ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

On July 8, 2008, the Board of Directors of American TonerServ Corp. (the "Company") approved changes to the compensation arrangements for two of the Company's executive officers. Effective upon the Company achieving positive earnings before interest, taxes depreciation and amortization, excluding extraordinary and one time items for one calendar month, the annual salary of Daniel J. Brinker, the Company's President and Chief Executive Officer, will be increased from $180,000 to $205,000, and the annual salary of Michael V. Ducey, the Company's Senior Vice President of Sales and Marketing, will be increased from $150,000 to $175,000.

Also on July 8, 2008, the Company's Board of Directors approved the establishment of a Bonus Pool for the last six months of 2008 as set forth below, with such amounts to be allocated to the executive officers and senior management of the Company as determined by the Board of Directors based on recommendations of the Compensation Committee. The Bonus Pool will be based on the Company achieving at least 80% of earnings before interest, taxes depreciation and amortization of $1,732,173 (the "Target") for the six months ended December 31, 2008. Up to $200,000 would accrue in the bonus pool if the Company reaches the Target plus $100,000. In addition, twenty five percent (25%) of any amount in excess of the Target plus $100,000 would be included in the bonus pool. There is no assurance that the Company will be able to achieve the levels of earnings before interest, taxes depreciation and amortization established by the Board of Directors for the Bonus Pool.