the Loan Agreement, Turbon International made a
$2,800,000 term loan to us and extended us a line of credit for up to an
additional $2,800,000. Proceeds from the term loan were utilized by us to
purchase certain Turbon AG shares (See "Share Purchase Agreement with Turbon").
In consideration of the $2,800,000 term loan, we issued a 5% promissory note to
Turbon International. Interest under the term loan note is payable quarterly on
each of January 31, April 30, July 31 and October 31 during the term of the loan
commencing January 31, 2006. Principal and accrued but unpaid interest under the
term loan note are due October 31, 2008 subject to acceleration upon an event of
default. The loan can be prepaid by us at any time prior to maturity without
penalty. The line of credit may only be used by us for the purpose of purchasing
products from Turbon International and certain affiliated entities. We will pay
interest of 5% per annum on all sums advanced under the line of credit. Interest
will be due and payable on the last day of each quarter starting with the
quarter ending November 30, 2005. Principal and accrued but unpaid interest
under the line of credit are due October 31, 2006 subject to acceleration upon
an event of default. All advances under the line of credit will be evidenced by
promissory notes. Amounts borrowed under the line of credit may be repaid by us
at any time prior to maturity without penalty and may be re-borrowed.

Upon an event of default under the term loan or line of credit the interest rate
payable under the applicable notes will be increased from 5% to 9% until cured.
Our indebtedness to Turbon International under both the term loan and line of
credit is secured by a first priority lien on our 400,000 shares of common stock
of Turbon AG.

RECHARGER INDUSTRY

The printer cartridge recharger industry ("Recharger Industry"), with estimated
worldwide revenues of $8 billion, consists of entities that remanufacture toner
and inkjet printer cartridge for resale back to consumers. Remanufactured toner
and inkjet cartridges provide a cost effective alternative to new cartridges.
They also offer an environmental benefit as reusing cartridges keeps tens of
thousands of tons of industrial grade plastics out of landfills. An estimated
700 million cartridges worldwide were thrown away in 2003.

A remanufactured cartridge is a recycled and refilled cartridge that is tested
to insure that it provides the same or greater performance (based on cartridge
yield) as a new, non-recycled cartridge. A used cartridge that is going to be
remanufactured is first disassembled and inspected for wear. Parts that are
damaged or worn are replaced, and other components are cleaned and
reconditioned. The cartridge is then reassembled, filled and tested for proper
performance.

Properly remanufactured cartridges do not damage the copy machine or printer in
which they are ultimately used. In order to remanufacture a cartridge you must
first have the empty one to refill.

                                        9
<PAGE>

When a new printer using a new cartridge is introduced it may take several
months if not years for the empty cartridges to become available in the quantity
that warrants the refiller to make the investment to tool up for remanufacture.

Toner cartridges can be remanufactured several times. Approximately 97% of the
combined components (plastic, metal, rubber, paper, foam and toner) in toner
cartridges can be recycled. If not recycled the plastic made of engineering
grade polymers, takes at least 1,000 years to decompose. Remanufactured toner
cartridges minimize the disposal of these materials, conserve natural resources
by eliminating the need for virgin materials, and saves energy in the
remanufacturing process.

Laser toner is a dry, powdered ink while inkjet inks are liquid. Laser printers
(as well as inkjet multifunction machines, laser copiers, and laser fax
machines) work by fusing toner to paper using heat. The printed results of
lasers are smudge-proof and waterproof. Inkjet printers (as well as inkjet
multifunction machines, inkjet copiers, photo printers, and inkjet fax machines)
spray tiny droplets of liquid ink onto paper. There have been great strides in
recent years in inkjet printing technology that have made them much more
resistant to smudging and smearing.

The Recharger Industry is currently highly fragmented with a large number of
small competitors competing in this growth segment. Much of this growth comes
from the fact that both consumers and business are increasingly utilizing
printers to develop their digitized image products. In order to compete,
participants will need to achieve economies of scale and develop expanded sales
channels. With the increased numbers of different printer cartridges the smaller
producers will need to move more toward outsourcing as a way to manage their
research and development and manufacturing costs. This will allow the business
owner to focus on the sales and service of their customers. Adsero seeks to
capitalize on this outsourcing through strategic arrangements to produce all of
their production as well as providing other services to enhance the small
business owner's ability to attract and retain customers.

CONSULTING AND OTHER SERVICE AGREEMENTS

Effective January 13, 2005 we entered into an agreement with 6327214 Canada
Inc., a corporation owned by William Smith pursuant to which we receive the
services of William Smith, our acting secretary, treasurer and chief financial
officer. Pursuant to the agreement we pay a fee of CDN$13,750 per month
(approximately US$11,500) which amount is subject to future modification upon
mutual agreement of the parties.

Effective February 1, 2005 we entered into a 1 year Investor Relations Agreement
with Agora Investor Relations Corp., an Ontario, Canada corporation ("Agora")
pursuant to which Agora provides shareholder services and, subject to compliance
with applicable laws, rules and regulation, other services intended to raise
public awareness of our business. In consideration of such services, we are
paying Agora monthly compensation of CDN$2,750 (approximately US$2,300) and have
issued to Agora 100,000 stock options, each to purchase one share of our common
stock, at a price of $1.50 per share. The options are exercisable, upon vesting,
during the period February 1, 2006 through February 1, 2008. 25,000 of the
options vest on each of May 1, 2005; August 1, 2005; November 1, 2005; and
February 1, 2006. The agreement is renewable at our option, for an additional 1
year term on similar terms.

                                       10
<PAGE>

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

Effective January 7, 2005 we entered into a financial consulting agreement with
Westminster Capital Inc. ("Westminster"). The term of the agreement is through
and until December 31, 2007. In consideration thereof, we issued 300,000 shares
to Westminster.

Effective January 7, 2005 we entered into a corporate consulting agreement with
Gregory Belzberg. The term of the agreement is through and until December 31,
2007. In consideration thereof, we issued 50,000 shares of our common stock to
Mr. Belzberg.

In January 2004 we entered into an exclusive financing arrangement with
Manchester Consolidated Corp. ("Manchester"), a corporation owned by Anthony
Pallante whereby a fee is payable by us, upon successful completion of a
financing or any acquisition, merger, or other business combination generated by
Manchester. The fees for financing were 10% up to $2 million plus 7% on $2
million to $5 million plus 5% on any excess over $5 million and the fees for an
acquisition which are based on the transaction value were 12% on first $5
million plus 7% on the next $5 million plus 4% on any excess value over $10
million. Where Manchester both raises financing and assists in a merger in the
same transaction it is entitled to the larger fee under the two provisions.
Either party to the agreement can terminate, without penalty, upon nine months
prior written notice. In July 2004 we amended the January 2004 financing
agreement arrangement. Thereunder, we are presently obligated to pay Manchester
a fee upon successful completion of a financing or any acquisitions, mergers, or
other business combinations arranged for us by or through Manchester. The
revised fee structure for financings are 10% for transactions up to and
including $2,000,000; 7% for transactions in excess of $2,000,000 up to and
including $5,000,000; and 5% for transactions in excess of $5,000,000. The
revised fee structure for acquisitions, mergers or other business combinations
is 12% for transactions up to and including $5,000,000; 7% for transactions in
excess of $5,000,000 up to and including $10,000,000; and 5% for transactions in
excess of $10,000,000. All other material terms of the arrangement remain
unchanged. In connection with its role in arranging the Share Purchase Agreement
with Teckn-O-Laser Global Company, we paid Manchester a transaction fee equal to
5% of the transaction value of CDN($15,382,000) (approximately US$12,813,206)
which was CDN$769,100 (approximately US$640,660). Payments consisted of
CDN$350,000 in cash (approximately US$291,550) and CDN$419,100 (approximately
US$349,250) in shares of our common stock valued at US$.50 per share resulting
in our March 2005 issuance of 698,500 shares to Manchester and its designees. As
more fully described above under "Share Purchase Agreement with Turbon AG", we
paid acquisition fees of $642,000 consisting of cash ($82,000) and 1,120,000
shares of stock valued at $.50 per share ($560,000) in connection with our
acquisition of an aggregate of 400,000 shares of Turbon AG.

                                       11
<PAGE>

Effective January 6, 2003 we executed a consulting agreement with Manchester
Administrative Services Inc. ("Manchester Administrative"), a corporation owned
by Anthony Pallante, to provide us with the services of various individuals.
Thereunder, Manchester Administrative was paid consulting fees of up to $40,000
per month depending on the level of work completed. Fees were invoiced monthly
on an ongoing basis. Pursuant to this agreement, we received the services of
William Smith, who signed the contract on behalf of Manchester Administrative,
as Executive Vice President. Manchester Administrative was paid $259,074 under
this agreement for 2004, $81,500 of which was paid to William Smith, $45,000 of
which was paid to Anthony Pallante, and the remainder consisted of expense
reimbursement related to our corporate reorganization and acquisition
activities. At the end of each quarter, under this agreement, Manchester
Administrative had the right to convert any unpaid fees into our common stock at
the greater of $1.00 per share or 80% of the then market price. This agreement
was terminated effective January 13, 2005.

Effective June 22, 2005, we entered into a Strategic Supply Agreement (the
"Agreement") with Turbon AG ("Turbon"), a leading global imaging supply company
specializing in the remanufacture of laser cartridges. Pursuant to the
Agreement, Turbon is a strategic supplier of remanufactured laser toner
cartridges for us at prices that are competitive in the market place for such
products and that are lower than prices offered by Turbon to other third party
customers for similar products under similar conditions. In consideration
thereof, we have given preferred vendor status to Turbon and have given
preference to ordering products from Turbon over competitive products of third
parties as long as Turbon's product quality meets our specifications. The
Agreement runs through December 31, 2008 and is subject to early termination and
renewal provisions.

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

For a description of additional service agreements see Executive Compensation -
Employment Agreements and Certain Relationships and Related Transactions.

FINANCING TRANSACTIONS

On November 4, 2005 we sold 2,400,000 subscription receipts at a price of $.50
per subscription receipt or an aggregate of $1,200,000 to HBT Holdings GmbH.
Each subscription receipt was automatically exercised, without payment of any
additional consideration, on January 31, 2006 into one unit. Each unit consists
of one share of our common stock (the "Unit Shares") and one common stock
purchase warrant (the "Unit Warrants"). Each warrant entitles the holder to
purchase, subject to adjustment, an additional share of our common stock (the
"Warrant Shares") at a price of $1.25 per share during the period ending at 5:00
p.m. (Toronto time) on May 3, 2008. Proceeds from the sales were utilized by us
purchase certain Turbon AG shares.

                                       12
<PAGE>

On November 4, 2005 we received aggregate loans of $600,000 from three related
persons. In consideration thereof, we issued 5% convertible promissory notes due
December 31, 2006 (the "Maturity Date") to Alain Lachambre ($136,198), Yvon
Leveille ($328,113) and Manchester Consolidated Corp. ($135,689). Interest and
principal on the notes are due on the Maturity Date. The notes can be prepaid by
us at any time. If all principal and interest due on the notes are not paid in
full on the Maturity Date, the respective holders may, at their sole option,
convert the total amount of unpaid principal and interest into shares of our
common stock at the rate of $.50 per share. The loan proceeds were utilized to
purchase certain Turbon AG shares.

As of November 4, 2005 we entered into a Loan Agreement (the "Loan Agreement")
with Turbon International Inc., ("Turbon International"), a wholly subsidiary of
Turbon AG, and Teckn-O-Laser Global Company, a wholly owned subsidiary of ours
("Teckn-O-Laser"). Pursuant to the Loan Agreement, Turbon International made a
$2,800,000 term loan to us and extended us a line of credit for up to an
additional $2,800,000. Proceeds from the term loan were utilized by us to
purchase certain Turbon AG shares. In consideration of the $2,800,000 term loan,
we issued a 5% promissory note to Turbon International. Interest under the term
loan note is payable quarterly on each of January 31, April 30, July 31 and
October 31 during the term of the loan commencing January 31, 2006. Principal
and accrued but unpaid interest under the term loan note are due October 31,
2008 subject to acceleration upon an event of default. The loan can be prepaid
by us at any time prior to maturity without penalty. The line of credit may only
be used by us for the purpose of purchasing products from Turbon International
and certain affiliated entities. We will pay interest of 5% per annum on all
sums advanced under the line of credit. Interest will be due and payable on the
last day of each quarter starting with the quarter ending November 30, 2005.
Principal and accrued but unpaid interest under the line of credit are due
October 31, 2006 subject to acceleration upon an event of default. All advances
under the line of credit will be evidenced by promissory notes. Amounts borrowed
under the line of credit may be repaid by us at any time prior to maturity
without penalty and may be re-borrowed.

Upon an event of default under the term loan or line of credit the interest rate
payable under the applicable notes will be increased from 5% to 9% until cured.
Our indebtedness to Turbon International under both the term loan and line of
credit has been guaranteed by Teckn-O-Laser and, subject to our receipt of
written consent from our existing secured lenders, will be secured by a first
priority lien on our 400,000 shares of common stock of Turbon AG.

On November 29, 2005 we entered into an Agency Agreement with Loewen, Ondaatje,
McCutcheon Limited ("LOM") pursuant to which we offered and sold through LOM, as
placement agent, (the "Agent") 1,400,000 subscription receipts (the
"Subscription Receipts") at a price of $.50 per Subscription Receipt or $700,000
in the aggregate. The offering was made to non-US persons in reliance on
Regulation S under the Securities Act of 1933 as amended. Each Subscription
Receipt was automatically exercised, without payment of any additional
consideration, effective December 31, 2005, into a unit (the "Units") consisting
of one share of our common stock (the "Unit Shares") and one common stock
purchase warrant (the "Unit Warrants"). Each Unit Warrant entitles the holder to
purchase an additional share of our common stock (the "Warrant Shares") at a
price of $1.25 per share during the 30 month period that commenced on November
29, 2005.

                                       13
<PAGE>

Pursuant to the Agency Agreement, we paid the Agent a commission of $49,000
which is equal to 7% of the gross aggregate offering proceeds and issued to the
Agent 98,000 broker warrants (the "Broker Warrants") which is equal to 7% of the
number of Subscription Receipts sold. Each Broker Warrant was automatically
exercised, without payment of any consideration, effective December 31, 2005,
into one agent's warrant (the Agent's Warrant"). Each Agent's Warrant entitles
the holder, subject to adjustment and the terms and condition set forth in the
Agent's Warrant certificate, to purchase from us one Unit at a price of $.50 per
Unit during the 30 month period that commenced November 29, 2005.

On November 9, 2005 we entered into an Agency Agreement with Loewen, Ondaatje,
McCutcheon Limited ("LOM") pursuant to which we offered and sold through LOM, as
placement agent, (the "Agent") 4,000,000 subscription receipts (the
"Subscription Receipts") at a price of $.50 per Subscription Receipt or
$2,000,000 in the aggregate. The offering was made to non-US persons in reliance
on Regulation S under the Securities Act of 1933 as amended. Each Subscription
Receipt was automatically exercised, without payment of any additional
consideration, effective December 31, 2005, into a unit (the "Units") consisting
of one share of our common stock (the "Unit Shares") and one common stock
purchase warrant (the "Unit Warrants"). Each Unit Warrant entitles the holder to
purchase an additional share of our common stock (the "Warrant Shares") at a
price of $1.25 per share during the 30 month period that commenced on November
9, 2005.

Pursuant to the Agency Agreement, we paid the Agent a commission of $140,000
which is equal to 7% of the gross aggregate offering proceeds and issued to the
Agent 280,000 broker warrants (the "Broker Warrants") which is equal to 7% of
the number of Subscription Receipts sold. Each Broker Warrant was automatically
exercised, without payment of any consideration, effective December 31, 2005,
into one agent's warrant (the Agent's Warrant"). Each Agent's Warrant entitles
the holder, subject to adjustment, to purchase from us one Unit at a price of
$.50 per Unit during the 30 month period that commenced November 9, 2005.

Pursuant to the Agency Agreement, we also granted the Agent the right to act as
co-lead member of an investment banking syndicate for purposes of marketing and
selling any brokered equity financing for us in Canada for a period of one year
commencing November 9, 2005. We also granted the Agent the right to a minimum
participation of 15% on any brokered equity financing for us in the United
States for a period of one year commencing November 9, 2005.

On July 21, 2005 we entered into an Agency Agreement with Loewen, Ondaatje,
McCutcheon Limited ("LOM") pursuant to which we offered and sold through LOM, as
placement agent, (the "Agent") 1,707,000 subscription receipts (the
"Subscription Receipts") at a price of $.75 per Subscription Receipt or
$1,280,250 in the aggregate. The offering was made to non-US persons in reliance
on Regulation S under the Securities Act of 1933 as amended. Each Subscription
Receipt was automatically exercised, without payment of any additional
consideration, effective December 31, 2005, into one and one-half units (the
"Units") resulting in our issuance of 2,560,500 Units. Each Unit consists of one
share of our common stock (the "Unit Shares") and one common stock purchase
warrant (the "Unit Warrants"). Each Unit Warrant entitles the holder to purchase
an additional share of our common stock (the "Warrant Shares") at a price of
$1.25 per share during the 30 month period that commenced on July 21, 2005.

                                       14
<PAGE>

Pursuant to the Agency Agreement, we paid the Agent a commission of $89,618
which is equal to 7% of the gross aggregate offering proceeds and issued to the
Agent 119,490 broker warrants (the "Broker Warrants") which is equal to 7% of
the number of Subscription Receipts sold. Each Broker Warrant was automatically
exercised, without payment of any consideration, effective December 31, 2005,
into, subject to adjustment, one and one-half agent's warrants (the Agent's
Warrant") resulting in our issuance of 179,235 Agent's Warrants. Each Agent's
Warrant entitles the holder, subject to adjustment and the terms and condition
set forth in the Agent's Warrant certificate, to purchase from us one Unit at a
price of $.50 per Unit during the 30 month period that commenced July 21, 2005.

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

Effective June 22, 2005 we entered into an agreement (the "Agreement") with
Loewen, Ondaatje, McCutcheon Limited ("LOM"), an investment banking firm.
Pursuant to the Agreement, LOM loaned us $1,001,000 on June 22, 2005 for the
specific purpose of allowing us to purchase issued and outstanding shares of
Turbon AG. The term of the loan was the one year period that commenced on June
22, 2005. Interest accrued on the outstanding amount of the loan at the rate of
10% compounded semi-annually, and was payable quarterly commencing September 1,
2005. As partial consideration for entering into the Agreement, we issued
100,000 common stock purchase warrants to LOM, each exercisable for the purchase
of one share of our common stock at a price of $1.50 per share during the 30
month period following issuance. The LOM loan was repaid in full from the
proceeds of our July 21, 2005 private placement.

As disclosed in greater detail above under "Barrington Loan Agreement",
effective January 31, 2005 we closed a loan agreement with Barrington Bank
International Ltd. pursuant to which we received CDN$2,000,000.

On January 7, 2005 we issued a $1,000,000 convertible promissory note (the
"Note") paying interest at the rate of 3.9% per annum to Westminster Capital
Inc. ("Westminster") in consideration of $1,000,000 which was used for us for
the primary purpose of providing funding for our acquisition of Teckn-O-Laser
Global Company. Interest and principal on the Note were due January 1, 2008
subject to prepayment or conversion commencing on or after July 1, 2005.

                                       15
<PAGE>

Interest and principal due on the Note were convertible into shares of our
common stock at a price of $.50 per share. For each share acquired upon
conversion, the holder was to also receive one common stock purchase warrant to
purchase one share of our common stock at a price of $1.50 per share at any time
prior to July 1, 2008. Effective September 30, 2005 Westminster converted the
principal ($1,000,000) and interest ($28,529) then due thereon, at a conversion
price of $.50 per unit, into an aggregate of 2,057,058 shares and 2,057,058
warrants.

On January 6, 2005 we entered into an equity purchase commitment with Trisan
Equitable Corporation pursuant to which Trisan agreed to purchase an aggregate
of $1,600,000 of our common shares valued at $.50 per share in stated amounts at
stated times. For each share purchased by Trisan under the equity purchase
commitment, we also agreed to issue to Trisan one common stock purchase warrant,
each to purchase one share of common stock at $1.50 per share. No shares were
ever purchased by Trisan under the equity purchase commitment which was
cancelled by mutual agreement on November 14, 2005.

In January, 2005 we sold 200,000 units to 1 person at $.50 per unit or $100,000
on an aggregate basis. Each unit consists of one share of our common stock and
one common stock purchase warrant. Each warrant entitles the holder to purchase
one share of our common stock at a price of $1.50 per share at any time during
the three year period commencing on January 31, 2005. The shares comprising part
of the units were issued in May 2005.

In January 2005 we sold an aggregate of 2,330,000 units to 10 persons at $.50
per unit or $1,165,000 on an aggregate basis. Each unit consists of one share of
our common stock (the "Unit Shares") and one common stock purchase warrant. Each
warrant entitles the holder to purchase one share of our common stock at a price
of $1.50 per share at any time during the three year period commencing on
January 31, 2005. The proceeds from the offering were used towards the funding
of our acquisition of Teckn-O-Laser Global Company. In connection with these
sales we issued 68,000 units to DGM Bank & Trust Inc. as a commission with
respect to sales of 680,000 units made through them in the offering (the "DGM
Units"). 2,210,000 of the Unit Shares and 56,000 shares comprising part of the
DGM Units were issued in March 2005. The remaining 120,000 Unit Shares and
12,000 shares comprising part of the DGM Units were issued in May 2005.

During the period July 2004 through October 2004 we sold an aggregate of 647,500
Special Warrants to 18 persons at $1.00 per unit or $647,500 on an aggregate
basis pursuant to our Agency Agreement dated June 22, 2004 with DGM Bank & Trust
Inc. (the "Agent"). Each Special Warrant was exercisable without additional
consideration to receive a Class A unit consisting of one share of our common
stock and one common stock purchase warrant. Each of these warrants, as amended,
entitles the holder to purchase one share of our common stock at $1.50 per share
at any time during the three year period that commenced on September 27, 2004.
In connection with the offering, we also issued 64,750 Special Warrants to the
Agent. Effective October 27, 2004 all of the Special Warrants were exercised
resulting in our issuance of 712,500 shares and 712,500 warrants. Pursuant to
the offering we were also obligated to pay a 100,000 share work fee to the
Agent, which was paid in March 2005. The proceeds from the offering were used to
fund our acquisition of Teckn-O-Laser Global Company. In January 2005, in
connection with a related unit offering, the proceeds of which were also to be

                                       16
<PAGE>

utilized for the funding of the acquisition, it became apparent that our unit
pricing was too high and that our units of the type underlying the Special
Warrants sold in this offering should be sold at $.50 per unit rather than $1.00
per unit. Consequently, in January 2005 we agreed to issue an additional 647,500
units to the offering subscribers or their designees, at no additional cost, to
bring their unit cost down to $.50 per unit. The additional units were issued in
March 2005.

On June 22, 2004 we entered into an Agency Agreement with DGM Bank & Trust Inc.
("DGM") whereby DGM was appointed as our exclusive placement agent for an
offering (the "Offering") of up to 4,250,000 special warrants (the "Special
Warrants") at a price of $1.00 per Special Warrant or $4,250,000 on an aggregate
basis. The Offering was to consist of a first offering (the "First Offering")
consisting of up to 750,000 Special Warrants and a second offering (the "Second
Offering") consisting of 2,750,000 Special Warrants. As discussed above, we sold
an aggregate of 647,500 Special Warrants in the First Offering and issued 64,750
Special Warrants to DGM in its capacity as placement agent. DGM was unable to
effect the Second Offering under the terms contemplated and the Second Offering
was subsequently abandoned. We did however, arrange alternative financing as
discussed above under the paragraph dealing with our December 2004 and January
2005 offering. In connection with the termination of the Agency Agreement we
issued 50,000 common shares and 150,000 common stock purchase warrants to DGM in
satisfaction of certain obligations of ours to DGM under the Agency Agreement.
We further agreed that if DGM engages in and completes any future financings on
our behalf that DGM will be compensated at rates to be negotiated. In the First
Offering, each Special Warrant was exercisable, for no additional consideration,
to receive one Class A Unit (the "A Units"). Each A Unit consists of one share
of our common stock and one common stock purchase warrant to purchase an
additional share of our common stock at a price of $1.50 per share at any time
during the three year period commencing on the closing date of the First
Offering. In the Second Offering, each Special Warrant was to be exercisable,
for no additional consideration, to receive one Class B Unit (the "B Units").
Each B Unit was to consist of one share of our common stock and one-half common
stock purchase warrant. Each full common stock purchase warrant was to be
exercisable to purchase one of our common stock at a price of $1.50 per share at
any time during the two year period commencing on the closing date of the Second
Offering. In consideration of the Agent's services, we agreed to pay the Agent a
commission equal to 10% of the gross proceeds raised in the Offering, except
with respect to sales to certain persons identified by us to the Agent. For
these sales, the commission was 5%. We further agreed to pay the Agent a 10%
commission with respect to certain unrelated financings by us, if any, during
the period June 22, 2004 through the closing date of the Second Offering. The
Agent could elect to receive commissions in cash, Special Warrants or some
combination thereof. We were further obligated to issue to the Agent, Special
Warrants in an amount equal to 10% of the Special Warrants sold in the Offering.
In the event, we raised gross proceeds of $500,000 or more in the First
Offering, we agreed to issue 100,000 common shares to the Agent as a work fee.

In May and June 2004 we sold an aggregate of 205,000 units to 3 persons at $1.00
per unit or $205,000 in the aggregate. Each unit consists of one share of our
common stock and one common stock purchase warrant. Each warrant, as amended,
entitles the holder to purchase one share of our common stock at a price of
$1.50 per share at any time during the three year period that commenced on the
subscription date. The proceeds from this offering were issued towards the
funding of our acquisition of Teckn-O-Laser Global Company. In January 2005 in

                                       17
<PAGE>

connection with a related unit offering, the proceeds of which were also to be
utilized towards the funding of the acquisition, it became apparent that our
unit pricing was too high and that our units of the type sold in May and June
2004 should be sold at $.50 per unit rather than $1.00 per unit. Consequently,
in January 2005 we agreed to issue an additional 205,000 units to the investors,
at no additional cost, to bring their unit cost down to $.50 per unit. Both the
original 205,000 units and the additional units were issued in March 2005.

In April 2004, we issued a $70,000 convertible promissory note bearing interest
at 10% per annum to Manchester Consolidated Corp. The note was due on demand. It
was convertible into shares of our common stock at a conversion price of $1.00
per share. The note, together with all accrued interest then due, was paid in
full in February 2005.

On January 1, 2004 we issued a 10%, $250,000 promissory note to BG Capital Group
Bahamas Ltd. in consideration of $250,000 advanced to us for use as working
capital. The Note was due January 1, 2005, or earlier in the event that we
consummated a business combination with an entity having revenues of $3,000,000
or more in its last completed fiscal year. In such latter event, the Note was
due thirty days after the completion of the business combination. In January
2005, the parties mutually agreed to extend the due date on the Note to February
28, 2005. In February 2005 we paid off the note and all accrued interest then
due on the note.

TURBON AG ACQUISITION

In April 2005, we expressed our interest to management of Turbon AG ("Turbon"),
in acquiring all the outstanding shares of Turbon, a leading global imaging
supply company publicly traded on the Frankfurt stock exchange. The aggregate
offering price, pursuant to the expression of interest, as revised, was
approximately US$50.8 million in cash. The completion and closing of an
acquisition by us of all of the outstanding shares of Turbon would be subject to
several conditions, including but not limited to, raising of the necessary funds
to close the transaction, obtaining the approval of Turbon's shareholders, and
our submission of a public offering to acquire all of Turbon's outstanding
shares in accordance with the applicable regulations to which we and Turbon are
subject. No assurance can be given that the acquisition can be successfully
completed or, if completed, the actual terms thereof. At the present time, we
have no agreements in place with Turbon, Turbon's shareholders or any lenders.

Effective June 22, 2005 we entered into a Share Purchase Agreement (the "Share
Purchase Agreement") with Turbon AG pursuant to which we agreed to purchase
400,000 Turbon AG shares from Turbon AG's treasury at a purchase price of $14
per share or an aggregate of $5,600,000 (the "Purchase Price"). On June 23, 2005
we paid Turbon $1,001,000 of the Purchase Price and acquired 71,500 of the
400,000 shares. On November 4, 2005 we paid Turbon AG $4,599,000 of the Purchase
Price and acquired the remaining 328,500 shares. The 400,000 shares purchased by
us represent 9.928% of Turbon AG's outstanding share capital consisting of
4,029,000 shares. Pursuant to the Share Purchase Agreement, Manchester
Consolidated Corp. earned acquisition fees of $642,000. The acquisition fee was
paid in a combination of cash ($82,000) and the balance in shares of our common
stock. For such purposes, the common stock was valued at $.50 per share.

                                       18
<PAGE>

EMPLOYEES

As of March 31, 2006 we had 144 employees including 96 in production, 26 in
sales and marketing, 5 in research & development and quality control, and 17 in
administration. Per location we have 138 in Sainte Julie, Quebec, 4 in Toronto,
Ontario, and 2 in Quebec City, Quebec. On November 30, 2004, the United Steel
Workers Union, local section 9414 (the "Union"), affiliated with the FTQ
(Federation des travailleurs du Quebec) was accredited to represent the
production employees of Teckn-O-Laser at the Sainte Julie location. The
accreditation certificate covers production employees, excluding office and
administrative employees and all other excluded by law. On January 9, 2005,
representatives were elected and negotiations commenced February 17, 2005. Our
first Union contract was completed and signed on November 5, 2005. The Union has
negotiated salary increases for the next 2 years at 2% in year 1 and 2.5% in
year 2. All other conditions remain similar to prior to the Union contract being
implemented.

MANUFACTURING AND PRODUCTION

We operate two manufacturing facilities. Our headquarters and main operations
facility is located in Sainte Julie, Quebec, in a 70,828 square foot facility.
We remanufacture laser toner cartridges, and inkjet cartridges at this facility.
The remanufacturing process includes inspecting the old cartridge, replacing all
worn parts, and print testing the cartridge for quality. Additionally, all
research and development is conducted at the Sainte Julie location. We employ
approximately 159 full time employees at this location.

We also lease 16,944 square feet in Memphis, Tennessee. The Memphis facility was
closed at the end of January 2006. We are currently attempting to sublease the
property. We also lease 2 other locations for use as sales offices in Quebec
City, Quebec and Toronto, Ontario.

PATENTS, TRADEMARKS, AND LICENSES

In the conduct of our business, we rely upon trade secrets and unpatented
proprietary technology. We seek to maintain the confidentiality of such
information by requiring employees, consultants and other parties to sign
confidentiality agreements and by limiting access by parties outside the Company
to such information. There can be no assurance, however, that these measures
will prevent the unauthorized disclosure or use of this information or that
others will not be able to independently develop such information. Additionally,
there can be no assurance that any agreements regarding confidentiality and
non-disclosure will not be breached, or, in the event of any breach, that
adequate remedies would be available to us.

We seek to protect technology, inventions and improvements that we consider
important through the use of trade secrets. While we do not believe that any of
our products infringe any valid claims of patents or other proprietary rights
held by third parties, there can be no assurance that these products do not
infringe any patents or other proprietary rights held by third parties. If an
infringement claim were made, the costs incurred to defend the claim could be
substantial and adversely affect us, even if we were ultimately successful in
defending the claim. If our products were found to infringe any proprietary
right of a third party, we could be required to pay significant damages or
license fees to the third party or cease production.

                                       19
<PAGE>

Litigation may also be necessary to protect trade secrets or techniques owned by
us. Any such claims or litigation could result in substantial costs and
diversion of effort by management.

Specifically, we believe patent protection is of limited usefulness for our
technologies, because competitors have the ability (even if we had a patent) to
develop substantially equivalent technology. Therefore, we rely on trade secrets
and other unpatented proprietary technology. There can be no assurance that we
can meaningfully protect our rights in such unpatented proprietary technology or
that others will not independently develop substantially equivalent proprietary
products or processes or otherwise gain access to our proprietary technology. We
also seek to protect our trade secrets and proprietary know-how, in part, with
confidentiality agreements with employees and consultants. There can be no
assurance that the agreements will not be breached, that we will have adequate
remedies for any breach or that our trade secrets will not otherwise become
known to or independently developed by competitors.

We own the following trademarks in Canada and the Unites States: Technolaser,
Evergreen, Reflexion and OEP - Original Equipment Protect.

PRODUCTS

Our products consist solely of types of remanufactured inkjet and toner
cartridges all of which are made in accordance with ISO 9001-2000 standards.

Laser toner cartridges

An extensive manufacturing process ensures that all our laser toner cartridges
meet or exceed the original equipment manufacturer's performance standard. Our
research and development staff has enabled us to remanufacture high quality
products while realizing cost savings for the end consumer. There is still
growth taking place in this market segment. We plan to aggressively develop
market share by selling products through our existing customer networks as well
as developing new business through alternative channels.

Inkjet cartridges

We manufacture and distribute remanufactured inkjet cartridges for the
industry's most popular printers. We center our inkjet product strategy on
providing multiple products under various brand names for customers seeking an
alternative to current high priced printing costs. Although this currently is a
very small portion of our business, there remains substantial growth
opportunities in this area.

Product Warranties

We offer a lifetime guarantee on our cartridges, including parts and labor,
against defects. We replace or reimburse our customers for defective cartridges
provided the cartridge has not been altered in any way. Further, we guarantee

                                       20
<PAGE>

that our cartridges will never damage a laser printer, fax, or photocopier. If
they do so, we are obligated to replace damaged equipment parts and reimburse
any repair costs. We do not assume responsibility for another direct or indirect
damages caused by the use of our cartridges.

SALES AND MARKETING

During the year ended December 31, 2005 we had revenues of $27,841,164 and a net
loss of $7,387,429. Our overall marketing strategy is to focus on core strengths
and identify the product demands of the imaging supplies market. Our goal is to
produce high quality cartridges which can be sold within a wide number of
formats thus minimizing our reliance on any one segment, channel or customer.
Our strategy will focus on the following channels:

         o  Recharger dealers

         o  Governmental and corporate channels

         o  Distributors to the retail channel

Recharger Dealers

Rechargers, or remanufacturers, are faced with the challenge of dealing with a
large number of different products, growing research and development demands,
and the growing market for color cartridges, which are more difficult to
remanufacture. These rechargers are currently considering outsourcing some
products to larger remanufacturers who have economies of scale and can spread
the costs of research and development over a larger base of business. We will
focus on these dealers with the intention of obtaining their outsourcing
business.

Government and Corporate Channels

Governments are extremely large users of ink and related products. We currently
sell into certain government departments but the growth opportunity is increased
as we provide a cost effective environmentally friendly alternative to the
original equipment manufacturer. Through distributors with existing government
business in other products, we are gaining access to this large market. As the
governmental departments are focusing on their budgets and the need to cut
costs, the need for alternatives increases, thus providing an opportunity for
growth. For example, the demand for remanufactured inkjet cartridges is growing
given the high cost per original equipment manufacturer cartridge and the
increased printer usage as employees are provided with printers in their
individual offices.

Distributors to the Retail Channel

We will look at different alternative retail channels in order to provide
products for the end consumer at convenient locations.

                                       21
<PAGE>

CUSTOMERS

Our principal customers are recharger dealers and retail channel distributors
that sell our products to end user consumers. At the present time we have in
excess of 200 customers. Our 9 largest customers account for almost 50% of our
sales. Clarity Imaging Technologies Inc, which accounts for approximately 14% of
our sales, is our only customer that presently accounts for more that 10% of our
sales. Although we do not believe the loss of any single customer would have a
long term detrimental effect on our business, the loss of several of our nine
largest customers could be expected to have a material adverse effect on our
business and financial results.

SUPPLIES AND SUPPLIERS

Required supplies and raw materials consist of empty printer cartridges and
related components including toner, imaging drums, wiper blades and clips. We
purchase supplies from 8 to 10 suppliers. Static Control Components is our
leading supplier accounting for approximately 80% of our raw materials and
sources. In the event we are unable to continue our relationships with Static
Control Components and our other suppliers, comparable supplies of like quality
and cost are available to us from several other sources. Accordingly, we do not
believe the loss of any of our suppliers would have a detrimental effect on us.

RESEARCH AND DEVELOPMENT

We devote a part of our annual research and development budget to new product
development and quality control. During its 2003 and 2004 fiscal years ended
April 30, 2003 and April 30, 2004, Teckn-O-Laser spent approximately CDN$475,000
(approximately US$395,833) and CDN$336,000 (approximately US$280,000)
respectively on research and development. We spent approximately US$300,000 on
research and development during 2005. Our research and development staff of five
(5) in Sainte Julie reengineers the original equipment manufacturers' products
in order to allow us to produce and sell remanufactured printer.

BACKLOG AND SEASONALITY

Due to the nature of our business and our customer relationships we have no back
orders and produce orders on demand, or from inventory, and ship the orders
usually within 48 hours of receipt. There is very little seasonality for our
business outside the normal summer slowdown and around standard holiday periods.

COMPETITION

The imaging consumables industry is highly competitive. We compete primarily on
the basis of technology, performance, price, quality, and reliability. We face
competition from both original equipment manufacturers such as Hewlett Packard,
Canon and Lexmark and from other after market manufacturers. After market
competitors include Turbon AG, Micro Solutions Enterprises, Nu-Kote
International, Clover/Data Products, Westpoint, and Laser Technologies Inc. The
original equipment manufacturers presently dominate the markets for toner
products and inkjet supplies. Many of our competitors are substantially larger
and have greater financial, technical and human resources than we do.

                                       22
<PAGE>

GOVERNMENT REGULATION; ENVIRONMENTAL LAWS

Certain of our operations involve the use of substances regulated under various
federal, state, local and international laws relating to the environment,
including those governing the discharge of pollutants into the air and water,
the management and disposal of hazardous substances and wastes and the cleanup
of contaminated sites. Our products are subject to various federal, state, local
and international laws governing chemical substances in products, including
those regulating the manufacture and distribution of chemical substances and
those restricting the presence of certain substances in electronics products. We
could incur substantial costs, including cleanup costs, fines and civil or
criminal sanctions, third-party damage or personal injury claims if we were to
violate or become liable under the environmental laws or if our products become
non-compliant with environmental laws.


                         ITEM 2. DESCRIPTION OF PROPERTY

Our headquarters, manufacturing and administrative operations are located in our
facility at 2101 Nobel Street, Sainte Julie, Quebec, J3E 1Z8 (the "Headquarters
Facility"). At such location we utilize approximately 70,828 square feet of
space. On August 15, 2005 our wholly owned subsidiary, Teckn-O-Laser Global
Company, sold the land and building at our Headquarters Facility for a gross
purchase price of approximately $2,900,000 (CDN$3,400,000). The same property
was leased back to our wholly owned subsidiary, Teckn-O-Laser Company, for a
period of approximately ten years, effective September 30, 2005, under a triple
net lease which provides for payments in equal monthly installments. The base
rent under the lease is $297,885 (CDN$345,775) per annum for the first five
years, and $327,673 (CDN$380,352) per annum for the next five years of the term
of the lease. The lease provides for two renewal options to extend the term of
the lease each by a period of five years. In addition to the Headquarters
Facility we lease warehouse and office space at the following locations: 16,944
square feet of warehouse and office space at 4380 Swinnea Road, Building B,
Suite 112,Memphis, TN, USA 38118 for $8,878 per month under a lease ending
December 2007; 1,382 square feet of sales office space at 401 Magnetic Drive,
#41-42, Downsview Ontario, Canada M3J 3H9, for $1,225 per month under a lease
ending September 2005; 320 square feet of sales office space at 1841-B,
boulevard Hamel, Quebec City, Canada G1N 3Y9 for $383 per month under a lease
ending May 2007; and 25,727 square feet of warehouse and office space at 1380
Newton, Local 100, Boucherville, Quebec J4B 5H3 for $13,666 per month under a
lease ending June 2010.


                            ITEM 3. LEGAL PROCEEDINGS

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

                                       23
<PAGE>

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

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

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


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

No matter was submitted to a vote of security holders, through the solicitation
of proxies or otherwise, during the fourth quarter of the fiscal year covered by
this report.


                                     PART II

              ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER
                        MATTERS AND SMALL BUSINESS ISSUER
                         PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

Our common stock is quoted on the OTC Bulletin Board of the National Association
of Securities Dealers, Inc. (the "NASD") under the symbol "ADSO." From May 11,
2000 until March 22, 2004, the first business day after March 19, 2004, the date
we changed our name from Reink Corp. to Adsero Corp., our stock was quoted under
the symbol "RINC." The following table sets forth, for the fiscal quarters
indicated, the high and low closing bid prices per share of our common stock.
Such quotations reflect inter-dealer prices, without retail mark-up, mark- down
or commission, and may not represent actual transactions. The prices set forth
below reflect the 1:20 reverse stock split which was effected on March 22, 2004.

                                       24
<PAGE>

      QUARTER INDICATED                                     HIGH BID     LOW BID
      ------------------                                    --------     -------
      March 31, 2003 ....................................   $   3.00     $   .20
      June 30, 2003 .....................................       1.20         .40
      September 30, 2003 ................................        .40         .20
      December 31, 2003 .................................       1.80         .20
      March 31, 2004 ....................................        .25         .03
      June 30, 2004 .....................................       1.65         .25
      September 30, 2004 ................................       1.73        1.05
      December 31, 2004 .................................       1.25         .65
      March 31, 2005 ....................................       1.90        1.02
      June 30, 2005 .....................................       1.42         .90
      September 30, 2005 ................................       1.80        1.37
      December 31, 2005 .................................       1.65        1.37

On March 31, 2006, the closing bid price for our common stock was $1.21 per
share.

HOLDERS

As of March 31, 2006, there were 174 record holders of our common stock.

DIVIDENDS

We have never declared any cash dividends with respect to our common stock.
Future payment of dividends is within the discretion of our board of directors
and will depend on our earnings, capital requirements, financial condition and
other relevant factors. Although there are no material restrictions limiting, or
that are likely to limit, our ability to pay dividends on our common stock, we
presently intend to retain future earnings, if any, for use in our business and
have no present intention to pay cash dividends on our common stock.

RECENT SALES OF UNREGISTERED SECURITIES

Effective January 2004, we converted an aggregate of approximately $196,900 in
debt into an aggregate of 19,690,000 restricted shares of our common stock.
Following the effectuation of our 20:1 reverse stock split on March 22, 2004
these shares became approximately 984,500 shares. The conversions were made
pursuant to Debt Conversion and General Release Agreements between us and three
persons. 100,000 of the shares were issued to Wayne Maddever in connection with
the conversion by BBP Consulting of $20,000 of debt. 384,500 of these shares
were issued to William Smith, through Manchester Administrative Services, in
connection with services performed by William Smith prior to 2003 valued at
$76,900. 500,000 of these shares were issued to R World Inc. in connection with
the conversion of $100,000 of debt.

                                       25
<PAGE>

On January 1, 2004 we issued a 10%, $250,000 promissory note to BG Capital Group
Bahamas Ltd. in consideration of $250,000 advanced to us for use as working
capital. In February 2005 we paid off the note and all accrued interest then due
on the note.

Effective January 2004, we converted an aggregate of $170,000 in Note principal
plus all interest then due thereon (approximately $17,800) into an aggregate of
18,360,000 restricted shares of our common stock. Following the effectuation of
our 20:1 reverse stock split on March 22, 2004 these shares became approximately
918,000 shares. The conversions were made pursuant to Note Cancellation and
Release Agreements between us and nine persons.

In April 2004, we issued an aggregate of 5,405,055 restricted shares of our
common stock to Interhold Co. and its designees pursuant to a February 28, 2004
Note Cancellation and General Release under which a $308,000 promissory note of
Reink Imaging USA, Ltd. in favor of Interhold Co., plus all interest due thereon
($73,240) was cancelled. Also cancelled was an April 7, 2003 Guarantee and
Security Agreement between Interhold and us which had been put in place as a
result of a January 2002 agreement.

In April 2004, we issued an aggregate of 2,350,500 restricted shares of our
common stock to designees of Manchester Administrative Services Ltd.
("Manchester") pursuant to a February 28, 2004 Debt Conversion and General
Release under which a debt of ours to Manchester in the approximate amount of
$306,500 was cancelled. This debt was incurred pursuant to our January 6, 2003
Consulting Agreement with Manchester and included debts incurred in January and
February 2004.

In April 2004, we issued an aggregate of 185,000 restricted shares (the "Stock")
to 3 persons pursuant to Note Cancellation and General Release Agreements dated
February 25, 2004; March 29, 2004; and March 30, 2004 respectively. Under these
agreements an aggregate of $185,000 of note principal plus all accrued interest
due thereon (approximately $62,248) was cancelled in consideration for the
Stock.

In April 2004, we issued a $70,000 convertible promissory note bearing interest
at 10% per annum to Manchester Consolidated Corp. The note, together with all
accrued interest then due, was paid in full in February 2005.

On April 15, 2004 we granted 100,000 stock options with an exercise price of
$.25 per share to each of Wayne Maddever, William Smith and Anthony Pallante in
consideration of services rendered in connection with our corporate
reorganization and services related to Reink USA's bankruptcy. These options
vest in equal amounts over a three year period on each of the first, second and
third anniversaries of the issuance date and are exercisable for a period of ten
years from issuance.

In May and June 2004 we sold an aggregate of 205,000 units to 3 persons at $1.00
per unit or $205,000 in the aggregate. Each unit consists of one share of our
common stock and one common stock purchase warrant. Each warrant, as amended,
entitles the holder to purchase one share of our common stock at a price of
$1.50 per share at any time during the three year period that commenced on the
subscription date. In January 2005 in connection with a related unit offering,

                                       26
<PAGE>

the proceeds of which were also to be utilized towards the funding of the
acquisition, it became apparent that our unit pricing was too high and that our
units of the type sold in May and June 2004 should be sold at $.50 per unit
rather than $1.00 per unit. Consequently, in January 2005 we agreed to issue an
additional 205,000 units to the investors, at no additional cost, to bring their
unit cost down to $.50 per unit. Both the original 205,000 units and the
additional units were issued in March 2005.

During the period July 2004 through October 2004 we sold an aggregate of 647,500
Special Warrants to 18 persons at $1.00 per unit or $647,500 on an aggregate
basis. In connection with the offering, we also issued 64,750 Special Warrants
to the placement agent. Each Special Warrant was exercisable without additional
consideration to receive a Class A unit consisting of one share of our common
stock and one common stock purchase warrant. Each of these warrants, as amended,
entitles the holder to purchase one share of our common stock at $1.50 per share
at any time during the three year period that commenced on September 27, 2004.
Effective October 27, 2004, all of the Special Warrants were exercised resulting
in our issuance of 712,250 shares and 712,250 warrants. Pursuant to the offering
we were also obligated to pay a 100,000 share work fee to the placement agent,
which was paid in March 2005. In January 2005, in connection with a related unit
offering, the proceeds of which were also to be utilized for the funding of the
acquisition, it became apparent that our unit pricing was too high and that our
units of the type underlying the Special Warrants sold in this offering should
be sold at $.50 per unit rather than $1.00 per unit. Consequently, in January
2005 we agreed to issue an additional 647,500 units to the offering subscribers,
or their designees, at no additional cost, to bring their unit cost down to $.50
per unit. The additional units were issued in March 2005.

In January 2005 we sold an aggregate of 2,330,000 units to 10 persons at $.50
per unit or $1,165,000 on an aggregate basis. Each unit consists of one share of
our common stock (the "Unit Shares") and one common stock purchase warrant. Each
warrant entitles the holder to purchase one share of our common stock at a price
of $1.50 per share at any time during the three year period commencing on
January 31, 2005. In connection with these sales we were also obligated to issue
68,000 units to DGM Bank & Trust Inc. as a commission with respect to sales of
680,000 units made through them in the offering (the "DGM Units"). 2,210,000 of
the Unit Shares and 56,000 shares comprising part of the DGM Units were issued
in March 2005. The remaining 120,000 Unit Shares and 12,000 shares comprising
part of the DGM Units were issued in May 2005.

In December 2004 we issued an aggregate of 350,000 shares of our common stock
under two consulting agreements.

On January 7, 2005 we issued a $1,000,000 convertible promissory note (the
"Note") paying interest at the rate of 3.9% per annum to Westminster Capital
Inc. ("Westminster") in consideration of $1,000,000. Interest and principal in
the Note are due January 1, 2008 subject to prepayment or conversion commencing
on or after July 1, 2005. Interest and principal due on the Note are convertible
into shares of our common stock at a price of $.50 per share. For each share
acquired upon conversion, the holder will also receive one common stock purchase
warrant to purchase one share of our common stock at a price of $1.50 per share
at any time prior to July 1, 2008. If prior to July 1, 2005 we issue any stock,

                                       27
<PAGE>

options, or warrants, other then certain specifically excluded securities
issuances, at a price or exercise price of less than $.50 per share, the per
share conversion price under the Note will be reduced to the price at which such
other securities were sold. Additionally, the Note conversion price is subject
to adjustment to give effect to any stock splits, stock dividends, or corporate
reorganizations by us prior to conversion or repayment of the Note.

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

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

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

In March 2005 we issued an aggregate of 698,500 shares of our common stock to
Manchester Consolidated Corp. ("Manchester") and its designees as part of the
financing fee payable to Manchester for its role in arranging the Teckn-O-Laser
Global Company acquisition. 538,500 of these shares were issued directly to
Manchester.

In February 2005, we issued 100,000 stock options with an exercise price of
$1.50 per share to Agora Investor Relations Corp. ("Agora") pursuant to our
February 1, 2005 Investor Relations Agreement with Agora. The options are
exercisable, upon vesting, during the two year period commencing February 1,
2006.

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

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

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

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<PAGE>

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

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

In connection with our July 21, 2005 Agency Agreement with Loewen, Ondaatje,
McCutcheon Limited hereof, and the related offering made thereunder, on July 21,
2005 we issued the following securities:

         o  1,707,000 Subscription Receipts; and

         o  119,490 Broker Warrants.

Effective September 30, 2005 Westminster Capital Inc., the holder of our January
7, 2005 3.9% 1,000,000 convertible promissory note, converted the principal
($1,000,000) and interest ($28,529) then due thereon, at a conversion price of
$.50 per unit, into an aggregate of 2,057,058 units. Each unit consists of one
share of our common stock and one common stock purchase warrant each of which is
exercisable to purchase an additional share of our common stock at a price of
$1.50 per share at any time prior to July 1, 2008. The 2,057,058 shares were
issued on December 12, 2005.

On November 4, 2005 we sold 2,400,000 subscription receipts at a price of $.50
per subscription receipt or an aggregate of $1,200,000 to one person. Each
subscription receipt was automatically exercised, without payment of any
additional consideration, on January 31, 2006 into one unit. Each unit consists
of one share of our common stock and one common stock purchase warrant. Each
warrant entitles the holder to purchase, subject to adjustment, an additional
share of our common stock at a price of $1.25 per share during the period ending
at 5:00 p.m. (Toronto time) on May 3, 2007.

On November 4, 2005 we received aggregate loans of $600,000 from three related
persons. In consideration thereof, we issued 5% convertible promissory notes due
December 31, 2006 (the "Maturity Date") to Alain Lachambre ($136,198), Yvon
Leveille ($328,113) and Manchester Consolidated Corp. ($135,689). Interest and
principal on the notes are due on the Maturity Date. The notes can be prepaid by
us at any time. If all principal and interest due on the notes are not paid in
full on the Maturity Date, the respective holders may, at their sole option,
convert the total amount of unpaid principal and interest into shares of our
common stock at the rate of $.50 per share.

On November 4, 2005 we entered into a term loan with Turbon International Inc.
In connection therewith we issued to Turbon International Inc. a $2,800,000 5%
promissory note due October 31, 2008.

                                       29
<PAGE>

In connection with our November 9, 2005 Agency Agreement with Loewen, Ondaatje,
McCutcheon Limited and the related offering made thereunder, on November 9, 2005
we issued the following securities:

         o  4,000,000 Subscription Receipts; and

         o  280,000 Broker Warrants.

In connection with our November 29, 2005 Agency Agreement with Loewen, Ondaatje,
McCutcheon Limited and the related offering made thereunder, we issued the
following securities:

         o  1,400,000 Subscription Receipts; and

         o  98,000 Broker Warrants.

On December 12, 2005 we issued 4,392,397 shares of our common stock to one
person. The recipient was the assignee of a person entitled to 1,120,000 shares
of our common stock as an acquisition fee related to our purchase of shares of
Turbon AG and was the assignee of two entities entitled to an aggregate of
3,272,397 shares of our common stock pursuant to a November 4, 2005 agreement
between us and these entities in which the entities agreed to a restructuring of
our obligations to them under a January 2, 2005 share purchase agreement.

Effective December 31, 2005 we issued an aggregate of 7,960,500 shares of our
common stock (the "Shares") and 7,960,500 warrants (the "Warrants") to the 13
holders of subscription receipts purchased in our July 21, 2005, November 9,
2005 and November 29, 2005 Regulation S private placement offerings pursuant to
the automatic exercise on December 31, 2005 of the subscription receipts. Each
Warrant is exercisable to purchase one share of our common stock at a price of
$1.25 per share during the 30 month period that commenced on the closing date of
the offering in which the overlying subscription receipts were issued.
Accordingly, 2,560,500 of the Warrants are exercisable through January 21, 2008;
4,000,000 of the Warrants are exercisable through May 9, 2008; and 1,400,000 of
the Warrants are exercisable through May 29, 2008.

Effective December 31, 2005, we issued an aggregate of 557,235 Agent's Warrants
pursuant to the automatic exercise of Broker's Warrants issued in connection
with our July 21, 2005, November 9, 2005 and November 29, 2005 Regulation S
private placement offerings. Each Agent's Warrant entitles the holder thereof to
purchase from us one unit (the "Units") at a price of $.50 per Unit. Each Unit
consists of one share of our common stock (the "Shares") and one common stock
purchase warrant (the "Warrants"), each exercisable to purchase one additional
share of our common stock (the "Warrant Shares") at a price of $1.25 per share
during the 30 month period that commenced on the closing date of the offering in
which the overlying Broker Warrants were issued. Accordingly, 179,235 of the
Warrants, if issued, will be exercisable through January 21, 2008, 280,000 of
the Warrants, if issued, will be exercisable through May 9, 2008 and 98,000 of
the Warrants, if issued, will be exercisable through May 29, 2008.

                                       30
<PAGE>

Effective January 31, 2006, we issued 2,400,000 shares of our common stock (the
"Shares") and warrants (the "Warrants") to purchase 2,400,000 shares of our
common stock to the holder of our November 4, 2005 subscription receipts upon
the automatic exercise of such subscription receipts on such date. No additional
consideration was payable to us upon the exercise. Each Warrant entitles the
holder to purchase, subject to adjustment, one share of our common stock at a
price of $1.25 per share at any time prior to 5:00 p.m. (Toronto time) on May 3,
2008.

In February 2006 we issued an aggregate of 60,000 stock options to four sales
consultants. Each option is exercisable at a price of $1.20 per share for a
period of ten years from issuance.

All of the foregoing issuances were made in reliance on Section 3(a)(9), 4(2) or
Regulation S of the Securities Act of 1933, as amended.

Securities Authorized For Issuance Under Equity Compensation Plans

The following table summarizes information regarding our stock option plans as
at March 31, 2006.

<TABLE>
<CAPTION>
                                                                                        NUMBER OF OPTIONS
                                                                                       REMAINING AVAILABLE
                                                                                       FOR FUTURE ISSUANCE
                                                                                           UNDER EQUITY
                                     NUMBER OF SHARES TO BE     WEIGHTED-AVERAGE        COMPENSATION PLANS
                                    ISSUED UPON EXERCISE OF    EXERCISE PRICE OF      (EXCLUDING SECURITIES
          PLAN CATEGORY               OUTSTANDING OPTIONS     OUTSTANDING OPTIONS    REFLECTED IN COLUMN (A))
                                              (A)                     (B)                    (C)
<S>                                 <C>                       <C>                    <C>
Equity compensation plans
   approved by security holders ..          708,500                $     1.31               791,500

Equity compensation plans not
   approved by security holders ..              N/A                       N/A                   N/A

TOTAL ............................          708,500                $     1.31               791,500
</TABLE>

STOCK OPTION PLANS

On April 5, 2000 and April 6, 2000, our board of directors and stockholders,
respectively, adopted a stock option plan. We have reserved 1,500,000 shares of
common stock for issuance upon exercise of options granted from time to time
under this stock option plan. The stock option plan is intended to assist us in
securing and retaining employees, advisors, and consultants by allowing them to
participate in our ownership and growth through the grant of incentive and
non-qualified options.

                                       31
<PAGE>

Under the stock option plan we may grant incentive stock options only to
employees including employee officers and directors, or we may grant
non-qualified options to our employees, officers, directors, advisors and
consultants. The stock option plan is presently administered directly by our
board of directors although it may in the future be administered by a committee
appointed by our board.

Subject to the provisions of the stock option plan, either the board or the
committee, if applicable, will determine who shall receive options, the number
of shares of common stock that may be purchased under the options, the time and
manner of exercise of options and exercise prices. The term of options granted
under the stock option plan may not exceed ten years or five years for an
incentive stock option granted to an optionee owning more than 10% of our voting
stock. The exercise price for incentive stock options shall be equal to or
greater than 100% of the fair market value of the shares of the common stock at
the time granted; provided that incentive stock options granted to a 10% holder
of our voting stock shall be exercisable at a price equal to or greater than
110% of the fair market value of the common stock on the date of the grant. The
exercise price for non-qualified options are set by the board or the committee,
in its discretion. The exercise price of options granted under the plan may be
payable in cash or, with the approval of the board or the committee, by delivery
of shares or by a combination of cash and shares. Shares of common stock
received upon exercise of options granted under the plan will be subject to
restrictions on sale or transfer.

As of March 31, 2006, we had issued options to purchase an aggregate of 708,500
shares of common stock under our stock options plans at exercise prices ranging
from $.25 to $13.40 per share. All of such issuances involved grants of
non-qualified stock options.


                            ITEM 6. PLAN OF OPERATION

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

In January 2005 we purchased Teckn-O-Laser Global Company, a remanufacturer of
laser toner and inkjet print cartridges. Prior to the acquisition, we had no
operations. Accordingly, no comparison of prior period results is contained
herein. Technolaser had grown from its inception in 1988 to approximately $27
million in revenues at the time of the acquisition. Approximately 60% of
Technolaser's business is in the US with the remainder in Canada. The cartridge
business has become increasingly competitive over the last few years resulting
in ongoing pricing pressure. This pressure is expected to continue for at least
the next year due to the overall consolidation which is occurring within the
industry. Technolaser was profitable from inception until 2004 and has gone
through some restructuring in response to the changes within the industry.
Approximately 90% of Technolaser's revenues is attributable to sales of
remanufactured laser toner cartridges. Due to the competitiveness of the
industry we began the process of outsourcing portions of our volume in order to
capitalize on lower cost manufacturing locations. As of December 31, 2005

                                       32
<PAGE>

approximately 40% of our production needs are sourced from Turbon AG. We
anticipate this amount increasing to in excess of 50% during 2006. As a result
of this shift we have and are in the process of modifying our cost structure and
fixed costs to coincide with our production levels. At the beginning of 2006 we
closed our Memphis distribution facility and we are in the process of closing
our Boucherville sorting center. These changes combined with other manpower
changes are expected to bring our costs back in line with the volume of
production in the local market.

We recorded a net loss of $ 7,387,429 during the year-ended December 31, 2005.
We recorded a goodwill impairment charge of $3,194,722, and a charge of
$1,703,131 due to restructuring of our business as we moved more of our
production off-shore. In addition, our depreciation was increased by $856,000
due to the retroactive amortization during the year related to certain
intangibles. Income before interest, depreciation and income taxes, as adjusted
for these items, was $90,105. As we move our production to lower cost
facilities, we have had to carry additional costs. Once this change has been
fully implemented, additional costs are expected to be taken out of our
operations thereby streamlining our cost structure and making us more
competitive within the marketplace in which we operate.

As of December 31, 2005, we had a working capital deficiency of approximately
$5,019,589 (including approximately $2,125,341 related to the discontinued
operation leaving a net working capital deficiency of approximately $2,894,248.
At December 31, 2005 and subsequent thereto, we are not in compliance with
certain covenants under a line of credit obligation and certain of its term
loans. The lender under these obligations has the right to demand immediate
repayment of these loans due to this event of default. On January 31, 2006 we
entered into a Standstill Agreement (the "Agreement") with the lender whereby
the lender agreed to suspend its rights under the loans until April 30, 2006
subject to our compliance with certain conditions. These conditions included our
payment of US$500,000 within two business days of the Agreement to reduce the
outstanding principal and interest balance due under the credit facility; to pay
a postponement fee to the lender of CDN$35,000 (approximately US$30,435); and to
pay penalty fees of CDN$20,000 per month for the period January 1, 2006 through
April 30, 2006 or an aggregate of CDN$80,000 (approximately US$69,565). All
required payments were made. As further discussed in "Item 1. Description of
Business - Standstill Agreement with National Bank of Canada", effective May 1,
2006 the lender has agreed, subject to compliance with certain conditions, to
further suspend its rights under the loans until July 31, 2006. Any demand to
repay the outstanding balance, which amounted to an aggregate of $3,000,116 at
December 31, 2005, would have a material adverse effect on our business. We
cannot provide any assurance that the lender under these obligations will not
demand repayment of the balance after completion of the Agreement.

Our continued existence is dependent upon our ability to raise additional
capital and generate revenue and operating cash flow through the execution of
our business plan. We can not provide any assurance that we will be able obtain
the financing we needs to sustain the business until such time that we generate
sufficient revenue and operating cash flow through the operations of the
Tecknolaser Group or other prospective acquiree businesses. These matters raise
substantial doubt about our ability to continue as a going concern.

                                       33
<PAGE>

During the quarter ended December 31, 2005 we raised approximately $4.4 million
in additional equity and entered into a loan agreements for approximately $7.2
million with various parties. These and prior financings allowed us to acquire
Teckn-O-Laser Global Company in January 2005 and an aggregate of 400,000
treasury shares of Turbon AG in June 2005 and November 2005. In April 2005 we
announced our interest in acquiring all of the outstanding shares of Turbon AG,
a German public company operating in the same business. No assurance can be
given that we will be able to successfully acquire all of Turbon AG's
outstanding shares. See "DESCRIPTION OF BUSINESS - Turbon AG Acquisition." As
discussed above, we have acquired 400,000 common shares of Turbon AG which
equates to approximately 10% of the outstanding shares of Turbon AG.

Except as provided herein, we have no present commitment that is likely to
result in our liquidity increasing or decreasing in any material way. In
addition, except as noted herein, we know of no trend, additional demand, event
or uncertainty that will result in, or that are reasonably likely to result in,
our liquidity increasing or decreasing in any material way. We have no material
commitments for capital expenditures. As a result of the Teckn-O-Laser Global
Company acquisition we operate a plant in Sainte Julie, Quebec that is equipped
to remanufacture laser toner printer cartridges. We also conduct reverse
engineering of products at this location. During its 2003 and 2004 fiscal years
ended April 30, 2003 and April 30, 2004, respectively, Teckn-O-Laser Global
Company expended approximately $395,833 (approximately CDN$475,0000) and
$280,000 (approximately CDN$336,000) on this reverse engineering process. We
spent approximately $300,000 on reverse engineering during 2005. We have 144
employees as a result of the Teckn-O-Laser Global Company acquisition. We
presently have sufficient cash available together with anticipated cash flow
from operations to cover our anticipated cash requirements for our existing
operations for the next 12 months assuming we can refinance our existing bank
debt. This does not take into account the additional financing we will require
during the next 12 months if we proceed with our present intention to attempt to
acquire the balance of Turbon AG or if we pursue other acquisitions. No
assurance can be given that we will raise additional financing, if sought, or
that if raised, that such financing will be obtained on beneficial terms.


                          ITEM 7. FINANCIAL STATEMENTS

The financial statements are included beginning immediately following the
signature page to this report. See Item 13 for a list of the financial
statements included.


              ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING, AND FINANCIAL DISCLOSURE

Not Applicable.

                                       34
<PAGE>

                        ITEM 8A. CONTROLS AND PROCEDURES

EVALUATION OF OUR DISCLOSURE CONTROLS AND INTERNAL CONTROLS

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

OFFICERS' CERTIFICATIONS

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

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting that
occurred during the quarter ended December 31, 2005 that have materially
affected or are reasonably likely to materially affect our internal control over
financial reporting.


                           ITEM 8B. OTHER INFORMATION

Not applicable.


                                    PART III

          ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
           PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

Directors serve until the next annual meeting of the stockholders; until their
successors are elected or appointed and qualified, or until their prior
resignation or removal. Officers serve for such terms as determined by our board
of directors. Each officer holds office until such officer's successor is
elected or appointed and qualified or until such officer's earlier resignation
or removal. No family relationships exist between any of our present directors
and officers.

                                       35
<PAGE>

The following table sets forth certain information, as of March 31, 2006, with
respect to our directors and executive officers.

                                                               Date of Election
                                                               or Appointment
Name             Positions Held                          Age   as Director
--------------   -------------------------------------   ---   -----------------
Yvon Leveille    President, Chief Executive Officer,      57   January 31, 2005
                 Director

William Smith    Secretary, Treasurer, Chief Financial    42   May 2000
                 Officer, Director

Wayne Maddever   Director                                 57   October 2000

Andre Leroux     Director                                 53   March 8, 2005

Donald Page      Chairman                                 52   March 30, 2005

John Ioannou     Director                                 49   November 14, 2005

Aldo DeLuca      Director                                 49   November 14, 2005

The following is a brief account of the business experience of each of our
directors and executive officers during the past five years or more.

YVON LEVEILLE joined us effective January 31, 2005, as a result of our
acquisition of Teckn-O-Laser Global Company ("Tecknolaser"). He founded
Tecknolaser in 1988 and has helped grow revenues from nil to over $27 million.
Previously he founded Micro Tempus in 1982, a communications software
development company which went public in 1986. He is a graduate of Devry
Institute of Technology - electronic engineering.

WILLIAM M. SMITH joined us in May 1999, as Chief Financial Officer and has
served as our Secretary, Treasurer, and as a Director since May 2000. From April
1998 to March 1999, Mr. Smith was the CFO of the Locator Group Inc., a leader in
the publishing industry. From September 1994 to March 1998, Mr. Smith was Vice
President and Treasurer of Cott Corporation, a publicly traded company in both
Canada and the United States. Cott Corporation is the largest private label
manufacturer of soft drinks in North America. Prior to 1994, Mr. Smith was the
Treasurer and Officer at Molson Breweries responsible for all financing, cash
flow, leasing and foreign exchange, amongst other senior financial
responsibilities. Mr. Smith is a chartered accountant and graduated with honors
from the University of Waterloo, Canada with a Bachelor of Mathematics degree in
1987.

                                       36
<PAGE>

WAYNE J. MADDEVER, PH.D., P. ENG. joined us as a Director in October 2000 and
was appointed President and CEO on January 10, 2003. On January 28, 2005 he
resigned his positions as our President and Chief Executive Officer. From
January 1999 until October 2000, Dr. Maddever was General Manager of Sanden
Machine, Ltd., a Cambridge, Ontario, Canada supplier of web offset printing
equipment to the forms, direct mail and commercial printing industries. From
December, 1996 to January, 1999, Dr. Maddever served as President of Resource
Plastics, Inc., the largest recycler of film and rigid plastics in Canada. From
May, 1991 to December 1996, Dr. Maddever served as General Manager of MG Canada,
a subsidiary of Messen Greishein Gnbh, Germany's largest industrial gas company.
Dr. Maddever received his Doctorate in Metallurgical and Materials Science
Engineering from the University of Toronto in 1978.

ANDRE LEROUX joined us as a Director in March 2005. Mr. Leroux has been Chairman
and CEO of Noveko Echographes Inc. since 2002. From 1999 through 2002 Mr. Leroux
was Chairman and CEO of Alliance Medical Inc. Prior to this, Mr. Leroux was
Chairman and CEO of Leroux Steel Inc.

DONALD PAGE joined us as the Chairman of Board of Directors in March 2005. Since
September 2003, Mr. Page has been a consultant with Glister Limited, a
management consulting firm. Prior to September 2003 Mr. Page was Vice Chairman
of Kingsdale Capital Partners Inc. Prior to March 2002 Mr. Page was Vice
President - Corporate Finance with Desjardins Securities Inc. Prior to August
2001, Mr. Page was Executive Vice President of Groome Capital Inc. Mr. Page is a
Chartered Accountant and graduated with a Bachelor of Arts from the University
of Western Ontario.

JOHN IOANNOU joined us as a Director in November 2005. Mr. Ioannou is an
experienced senior executive with approximately 27 years of experience in which
he has operated and advised businesses in the technology, services, private
equity and manufacturing sectors. From August 2004 to the present he has served
as Vice President, New Ventures for The Turbon Group. From December 2002 until
August 2004 he served as the Chief Executive Officer for InTone Corporation.
From April 2001 until September 2002 he was the General Partner of Endeavor
Capital Management, a private equity firm specializing in technology and
manufacturing segments. He also spent 14 years with IBM where he served in a
number of different management positions in marketing, finance, sales and
operations. Mr. Ioannou holds a B.S. in management from St. Peter's College.

ALDO DELUCA joined us as a Director in November 2005. Mr. DeLuca is an
experienced senior executive with approximately 26 years of experience working
for businesses ranging from private sector entities to Fortune 200 companies.
From January 2004 until the present he has been employed as the Managing
Director of Finance and Operations for The Turbon Group. From November 1999
through December 2003 he served as the Chief Executive Officer of Granite
Packaging Supply/Weidner Plastics. Prior to that, Mr. Deluca held various senior
management positions within the packaging industry. Mr. Deluca holds a B.A. in
Management/Accounting from Temple University and an MBA from Rider University.

                                       37
<PAGE>

BOARD OF DIRECTORS

Effective March 30, 2005 our non-employee directors receive CDN$1,000 for each
board and board committee meeting they attend. Further, on March 30, 2005 we
issued stock options to our non-employee directors. Directors are reimbursed
their expenses, if any, for attendance at meetings of the board of directors.
Our board of directors may designate from among its members an executive
committee and one or more other committees. Effective March 30, 2005 we have
designated an audit committee. Our audit committee is comprised of Andre Leroux
and Donald Page with Mr. Page serving as the audit committee financial expert.
Mr. Page is an independent director. Effective the same date, we designated a
compensation committee comprised of Mr. Page and Dr. Maddever. On November 14,
2005 we increased the size of our board of directors from five to seven persons
and appointed John Ioannou and Aldo DeLuca to fill the newly created board
vacancies.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act, as amended, requires that our directors,
executive officers and persons who own more than 10% of a class of our equity
securities which are registered under the Exchange Act to file with the
Commission initial reports of ownership and reports of changes of ownership of
such registered securities.

To our knowledge, based solely on a review of copies of such reports, no person
required to file such a report failed to file a required report or failed to
file a required report on a timely basis with respect to the fiscal year covered
by this report, except as follows:

         o  Wayne Maddever failed to file a Form 4 and filed a Form 5 (which
            included the required Form 4 disclosures) on a late basis.

         o  Andre Leroux failed to file a Form 3 and a Form 4 and filed a Form 5
            (which included the required Form 3 and Form 4 disclosures) on a
            late basis.

         o  Donald Page failed to file a Form 3, Forms 4 and filed a Form 5
            (which included the required Form 3 and Form 4 disclosures) on a
            late basis.

         o  Yvon Leveille failed to file a Form 3, Forms 4 and filed a Form 5
            (which included the required Form 3 and Form 4 disclosures) on a
            late basis.

         o  Dynamic Power Hedge Fund, through its investment manager, filed a
            Form 3 on a late basis.

                                       38
<PAGE>

CODE OF ETHICS

On March 30, 2005 we adopted a Code of Ethics that applies to our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. A copy of our Code of
Ethics will be provided to any person requesting same without charge. To request
a copy of our Code of Ethics please make written request to our President c/o
Adsero Corp. at 2101 Nobel Street, Sainte Julie, Quebec, J3E 1Z8.


                         ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth information concerning the total compensation
paid or accrued by us during the three fiscal years ended December 31, 2005 to
(i) all individuals that served as our chief executive officer or acted in a
similar capacity for us at any time during the fiscal year ended December 31,
2005 and (ii) all individuals that served as executive officers of ours at any
time during the fiscal year ended December 31, 2005 that received annual
compensation during the fiscal year ended December 31, 2005 in excess of
$100,000.
<TABLE>
                                              SUMMARY COMPENSATION TABLE
<CAPTION>
                                        ANNUAL COMPENSATION                    LONG TERM COMPENSATION
                               -------------------------------------    -------------------------------------
                                                                                              AWARDS               PAYMENTS
                                                                                      -----------------------    ------------
NAME OF INDIVIDUAL                                                      RESTRICTED     SECURITIES
AND PRINCIPAL                                           OTHER ANNUAL      STOCK        UNDERLYING       LTIP      ALL OTHER
POSITION               YEAR       SALARY       BONUS    COMPENSATION     AWARD(S)     OPTIONS/SARS    PAYOUTS    COMPENSATION
--------------------   ----    ------------    -----    ------------    ----------    ------------    -------    ------------
<S>                    <C>     <C>             <C>      <C>             <C>           <C>             <C>        <C>
Wayne Maddever
President/CEO          2005    $       0        $ 0         $ 0             0           30,000(1)        0             0
                       2004    $       0        $ 0         $ 0             0          100,000(1)        0             0
                       2003    $  58,000(2)     $ 0         $ 0             0                0           0             0

Yvon Leveille
President/CEO          2005    $ 149,804        $ 0         $ 0             0                0           0             0
                       2004    $       0        $ 0         $ 0             0                0           0             0
                       2003    $       0        $ 0         $ 0             0                0           0             0

Alain Lachambre
Vice President         2005    $ 148,036        $ 0         $ 0             0                0           0             0
                       2004    $       0        $ 0         $ 0             0                0           0             0
                       2003    $       0        $ 0         $ 0             0                0           0             0

William Smith
Secretary/Treasurer/
CFO                    2005    $ 100,600        $ 0         $ 0             0                0           0             0
                       2004    $  81,500        $ 0         $ 0             0          100,000(3)        0             0
                       2003    $  86,400        $ 0         $ 0             0                0           0             0
</TABLE>
_______________

      (1)   On April 15, 2005 Mr. Maddever received 100,000 stock options, each
            exercisable for the purchase of one share of our common stock at a
            price of $.25 per year for a period of 10 years from issuance. The
            options vest in equal 1/3 amounts over a three year period on each
            of the first, second and third anniversaries of the date of
            issuance. On March 30, 2005 Mr. Maddever received 30,000 stock
            options, each exercisable for the purchase of one share of our
            common stock at a price of $1.06 per year for a period of 10 years
            from issuance. The options vest in equal 1/3 amounts over a three
            year period on each of the first, second and third anniversaries of
            the date of issuance.

                                       39
<PAGE>

      (2)   Includes $20,000 which was converted in January 2004, through BBP
            Consulting, a sole proprietorship owned by Mr. Maddever, into
            100,000 shares of our common stock.

      (3)   On April 15, 2005 Mr. Smith received 100,000 stock options, each
            exercisable for the purchase of one share of our common stock at a
            rice of $.25 per year for a period of 10 years from issuance. The
            options vest in equal 1/3 amounts over a three year period on each
            of the first, second and third anniversaries of the date of
            issuance.

No stock appreciation rights were granted to the named executive officers during
the year ended December 31, 2005.

The following table sets forth information as to Options held by the named
executive officers at December 31, 2005:
<TABLE>
<CAPTION>
                                                      NUMBER OF
                                                     SECURITIES                VALUE OF
                                                     UNDERLYING               UNEXERCISED
                                                     UNEXERCISED             IN-THE-MONEY
                                                     OPTIONS AT               OPTIONS AT
                        SHARES                    FISCAL YEAR END -        FISCAL YEAR END -
                       ACQUIRED        VALUE        EXERCISABLE/             EXERCISABLE/
NAME OF INDIVIDUAL   UPON EXERCISE   REALIZED       UNEXERCISABLE            UNEXERCISABLE
------------------   -------------   --------   --------------------   -------------------------
<S>                  <C>             <C>        <C>                    <C>
Wayne Maddever            N/A          N/A      33,333 Exercisable     $ 41,666 Exercisable(1)
                                                96,667 Unexercisable   $ 96,534 Unexercisable(1)

Yvon Leveille             N/A          N/A              N/A                      N/A

Alain Lachambre           N/A          N/A              N/A                      N/A

William Smith             N/A          N/A      44,583 Exercisable     $ 41,666 Exercisable(1)
                                                66,667 Unexercisable   $ 83,334 Unexercisable(1)
</TABLE>
_______________

      (1)   Based upon closing price of $1.50 per share on December 30, 2005.

STOCK OPTION PLAN

On April 5, 2000, our Board of Directors (the "Board") approved a stock option
plan (the "Option Plan") which was approved by our shareholders on April 6,
2000. Under the Option Plan, our Board in its discretion, may grant stock
options to purchase shares of our common stock to employees, advisors and
consultants. The Board has authorized the reservation of 1,500,000 common shares
in conjunction with the authorization to grant an aggregate of 1,500,000 options
pursuant to the Option Plan.

                                       40
<PAGE>

On May 26, 2000, our Board of Directors approved the grant of an aggregate of
62,625 stock options to various employees, including executive officers. The
options have an exercise price of $13.40 per share and vest over a period of
three years. 40,125 of these options expired in connection with the bankruptcy
of our former subsidiary, Reink Imaging USA Ltd.

On December 14, 2001 we granted 2,500 options with an exercise price of $5.00
per share, all of which expired in connection with the bankruptcy of Reink
Imaging USA, Ltd.

On January 10, 2002 we granted 20,750 options with an exercise price of $5.00
per share to various employees of the Company, 13,250 of which expired in
connection with the bankruptcy of Reink Imaging USA, Ltd.

On April 15, 2004 we granted an aggregate of 300,000 options to 3 persons with
an exercise price of $.25 per share.

On January 31, 2005 we granted an aggregate of 244,500 options with an exercise
price of $1.57 per share to 12 employees of Teckn-O-Laser Global Company.
136,000 of these options were cancelled effective March 31, 2006.

On February 1, 2005 we granted 100,000 stock options with an exercise price of
$1.50 per share to Agora Investor Relations Corp.

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

In February 2006 we granted an aggregate of 60,000 stock options with an
exercise price of $1.20 per share to four sales consultants.

The total number of stock options outstanding as at March 31, 2006 is 708,500.

EMPLOYMENT AND CONSULTING AGREEMENTS

Effective January 6, 2003 we executed a consulting agreement with BBP Consulting
("BBP"), a sole proprietorship owned by Wayne Maddever, whereby BBP provided us
with the services of Wayne Maddever. Pursuant to the consulting agreement, BBP
was paid consulting fees of up to $15,000 per month. Mr. Maddever earned $0
under this agreement for 2004. At the end of each quarter, under this agreement,
Mr. Maddever had the right to convert any unpaid fees into our common stock at
the greater of $1.00 per share or 80% of the then market price. This agreement
was terminated effective January 28, 2005 upon the resignation of Mr. Maddever
as our President and Chief Executive Officer.

Effective January 6, 2003 we executed a consulting agreement with Manchester
Administrative Services Inc. ("Manchester Administrative"), a corporation owned
by Anthony Pallante, to provide us with the services of various individuals.
Thereunder, Manchester Administrative was paid consulting fees of up to $40,000
per month depending on the level of work completed. Fees were invoiced monthly
on an ongoing basis. Pursuant to this agreement, we received the services of

                                       41
<PAGE>

William Smith, who signed the contract on behalf of Manchester Administrative,
as Executive Vice President. Manchester Administrative was paid $259,074 under
this agreement for 2004, $81,500 of which was paid to William Smith, $45,000 of
which was paid to Anthony Pallante and $132,574 of which was paid to Manchester
Administrative for expense reimbursement. At the end of each quarter, under this
agreement, Manchester Administrative had the right to convert any unpaid fees
into our common stock at the great of $1.00 per share or 80% of the then market
price. This agreement was terminated effective January 13, 2005.

Effective as at the January 31, 2005 closing of the Share Purchase Agreement, we
entered into renewable 3 year employment agreements with each of Yvon Leveille
and Alain Lachambre. The Leveille Employment Agreement provides for Mr. Leveille
to serve as our President and Chief Executive Officer and further provides for
the payment to Mr. Leveille of an initial base salary of CDN$175,000
(approximately US$146,000) together with performance based bonuses.

The Lachambre Employment Agreement provides for Mr. Lachambre to serve as our
Vice President - Sales and Marketing and further provides for the payment to Mr.
Lachambre of an initial base salary of CDN$166,000 (approximately US$138,000)
together with performance based bonuses.

Effective January 13, 2005 we entered into an agreement with 6327214 Canada
Inc., a corporation owned by William Smith pursuant to which we receive the
services of William Smith, our acting secretary, treasurer and chief financial
officer. Pursuant to the agreement we pay a fee of CDN$13,750 per month
(approximately US$11,500) which amount is subject to future modification upon
mutual agreement of the parties.

OPTION/SAR GRANTS IN LAST FISCAL YEAR (INDIVIDUAL GRANTS)

The named executive officers received no options and no SAR grants from us
during the fiscal year ended December 31, 2005.

STOCK APPRECIATION RIGHTS

The named executive officers did not receive any stock appreciation rights from
us during the fiscal year ended December 31, 2005.

LONG TERM INCENTIVE PLAN AWARDS

We made no long-term incentive plan awards to the named executive officers
during the fiscal year ended December 31, 2005.

COMPENSATION OF DIRECTORS

Our non-employee directors receive CDN$1,000 for each meeting of the Board of
Directors. Directors are reimbursed for their expenses, if any, for attendance
at meetings of the Board of Directors. In addition our non-employee Directors
received stock options in March 2005.

                                       42
<PAGE>

REPORT ON REPRICING OF OPTIONS/SARS

During the fiscal year ended December 31, 2005 we did not adjust or amend the
exercise price of any stock options or SARs owned by the named executive
officers.


   ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
                           RELATED STOCKHOLDER MATTERS

The following table sets forth information with respect to the beneficial
ownership of our common stock and Series A preferred stock known by us as of
March 31, 2006 by:

         o  each person or entity known by us to be the beneficial owner of more
            than 5% of our common stock or 5% of our Series A preferred stock;

         o  each of our directors;

         o  each of our executive officers; and

         o  all of our directors and executive officers as a group.

The percentages in the table have been calculated on the basis of treating as
outstanding for a particular person, all shares of our common stock outstanding
on such date and all shares of our common stock and Series A preferred stock
issuable to such holder in the event of exercise of outstanding options,
warrants, subscription receipts, Broker Warrants, rights or conversion
privileges owned by such person at said date which are exercisable within 60
days of such date. Except as otherwise indicated, the persons listed below have
sole voting and investment power with respect to all shares of our common stock
and Series A preferred stock owned by them, except to the extent such power may
be shared with a spouse.

                                       43
<PAGE>
<TABLE>
<CAPTION>
                                                              Amount and Nature
                                                              of Beneficial            Percentage of
Name of Beneficial Owner      Title of Class                  Ownership(1)             Class(2)
---------------------------   -----------------------------   ----------------------   -------------
<S>                           <C>                             <C>                      <C>
Wayne Maddever                Common stock, par value $.001   178,166 Shares (3)                .52%
                              per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

William Smith                 Common stock, par value $.001   489,916 Shares (4)               1.44%
                              per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

Yvon Leveille                 Common stock, par value $.001   4,593,333 Shares (5)            11.89%
                              per share

                              Series A preferred stock, par   4,593,333 Shares                70.67%
                              value $.0001 per share

Andre Leroux                  Common stock, par value $.001   10,000 Shares (6)                 .03%
                              per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

Donald Page                   Common stock, par value $.001   158,043 Shares (7)                .46%
                              per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

Alain Lachambre               Common stock, par value $.001   1,906,667 Shares (8)             5.31%
                              per share

                              Series A preferred stock, par   1,906,667 Shares                29.33%
                              value $.0001 per share

Anthony M. Pallante           Common stock, par value $.001   1,876,852 Shares (9)              5.5%
                              per share
</TABLE>

                                       44
<PAGE>
<TABLE>
<CAPTION>
                                                              Amount and Nature
                                                              of Beneficial            Percentage of
Name of Beneficial Owner      Title of Class                  Ownership(1)             Class(2)
---------------------------   -----------------------------   ----------------------   -------------
<S>                           <C>                             <C>                      <C>
                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

Westminster Capital Inc.      Common stock, par value $.001   5,064,822 Shares (10)           14.03%
                              per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

Barrington Bank               Common stock, par value $.001   2,522,195 Shares (11)            7.04%
International Ltd.            per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

HBT Holdings GmbH             Common stock, par value $.001   9,192,397 Shares (12)           25.22%
                              per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

Aldo DeLuca                   Common stock, par value $.001   0 Shares                            0%
                              per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

John Ioannou                  Common stock, par value $.001   0 Shares                            0%
                              per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share
</TABLE>

                                       45
<PAGE>
<TABLE>
<CAPTION>
                                                              Amount and Nature
                                                              of Beneficial            Percentage of
Name of Beneficial Owner      Title of Class                  Ownership(1)             Class(2)
---------------------------   -----------------------------   ----------------------   -------------
<S>                           <C>                             <C>                      <C>
AIG Global Investment Corp.   Common stock, par value $.001   2,600,000 Shares (13)            7.35%
                              per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

Fier-Cap Diamant Sec.         Common stock, par value $.001   2,550,000 Shares (14)            7.22%
                              per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

Northern Rivers Innovation    Common stock, par value $.001   1,736,100 Shares (15)            4.97%
Fund LP                       per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

Dynamic Power Hedge Fund      Common stock, par value $.001   4,800,100 Shares (16)           13.17%
                              per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

Loewen Ondaatje McCutcheon    Common stock, par value $.001   2,014,570 Shares (17)            5.83%
Limited                       per share

                              Series A preferred stock, par   0 Shares                            0%
                              value $.0001 per share

All officers and directors    Common stock, par value $.001   5,429,458                       13.96%
as a group (7 persons)        per share                       Shares(3)(4)(5)(6)(7)

                              Series A preferred stock, par   4,593,333 Shares                70.67%
                              value $.0001 per share
</TABLE>

                                       46
<PAGE>

____________________

      (1)   As used herein, the term beneficial ownership with respect to a
            security is defined by Rule 13d-3 under the Securities Exchange Act
            of 1934 as consisting of sole or shared voting power (including the
            power to vote or direct the vote) and/or sole or shared investment
            power (including the power to dispose or direct the disposition of)
            with respect to the security through any contract, arrangement,
            understanding, relationship or otherwise, including a right to
            acquire such power(s) during the next 60 days. Unless otherwise
            noted, beneficial ownership consists of sole ownership, voting and
            investment rights.

      (2)   There were 34,051,930 shares of common stock and 6,500,000 shares of
            preferred stock issued and outstanding on March 31, 2006.

      (3)   Includes 76,666 shares underlying stock options exercisable within
            the next 60 days and 1,500 shares owned by the Estate of William
            Maddever. Excludes 53,334 shares underlying stock options not
            exercisable within the next 60 days.

      (4)   Includes 77,916 shares underlying stock options exercisable within
            the next 60 days and 384,000 shares owned by Mr. Smith's wife,
            Carolyn Robus Smith. Excludes 33,334 shares underlying stock options
            not exercisable within the next 60 days.

      (5)   Includes 4,593,333 Series I Exchangeable Shares of 3091503 Nova
            Scotia Company owned by 9144-6773 Quebec Inc., a company
            beneficially owned by Mr. Leveille, which are presently convertible
            on a 1 for 1 basis into shares of our common stock. Excludes 656,226
            shares issuable upon conversion of an outstanding promissory note
            that is not convertible within the next 60 days.

      (6)   Includes 10,000 shares underlying presently exercisable stock
            options. Excludes 20,000 shares underlying stock options not
            exercisable within the next 60 days.

      (7)   Donald Page has a consulting agreement with DGM Bank and Trust Inc.
            under which he has equity participation rights in transactions where
            he has assisted. DGM Bank & Trust Inc. owns shares of our common
            stock and common stock purchase warrants. Through the consulting
            agreement, Mr. Page has an indirect beneficial interest in 70,688
            common shares and 70,688 warrants. Includes 16,667 shares underlying
            presently exercisable stock options. Excludes 33,333 shares
            underlying stock options not exercisable within the next 60 days.

      (8)   Includes 1,906,667 Series I Exchangeable Shares of 3091503 Nova
            Scotia Company owned by 9144-6906 Quebec Inc., a company
            beneficially owned by Mr. Lachambre, which are convertible on a 1
            for 1 basis into shares of our common stock. Excludes 272,396 shares
            issuable upon conversion of an outstanding promissory note that is
            not convertible within the next 60 days.

      (9)   Includes 1,456,500 shares held in the name of Manchester
            Consolidated Corp. which is beneficially owned by Anthony M.
            Pallante, 7,500 shares owned by MCPET, a private equity fund managed
            by Manchester Consolidated Corp., 334,936 shares owned by Mr.
            Pallante's wife, Frances Pallante, and 77,916 shares underlying
            stock options exercisable within the next 60 days. Excludes 33,334
            shares underlying stock options not exercisable within the next 60
            days and 500,000 shares owned by R World Inc., a company in which
            Mr. Pallante has a 40% interest. Excludes 271,378 shares issuable to
            Manchester Consolidated Corp. upon conversion of an outstanding
            promissory note that is not convertible within the next 60 days.

                                       47
<PAGE>

      (10)  The beneficial owner of Westminster Capital Inc. is William
            Belzberg. Includes 2,057,058 shares issuable upon exercise of
            presently exercisable warrants.

      (11)  Includes 1,800,000 shares issuable upon conversion of an outstanding
            loan.

      (12)  The beneficial owner of HBT Holdings GmbH is Holger
            Brueckmann-Turbon. Includes 2,400,000 shares underlying presently
            exercisable common stock purchase warrants.

      (13)  Includes 1,300,000 shares underlying presently exercisable common
            stock purchase warrants.

      (14)  Includes 1,275,000 shares underlying presently exercisable common
            stock purchase warrants.

      (15)  Includes 868,050 shares underlying presently exercisable common
            stock purchase warrants.

      (16)  Includes 2,400,050 shares underlying presently exercisable common
            stock purchase warrants.

      (17)  Includes 500,500 shares underlying presently exercisable common
            stock purchase warrants.

The addresses for each of Wayne Maddever, William Smith, Yvon Leveille, Andre
Leroux, Donald Page and Alain Lachambre is c/o Adsero Corp., 2101 Nobel Street,
Sainte Julie, Quebec J3E 1Z8. The addresses for each of John Ioannou and Aldo
DeLuca is 2704 Cindel Drive, Cinnaminson, NJ 08077. The address for HBT Holdings
GmbH is Goeckinghofstrasse 34, D-58332, Schwelm, Germany. The address for
Anthony M. Pallante is 120 Adelaide Street West, Suite 2401, Toronto, Ontario
M5H 1T1. The address for Westminster Capital Corp. is 9665 Wilshire Boulevard,
Suite M-10, Beverly Hills, California 90212. The address for Barrington Bank
International Ltd. is 2nd Floor, Cumberland House, 27 Cumberland Street, PO Box
N-3026, Nassau, Bahamas. The address for Dynamic Power Hedge Fund is 55th Floor,
Scotia Plaza, 40 King Street West, Toronto, Ontario M5H 4A9. The address for
Northern Rivers Innovation Fund LP is 200 Bay Street, Suite 2000, Royal Bank
Plaza, North Tower, Toronto, Ontario M5J 2J2. The address for FIER-Cap Diamant
Sec. is 900 Rene Levesque Est. Boulevard, Quebec, Quebec G1R 2B5. The address
for AIG Global Investment Corp. is 145 Wellington Street W., Toronto, Ontario
M5J 1H8. The address for Loewen Ondaatje McCutcheon Limited is 55 Avenue Road,
Suite 2250, East Tower, Toronto, Ontario M5R 3L2.

CHANGES IN CONTROL

Not Applicable.


             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Effective January 6, 2003 we executed a consulting agreement with BBP Consulting
("BBP"), a sole proprietorship owned by Wayne Maddever, whereby BBP provided us
with services of Wayne Maddever. Pursuant to the consulting agreement, BBP was
paid consulting fees of up to $15,000 per month. Mr. Maddever earned $0 under
this agreement for 2004. At the end of each quarter, under this agreement, Mr.
Maddever had the right to convert any unpaid fees into our common stock at the
greater of $1.00 per share or 80% of the then market price. This agreement was
terminated effective January 28, 2005 upon resignation of Mr. Maddever as our
President and Chief Executive Officer.

                                       48
<PAGE>

Effective January 6, 2003 we executed a consulting agreement with Manchester
Administrative Services Inc. ("Manchester Administrative"), a corporation owned
by Anthony Pallante, to provide us with the services of various individuals.
Thereunder, Manchester Administrative was paid consulting fees of up to $40,000
per month depending on the level of work completed. Fees were invoiced monthly
on an ongoing basis. Pursuant to this agreement, we received the services of
William Smith, who signed the contract on behalf of Manchester Administrative,
as Executive Vice President. Manchester Administrative was paid approximately
$259,074 under this agreement for 2004, approximately $81,500 of which was paid
to William Smith. This agreement was terminated effective January 13, 2005.

In January 2004 we entered into an exclusive financing arrangement with
Manchester Consolidated Corp. ("Manchester"), a corporation owned by Anthony
Pallante whereby a fee is payable by us, upon successful completion of a
financing or any acquisition, merger, or other business combination generated by
Manchester. The fees for financing were 10% up to $2 million plus 7% on $2
million to $5 million plus 5% on any excess over $5 million and the fees for an
acquisition which are based on the transaction value were 12% on first $5
million plus 7% on the next $5 million plus 4% on any excess value over $10
million. Where Manchester both raises financing and assists in a merger in the
same transaction it is entitled to the larger fee under the two provisions.
Either party to the agreement can terminate, without penalty, with 9 months
written notice. In July 2004 we amended the January 2004 financing agreement
arrangement. Thereunder, we are presently obligated to pay Manchester a fee upon
successful completion of a financing or any acquisitions, mergers, or other
business combinations arranged for us by or through Manchester. The revised fee
structure for financings are 10% for transactions up to and including
$2,000,000; 7% for transactions in excess of $2,000,000 up to and including
$5,000,000; and 5% for transactions in excess of $5,000,000. The revised fee
structure for acquisitions, mergers or other business combinations is 12% for
transactions up to and including $5,000,000; 7% for transactions in excess of
$5,000,000 up to and including $10,000,000; and 5% for transactions in excess of
$10,000,000. All other material terms of the arrangement remain unchanged. In
connection with its role in arranging the Share Purchase Agreement with
Teckn-O-Laser Global Company, we paid Manchester a transaction fee equal to 5%
of the transaction value of CDN($15,382,000) (approximately US$12,813,206) which
was CDN$769,100 (approximately US$640,660). Payments consisted of CDN$350,000 in
cash (approximately US$291,550) and CDN$419,100 (approximately US$349,250) in
shares of our common stock valued at US$.50 per share resulting in our March
2005 issuance of 538,500 shares to Manchester and an aggregate of 160,000 shares
to two designees of Manchester. As more fully described under "DESCRIPTION OF
BUSINESS - Share Purchase Agreement with Turbon AG", in November 2005 we paid
acquisition fees of $642,000 pursuant to the financing arrangement to Manchester
and its designees consisting of cash ($82,000) and 1,120,000 shares of stock
valued at $.50 per share ($560,000) in connection with our acquisition of an
aggregate of 400,000 shares of Turbon AG.

                                       49
<PAGE>

Effective January 2004, we converted an aggregate of approximately $196,900 in
debt into an aggregate of 19,690,000 restricted shares of our common stock.
Following the effectuation of our 20:1 reverse stock split on March 22, 2004
these shares became approximately 984,500 shares. The conversions were made
pursuant to Debt Conversion and General Release Agreements between us and three
persons. 100,000 of these shares were issued to Wayne Maddever in connection
with the conversion by BBP Consulting of $20,000 of debt. 384,500 of these
shares were issued to William Smith, through Manchester Administrative Services,
in connection with the conversion of $76,900 owed to Manchester Administrative
Services in connection with services performed by William Smith prior to 2003.
500,000 of these shares were issued to R. World Inc. in connection with the
conversion of $100,000 of debt.

In April 2004 we issued an aggregate of 2,350,500 restricted shares (the
"Manchester Shares") of our common stock to designees of Manchester
Administrative Services Ltd. ("Manchester") pursuant to a February 28, 2004 Debt
Conversion and General Release under which a debt of ours to Manchester in the
approximate amount of $328,500 was cancelled. This debt was incurred pursuant to
our January 6, 2003 Consulting Agreement with Manchester and includes debts
incurred in January and February 2004. 920,000 of the Manchester Shares were
issued to Manchester Consolidated Corp.

In April 2004 we issued a $70,000 convertible promissory note bearing interest
at 10% per annum to Manchester Consolidated Corp. The note was due on demand. It
was convertible into shares of our common stock at a conversion price of $1.00
per share. The Note was repaid in full on February 2005.

On April 15, 2004 we granted 100,000 stock options to each of Wayne Maddever,
William Smith and Anthony Pallante in consideration of services rendered in
connection with our corporate reorganization and services related to Reink USA's
bankruptcy. These options vest over a three year period commencing on the first
anniversary of the issuance date and are exercisable for a period of ten years
from grant.

Effective as at the January 31, 2005 closing of the Share Purchase Agreement, we
entered into a renewable 3 year employment agreements with each of Yvon Leveille
and Alain Lachambre. The Leveille Employment Agreement provides for Mr. Leveille
to serve as our President and Chief Executive Officer and further provides for
the payment to Mr. Leveille of an initial base annual salary of CDN$175,000
(approximately US$146,000) together with performance based bonuses. The
Lachambre Employment Agreement provides for Mr. Lachambre to serve as our Vice
President - Sales and Marketing and further provides for the payment to Mr.
Lachambre of an initial base salary of CDN$166,000 (approximately US$138,000)
together with performance based bonuses.

Effective January 13, 2005 we entered into an agreement with 6327214 Canada
Inc., a corporation owned by William Smith pursuant to which we receive the
services of William Smith, our acting secretary, treasurer and chief financial
officer. Pursuant to the agreement we pay a fee of CDN$13,750 per month
(approximately US$11,500) which amount is subject to future modification upon
mutual agreement of the parties.

                                       50
<PAGE>

Effective January 31, 2005 in connection with the Teckn-O-Laser Global Company
acquisition (the "Share Purchase Agreement"), 3091503 Nova Scotia Company, an
indirect subsidiary of ours, issued an aggregate of 6,500,000 Series I
Exchangeable Shares to the former shareholders of Teckn-O-Laser Global Company,
9144-6773 Quebec Inc. and 9144-6906 Quebec Inc. (the "Global Shareholders"),
each of which is convertible into one share of our common stock. The beneficial
owners of 9144-6773 Quebec Inc. and 9144-6906 Quebec Inc. are Yvon Leveille and
Alain Lachambre. In the same transaction, we issued an aggregate of 6,500,000
shares of our Series A Special Voting Preferred Stock to the Global
Shareholders. 4,593,333 of each of the Series I Exchangeable Shares and Series A
Special Voting Preferred Shares were issued to 9144-6773 Quebec Inc. and
1,906,667 of each of the Series I Exchangeable Shares and Series A Special
Voting Preferred were issued to 9144-6906 Quebec Inc. We also issued an
aggregate of 1,932,000 shares of preferred stock of 3091503 Nova Scotia and paid
CDN$750,000 to the Global Shareholders. As more fully described under
"DESCRIPTION OF BUSINESS - Teckn-O-Laser Share Purchase Agreement", in November
2005 we entered into an agreement with the Global Shareholders to restructure
certain post closing obligations of ours to the Global Shareholders pursuant to
the Share Purchase Agreement. Pursuant to the restructuring certain conditional
payment obligations of ours were cancelled as were the 1,932,000 shares of
preferred stock of 3091503 Nova Scotia Company. In consideration thereof, we
paid the Global Shareholders $600,000, issued 3,272,397 shares of our common
stock to an assignee of the Global Shareholders and agreed to pay additional
aggregate cash payments of $2,290,678 to the Global Shareholders in six equal
quarterly installments of $381,780 each commencing March 31, 2007.

On March 30, 2005 we granted 50,000 stock options to Donald Page, 30,000 stock
options to Andre Leroux and 30,000 stock options to Wayne Maddever, each
exercisable for one share of our common stock at a price of $1.06 per share. The
options vest equally on each of the first, second and third anniversaries of the
date of grant and are exercisable at any time during the ten year period
commencing on the date of grant.

As more fully disclosed under "DESCRIPTION OF BUSINESS - Financing
Transactions", on November 4, 2005 we sold 2,400,000 subscription receipts at a
price of $.50 per subscription receipt or an aggregate of $1,200,000 to HBT
Holdings GmbH. Each subscription receipt was automatically exercised, without
payment of any additional consideration, on January 31, 2006 into one unit. Each
unit consists of one share of our common stock (the "Unit Shares") and one
common stock purchase warrant (the "Unit Warrants"). Each warrant entitles the
holder to purchase, subject to adjustment, an additional share of our common
stock (the "Warrant Shares") at a price of $1.25 per share during the period
ending at 5:00 p.m. (Toronto time) on May 3, 2008. Holger Brueckmann-Turbon is
the beneficial owner of HBT Holdings GmbH.

As more fully disclosed under "DESCRIPTION OF BUSINESS - Financing
Transactions", on November 4, 2005 we received aggregate loans of $600,000 from
three related persons. In consideration thereof, we issued 5% convertible
promissory notes due December 31, 2006 (the "Maturity Date") to Alain Lachambre
($136,198), Yvon Leveille ($328,113) and Manchester Consolidated Corp.
($135,689). Interest and principal on the notes are due on the Maturity Date.

                                       51
<PAGE>

As more fully disclosed under "DESCRIPTION OF BUSINESS - Financing
Transactions", as of November 4, 2005 we entered into a Loan Agreement (the
"Loan Agreement") with Turbon International Inc., ("Turbon International"), a
wholly subsidiary of Turbon AG, and Teckn-O-Laser Global Company, a wholly owned
subsidiary of ours. Pursuant to the Loan Agreement, Turbon International made a
$2,800,000 term loan to us and extended us a line of credit for up to an
additional $2,800,000. Holger Brueckmann-Turbon is the chief executive officer
and a principal shareholder of Turbon AG.


                                ITEM 13. EXHIBITS

Financial Statements                                             Page
--------------------                                             ----

Report of Independent Registered Public Accounting Firm ......    F-1

Consolidated Balance Sheet as at December 31, 2005 ...........    F-2

Consolidated Statement of Operations
for the years ended December 31, 2005 and December 31, 2004 ..    F-3

Consolidated Statements of Changes in Stockholders'
Equity (Deficiency) ..........................................    F-4

Consolidated Statement of Cash Flows for the years ended
December 31, 2005 and December 31, 2004 ......................    F-5

Notes to Consolidated Financial Statements ...................    F-6


FINANCIAL STATEMENT SCHEDULES

All financial statement schedules are omitted because they are not applicable or
the required information is shown in the financial statements or notes thereto.


EXHIBITS

The following exhibits are included as part of this report:

                                       52
<PAGE>

             SEC REPORT
EXHIBIT NO.  REFERENCE NO.  DESCRIPTION
-----------  -------------  ----------------------------------------------------

2            2              Plan and Agreement of Reorganization by Merger of
                            Adsero Corp. With and Into Newmarket Strategic
                            Development Corp. Under the Name of Adsero Corp.(1)

3.1          3.1            Articles of Incorporation and Amendments (1)

3.2          3.2            By-Laws (1)

3.3          Appendix A     Certificate of Amendment to the Certificate of
                            Incorporation as filed with the Delaware Secretary
                            of State on March 19, 2004(6)

4.1          4.1            Certificate of Designation of Registrant creating
                            Series A Special Voting Preferred Stock as filed
                            with the Delaware Secretary of State on January
                            25, 2005 (3).

4.2          4.2            Form of Option Agreement for TOL Canada Employees
                            (3).

4.3          4.1            Form of Special Warrant (5).

4.4          4.2            Form of Warrant Certificate (5).

4.5          4.3            Warrant Indenture (5).

4.6          4.1            Form of Subscription Receipt (9).

4.7          4.2            Form of Broker Warrant (9).

4.8          4.1            Form of Subscription Receipt for November 4, 2005
                            Private Placement (10).

4.9          4.2            Form of Warrant for November 4, 2005 Private
                            Placement (10).

4.10         4.3            Form of Broker Warrant for November 4, 2005
                            Private Placement (10).

4.11         4.1            Subscription Receipt Certificate dated November
                            29, 2005 (11).

4.12         4.2            Broker Warrant Certificate dated November 29, 2005
                            (11).

                                       53
<PAGE>

             SEC REPORT
EXHIBIT NO.  REFERENCE NO.  DESCRIPTION
-----------  -------------  ----------------------------------------------------

9            9              Agreement for Sale and Purchase of Assets of
                            Assembly Services Unlimited, Inc. d/b/a Wildan
                            Services and Membership Certificates of Brittany
                            LLC and Plan of Reorganization (1)

10.1         10.1           Exclusive Agreement for Distribution of Product (1)

10.2         10.2           Employment Agreements:
                            William E. Gallagher (1)
                            Robert Sinatra (1)

10.3         10.3           Consulting Agreement dated as of January 6, 2003
                            between Registrant and BBP Consulting (2).

10.4         10.4           Consulting Agreement dated as of January 6, 2003
                            between Registrant and Manchester Administrative
                            Services Inc. (2)

10.5         10.5           Exclusive Financial Advisor Agreement dated
                            January 1, 2004 between Registrant and Manchester
                            Consolidated Corp. (2)

10.6         10.6           $250,000 Promissory Note of Registrant dated
                            January 1, 2004 issued to BG Capital Group Bahamas
                            Ltd. (2)

10.7         10.1           Share Purchase Agreement dated as of January 2,
                            2005 among Registrant, YAC Corp., Teckn-O-Laser
                            Company, 3091503 Nova Scotia Company,
                            Teckn-O-Laser Global Company, 3091732 Nova Scotia
                            Company and the Shareholders of Teckn-O-Laser
                            Global Company (3).

10.8         10.2           Series I Exchangeable Shares Voting and Exchange
                            and Support Agreement dated as of January 2, 2005
                            among Registrant, YAC Corp., 3091732 Nova Scotia
                            Company, 3091503 Nova Scotia Company and the
                            persons holding Exchangeable Shares of 3091503
                            Nova Scotia Company(3).

10.9         10.3           Series II Exchangeable Shares Voting and Exchange
                            and Support Agreement dated as of January 2, 2005
                            among Registrant, YAC Corp., 3091732 Nova Scotia
                            Company, 3091503 Nova Scotia Company and the
                            persons holding Exchangeable Shares of 3091503
                            Nova Scotia Company(3).

                                       54
<PAGE>

             SEC REPORT
EXHIBIT NO.  REFERENCE NO.  DESCRIPTION
-----------  -------------  ----------------------------------------------------

10.10        10.4           Preferred Share Purchase and Support Agreement dated
                            as of January 2, 2005 among Registrant, YAC Corp.,
                            3091732 Nova Scotia Company, 3091503 Nova Scotia
                            Company and the persons holding Preferred Shares of
                            3091503 Nova Scotia Company(3).

10.11        10.5           Share Purchase Agreement dated as of January 1, 2005
                            among Registrant, Teckn-O-Laser Global Inc., and
                            Teckn-O-Laser USA Inc. (3).

10.12        10.6           Lock Up Agreement dated as of January 2, 2005 among
                            9144-6773 Quebec, Inc., 9144-6906 Quebec, Inc.,
                            3091503 Nova Scotia Company, Registrant, YAC Corp.,
                            and 3091732 Nova Scotia Company (3).

10.13        10.7           Employment Agreement dated January 31, 2005 among
                            Teckn-O-Laser Company, Alain Lachambre and
                            Registrant (3).

10.14        10.8           Employment Agreement dated January 31, 2005 among
                            Teckn-O-Laser Company, Yvon Leveille and Registrant
                            (3).

10.15        10.9           Loan Agreement dated as of January 26, 2005 among
                            Teckn-O-Laser Company, Registrant, YAC Corp.,
                            3091503 Nova Scotia Company, 3091732 Nova Scotia
                            Company, Teckn-O-Laser Global Company, Teckn-O-Laser
                            USA Inc. and Barrington Bank International Limited
                            (3).

10.16        10.10          Pledge and Security Agreement dated as of January
                            26, 2005 between Registrant and Barrington Bank
                            International Limited (3).

10.17        10.11          Guaranty Agreement dated as of January 26, 2005
                            among Registrant, YAC Corp., Teckn-O-Laser USA Inc.,
                            and Barrington Bank International Limited (3).

10.18        10.12          Funding and Pay Off Agreement dated as of January
                            31, 2005 among Teckn-O-Laser Global Company,
                            Teckn-O-Laser Company, Teckn-O-Laser USA Inc., Yvon
                            Leveille, Alain Lachambre, Celine Plourde,
                            Registrant, YAC Corp., 3091732 Nova Scotia Company,
                            3091503 Nova Scotia Company, Caisse de depot et
                            placement du Quebec, and Barrington Bank
                            International Limited (3).

                                       55
<PAGE>

             SEC REPORT
EXHIBIT NO.  REFERENCE NO.  DESCRIPTION
-----------  -------------  ----------------------------------------------------

10.19        10.13          Security Agreement dated as of January 26, 2005
                            between Registrant and Barrington Bank International
                            Limited (3).

10.20        10.1           Agency Agreement dated June 22, 2004 between
                            Registrant and DGM Bank & Trust Inc. (4)

10.21        10.21          Convertible $1,000,000 Promissory Note of Registrant
                            dated January 7, 2005 issued to Westminster Capital,
                            Inc. (7)

10.22        10.22          Consulting Agreement dated as of January 7, 2005
                            between Registrant and Gregory Belzberg. (7)

10.23        10.23          Consulting Agreement dated as of January 7, 2005
                            between Registrant and Westminster Capital, Inc. (7)

10.24        10.1           Strategic Supply Agreement effective as of June 22,
                            2005 between Registrant and Turbon AG. (8)

10.25        10.2           Letter Agreement dated June 22, 2005 between
                            Registrant and Loewen, Ondaatje, McCutcheon Limited.
                            (8)

10.26        10.3           Share Purchase Agreement dated as of June 22, 2005
                            between Registrant and Turbon AG. (8)

10.27        10.4           Letter Agreement dated June 22, 2005 between
                            Registrant and NCR Corporation (on behalf of NCR
                            Gmbh). (8)

10.28        10.5           Letter Agreement dated as of June 21, 2005 between
                            Registrant and Holger Brueckmann-Turbon. (8)

10.29        10.6           Letter Agreement dated as of June 21, 2005 between
                            Registrant and Gothaer Lebensversicherung AG. (8)

10.30        10.1           Agency Agreement dated July 21, 2005 between
                            Registrant and Loewen, Ondaatje, McCutcheon Limited.
                            (9)

10.31        10.2           Form of Lock Up Agreement. (9)

10.32        10.1           Restructuring Agreement dated November 4, 2005 among
                            Registrant, 9144-6773 Quebec Inc. and 9144-6906
                            Quebec Inc. (10)

                                       56
<PAGE>

             SEC REPORT
EXHIBIT NO.  REFERENCE NO.  DESCRIPTION
-----------  -------------  ----------------------------------------------------

10.33        10.2           Loan Agreement with Turbon International Inc. and
                            Teckn-O-Laser Global Company dated November 4, 2005.
                            (10)

10.34        10.3           $2,800,000 Term Loan Promissory Note dated November
                            4, 2005. (10)

10.35        10.4           Form of Credit Line Promissory Note with Turbon
                            International Inc. (10)

10.36        10.5           Loan Guarantee of Teckn-O-Laser Global Company dated
                            November 4, 2005. (10)

10.37        10.6           Promissory Note dated November 4, 2005 issued to
                            Yvon Leveille. (10)

10.38        10.7           Promissory Note date November 4, 2005 issued to Alan
                            Lachambre. (10)

10.39        10.8           Promissory Note date November 4, 2005 issued to
                            Manchester Consolidated Corp. (10)

10.40        10.9           Agency Agreement dated November 9, 2005 between
                            Registrant and Loewan Ondaatje McCutcheon Limited.
                            (10)

10.41        10.10          Agreement of Lease between Sreit (Central No. 3) Ltd
                            and Teckn-O-Laser Company. (10)

10.42        10.1           Agency Agreement, dated November 29, 2005 between
                            Registrant and Loewen, Ondaatje, McCutcheon Limited.
                            (11)

10.43        10.1           Standstill Agreement, dated January 31, 2006 between
                            Registrant and National Bank of Canada (12)

14           14             Code of Ethics (7)

21                          List of Subsidiaries of Registrant

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

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

32.1                        Rule 1350 Certification of Chief Executive Officer

32.2                        Rule 1350 Certification of Chief Financial Officer

                                       57
<PAGE>

__________________

      (1)   Incorporated by reference to Registrant's Form 10 (SEC File No.:
            0-31040) as filed on February 9, 2001.

      (2)   Filed with the Securities and Exchange Commission on April 26, 2004
            as an exhibit, numbered as indicated above, to the Registrant's
            Annual Report on Form 10-KSB for the year ended December 31, 2003,
            which exhibit is incorporated herein by reference.

      (3)   Filed with the Securities and Exchange Commission on February 4,
            2005 as an exhibit, numbered as indicated above, to the Registrant's
            Current Report on Form 8-K dated January 31, 2005, which exhibit is
            incorporated herein by reference.

      (4)   Filed with the Securities and Exchange Commission on August 26, 2004
            as an exhibit, numbered as indicated above, to the Registrant's
            Quarterly Report on Form 10-QSB for the quarter ended June 30, 2004,
            which exhibit is incorporated herein by reference.

      (5)   Filed with the Securities and Exchange Commission on October 1,
            2004, as an exhibit, numbered as indicated above, to the
            Registrant's Current Report on Form 8-K dated September 27, 2004,
            which exhibit is incorporated herein by reference.

      (6)   Filed with the Securities and Exchange Commission on February 23,
            2004 as an exhibit, numbered as indicated above to the Registrant's
            Definitive Information Statement dated February 23, 2004, which
            exhibit is incorporated herein by reference.

      (7)   Filed with the Securities and Exchange Commission on April 18, 2005
            as an exhibit, numbered as indicated above, to the Registrant's
            Annual Report Form 10-KSB for the year ended December 31, 2004,
            which exhibit is incorporated herein by reference.

      (8)   Filed with the Securities and Exchange Commission on June 28, 2005
            as an exhibit, numbered as indicated above, to the Registrant's
            Current Report on Form 8-K dated June 22, 2005, which exhibit is
            incorporated herein by reference.

      (9)   Filed with the Securities and Exchange Commission on July 28, 2005
            as an exhibit, numbered as indicated above, to the Registrant's
            Current Report on Form 8-K dated July 21, 2005, which exhibit is
            incorporated herein by reference.

      (10)  Filed with the Securities and Exchange Commission on November 23.
            2005 as an exhibit, numbered as indicated above, to the Registrant's
            Quarterly Report on Form 10-QSB for the quarter ended September 30,
            2005, which exhibit is incorporated herein by reference.

      (11)  Filed with the Securities and Exchange Commission on December 2,
            2005 as an exhibit, numbered as indicated above, to the Registrant's
            Current Report on Form 8-K dated November 29, 2005, which exhibit is
            incorporated herein by reference.

      (12)  Filed with the Securities and Exchange Commission on February 14,
            2006 as an exhibit, numbered as indicated above, to the Registrant's
            Current Report on Form 8-K dated January 31, 2006, which exhibit is
            incorporated herein by reference.

                                       58
<PAGE>

                 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees.

The aggregate fees billed to us by our principal accountant for services
rendered during the fiscal years ended December 31, 2005 and 2004 are set forth
in the table below:

                                      Fiscal year ended  Fiscal year ended
            Fee Category              December 31, 2005  December 31, 2004
            --------------------------------------------------------------

            Audit fees (1) ..........     $ 300,000          $ 82,000
            Audit-related fees (2) ..       150,000                 0
            Tax fees (3) ............             0                 0
            All other fees (4) ......             0                 0
            Total fees ..............     $ 450,000            82,000
__________________

      (1)   Audit fees consists of fees incurred for professional services
            rendered for the audit of consolidated financial statements, for
            reviews of our interim consolidated financial statements included in
            our quarterly reports on Form 10-QSB and for services that are
            normally provided in connection with statutory or regulatory filings
            or engagements.

      (2)   Audit-related fees consists of fees billed for professional services
            that are reasonably related to the performance of the audit or
            review of our consolidated financial statements, but are not
            reported under "Audit fees."

      (3)   Tax fees consists of fees billed for professional services relating
            to tax compliance, tax planning, and tax advice.

      (4)   All other fees consists of fees billed for all other services.

Audit Committee's Pre-Approval Practice.

Effective March 30, 2005 we formed an audit committee. Section 10A(i) of the
Securities Exchange Act of 1934 prohibits our auditors from performing audit
services for us as well as any services not considered to be "audit services"
unless such services are pre-approved by our audit committee or unless the
services meet certain de minimis standards.

                                       59
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on it behalf by the undersigned, thereunto duly authorized.

                                     ADSERO CORP.

Dated: May 10, 2006                  By: /s/ William Smith
                                         -------------------------------------
                                         William Smith, Secretary, Treasurer
                                         and Chief Financial and
                                         Accounting Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on this 10th day of May, 2006.

                           /s/ Yvon Leveille
                           ----------------------------------------------------
                           Yvon Leveille, President, Chief Executive Officer,
                           and Director

                           /s/ William Smith
                           ----------------------------------------------------
                           William Smith, Secretary, Treasurer, Chief Financial
                           and Accounting Officer and Director

                           /s/ Wayne Maddever
                           ----------------------------------------------------
                           Wayne Maddever, Director

                           /s/ Donald Page
                           ----------------------------------------------------
                           Donald Page, Director

                                       60
<PAGE>

                     M A R C U M   &   K L I E G M A N   LLP
                   __________________________________________

                   CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS

     A LIMITED LIABILITY PARTNERSHIP CONSISTING OF PROFESSIONAL CORPORATIONS


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------


To the Audit Committee of the
Board of Directors and Shareholders
of Adsero Corp.


We have audited the accompanying consolidated balance sheet of Adsero Corp. and
Subsidiaries (the "Company") as of December 31, 2005, and the related
consolidated statements of operations, changes in stockholders' equity
(deficiency) and cash flows for each of the two years in the period ended
December 31, 2005. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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 financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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 financial statements referred to above present fairly, in
all material respects, the financial position of Adsero Corp., as of December
31, 2005, and the results of its operations and its cash flows for each of the
two years in the period ended December 31, 2005 in conformity with United States
generally accepted accounting principles.


               655 Third Avenue o 16th Floor o New York, NY 10017

                         Tel 212-981-3000 o 212-981-3001

           Melville   New York   Greenwich   Grand Cayman    Riverhead

                                  www.mkllp.com

<PAGE>

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As more fully described in
Note 2 to the financial statements, the Company has sustained recurring
operating losses and has an accumulated deficit of $19,376,401 as of December
31, 2005. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans regarding those matters are
also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


                                       /s/ Marcum & Kliegman LLP


New York, NY
May 1, 2006

                                       F-1
<PAGE>

                          ADSERO CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2005

                                     ASSETS
                                     ------
CURRENT ASSETS

   Cash ......................................................    $   1,302,294
   Accounts receivable, net ..................................        4,887,744
   Inventories ...............................................        3,701,876
   Taxes receivable ..........................................          227,730
   Prepaid expenses and other assets .........................          178,311
   Deferred acquisition costs ................................           32,451
                                                                  -------------

      TOTAL CURRENT ASSETS ...................................       10,330,406

   Property and equipment,net ................................        2,120,311
   Investment in Turbon AG. ..................................        6,398,774
   Goodwill ..................................................        2,388,298
   Intangible assets .........................................        3,939,000
   Other assets ..............................................           74,835
                                                                  -------------

         Total Assets ........................................    $  25,251,624
                                                                  =============

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

   Line of credit obligation .................................    $   2,583,774
   Installment loans .........................................          324,449
   Finished goods purchasing line of credit ..................        2,772,510
   Accounts payable ..........................................        4,948,853
   Accrued compensation ......................................          708,812
   Warranties and related accruals ...........................          347,200
   Accrued expenses ..........................................          710,531
   Liabilities of discontinued operation .....................        2,125,341
   Notes payable - stockholders ..............................          600,000
   Note payable - former officer
      (including accrued interest of $66,495) ................          172,988
   Current portion of equipment financing obligations ........           55,537
                                                                  -------------
      TOTAL CURRENT LIABILITIES ..............................       15,349,995

   Equipment financing obligations ...........................          122,177
   Stock purchase loan .......................................        2,800,000
   Acquisition debt ..........................................        2,290,678
   Convertible promissory note ...............................        1,644,690
                                                                  -------------
         Total Liabilities ...................................       22,207,540
                                                                  -------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

   Common stock, $.001 par value, 100,000,000 shares
      authorized, 34,051,930 shares issued and outstanding ...           34,052
   Series I exchangeable shares of subsidiary, 6,500,000
      shares outstanding, exchangeable one for one into
      common shares of the company ...........................        3,250,000
   Series A Preferred Special Voting Stock, $.0001
      par value, 20,000,000 shares authorized, 6,500,000
      issued and outstanding .................................              650
   Additional paid-In-capital ................................       19,363,048
   Accumulated other comprehensive income - Foreign currency
      translation adjustment .................................         (227,265)
   Accumulated deficit .......................................      (19,376,401)
                                                                  -------------
      TOTAL STOCKHOLDERS' EQUITY .............................        3,044,084
                                                                  -------------

         Total Liabilities and Stockholders' Equity ..........    $  25,251,624
                                                                  =============

                 See notes to consolidated financial statements

                                       F-2
<PAGE>

                          ADSERO CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                FOR THE YEAR ENDED DECEMBER 31,
                                                -------------------------------
                                                     2005              2004
                                                ------------       ------------
REVENUES .................................      $ 27,841,164       $          -

COST OF GOODS SOLD .......................        22,301,445                  -
                                                ------------       ------------
   GROSS PROFIT ..........................         5,539,719                  -
                                                ------------       ------------

OPERATING EXPENSES
   Salaries and compensation .............         3,125,223            250,000
   Sales and administrative ..............         3,999,415            829,500
   Goodwill impairment charge ............         3,194,722
   Restructuring charge ..................           140,100                  -
   Depreciation and amortization .........         1,603,361                  -
                                                ------------       ------------
   TOTAL OPERATING EXPENSES ..............        12,062,821          1,079,500
                                                ------------       ------------

LOSS FROM OPERATIONS .....................        (6,523,102)        (1,079,500)

   INTEREST EXPENSE ......................           864,327             54,870
   LOSS ON CONVERSION OF DEBT ............                 -            627,340
                                                ------------       ------------

LOSS BEFORE INCOME TAXES .................        (7,387,429)        (1,761,710)

   INCOME TAXES ..........................                 -                  -
                                                ------------       ------------

NET LOSS .................................      $ (7,387,429)      $ (1,761,710)
                                                ============       ============

NET LOSS PER SHARE,
   BASIC AND DILUTED .....................      $      (0.28)      $      (0.19)
                                                ============       ============

WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING ....................        26,733,801          9,487,361
                                                ============       ============

                 See notes to consolidated financial statements

                                       F-3
<PAGE>

                          ADSERO CORP. AND SUBSIDIARIES
     CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                         Series I Exchangeable        Series A
                                                      Common Stock        Shares in Subsidiary     Preferred Stock
                                                 ---------------------   ----------------------   ------------------
                                                    Shares      Amount     Shares      Amount       Shares    Amount
                                                 -----------   -------   ---------   ----------   ---------   ------
<S>                                              <C>           <C>       <C>         <C>          <C>         <C>
BALANCE - JANUARY 1, 2004 .....................    1,082,700   $ 1,083               $                        $

  Sale of stock and warrants for cash .........      852,500       852
  Conversion of debt expense
  Stock issued on debt conversion .............    9,843,025     9,843
  Stock issued for services ...................      964,750       965
  Net loss                                                 -         -           -            -           -        -

                                                 -----------   -------   ---------   ----------   ---------   ------
BALANCE - DECEMBER 31, 2004 ...................   12,742,975    12,743

  Common stock issued in private placements ...   12,037,000    12,037           -            -           -        -
  Common stock issued to placement agent ......      218,000       218           -            -           -        -
  Common stock issued re: Tecknolaser
    acquisition ...............................    3,272,397     3,272
  Common Stock issued on conversion of note
    payable ...................................    2,057,058     2,057
  Common stock issued in connection with
    debt financing ............................      200,000       200           -            -           -        -
  Common stock issued under price
    adjustment ................................    1,706,000     1,706           -            -           -        -
  Preferred stock issued as purchase
    consideration .............................            -         -           -            -   6,500,000      650
  Series I exchangeable shares issued as
    purchase consideration ....................            -         -   6,500,000    3,250,000           -        -
  Deferred compensation .......................            -         -           -            -           -        -
  Amortization of deferred compensation .......            -         -           -            -           -        -
  Common stock issued to transaction
    advisor for services ......................    1,818,500     1,819           -            -           -        -
  Foreign currency translation adjustment .....            -         -           -            -           -        -
  Net Loss ....................................            -         -           -            -           -        -

                                                 -----------   -------   ---------   ----------   ---------   ------
BALANCE - DECEMBER 31, 2005 ...................   34,051,930   $34,052   6,500,000   $3,250,000   6,500,000   $  650
                                                 ===========   =======   =========   ==========   =========   ======
                                                                                                         (continued)
</TABLE>
                 See notes to consolidated financial statements

                                      F-4A
<PAGE>

                          ADSERO CORP. AND SUBSIDIARIES
     CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                                   (continued)
<TABLE>
<CAPTION>

                                                                 Additional                                      Total
                                                   Deferred       Paid-In         F/X       Accumulated       Stockholders'
                                                 Compensation     Capital     Translation     Deficit      Equity (Deficiency)
                                                 ------------   -----------   -----------   ------------   -------------------
<S>                                              <C>            <C>           <C>           <C>            <C>
BALANCE - JANUARY 1, 2004 .....................  $              $ 6,306,417   $             $(10,227,262)  $       (3,919,762)

  Sale of stock and warrants for cash .........                     803,736                                           804,588
  Conversion of debt expense ..................                     627,340                                           627,340
  Stock issued on debt conversion .............                   1,233,125                                         1,242,968
  Stock issued for services ...................                     449,035                                           450,000
  Net loss ....................................                                               (1,761,710)          (1,761,710)

                                                 ------------   -----------   -----------   ------------   ------------------
BALANCE - DECEMBER 31, 2004 ...................             -     9,419,653             -    (11,988,972)          (2,556,576)

  Common stock issued in private placements ...             -     6,076,595             -              -            6,088,632
  Common stock issued to placement agent ......             -          (218)            -              -                    -
  Common stock issued re: Tecknolaser
    acquisition ...............................                   1,632,927                                         1,636,199
  Common Stock issued on conversion of note
    payable ...................................                   1,026,472                                         1,028,529
  Common stock issued in connection with
    debt financing ............................             -        99,800             -              -              100,000
  Common stock issued under price
    adjustment ................................             -        (1,706)            -              -                    -
  Preferred stock issued as purchase
    consideration .............................             -          (650)            -              -                    -
  Series I exchangeable shares issued as
    purchase consideration ....................             -             -             -              -            3,250,000
  Deferred compensation .......................      (111,993)      111,993             -              -                    -
  Amortization of deferred compensation .......       111,993             -             -              -              111,993
  Common stock issued to transaction
    advisor for services ......................             -       998,182             -              -            1,000,001
  Foreign currency translation adjustment .....             -             -      (227,265)             -             (227,265)
  Net Loss ....................................             -             -             -     (7,387,429)          (7,387,429)

                                                 ------------   -----------   -----------   ------------   ------------------
BALANCE - DECEMBER 31, 2005 ...................  $          -   $19,363,048   $  (227,265)  $(19,376,401)  $        3,044,084
                                                 ============   ===========   ===========   ============   ==================

</TABLE>
                 See notes to consolidated financial statements

                                      F-4B
<PAGE>

                          ADSERO CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                         FOR THE YEAR ENDED DECEMBER 31,
                                                         -------------------------------
                                                              2005              2004
                                                         -------------      ------------
<S>                                                      <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

      Net Loss .......................................   $  (7,387,429)     $ (1,761,710)
                                                         -------------      ------------

   Adjustments to reconcile net loss to net cash
      used in operating activities:
      Depreciation and amortization ..................       1,603,361
      Bad debt reserve ...............................         169,007
      Inventory reserve ..............................         159,630
      Non-cash interest expense ......................          72,654            51,253
      Impairment of goodwill .........................       3,194,722
      Stock issued for services ......................                           250,000
      Amortization - stock based compensation ........         111,993
      Loss on conversion of debt .....................               -           627,340
   Changes in operating assets and liabilities:
      Accounts receivable ............................      (1,235,519)
      Inventories ....................................        (532,591)
      Prepaid expenses and other assets ..............         171,416
      Accounts payable and accrued expenses ..........         526,297            67,210
      Income taxes receivable ........................         557,767
                                                         -------------      ------------
         Total Adjustments ...........................       4,798,737           995,803
                                                         -------------      ------------

NET CASH USED IN OPERATING ACTIVITIES ................      (2,588,692)         (765,907)
                                                         -------------      ------------

CASH FLOWS USED IN INVESTING ACTIVITIES
      Investment in Turbon ...........................      (5,742,126)
      Acquisition of business, net of cash received ..      (6,095,347)
      Puchase of fixed assets ........................        (657,840)
                                                         -------------      ------------
NET CASH USED IN INVESTING ACTIVITIES ................     (12,495,313)                -
                                                         -------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES

      Repayment on notes payable to related parties ..         (76,079)
      Repayment of mortgage ..........................      (2,338,375)
      Principal payments on long term debt ...........        (666,065)
      Bank loan ......................................         (84,499)
      Proceeds from issuances of common stock ........       6,088,632           804,588
      Supplier line of credit ........................       2,772,510
      Proceeds from term loan ........................       2,800,000
      Proceeds received from sale of building ........       2,639,496
      Proceeds from issuances of notes ...............       4,562,716
      Proceeds from issuances of convertible notes ...       1,028,529            70,075
      Proceeds (repayments) of loan payable ..........        (275,000)           52,500
                                                         -------------      ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES ............      16,451,864           927,163
                                                         -------------      ------------

EFFECT OF EXCHANGE RATE ON CASH ......................        (227,265)                -

NET INCREASE IN CASH .................................       1,140,594           161,256

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

CASH AT END OF PERIOD ................................   $   1,302,294      $    161,700
                                                         =============      ============

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES

      ACQUISITION OF BUSINESS

      Assets acquired ................................   $  13,022,884
      Costs in excess of net assets acquired .........      10,403,020
      Liabilities assumed ............................     (12,095,107)
      Stock purchase consideration ...................      (4,886,199)
      Transaction costs ..............................        (349,251)
                                                         -------------

      Net cash paid for acquisition of business ......   $   6,095,347
                                                         =============
</TABLE>
                 See notes to consolidated financial statements

                                       F-5
<PAGE>

                          ADSERO CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   FOR YEARS ENDING DECEMBER 31, 2005 AND 2004

1. ORGANIZATION

         Adsero Corp. ("Adsero"), formerly known as Reink Corp., was
         incorporated in Delaware on March 6, 1999. Adsero is the parent of
         wholly owned subsidiaries Teckn-O-Laser Global Company, Teckn-O-Laser
         Inc. and Tecknolaser USA inc. (collectively the "Tecknolaser Group")
         which acquisition was completed effective January 2, 2005 as described
         in Note 4.

         Adsero and the Tecknolaser Group (collectively the "Company") is a
         manufacturer and distributor of remanufactured toner cartridges and
         inkjet cartridges. The Company markets these products domestically and
         internationally through a variety of channels including distributors of
         office supplies and related products and retail office supply stores.

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

         Effective January 2, 2005, the Company no longer is considered a
         development stage entity.

2. LIQUIDITY AND FINANCIAL CONDITION

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

         At December 31, 2005, the Company had a working capital deficiency of $
         5,019,589 ($2,894,248 excluding liabilities from discontinued
         operations) and was not in compliance with certain covenants under its
         line of credit obligation and certain of its term loans described in
         Note 11. The lender under these obligations has the right to demand
         immediate repayment of these loans due to the event of default.
         Subsequent to December 31, 2005, the Company and the lender entered
         into a standstill agreement intended to provide the Company with
         additional time to source a new lender, however; this agreement only
         provides the Company with temporary relief from a possible demand for
         payment and includes various restrictions that do not alleviate the
         Company's immediate liquidity constraints. The lender's exercise of
         these rights and possible demand for immediate repayment of the
         outstanding balances, which amount to an aggregate of $3,000,116 at
         December 31, 2005, would have a material adverse effect on the
         business. The Company cannot provide any assurance that the lender
         under these obligations will waive its violation of such covenants nor
         can the Company provide any assurance that the lender will not exercise
         its right to demand immediate repayment.

         During the year ended December 31, 2005 the Company raised $6,411,250
         through sales of its equity securities, $2,666,666 through issuance of
         convertible notes and $3,400,000 in debt financing. The Company has
         undertook various initiatives to streamline the business and reduce
         costs including, but not necessarily limited to, having entered into
         the sale lease back transaction described in Note 10, increasing the
         volume of goods it distributes as opposed to manufacturers by having
         outsourced the manufacture of goods to a prospective acquiree (Note
         13), reducing its employee headcount and closing certain facilities.

                                       F-6
<PAGE>

         The Company's ability to recover its assets and continue its operations
         is dependent upon its ability to raise additional capital and generate
         revenue and operating cash flow through the execution of its business
         plan. There can be no assurance that the Company will be successful in
         its efforts to operate the Tecknolaser Group or any other prospective
         acquiree businesses profitably. The Company also cannot provide any
         assurance that it will obtain the financing it needs to sustain the
         business until such time that it is able to generate sufficient revenue
         and operating cash flow through the operations of the Tecknolaser Group
         or other prospective acquiree businesses. These matters raise
         substantial doubt about the Company's ability to continue as a going
         concern. The financial statements do not include any adjustments
         relating to the recovery of the recorded assets or the classification
         of liabilities that might be necessary should the Company be unable to
         continue as a going concern.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

         The consolidated financial statements include the accounts of the
         Company and its wholly-owned subsidiaries. All significant
         inter-company transactions have been eliminated. The investment in
         Turbon AG has been accounted for at cost (Note 24).

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

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

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

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

         The Company requires all of its product sales to be supported by
         evidence of a sale transaction that clearly indicates the selling price
         to the customer, shipping terms, payment terms (generally 30 days) and
         refund policy, if any. Selling prices of the products are fixed at the
         time the sale is consummated. The Company recognizes revenue at the
         time in which it receives a confirmation that the goods were either
         tendered at their destination when shipped "FOB destination," or
         transferred to a shipping agent when "FOB shipping point." In addition,
         the Company evaluates the creditworthiness of new customers and
         monitors the creditworthiness of its existing customers to determine
         whether events or changes in their financial circumstances would raise
         doubt as to the collectibility of sales transactions.

         The Company has also made approximately $3.7 million of product sales
         as a distributor of goods under a strategic supply arrangement with
         Turbon AG (Note 13). With respect to these sales, the Company takes
         title to the products and bears the risks and rewards of ownership,
         including the risk of loss for collection, delivery or returns.
         Accordingly, the Company has determined, in accordance with EITF 99-19
         "Reporting Revenue Gross as a Principal versus Net as an Agent," that
         it acts as a principal in these transactions and therefore records such
         revenue on a gross basis.

                                       F-7
<PAGE>

         The Company provides its customers with warranty coverage on its
         products as described in Note 13. Provisions for estimated expenses
         related to product warranties are made at the time products are sold.
         These estimates are established using historical information on the
         nature, frequency, and average cost of warranty claims. Management
         actively studies trends of warranty claims and takes action to improve
         product quality and minimize warranty claims.

         The Company has entered into individually negotiated volume rebate
         arrangements with several of its customers. In addition, the Company
         issues sales discounts on product purchases made by customers who
         participate in its Reflexion Private Label Program (Note 20). Sales
         discounts under the Reflexion Private Label Program range from 0% to
         10% based on volumes of products purchased during semi-annual
         measurement periods. All volume rebates and sales discounts are accrued
         and accounted for as a reduction of revenue based on actual rebates and
         discounts earned. Aggregate volume rebates and sales discounts amounted
         to $936,064 for the year ended December 31, 2005, including $245,058
         included in accrued expenses in the accompanying balance sheet.

         The Company periodically permits its customers to return unused goods
         for a restocking fee of 15%. Returns of unused goods amounted to
         $604,890 during the year ended December 31, 2005 including $119,416
         included in accrued expenses in the accompanying balance sheet.

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

         The Company has a policy of reserving for uncollectible accounts based
         on its best estimate of the amount of probable credit losses in its
         existing accounts receivable. The Company periodically reviews its
         accounts receivable to determine whether an allowance is necessary
         based on an analysis of past due accounts and other factors that may
         indicate that the realization of an account may be in doubt. Account
         balances deemed to be uncollectible are charged to the allowance after
         all means of collection have been exhausted and the potential for
         recovery is considered remote. As of December 31, 2005, the Company has
         had a low occurrence of credit losses and based on a review of balances
         outstanding has determined that an allowance for doubtful accounts of
         $169,007 is necessary.

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

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

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

         Property and Equipment are stated at cost less accumulated depreciation
         and amortization. Depreciation and amortization are calculated using
         the straight line methods over the estimated useful lives, which
         generally range from 3 to 10 years.

         Goodwill
         --------

         Goodwill represents the excess of purchase considerations and related
         transaction expenses that are incurred in connection with completing
         acquisitions of businesses accounted for in accordance with SFAS 141
         "Business Combinations." SFAS 142, "Goodwill and Other Intangible
         Assets," requires that goodwill be tested for impairment at the
         reporting unit level (operating segment or

                                       F-8
<PAGE>

         one level below an operating segment) on an annual basis and between
         annual tests in certain circumstances. Application of the goodwill
         impairment test requires judgment, including the identification of
         reporting units, assigning assets and liabilities to reporting units,
         assigning goodwill to reporting units, and determining the fair value.
         Significant judgments required to estimate the fair value of reporting
         units include estimating future cash flows, determining appropriate
         discount rates and other assumptions.

         The Company's annual impairment review of goodwill has identified that
         a goodwill impairment charge amounting to $3,194,722 is necessary for
         the year ended December 31, 2005.

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

         The Company periodically reviews the carrying values of its long lived
         assets in accordance with SFAS 144 "Long Lived Assets" when events or
         changes in circumstances would indicate that it is more likely than not
         that their carrying values may exceed their realizable values and
         records impairment charges when considered necessary. The Company has
         determined that no impairment charges are necessary during the year
         ended December 31, 2005.

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

         The preparation of financial statements in conformity with accounting
         principles generally accepted in the United States of America requires
         management to make estimates and assumptions that affect the reported
         amounts of assets and liabilities and disclosures of contingent assets
         and liabilities at the date of the financial statements and the
         reported amounts of revenues and expenses during the reporting period.
         The Company uses estimates for items, including but not limited to:
         volume discounts, warranty provisions, rebate accruals, purchase price
         allocations, goodwill and intangibles carrying values, lives for
         depreciable and amortizable assets, and the pricing of equity
         securities as purchase consideration. Actual results could differ from
         those estimates.

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

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

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

         The Company accounts for conversion options embedded in convertible
         notes in accordance with Statement of Financial Accounting Standard
         ("SFAS) No. 133 "Accounting for Derivative Instruments and Hedging
         Activities" ("SFAS 133") and EITF 00-19 "Accounting for Derivative
         Financial Instruments Indexed to, and Potentially Settled in, a
         Company's Own Stock" ("EITF 00-19"). SFAS 133 generally requires
         Companies to bifurcate conversion options embedded in convertible notes
         from their host instruments and to account for them as free standing
         derivative financial instruments in accordance with EITF 00-19. SFAS
         133 provides for an exception to this rule when convertible notes, as
         host instruments, are deemed to be conventional as that term is

                                       F-9
<PAGE>

         described in the implementation guidance under Appendix A to SFAS 133
         and further clarified in EITF 05-2 "The Meaning of "Conventional
         Convertible Debt Instrument" in Issue No. 00-19.

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

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

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

         The Company accounts for the issuance of common stock purchase warrants
         issued and other free standing derivative financial instruments in
         accordance with the provisions of EITF 00-19. Based on the provisions
         of EITF 00-19, the Company classifies as equity any contracts that (i)
         require physical settlement or net-share settlement or (ii) gives the
         Company a choice of net-cash settlement or settlement in its own shares
         (physical settlement or net-share settlement). The Company classifies
         as assets or liabilities any contracts that (i) require net-cash
         settlement (including a requirement to net cash settle the contract if
         an event occurs and if that event is outside the control of the
         Company) (ii) give the counterparty a choice of net-cash settlement or
         settlement in shares (physical settlement or net-share settlement).

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

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

         As described in Note 4, the Company granted 244,500 stock options, to
         certain employees of Tecknolaser Group and 110,000 to the three
         independent members of its board of directors during the quarter ended
         March 31, 2005.

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

                                      F-10
<PAGE>

                                                       For the Year
                                                     Ended December 31,
                                                ---------------------------
                                                   2005            2004
                                                ------------   ------------
         Net loss, as reported ..............   $ (7,387,429)  $ (1,761,710)
         Incremental amount of stock based
          compensation expense determined
          under the fair value method .......       (183,941)        (3,125)
                                                ------------   ------------
         Net loss, pro-forma ................     (7,571,370)    (1,764,835)
                                                ============   ============
         Income loss per share:
            Basic and diluted, as reported ..          (0.28)         (0.19)
                                                ============   ============
            Basic and Diluted, pro-forma ....          (0.28)         (0.19)
                                                ============   ============

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

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

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

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

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

         Net Loss Per Share
         ------------------

         The Company presents net income (loss) per share ("EPS") in accordance
         with SFAS No. 128, "Earnings per Share." Accordingly, the Company
         computes basic EPS based upon the weighted average number of common
         shares outstanding. Diluted EPS, when presented is computing using the
         weighted average number of common and potential common shares
         outstanding. Potential common shares would include stock options using
         the treasury stock method, and convertible notes and exchangeable
         shares using the "if converted" method. Potential common shares are
         excluded from the calculation of diluted EPS in loss periods, as the
         impact is anti-dilutive.

         As described in Note 4, the Company issued, as purchase consideration,
         6,500,000 of its Series I Exchangeable shares to the sellers of the
         Tecknolaser Group. The same stockholders also hold all 6,500,000 shares
         of the Company' Series A Preferred Special Voting Stock. In accordance

                                      F-11
<PAGE>

         with the provisions of Issue No. 5 of EITF 03-6 "Participating
         Securities and the Two-Class Method under FASB Statement No. 128," the
         Company has included the Series I Exchangeable shares in its
         determination of basic loss per share for the year ended December 31,
         2005 because the features of these securities, taken together, provide
         its holders with rights identical to those of the Company's
         stockholders.

         The following table provides a summary of all potentially dilutive
         securities as of December 31, 2005 and 2004 that have been excluded
         from the computation of basic loss per share as their effect would be
         anti-dilutive:

                                                          December 31,
                                                       2005          2004
                                                   ------------   ----------
               Stock options ...................        784,500      337,500
               Common stock purchase warrants ..     17,065,313      993,680
               Convertible debentures ..........      1,644,690       70,000
                                                   ------------   ----------
               Total ...........................    19,494,5033    1,401,180
                                                   ============   ==========

         The Company issued an additional 2,400,000 shares of common stock and
         2,400,000 common stock purchase warrants subsequent to December 31,
         2005 that are dilutive (Note 28).

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

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

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

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

                                      F-12
<PAGE>

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

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

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

         In May 2005, the Financial Accounting Standards Board ("FASB") issued
         Statement of Financial Accounting Standards No. 154, "Accounting
         Changes and Error Corrections - a replacement of APB Opinion No. 20 and
         FASB Statement No. 3"("SFAS 154"). This Statement replaces APB Opinion
         No. 20, Accounting Changes, and FASB Statement No. 3, Reporting
         Accounting Changes in Interim Financial Statements, and changes the
         requirements for the accounting for and reporting of a change in
         accounting principle. This Statement applies to all voluntary changes
         in accounting principle. It also applies to changes required by an
         accounting pronouncement in the unusual instance that the pronouncement
         does not include specific transition provisions. When a pronouncement
         includes specific transition provisions, those provisions should be
         followed.

         APB Opinion No. 20 previously required that most voluntary changes in
         accounting principle be recognized by including in net income of the
         period of the change the cumulative effect of changing to the new
         accounting principle. This Statement requires retrospective application
         to prior periods' financial statements of changes in accounting
         principle, unless it is impracticable to determine either the
         period-specific effects or the cumulative effect of the change. When it
         is impracticable to determine the period-specific effects of an
         accounting change on one or more individual prior periods presented,
         this Statement requires that the new accounting principle be applied to
         the balances of assets and liabilities as of the beginning of the
         earliest period for which retrospective application is practicable and

                                      F-13
<PAGE>

         that a corresponding adjustment be made to the opening balance of
         retained earnings (or other appropriate components of equity or net
         assets in the statement of financial position) for that period rather
         than being reported in an income statement. When it is impracticable to
         determine the cumulative effect of applying a change in accounting
         principle to all prior periods, this Statement requires that the new
         accounting principle be applied as if it were adopted prospectively
         from the earliest date practicable. This Statement is effective for
         accounting changes and corrections of errors made in fiscal years
         beginning after December 15, 2005. The Company does not believe that
         the adoption of SFAS 154 will have a significant effect on its
         financial statements.

         On June 29, 2005, the EITF ratified Issue No. 05-2, "The Meaning of
         `Conventional Convertible Debt Instrument' in EITF Issue No. 00-19,
         `Accounting for Derivative Financial Instruments Indexed to, and
         Potentially Settled in, a Company's Own Stock.'" EITF Issue 05-2
         provides guidance on determining whether a convertible debt instrument
         is "conventional" for the purpose of determining when an issuer is
         required to bifurcate a conversion option that is embedded in
         convertible debt in accordance with SFAS 133. Issue No. 05-2 is
         effective for new instruments entered into and instruments modified in
         reporting periods beginning after June 29, 2005. The adoption of this
         pronouncement did not have a material effect on the Company's financial
         statements.

         In September 2005, Issue No. 05-4, "The Effect of a Liquidated Damages
         Clause on a Freestanding Financial Instrument Subject to EITF Issue No.
         00-19, `Accounting for Derivative Financial Instruments Indexed to, and
         Potentially Settled in, a Company's Own Stock.'" EITF 05-4 provides
         guidance to issuers as to how to account for registration rights
         agreements that require an issuer to use its "best efforts" to file a
         registration statement for the resale of equity instruments and have it
         declared effective by the end of a specified grace period and, if
         applicable, maintain the effectiveness of the registration statement
         for a period of time or pay a liquidated damage penalty to the
         investor. The Company is currently in the process of evaluating the
         effect that the adoption of this pronouncement may have on its
         financial statements.

         In September 2005, the FASB ratified the Emerging Issues Task Force's
         ("EITF") Issue No. 05-7, "Accounting for Modifications to Conversion
         Options Embedded in Debt Instruments and Related Issues," which
         addresses whether a modification to a conversion option that changes
         its fair value affects the recognition of interest expense for the
         associated debt instrument after the modification and whether a
         borrower should recognize a beneficial conversion feature, not a debt
         extinguishment if a debt modification increases the intrinsic value of
         the debt (for example, the modification reduces the conversion price of
         the debt). This issue is effective for future modifications of debt
         instruments beginning in the first interim or annual reporting period
         beginning after December 15, 2005. The Company is currently in the
         process of evaluating the effect that the adoption of this
         pronouncement may have on its financial statements.

         In September 2005, the FASB also ratified the EITF's Issue No. 05-8,
         "Income Tax Consequences of Issuing Convertible Debt with a Beneficial
         Conversion Feature," which discusses whether the issuance of
         convertible debt with a beneficial conversion feature results in a
         basis difference arising from the intrinsic value of the beneficial
         conversion feature on the commitment date (which is treated recorded in
         the shareholder's equity for book purposes, but as a liability for
         income tax purposes), and, if so, whether that basis difference is a
         temporary difference under FASB Statement No. 109, "Accounting for
         Income Taxes." This Issue should be applied by retrospective
         application pursuant to Statement 154 to all instruments with a
         beneficial conversion feature accounted for under Issue 00-27 included

                                      F-14
<PAGE>

         in financial statements for reporting periods beginning after December
         15, 2005. The Company is currently in the process of evaluating the
         effect that the adoption of this pronouncement may have on its
         financial statements.

         In February 2006, the FASB issued SFAS No. 155 "Accounting for Certain
         Hybrid Financial Instruments-an amendment of FASB Statements No. 133
         and 140" ("FAS 155"). FAS 155 addresses the following: a) permits fair
         value re-measurement for any hybrid financial instrument that contains
         an embedded derivative that otherwise would require bifurcation; b)
         clarifies which interest-only strips and principal-only strips are not
         subject to the requirements of Statement 133; c) establishes a
         requirement to evaluate interests in securitized financial assets to
         identify interests that are freestanding derivatives or that are hybrid
         financial instruments that contain an embedded derivative requiring
         bifurcation; d) clarifies that concentrations of credit risk in the
         form of subordination are not embedded derivatives; and e) amends
         Statement 140 to eliminate the prohibition on a qualifying
         special-purpose entity from holding a derivative financial instrument
         that pertains to a beneficial interest other than another derivative
         financial instrument. FAS 155 is effective for all financial
         instruments acquired or issued after the beginning of an entity's first
         fiscal year that begins after September 15, 2006. The Company is
         currently evaluating the requirements of FAS 155, but does not expect
         that the adoption of this pronouncement will have a material effect on
         its financial statements.

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

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

4. ACQUISITION OF THE TECKNOLASER GROUP

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

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

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

         The Company acquired the Tecknolaser Group to establish a platform that
         would enable it to penetrate the imaging consumables market and to
         position itself to acquire other high potential businesses in the same

                                      F-15
<PAGE>

         market segment. The accompanying statement of operations for the year
         ended December 31, 2005 includes the results of the Tecknolaser Group.

         Business Combination Accounting
         -------------------------------

         The Company accounted for its acquisitions of the Tecknolaser Group
         using the purchase method of accounting prescribed under SFAS 141
         "Business Combinations." Under the purchase method, the acquiring
         enterprise records any purchase consideration issued to the sellers of
         the acquired business at their fair values. The aggregate of the fair
         value of the purchase consideration plus any direct transaction
         expenses incurred by the acquiring enterprise is allocated to the
         assets acquired (including any separately identifiable intangibles) and
         liabilities assumed based on their fair values at the date of
         acquisition. The excess of cost of the acquired entities over the fair
         values of identifiable assets acquired and liabilities assumed is
         recorded as goodwill. The Tecknolaser Group's results of operations are
         included in the Company consolidated results of operations for the year
         ended December 31, 2005.

         The Company evaluated its acquisition of the Stockholder Group to
         identify the acquiring entity in accordance with SFAS 141 for business
         combinations effected through an exchange of equity interests. Based on
         such evaluation the Company determined that it was the acquiring entity
         in the transaction due, in part, to the level of cash consideration
         paid to the sellers and future cash consideration contingent upon
         future earnings of the business. In addition, (1) the larger portion of
         the relative voting rights in the Company, on both a voting and fully
         diluted basis, were retained by the Adsero's stockholders and holders
         of dilutive securities at the time of the acquisition, (2) the sellers
         of the Tecknolaser Group are not deemed to be a significant minority
         interest relative to all voting rights, (3) Adsero's stockholders,
         through the voting rights, retained the ability to appoint a majority
         of members to the Company's board of directors' and (4) only two key
         executive positions and one board seat was retained by the sellers of
         the Group. In addition, the Chief Executive Officer of the Tecknolaser
         Group, who became Chairman of the Board of Directors, abstains from any
         deliberations or votes when reporting to the remainder of the board
         with respect to the required to report to the board with respect to the
         performance of the Tecknolaser Group as an investee business of Adsero
         and the measurement and payment of any contingent consideration
         provided under the agreement.

         The aggregate purchase price that the Company paid for its acquisition
         of the Tecknolaser Group, after giving effect to net addition
         consideration paid as a result of having modified the purchase price
         (described below) amounted to $11,330,799. The purchase price, as
         modified, includes $2,476,412 of cash, $3,250,000 for the combined fair
         value 6,500,000 shares of the Company's newly created Series A
         Preferred Special Voting Stock (the "Series A Preferred Stock") and
         6,500,000 Series I Exchangeable Shares in its Acquirer Subsidiary,
         $1,677,508 of fees, $1,636,199 for the fair value of 3,272,397 shares
         of common stock and $2,290,678 of additional payments to be made in
         future periods.

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

         The Company also issued to the sellers, 6,500,000 shares of its Series
         A Preferred Stock") and 6,500,000 Series I Exchangeable Shares in its
         Acquirer Subsidiary. Shares of the Company's Series A Preferred Stock

                                      F-16
<PAGE>

         have the right to vote on all matters submitted to the vote of the
         Company's common stockholders on the basis of one vote for each share
         held and entitle such holders to receive dividends if and when declared
         by the Company's board of directors. The Series I Exchangeable shares
         are convertible into shares of the Company's common stock at any time
         at the option of the selling stockholders, however; any conversion of
         Series I Exchangeable shares into the Company's common stock results in
         the automatic cancellation of a corresponding number of Series A
         Preferred Special Voting Stock.

         The combined features of the Series A Preferred and Series I
         Exchangeable shares provide the selling stockholders with rights
         identical to those of the Company's common stockholders. Accordingly,
         the Company determined the combined fair value of such shares to be
         $.50 per share ($3,250,000 in the aggregate) based on the recent
         selling price of restricted common shares (with identical features)
         sold to unrelated parties in recent private placement transactions
         (Note 21).

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

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

         Modification of Tecknolaser purchase
         ------------------------------------

         On November 4, 2005 the Company entered into an agreement with
         9144-6773 Quebec Inc. and 9144-6906 Quebec Inc. (the "Modification
         Agreement"), providing for the restructuring of certain payments
         stipulated in the Share Purchase Agreement described above. These
         obligations were modified to improve the Company's liquidity and
         facilitate its purchase of treasury shares of Turbon AG as described
         below.

         Pursuant to the restructuring, the Company and Acquiree Shareholders
         agreed to cancel any obligation on the part of the Company to (a), make
         any Contingent Consideration payments to the Acquiree Shareholders
         (described in the Share Purchase Agreement) and (b) redeem the
         1,932,000 shares of Redeemable Preferred Stock originally issued as
         part of the purchase consideration. In exchange, the Company agreed to
         make an immediate payment of $600,000 to the Acquiree Shareholders,
         issue 3,272,397 shares to the Acquiree Shareholders, make an aggregate
         of $2,290,678 in additional cash payments in six equal installments of
         approximately $381,780 each on March 31, 2007; June 30, 2007; September
         30, 2007; December 31, 2007; March 31, 2008 and June 30, 2008.

         Purchase Price Allocation
         -------------------------

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

                                      F-17
<PAGE>

               Cash ........................................   $       38,348
               Accounts Receivable .........................        3,821,232
               Inventory ...................................        3,328,915
               Other Current Assets ........................        1,010,062
               Property And Equipment ......................        4,824,329
                                                               --------------
               Total Assets ................................       13,022,886
                                                               --------------
               Line Of Credit ..............................       (2,668,274)
               Long Term Debt ..............................       (3,506,603)
               Accounts Payable And Accrued Expenses .......       (5,920,230)
                                                               --------------
               Total Liabilities Assumed ...................      (12,095,107)
                                                               --------------
               Fair Value Of Net Assets Acquired ...........          927,779
               Excess Of Purchase Over Net Assets Acquired
                Allocated to:
               Customer List ...............................        1,540,000
               Intellectual Property .......................        2,740,000
               Trademarks ..................................          540,000
               Goodwill ....................................        5,583,020
                                                               --------------
               Total Purchase Price ........................   $   11,330,799
                                                               --------------

         The Company originally had recorded $9,903,020 of goodwill in
         connection with its acquisition of the Tecknolaser Group. The amount of
         goodwill that the Company recorded in connection with the acquisition
         was determined by comparing the aggregate amount of the purchase price
         plus related transaction costs to the fair value of the net tangible
         and identifiable intangible assets acquired for the business. The
         Company subsequently determined, upon the completion of a formal
         valuation study performed by an outside valuation specialist, that
         $4,320,000 of the purchase price is attributable to other separately
         identifiable intangible assets including a customer list in the amount
         of $1,540,000, intellectual property of $2,740,000 and trademarks in
         the additional amount of $40,000 (Note 9).

         The Company and the sellers agreed to treat the acquisition of the
         Tecknolaser Group as an asset purchase for income tax reporting
         purposes. Accordingly, there were no differences between the financial
         reporting and tax bases of the assets acquired and liabilities assumed
         at the date of the transaction. In addition, the goodwill and
         intangibles are considered to be deductible for tax purposes.

         The Company performed its annual impairment test of goodwill at its
         designated valuation date of December 31, 2005 in accordance with SFAS
         142. As a result of these tests, the Company determined that the
         recoverable amount of goodwill with respect to the acquired business
         amounted to $2,388,298. Accordingly, the Company recorded a goodwill
         impairment charge in the amount of $3,194,722 for the year ended
         December 31, 2005. The valuation was performed by an outside specialist
         using a weighted average discounted cash flows modeling approach.

         The following table provides unaudited pro-forma results of operations
         and loss per share data for the year ended December 31, 2004 as if the
         Tecknolaser Group had been acquired on January 1, 2004.

                                      F-18
<PAGE>

                                                        For the Year
                                                            Ended
                                                      December 31, 2004
                                                      -----------------
            Revenues ...............................         28,852,207
            Cost of good sold ......................         21,856,515
                                                      -----------------
            Gross profit ...........................          6,995,692
            Operating expenses
                Selling General & Administration ...          7,218,804
                Conversion of debt expense .........            627,340
                Stock issued for services ..........            250,000
                Depreciation and amortization ......            734,788
                                                      -----------------
                Total operating expenses ...........          8,830,932
                Loss from operations ...............         (1,835,240)
                Interest expense ...................            822,135
                                                      -----------------
            Loss before income taxes ...............         (2,657,375)
            Income taxes (benefit) .................           (242,200)
                                                      -----------------
            Net Loss ...............................         (2,415,175)
                                                      =================
            Net Loss per share basic ...............  $           (0.12)

         Pro-forma net loss per share gives effect to common sock issued (i) in
         certain financing transactions in which the proceeds were used to
         consummate the acquisition, (ii) as compensation to a related party
         transaction advisor, (iii) in connection with a concurrent debt
         financing, and (iv) to the sellers upon the modification of the
         purchase price. The presentation also gives effect to the Series I
         Exchangeable Shares, which are deemed to be participating securities.

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

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

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

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

         All Holders of Acquiror Series I Exchangeable Shares were issued one
         share of the Company's newly created Series A Preferred Special Voting
         Stock (the "Series A Preferred Stock") for each Acquiror Series I
         Exchangeable Share owned. Shares of the Company's Series A Preferred

                                      F-19
<PAGE>

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

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

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

                                           Number of Acquiror
                        Dates               Preferred Shares

                  September 1, 2005 ....        750,000
                  September 30, 2005 ...        443,250
                  December 31, 2005 ....        443,250
                  March 31, 2006 .......        295,500

         The September 1, and September 30, 2005 obligations for redemption were
         delayed at the request of the Company. On November 4, 2005 all of the
         Acquiror Preferred Shares along with all future payments under the
         earn-out obligation were cancelled in exchange for $600,000 cash
         payment on or before November 24, 2005, 3,272,397 common shares and
         $2,290,678 in payments to be paid equally over 6 quarters commencing
         March, 2005.

                                      F-20
<PAGE>

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

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

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

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

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

         As described in Note 4, effective November 4, 2005, the Company and the
         Aquiree Shareholders agreed to modify certain provisions of the
         original Share Purchase Agreement relating to the payment of contingent
         consideration and to cancel 1,932,000 Redeemable Preferred Shares in
         exchange for $2,890,678 in cash and 600,000 shares of the Company
         common stock.

5. IMPAIRMENT OF GOODWILL

         The Company recorded $9,903,020 of goodwill in connection with its
         acquisition of Tecknolaser (Note 4). The amount of goodwill that the
         Company recorded in connection with the acquisition was determined by
         comparing the aggregate amount of the purchase price plus related
         transaction costs to the fair value of the net tangible and
         identifiable intangible assets acquired for the business.

                                      F-21
<PAGE>

         The Company performed its annual impairment test of goodwill at its
         designated valuation date of December 31, 2005 in accordance with SFAS
         142. As a result of these tests, the Company determined that the
         recoverable amount of goodwill with respect to its acquired business
         amounted to $2,388,298 (after having reallocated $4,320,000 of the
         purchase price from goodwill to acquired intangibles as described in
         Note 4). Accordingly, the Company recorded a goodwill impairment charge
         in the amount of $3,194,722 for the year ended December 31, 2005. The
         valuation was performed by an outside specialist using a weighted
         average discounted cash flows modeling approach.

         The Company recorded the aforementioned charge during the quarter ended
         December 31, 2005 after the Company's management and its board of
         directors re-evaluated the strategic direction of the business. As a
         result of having made this evaluation, management determined that the
         Company's future revenue streams relating to the sales of manufactured
         cartridges are likely to be less than the amounts it originally
         predicted with respect to its acquisition of the Tecknolaser Group. The
         Company specifically attributes the shift in its business to intense
         competition in the re-charger industry. Accordingly, management
         determined that it would be necessary to curtail manufacturing and
         increase distribution of goods produced by outside parties in an effort
         to increase margins and generate operating profits and cash flow. The
         Company will continue monitoring the carrying amount of its goodwill in
         future periods to assess whether any further changes in circumstances
         or events that could occur may further affect the carrying value of its
         goodwill.

6. INVENTORIES

         Inventories consist of the following at December 31, 2005:

                  Raw materials ....   $  757,960
                  Finished goods ...    3,103,546
                                       ----------
                                        3,861,506
                  Less reserves ....     (156,630)
                                       ----------
                                       $3,701,876
                                       ==========

         The Company recorded inventory write-downs of approximately $1,700,000
         during the year ended December 31, 2005 to reduce excess, slow moving
         and obsolete goods to their net realizable value.

7. PREPAID EXPENSES

         Prepaid expenses consist of the following at December 31, 2005:

                  Deposit - Barrington Bank ....      51,591
                  Industry trade shows .........      37,650
                  Other ........................      89,070
                                                   ---------
                                                   $ 178,311
                                                   =========

                                      F-22
<PAGE>

8. PROPERTY AND EQUIPMENT

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

                  Leasehold improvements ...........   $   138,437
                  Machinery and Equipment ..........       692,739
                  Furniture and Fixtures ...........       384,233
                  Computer Equipment ...............     1,313,872
                                                       -----------
                                                         2,529,281
                  Less Accumulated Depreciation ....      (408,970)
                                                       -----------
                                                       $ 2,120,311
                                                       ===========

         Depreciation expense for the year ended December 31, 2005 amounted to
         $722,362. As described in Note 10, the Company consummated a sale of
         its main production plant in Sainte Julie, Quebec, for proceeds of
         $2,777,460 (CDN$3,400,000). The net carrying value of the land and
         building amounted to $2,281,397 at the time of the sale. The building
         cost was adjusted to net realizable value under purchase accounting and
         therefore no gain or loss was recorded.

9. INTANGIBLE ASSETS

           Intangible assets consist of the following at December 31, 2005:

                  Intellectual Property ......   $ 2,740,000
                  Customer Relationships .....     1,540,000
                  Trademarks .................       540,000
                                                   4,820,000
                  Less amortization ..........      (881,000)
                                                 -----------
                                                 $ 3,939,000
                                                 ===========

         These amounts are amortized on a straight-line basis over a 5 year
         period. Amortization expense amounted to $881,000 for the year ended
         December 31, 2005 including $856,000 that the Company recorded during
         the fourth quarter for a change in accounting estimate. The change in
         accounting estimate reflects certain changes that the Company made to
         the allocation of the purchase of the Tecknolaser Group after having
         completed a formal valuation analysis of the acquired business.

10. SALE LEASEBACK OF PRODUCTION PLANT

         On August 15, 2005, the Company sold its land and building for gross
         proceeds amounting to approximately $2,900,000 (CDN$3,400,000). The
         Company is leasing the same property from the sellers under a ten year
         lease agreement expiring in September 2015.

         There Company recorded the amount of the excess of the selling over the
         net carrying value of the property at the time of the sale as a
         reduction of goodwill. Accordingly, no gain was recorded.

                                      F-23
<PAGE>

11. LINE OF CREDIT AND INSTALLMENT LOANS DUE ON DEMAND

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

         That Company has a credit facility with a Canadian bank that provides
         for aggregate borrowings of up to approximately $3.0 million (CDN$3.5
         million), including an exchange line of credit for an amount of
         US$250,000. The loan is secured by a first ranking lien for an amount
         of approximately $4.3 million (CDN$5 million) on all accounts
         receivable and inventories. Interest is at the Bank's Canadian prime
         rate plus 1% (6% as at December 31, 2005) and is renewable annually.

         The Company is required to comply with certain financial ratios under
         the terms of the bank loan. As of December 31, 2005, and subsequent
         thereto, the Company is not in compliance with one of these financial
         ratios. As described in Note 28, the Company entered in a standstill
         agreement with the lender under this obligation in which the lender
         temporarily agreed to suspend their rights under the loan agreement,
         subject to certain conditions. The Company cannot provide any assurance
         that the lender under this obligation will not demand its immediate
         repayment. A demand for immediate repayment would have a material
         adverse affect on the Company ability to sustain its operations.

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

         The Company has the following outstanding term loans, under which it is
         required to comply with certain financial ratios. As of December 31,
         2005, and subsequent thereto, the Company is not in compliance with
         these financial ratios. The contractual terms of the loans,
         notwithstanding the Company's event of default are as follows:

                                  Obligation                             Balance

         Term loan, Secured by automotive equipment,
            6.65%, payable in monthly instalments of
            1,250(CDN$1,500), maturing in November 2006 (1) .........   $ 91,574

         Term loan, secured by a lien on all present and
            future furniture, fixtures and equipment, Canadian
            bank prime rate plus 1% (5.25% as at September 30,
            2005), payable in monthly instalments of $17,360
            (CDN$20,833), maturing January 2007 (1) .................    232,875
                                                                        --------
                                                                        $324,449
                                                                        ========

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

                                      F-24
<PAGE>

12. LIABILITIES OF DISCONTINUED OPERATION

         In January, 2003 the three largest creditors (the "Petitioners") of
         Reink Imaging USA, Ltd. ("Reink"), a former subsidiary operating
         business, filed a petition to force Reink into Chapter 7 under the US
         Federal Bankruptcy Act. The Company believes that certain of the
         Petitioners and officers of this former business unit formed a new
         business that became a direct competitor of the Company. On July 10,
         2003 the case was converted from Chapter 11 "Reorganization" into
         Chapter 7 "Liquidation", and a Bankruptcy Trustee was appointed to
         administer the estate. As a result, the Company lost control of Reink.

         Reink's remaining liabilities, which consist of $2,125,341 of accounts
         payable and accrued expenses, are presented in the accompanying balance
         sheet as liabilities of discontinued operations until such time that
         the bankruptcy is adjudicated. The Bankruptcy Trustee has commenced
         filings to wind up the bankruptcy case and move for adjudication,
         however; the Company has not received any definitive indication as to
         when these legal proceedings are likely to conclude. The Company
         anticipates that the conclusion of the bankruptcy proceedings will
         result in a complete discharge of these liabilities, however; the
         Company cannot determine their ultimate disposition in the absence of a
         court ruling. Accordingly, the Company deems this balance to be a gain
         contingency that will not be recognized until the outcome of such
         contingency is known.

13. CREDIT AND STRATEGIC SUPPLY AGREEMENTS WITH TURBON AG

         Loan Agreement with Turbon International Inc.
         ---------------------------------------------

         As of November 4, 2005 the Company entered into a $5,600,000 Loan
         Agreement (the "Loan Agreement") with Turbon International Inc.,
         ("Turbon International"), a wholly subsidiary of Turbon AG, and
         Teckn-O-Laser Global Company, a wholly owned subsidiary of the Company
         ("Teckn-O-Laser"). Pursuant to the Loan Agreement, Turbon International
         made a $2,800,000 term loan to the Company (Note 14) and extended a
         line of credit for up to an additional $2,800,000 (below).

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

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

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

                                      F-25
<PAGE>

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

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

         As described in Note 24, the Company made a tender offer to acquire all
         of the outstanding capital stock of Turbon in a proposed purchase
         business combination, which is still subject to completion.

14. TERM LOAN PAYABLE TO TURBON AG

         As described in Note 13, the Company entered into $5,600,000 Turbon
         Loan Agreement on November 4, 2005 which includes a $2,800,000 term
         loan. The proceeds from the term loan were utilized to purchase certain
         Turbon AG shares under s stock purchase agreement dated June 22, 2005
         (Note 24). In consideration of the $2,800,000 term loan, the Company
         issued a 5% promissory note to Turbon International. Interest is
         payable quarterly on each of January 31, April 30, July 31 and October
         31 during the term of the loan commencing January 31, 2006. Principal
         and accrued but unpaid interest are due October 31, 2008 subject to
         acceleration upon an event of default. The loan can be prepaid at any
         time prior to maturity without penalty. Upon an event of default the
         interest rate will be increased from 5% to 9% until the default is
         cured. The term loan is secured by a first priority lien on the 400,000
         shares of common stock of Turbon AG.

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

15. OTHER LONG TERM DEBT

         Equipment Financing Obligations
         -------------------------------

         The Company is under the following equipment financing obligations as
         of December 31, 2005:

         Equipment financing, with interest ranging from 6.52%
            and 10%, payable monthly, maturing at various dates
            until April 2009 ......................................   $ 154,370

         Term loans, payable in monthly instalments of
            $1,600(CDN$1,921) without interest, maturing at
            various dates through August 2008 .....................      23,345
                                                                      ---------
                                                                        177,715
         Less current portion .....................................     (55,538)
                                                                      ---------
         Total long term debt .....................................   $ 122,177
                                                                      =========

                                      F-26
<PAGE>

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

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

         This loan was repaid in full, including interest of $7,679, from the
         proceeds of the equity securities sold on July 21, 2005 pursuant to the
         Agency Agreement between LOM and the Company.

         Notes Repaid in 2005
         --------------------

         On January 1, 2004 the Company issued a 10%, $250,000 promissory note
         to BG Capital Group Bahamas Ltd. in consideration of $250,000 advanced
         to the Company as working capital. In February 2005 the Company repaid
         the note and all accrued interest then due on the note.

         In April 2004, the Company issued a $70,000 convertible promissory note
         bearing interest at 10% per annum to Manchester Consolidated Corp. The
         note, together with all accrued interest then due, was paid in full in
         February 2005.

16. NOTE PAYABLE - FORMER OFFICER

         The Company has a note payable to a former CEO and Director of the
         Company in the principal amount of $112,500 that bears interest at 18%
         per annum. The Company commenced and continues to pursue litigation
         with the Former Officer with the respect to his alleged violations of
         non-competition and confidentiality agreements within his employment
         contract. The aggregate balance of the note, including accrued interest
         of $60,488 amounted to $172,988 at December 31, 2005. The Company is
         presently unable to determine the outcome or possible range of loss, if
         any, with respect to this matter at the current time.

17. NOTES PAYABLE - STOCKHOLDERS

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

                                      F-27
<PAGE>

18. CONVERTIBLE PROMISSORY NOTES

         Barrington Bank
         ---------------

         Effective January 26, 2005 the Company entered into a 5 year $1,639,320
         (approximately Cdn$2,000,000) convertible loan agreement (the "Loan
         Agreement") with Barrington Bank International Limited ("Barrington
         Bank") with interest payable quarterly at 12% per annum during the
         first 12 months and 20% per annum thereafter. This obligation is
         subordinated to the Bank of Line of Credit and is secured by
         substantially all the Company's assets.

         The Loan Agreement provides for a prepayment penalty which specifies
         that in the event the Company prepays the obligation prior to its one
         year anniversary date, it will be obligated to pay a fee equal to the
         amount of additional interest that it would have paid had the
         obligation remained outstanding through the 1 year anniversary date.
         Commencing on the 6 month anniversary of the loan, Barrington Bank has
         the right to convert the remaining principal balance into shares of the
         Company's common stock at a conversion price of $1.00 per share. The
         Company also issued 200,000 shares of common stock to the Lender and
         has agreed to register these shares within the next registration
         statement filed by the Company. The Company accounted for the issuance
         of the shares as a debt discount, which is being amortized over the
         term of the loan. The loan was modified on February 1, 2006 (Note 28).

         Westminster Capital Inc.
         ------------------------

         On January 7, 2005 the Company issued a $1,000,000 convertible
         promissory note with interest payable at the rate of 3.9% per annum to
         Westminster Capital Inc. ("Westminster"). Principal and interest under
         this note were originally due on January 1, 2008 subject to prepayment
         or conversion commencing on or after July 1, 2005. The conversion
         feature of the note provided the note, including interest and
         principal, were convertible, at the option of the holder, into shares
         of common stock at a price of $0.50 per share. For each share acquired
         upon conversion, the holder will also receive one common stock purchase
         warrant to purchase one share of common stock at a price of $1.50 per
         share at any time prior to July 1, 2008.

         On September 30, 2005 the $1,000,000 note plus $28,529 of accrued
         interest were converted into 2,057,058 common shares and 2,057,058
         warrants at its contractual conversion price of $0.50 per share

         The Company evaluated the conversion features of these notes to
         determine whether the embedded conversion options should be bifurcated
         and accounted for as free-standing derivative financial instruments in
         accordance with SFAS 133 and EITF 00-19. The Company determined, in
         accordance with the implementation guidance under Appendix A to SFAS
         133 that was further clarified in EITF 05-2, that these convertible
         notes are conventional debt instruments which do not host embedded
         conversion options that are deemed to be free standing derivatives
         financial instruments. In addition, the conversion price of the
         embedded conversion feature was deemed to be equal to the fair value of
         the underlying securities into which these shares are convertible,
         based upon the recent selling price of securities with substantially
         identical features sold in recently completed private placement
         transactions. Accordingly, these noted are not considered to include a
         beneficial conversion feature.

                                      F-28
<PAGE>

19. COMMITMENTS AND CONTINGENCIES

         Principal Payments Due on Debt Obligations
         ------------------------------------------

         The Company is required to make the following principal payments under
         all of its debt agreements, excluding amounts under obligations in
         which the lender has the right to demand immediate repayment:

                  For the year ending December 31,

                        2006 ........       512,328
                        2007 ........       512,920
                        2008 ........       433,422
                        2009 ........       424,510
                     Thereafter .....     1,921,803
                                        -----------
                                        $ 3,804,983
                                        ===========

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

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

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

         On June 25, 2004 the Company entered into a non-binding letter
         agreement with Dancap Private Equity Inc. ("Dancap") with respect to a
         proposed financing transaction that was not consummated. Dancap
         instituted an action against the Company in Ontario Superior Court
         related to a break-up fee pursuant to the terms of the agreement. The
         Company settled its litigation with Dancap for approximately $42,500
         (Cdn$50,000) on November 10, 2005.

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

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

         The Company entered into renewable 3 year employment agreements with
         each of Yvon Leveille and Alain Lachambre. The initial base annual
         salaries payable to Messrs. Leveille and Lachambre under their
         employment agreements are CDN$175,000 (approximately US$146,000) and
         CDN$166,000 (approximately US$139,000), respectively. The employment
         agreements further provide for the payment of performance based bonuses
         of up to 100% of salary at the discretion of the compensation committee
         of the board of directors.

                                      F-29
<PAGE>

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

         The Company entered into a series of consulting agreements with certain
         related and unrelated parties that are more fully described in Note 23.

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

         The lease is being accounted for as an operating lease, which calls for
         equal monthly installments. The base rent is $297,885 (CDN$345,775) per
         annum for the first five years, and $327,673 (CDN$380,352) per annum
         for the next five years. The lease provides for two renewal options to
         extend the term of the lease each by a period of five years. Future
         minimum lease payments for years ending subsequent to December 31, 2005
         are as follows:

                  For the year ending December 31,

                        2006 .....................       512,328
                        2007 .....................       512,920
                        2008 .....................       433,422
                        2009 .....................       424,510
                     Thereafter ..................     1,921,803
                                                     -----------
                                                     $ 3,804,983
                                                     ===========

         Rent expense amounted to $302,687 and $0 respectively for the years
         ended December 31, 2005 and 2004.

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

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

20. WARRANTY, REBATE AND VOLUME DISCOUNT ARRANGEMENTS

         Warranty
         --------

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

                                      F-30
<PAGE>

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

         The Company offers a program whereby it agrees to pay to a customer a
         combination of cash and Adsero stock, provided the customer turns over
         the majority of their manufacturing business into Adsero's system for
         manufacturing. The package consists of a combination of cash payments
         and shares in Adsero payable over the life of the contract, which is 3
         years, and is dependent on volume levels. As part of the program the
         Company offers the Reflexion brand name along with economies of scale,
         and numerous advertising and volume discount incentives in order to
         help grow the business. The Reflexion member then continues to manage
         its customer base and grow sales with the additional tools provided by
         the Company. The Company has reviewed the existing contracts and has
         accrued approximately $220,000 in the current income statement to
         reflect the remaining liability over the duration of these contracts.
         As payments are made the amounts will be reduced.

21. STOCKHOLDERS' EQUITY (DEFICIENCY)

         Private Placements of Equity Securities
         ---------------------------------------

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

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

         On July 21, 2005 pursuant to the Agency Agreement with LOM the Company
         offered and sold through LOM, as placement agent, 1,707,000
         subscription receipts at a price of $.75 per Subscription Receipt or
         $1,280,250 in the aggregate. Each Subscription Receipt will be
         automatically exercised, without payment of any additional
         consideration, at the Automatic Exercise Date into, subject to
         adjustment, a unit consisting of one share of the Company's common
         stock and one common stock purchase warrant. Each Unit Warrant entitles
         the holder to purchase an additional share of the Company's common
         stock at a price of $1.25 per share during the 30 month period that
         commenced on July 21, 2005. The offer of the Subscription Receipts was
         made subject to satisfaction of certain conditions (the "Qualification
         Conditions"). Failure to meet the Qualification Conditions by the
         Qualification Date, as defined below, results in each Subscription
         Receipt being exercised into 1.5 Units. The Qualification Date is
         defined as the earlier of (i) December 31, 2005; or (ii) the date ten
         business days following the date by which both (a) a receipt (the
         "Receipt") for the Company's final prospectus that qualifies the Units
         and Agent's Warrants, as such term is defined below, for issuance in
         Canada has been obtained by us from the securities commissions or
         securities regulatory authorities in those Canadian provinces where
         purchasers of the Subscription Receipts reside and (b) a registration
         statement under the Securities Act of 1933, as amended, (the
         Registration Statement") has become effective for registering the
         resale of the Unit Shares, Unit Warrants (including those underlying
         the Agent's Warrants, as defined below), and the Warrant Shares
         issuable upon exercise of the Unit Warrants.

                                      F-31
<PAGE>

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

         The Company was not successful in its efforts to meet the Qualification
         Conditions by the Qualification Date, as described above, on the
         earliest contractual qualification date of December 31, 2005.
         Accordingly, the Company was required to issue an additional 853,500
         subscription receipts to the investors in the transaction on December
         31, 2005.

         Pursuant to the Agency Agreement, the Company paid the Agent a
         commission of $89,618 which is equal to 7% of the gross aggregate
         offering proceeds and issued to the Agent 119,490 warrants which is
         equal to 7% of the number of Subscription Receipts sold. Each warrant
         provides for the purchase of a Unit at a price of $.75 per Unit during
         the 30 month period that commenced July 21, 2005. If the Qualification
         Conditions have not been satisfied by the Automatic Exercise Date, as
         defined below, then each Broker Warrant will be automatically exercised
         at the Automatic Exercise Date into 1.5 Agent's Warrants.

         On November 4, 2005 the Company sold 2,400,000 subscription receipts at
         a price of $.50 per subscription receipt or an aggregate of $1,200,000
         to HBT Holdings GmbH, each subscription receipt to be automatically
         exercised, without payment of any additional consideration, on January
         31, 2006 into one unit. Each unit consists of one share of common stock
         (the "Unit Shares") and one common stock purchase warrant (the "Unit
         Warrants"). Each warrant entitles the holder to purchase, subject to
         adjustment, an additional share of common stock (the "Warrant Shares")
         at a price of $1.25 per share during the period ending at 5:00 p.m.
         (Toronto time) on May 3, 2008. We have agreed to use best efforts to
         file a registration statement on or before March 31, 2006 and to have
         such registration statement declared effective within 90 days of
         filing, registering the resale of the Unit Shares and Unit Warrants and
         the issuance of the Warrant Shares. The issuance of the subscription
         receipts was made in reliance on Regulation S under the Securities Act
         of 1933, as amended. Proceeds from the sales were utilized to purchase
         certain Turbon AG shares.

         On November 9, 2005 the Company entered into an Agency Agreement with
         Loewen, Ondaatje, McCutcheon Limited ("LOM") pursuant to which the
         Company offered and sold through LOM, as placement agent, (the "Agent")
         4,000,000 subscription receipts (the "Subscription Receipts") at a
         price of $.50 per Subscription Receipt or $2,000,000 in the aggregate.
         The offering was made to non-US persons in reliance on Regulation S
         under the Securities Act of 1933 as amended. Each Subscription Receipt
         will be automatically exercised, without payment of any additional
         consideration, at the Automatic Exercise Date, as defined below, into,
         subject to adjustment, a unit (the "Units") consisting of one share of
         common stock (the "Unit Shares") and one common stock purchase warrant
         (the "Unit Warrants"). Each Unit Warrant entitles the holder to
         purchase an additional share of common stock (the "Warrant Shares") at
         a price of $1.25 per share during the 30 month period that commenced on
         November 9, 2005.

         Pursuant to the Agency Agreement, the Company paid the Agent a
         commission of $140,000 which is equal to 7% of the gross aggregate
         offering proceeds and issued to the Agent 280,000 broker warrants (the
         "Broker Warrants") which is equal to 7% of the number of Subscription
         Receipts sold. All Broker Warrants were exercised on December 31, 2005
         into agent's warrant (the Agent's Warrant"). Each Agent's Warrant
         entitles the holder, subject to adjustment and the

                                      F-32
<PAGE>

         terms and condition set forth in the Agent's Warrant certificate, to
         purchase one Unit at a price of $.50 per Unit during the 30 month
         period that commenced November 9, 2005.

         Pursuant to the Agency Agreement, the Company also granted the Agent
         the right to act as co-lead member of an investment banking syndicate
         for purposes of marketing and selling any brokered equity financing for
         the Company in Canada for a period of one year commencing November 9,
         2005. The Company also granted the Agent the right to a minimum
         participation of 15% on any brokered equity financing in the United
         States for a period of one year commencing November 9, 2005.

         On November 29, 2005 the Company entered into an Agency Agreement with
         Loewen, Ondaatje, McCutcheon Limited ("LOM") pursuant to which the
         Company offered and sold through LOM, as placement agent, (the "Agent")
         1,400,000 subscription receipts (the "Subscription Receipts") at a
         price of $.50 per Subscription Receipt or $700,000 in the aggregate.
         The offering was made to non-US persons in reliance on Regulation S
         under the Securities Act of 1933 as amended. Each Subscription Receipt
         was automatically exercised, without payment of any additional
         consideration, into a unit (the "Units") consisting of one share of
         common stock (the "Unit Shares") and one common stock purchase warrant
         (the "Unit Warrants"). Each Unit Warrant entitles the holder to
         purchase an additional share of common stock (the "Warrant Shares") at
         a price of $1.25 per share during the 30 month period that commenced on
         November 29, 2005.

         Pursuant to the Agency Agreement, the Company paid the Agent a
         commission of $49,000 which is equal to 7% of the gross aggregate
         offering proceeds and issued to the Agent 98,000 broker warrants (the
         "Broker Warrants") which is equal to 7% of the number of Subscription
         Receipts sold. Each Broker Warrant was automatically exercised, without
         payment of any consideration, into one agent's warrant (the Agent's
         Warrant"). Each Agent's Warrant entitles the holder, subject to
         adjustment and the terms and condition set forth in the Agent's Warrant
         certificate, to purchase from the Company one Unit at a price of $.50
         per Unit during the 30 month period that commenced November 29, 2005.

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

         As described in Note 21, the Company issued 200,000 shares of common
         stock with registration rights to Barrington Bank in accordance with
         the Loan Agreement. These shares were recorded as a financing cost and
         are being amortized as interest expense over the life of the loan. The
         Company recorded these shares at an aggregate fair value of $100,000,
         or $.50 per share, based on the selling price of restricted shares with
         substantially identical features sold in recently completed private
         placements transactions.

         Issuance of Common Stock as Fees to Related Party Transaction Advisor
         ---------------------------------------------------------------------

         In March 2005, the Company issued an aggregate of 698,500 shares of
         restricted common stock to Manchester Consolidated Corp. ("Manchester")
         and its designees for transaction advisory services provided to the
         Company in connection with its acquisition of the Tecknolaser Group.
         The Company recorded these shares at an aggregate fair value of
         $349,250, or $.50 per share, based on the selling price of restricted
         shares with substantially identical features sold in recently completed
         private placements transactions.

                                      F-33
<PAGE>

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

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

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

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

         Common Stock Purchase Warrants and Registration Rights
         ------------------------------------------------------

         The Company issued all warrants under the Unit Shares with registration
         rights agreements that stipulate that the Company will file a
         registration statement to register the underlying shares on a best
         efforts basis. The Company contracts wither respect to these
         instruments do not expressly required settlement in registered share
         nor is the Company precluded from delivering restricted stock to the
         holders of these warrants in the event such holders elect to exercise
         their warrants prior to the Company causing a registration statement to
         be declared effective under the Securities Act. In addition, there are
         no provisions under which the Company would be required to net cash
         settle any of the aforementioned instruments. Accordingly, the Company
         has classified its common stock purchase warrants as equity instruments
         in accordance with EITF 00-19.

         The Company is also not required under any of its registration
         obligations to pay liquidating damages or other forms of penalties in
         the event of its failure to cause a registration statement to be
         declared effective within contractually defined periods of time.

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

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

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

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

         As described in Note 4, the Company issued 6,500,000 shares of Series A
         Special Voting Preferred Stock as partial purchase consideration to the
         former shareholders of the Tecknolaser Group. The Series A Special
         Voting Preferred Stock is non-participating and the holder's rights
         allow them only to vote. Each Series A Special Preferred Voting share
         is cancellable on a one-for-one basis upon the exercise of certain
         conversion privileges embedded in the Series I Exchangeable Shares
         described below.

                                      F-34
<PAGE>

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

         As described in Note 4, the Company issued 6,500,000 Series I
         Exchangeable Shares of 3091503 Nova Scotia Company, an indirect
         subsidiary, as partial purchase consideration to the former
         shareholders of the Tecknolaser Group. Each Series I Exchangeable Share
         is convertible into one share of the Company's common stock at the
         option of the holder at any time. Upon issuance of any common shares of
         the Company, the corresponding number of Series A Preferred Special
         Voting will be cancelled.

         As described in Note 4, the Company recorded the Series I Exchangeable
         shares at an aggregate fair value of $3,250,000, or $0.50 per share,
         based on the recent selling price of restricted securities (with
         substantially identical features to these shares) sold in recently
         completed private placement transactions.

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

         In February 2005, the Company issued 100,000 stock options with an
         exercise price of $1.55 per share to Agora Investor Relations Corp.
         ("Agora") pursuant to its February 1, 2005 Investor Relations Agreement
         with Agora. The options are exercisable, upon vesting, during the two
         year period commencing February 1, 2006. The Company recorded deferred
         compensation in the amount of $111,993 that is being amortized in the
         amount of $27,998 through December 31, 2005.

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

         Pursuant to the Share Purchase Agreement described in Note 4, the
         Company agreed to issue an aggregate of 300,000 non-statutory stock
         options under its 2000 Stock Option Plan to certain employees of the
         Tecknolaser Group. The options granted to each employee have a maximum
         term of 10 years and vest in equal amounts, each equal to 1/3 of the
         total number of options granted to the employee, on each of the first,
         second and third anniversaries of the date of grant.

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

         Conversion of Note into Common Stock
         ------------------------------------

         On September 30, 2005 the $1,000,000 note payable to Westminster
         Capital plus $28,529 of accrued interest were converted into 2,057,058
         common shares and 2,057,058 warrants at its contractual conversion
         price of $0.50 per share

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

         On January 6, 2005 the Company obtained an equity purchase commitment
         from Trisan Equitable Corporation ("Trisan") pursuant to which Trisan
         had committed to purchase an aggregate of $1,600,000 of the Company's
         common shares valued at $0.50 per share in stated amounts at stated
         times. Effective November 4, 2005 the equity purchase commitment was
         cancelled with a full release from both the Company and Trisan related
         to any past or ongoing future commitments.

                                      F-35
<PAGE>

         Equity Transactions Completed in 2004
         -------------------------------------

         Effective January 2004, the Company converted an aggregate of
         approximately $196,900 in debt into an aggregate of 19,690,000
         restricted shares of our common stock. Following the effectuation of
         our 20:1 reverse stock split on March 22, 2004 these shares became
         approximately 984,500 shares. The conversions were made pursuant to
         Debt Conversion and General Release Agreements between the Company and
         certain related parties. 100,000 of the shares were issued to Wayne
         Maddever in connection with the conversion by BBP Consulting of $20,000
         of debt. 384,500 of these shares were issued to William Smith, through
         Manchester Administrative Services, in connection with services
         performed by William Smith prior to 2003 valued at $76,900. 500,000 of
         these shares were issued to R World Inc. in connection with the
         conversion of $100,000 of debt.

         Effective January 2004, the Company converted an aggregate of $170,000
         in Note principal interest of approximately $17,800 into an aggregate
         of 18,360,000 restricted shares of our common stock. Following the
         effectuation of our 20:1 reverse stock split on March 22, 2004 these
         shares became approximately 918,000 shares. The conversions were made
         pursuant to Note Cancellation and Release Agreements between the
         Company and nine persons.

         In April 2004, the Company issued an aggregate of 5,405,055 restricted
         shares of common stock to Interhold Co. and its designees pursuant to a
         February 28, 2004 Note Cancellation and General Release under which a
         $308,000 promissory note of Reink Imaging USA, Ltd. in favor of
         Interhold Co., plus all interest due thereon ($73,240) was cancelled.
         Also cancelled was an April 7, 2003 Guarantee and Security Agreement
         between Interhold and the Company which had been put in place as a
         result of a January 2002 agreement.

         In April 2004, the Company issued an aggregate of 2,350,500 restricted
         shares of our common stock to designees of Manchester Administrative
         Services Ltd. ("Manchester") pursuant to a February 28, 2004 Debt
         Conversion and General Release under which a debt of ours to Manchester
         in the approximate amount of $306,500 was cancelled. This debt was
         incurred pursuant to our January 6, 2003 Consulting Agreement with
         Manchester and included debts incurred in January and February 2004.

         In April 2004, the Company issued an aggregate of 185,000 restricted
         shares (the "Stock") to 3 persons pursuant to Note Cancellation and
         General Release Agreements dated February 25, 2004; March 29, 2004; and
         March 30, 2004 respectively. Under these agreements an aggregate of
         $185,000 of note principal plus all accrued interest due thereon
         (approximately $62,248) was cancelled in consideration for the Stock.

         On April 15, 2004 the Company granted 100,000 stock options with an
         exercise price of $.25 per share to each of Wayne Maddever, William
         Smith and Anthony Pallante in consideration of services rendered in
         connection with our corporate reorganization and services related to
         Reink USA's bankruptcy. These options vest in equal amounts over a
         three year period on each of the first, second and third anniversaries
         of the issuance date and are exercisable for a period of ten years from
         issuance.

         In May and June 2004 the Company sold an aggregate of 205,000 units to
         3 persons at $1.00 per unit or $205,000 in the aggregate. Each unit
         consists of one share of our common stock and one common stock purchase
         warrant. Each warrant, as amended, entitled the holder to purchase one
         share of common stock at a price of $1.50 per share at any time during
         the three year period that commenced on the subscription date. In
         January 2005 in connection with a related unit offering,

                                      F-36
<PAGE>

         the proceeds of which were also to be utilized towards the funding of
         the acquisition, it became apparent that our unit pricing was too high
         and that our units of the type sold in May and June 2004 should be sold
         at $.50 per unit rather than $1.00 per unit. Consequently, in January
         2005 the Company agreed to issue an additional 205,000 units to the
         investors, at no additional cost, to bring their unit cost down to $.50
         per unit.

         During the period of July 2004 through October 2004 the Company sold an
         aggregate of 647,500 Special Warrants to 18 persons at $1.00 per unit
         or $647,500 on an aggregate basis. In connection with the offering, the
         Company also issued 64,750 Special Warrants to the placement agent.
         Each Special Warrant was exercisable without additional consideration
         to receive a Class A unit consisting of one share of our common stock
         and one common stock purchase warrant. Each of these warrants, as
         amended, entitles the holder to purchase one share of our common stock
         at $1.50 per share at any time during the three year period that
         commenced on September 27, 2004. Effective October 27, 2004, all of the
         Special Warrants were exercised resulting in our issuance of 712,250
         shares and 712,250 warrants. Pursuant to the offering the Company were
         also obligated to pay a 100,000 share work fee to the placement agent,
         which was paid in March 2005. In January 2005, in connection with a
         related unit offering, the proceeds of which were also to be utilized
         for the funding of the acquisition, it became apparent that our unit
         pricing was too high and that our units of the type underlying the
         Special Warrants sold in this offering should be sold at $.50 per unit
         rather than $1.00 per unit. Consequently, in January 2005 the Company
         agreed to issue an additional 647,500 units to the offering
         subscribers, or their designees, at no additional cost, to bring their
         unit cost down to $.50 per unit.

22. RESTRUCTURING CHARGE

         As a result of the changes within the existing business of the Company,
         and its main operating subsidiary, certain changes have been undertaken
         due to the outsourcing of production to the Turbon group. As a result
         the Company has eliminated certain positions and recorded a charge for
         one-time termination benefits payable to such employees in the amount
         of $140,100.

23. CONSULTING AGREEMENTS

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

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

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

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

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

         In January 2005, the Company executed a consulting agreement with
         6327214 Canada Inc., a company owned by William Smith, the Company's
         CFO, to provide consulting services to the Company. 6327214 Canada Inc.
         is paid approximately $11,500 per month based on invoicing to

                                      F-37
<PAGE>

         the Company. In addition, the Company covers all business related
         expenses incurred by 6327214 Canada Inc. while delivering the
         consulting services. This agreement continues until terminated and can
         be terminated by the Company upon 10 months written notice.

         Manchester Consolidated Corp. (A Related Party)
         -----------------------------------------------

         In January 2004 the Company entered into an exclusive financing
         arrangement with Manchester Consolidated Corp. ("Manchester"), a
         corporation owned by Anthony Pallante whereby a fee is payable based
         upon successful completion of a financing or any acquisition, merger,
         or other business combination generated by Manchester. The fee
         structure for financings are 10% for transactions up to and including
         $2,000,000; 7% for transactions in excess of $2,000,000 up to and
         including $5,000,000; and 5% for transactions in excess of $5,000,000.
         The fee structure for acquisitions, mergers or other business
         combinations is 12% for transactions up to and including $5,000,000; 7%
         for transactions in excess of $5,000,000 up to and including
         $10,000,000; and 5% for transactions in excess of $10,000,000. In
         connection with its role in arranging the Share Purchase Agreement with
         Teckn-O-Laser Global Company, the Company paid Manchester a transaction
         fee equal to 5% of the transaction value of CDN($15,382,000)
         (approximately US$12,813,206) which was CDN$769,100 (approximately
         US$640,660). Payments consisted of CDN$350,000 in cash (approximately
         US$291,550) and CDN$419,100 (approximately US$349,250) in shares of
         common stock valued at US$0.50 per share resulting in the March 2005
         issuance of 538,500 shares to Manchester and an aggregate of 160,000
         shares to two designees of Manchester. As more fully described under
         "DESCRIPTION OF BUSINESS - Share Purchase Agreement with Turbon AG", in
         November 2005 the Company paid acquisition fees of $642,000 pursuant to
         the financing arrangement to Manchester and its designees consisting of
         cash ($82,000) and 1,120,000 shares of stock valued at $0.50 per share
         ($560,000) in connection with the acquisition of an aggregate of
         400,000 shares of Turbon AG.

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

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

         The options are exercisable during the period February 1, 2006 through
         February 1, 2008. The agreement is renewable at the Company's option,
         for an additional 1 year term on similar terms.

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

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

                                      F-38
<PAGE>

24. PROPOSED ACQUISITION OF TURBON AG

         In April 2005, the Company expressed its interest to management of
         Turbon AG ("Turbon"), in acquiring all the outstanding shares of
         Turbon, a leading global imaging supply company publicly traded on the
         Frankfurt stock exchange. The aggregate offering price, pursuant to the
         expression of interest, as revised, is approximately US$56.6 million in
         cash. The completion and closing of an acquisition of all of the
         outstanding shares of Turbon is subject to several conditions,
         including but not limited to, raising of the necessary funds to close
         the transaction, obtaining the approval of Turbon's shareholders, and
         the submission of a public offering to acquire all of Turbon's
         outstanding shares in accordance with the applicable regulations to
         which the Company and Turbon are subject.

         The Company cannot provide any assurance that it will complete its
         proposed acquisition or that the terms of the transaction if completed
         will not be materially different from the terms that are currently
         proposed. At the present time, the Company has no agreements in place
         with Turbon, Turbon's shareholders, nor has it secured any commitments
         to obtain the financing its needs to complete the proposed transaction.
         In addition, the events that must take place to cause the the vote of
         Turbon's shareholders to take place is outside the Company's control
         and the Company cannot provide any assurance that a majority of
         Turbon's shareholders will vote in favor of this proposed transaction.

         Share Purchase Agreement with Turbon AG
         ---------------------------------------

         Effective June 22, 2005 the Company entered into a Share Purchase
         Agreement with Turbon pursuant to which it agreed to purchase 400,000
         Turbon shares from Turbon's treasury at a purchase price of $14 per
         share or an aggregate of $5,600,000 (the "Purchase Price"). On June 23,
         2005 the Company paid Turbon $1,001,000 of the Purchase Price which
         represents 71,500 shares. The balance of $4,599,000 (328,500 shares)
         was completed November 4, 2005. These funds were comprised of
         $1,200,000 from a private placement of equity securities (Note 21), a
         $2,800,000 term loan from Turbon International (Notes 31 and 14), and a
         $600,000 loan from three shareholders, two of which are officers of the
         Company (Note 17). Pursuant to the Share Purchase Agreement, Manchester
         Consolidated Corp. earned acquisition fees of $642,000. The acquisition
         fee was paid in a combination of cash ($82,000) and the balance in
         1,120,000 shares of common stock with an aggregate fair value of $0.50,
         based on the recent selling price of securities with substantially
         identical features, sold in recently competed private placement
         transactions.

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

                                      F-39
<PAGE>

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

25. MAJOR CUSTOMERS AND FOREIGN AND DOMESTIC OPERATIONS

         During the year ended December 31, 2005, ten customers represented 41%
         of our total sales and one customer represented appreciatively 16% of
         our total sales. Sales to customers in the United States represented
         61% of total sales and sales to customers outside the United States
         represented 39% of total sales. Substantially all of the Company's
         operating assets are located in Canada.

26. EMPLOYEE STOCK OPTIONS

         The following table summarizes the changes in employee stock options
         outstanding and the related exercise prices for the shares of the
         Company common stock:
<TABLE>
<CAPTION>
                                                                        Weighted
                                                         Weighted       Average
                                                         Average       Remaining
                                                         Exercise   Contractual life
                                               Shares     Price         (in years)     Exercisable
                                              --------   --------   ----------------   -----------
<S>                                           <C>        <C>        <C>                <C>
      Outstanding at January 1, 2004 ......     37,500   $  11.72         7.6              137,500

      Granted .............................    300,000   $   0.25        8.25
                                              --------

      Outstanding at January 1, 2005 ......    337,500   $   1.52          8               137,500

      Expired .............................     (7,500)  $  13.40                           (7,500)

      Granted .............................    354,500   $   1.41         9.0              100,000
                                              --------                                 -----------

      Outstanding at December 31, 2005 ....    684,500   $   1.34         8.6              230,000
                                              ========                                 ===========

<CAPTION>
                                       Options Outstanding                           Options Exercisable
                          ---------------------------------------------  -------------------------------------------
                                           Weighted                                      Weighted
                                           average          Weighted                     average         Weighted
Range of exercise            Number    contractual life     average         Number     contractual       average
      prices              outstanding     remaining      exercise price  exercisable  life remaining  exercise price
-----------------------   -----------  ----------------  --------------  -----------  --------------  --------------
<S>                       <C>          <C>               <C>             <C>          <C>             <C>
         $0.25 ........       300,000        8.75           $   0.25         100,000       8.75           $  0.25
$1.06 - $ 1.57 ........       354,500        9.75           $   1.41               0          0                 0
$5.00 - $13.40 ........        30,000        5.50           $  11.30          30,000       5.50           $ 11.30

                          -----------                                    -----------
                              684,500                                        130,000
                          ===========                                    ===========
</TABLE>

                                      F-40
<PAGE>

27. INCOME TAXES

         Deferred tax assets consist of the following:

                                                            DECEMBER 31,
                                                     ------------------------
                                                        2005          2004
                                                     ----------    ----------
                                                      (AMOUNTS IN THOUSANDS)
         Deferred tax assets:
            Net operating loss carry forwards ....   $    5,165    $    4,000
            Allowance for doubtful accounts ......           57
            Goodwill .............................          959
            Deferred compensation ................          241
            Other intangibles ....................          194
                                                     ----------    ----------
                                                          6,616         4,000
            Valuation allowance ..................       (6,616)       (4,000)
                                                     ----------    ----------
            Net deferred tax assets ..............   $        0    $        0
                                                     ==========    ==========

         The difference between the expected rate of 34% for federal income tax
         purposes and the effective rate of 38% represent the effect of state
         and provincial income taxes (in Canada), net of their federal income
         tax benefit.

         The change in the valuation allowance amounts to $2,616,000 for the
         year ended December 31, 2005. The Company has net operating losses of
         approximately $13,400,000, that may be available to offset future
         taxable income, which expire at various times through 2025. The net
         operating losses may be subject to a substantial limitation under the:
         "Change of Ownership" rules under Section 382 of the Internal Revenue
         Code. The Company fully reserved for these and all other deferred tax
         assets as it is deemed, to be more than not, that their benefit will
         not be realized in future periods.

28. SUBSEQUENT EVENTS

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

         Effective January 31, 2006, the Company issued 2,400,000 shares of our
         common stock (the "Shares") and warrants (the "Warrants") to purchase
         2,400,000 shares of common stock to the holder of the November 4, 2005
         subscription receipts upon the automatic exercise of such subscription
         receipts on such date. No additional consideration was payable to the
         Company upon the exercise. Each Warrant entitles the holder to
         purchase, subject to adjustment, one share of our common stock at a
         price of $1.25 per share at any time prior to May 3, 2008.

         Modification of Convertible Note
         --------------------------------

         Effective February 1, 2006, the interest rate on the convertible note
         payable to Barrington Bank was decreased to 8% for the period February
         1, 2006 to July 31, 2006. In addition the conversion price was adjusted
         to $0.50 per share.

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<PAGE>

         Compensation to consultants
         ---------------------------

         On February 7, 2006 the Company granted 60,000 stock options to 4
         consultants, 15,000 to each. Each stock option allows the holder to
         purchase 1 common share of the Company for $1.20 per share. These
         options vest immediately and expire in 10 years. The consultants are
         working to generate sales for the Company. In addition to the options,
         the Company also agreed to pay a commission of 1.5% of net sales
         derived from accounts which were introduced by ny of the 4 consultants.
         This cash commission will be split among the 4 consultants and will be
         payable related to an 18 month period of sales commencing from the date
         of the first shipment to the applicable account. The commission is
         payable 30 days after each applicable quarter end.

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

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

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

                                      F-42