6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO

RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

Filing No. 1 for the Month of May, 2006

ADB Systems International Ltd.

(Exact name of Registrant)

302 The East Mall, Suite 300, Toronto, Ontario Canada M9B 6C7

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F x Form 40-F ¨

 Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

 Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

 Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨ No x

 If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- __________

ADB SYSTEMS INTERNATIONAL LTD.

On May 15, 2006, ADB Systems International Ltd. (“ADB” or the “Company”) issued the press release attached to this Form 6-K as Exhibit 1 providing its interim financial results for the first quarter ended March 31, 2006. All figures are in Canadian dollars. The Company’s First Quarter 2006 Report is attached to this Form 6-K as Exhibit 3.

This Form 6-K may include comments that do not refer strictly to historical results or actions and may be deemed to be forward-looking within the meaning of the Safe Harbor provisions of the U.S. federal securities laws. These include, among others, statements about expectations of future revenues, profitability, cash flows, and cash requirements. Forward-looking statements are subject to risks and uncertainties that may cause ADB’s results to differ materially from expectations. These risks include ADB’s future capital needs, expectations as to profitability and operating results, ability to further develop business relationships and revenues, expectations about the markets for its products and services, acceptance of its products and services, competitive factors, ability to repay debt, ability to attract and retain employees, new products and technological changes, ability to develop appropriate strategic alliances, protection of its proprietary technology, ability to acquire complementary products or businesses and integrate them into its business, geographic expansion of its business and other such risks as ADB may identify and discuss from time to time, including those risks disclosed in ADB’s most recent Form 20-F filed with the Securities and Exchange Commission. Accordingly, there is no certainty that ADB’s plans will be achieved.

Exhibits

Exhibit 1 - Press Release dated May 15, 2006

Exhibit 2 - First Quarter Financial Data

Exhibit 3 - First Quarter 2006 Report

Exhibit 4 - Certifications of Interim Filings

SIGNATURES

 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ADB SYSTEMS INTERNATIONAL LTD.
Date: May 16, 2006	By:	/s/ Jeffrey Lymburner
		Name: Jeffrey Lymburner
		Title: Chief Executive Officer

EX-1

Exhibit 1

  ADB Systems International Ltd. 302 The East Mall, Suite 300 Toronto, ON M9B 6C7 Tel: 416 640-0400 / Fax: 416 640-0412 Website: www.adbsys.com (TSX: ADY; OTCBB: ADBYF)

 For Immediate Release

ADB REPORTS Q1 FINANCIAL RESULTS

Grows revenue year-over-year and decreases expenses

Toronto, ON - May 15, 2006 - ADB Systems International (TSX: ADY; OTCBB: ADBYF), a global provider of asset lifecycle management solutions, announced today its interim financial results for the first quarter ended March 31, 2006. All figures are in Canadian dollars.

ADB reported revenues of $1.72 million for the quarter, an increase of more than 12 percent when compared to the $1.54 million generated in the first quarter of 2005. In the fourth quarter of 2005, ADB generated revenues of $1.83 million, representing a sequential decrease of six percent for Q1 2006. Revenues were comprised of software license sales, service and application hosting fees.

“We continue to see year-over-year revenue growth that is indicative of the steady improvements we are making as a result of growing customer relationships and the continued focus on key industry sectors,” said Jeff Lymburner, CEO of ADB Systems.

In accordance with generally accepted accounting principles (GAAP), ADB recorded a net loss for the period of $480,000 or $0.01 per basic share. This compares to a net loss of $736,000 or $0.01 per basic share in the first quarter of 2005. In the fourth quarter of 2005, ADB recorded a net loss of $785,000 or $0.01 per basic share. Loss from operations improved to $228,000 in the first quarter of 2006 from $570,000 in Q1 2005.

In the first quarter, ADB also recorded an EBITDA loss of $145,000, an improvement of 74 percent when compared to the $556,000 recorded in the first quarter of 2005. The company considers EBITDA to be a meaningful performance measure as it provides an approximation of operating cash flows.

“In concert with our revenue growth, we continue to reduce our expenses in all facets of our operations,” Mr. Lymburner said. “This improved bottom-line performance provides further evidence of the progress we continue to make.”

As at March 31, 2006, ADB held cash and marketable securities totaling $876,000. At the end of the fourth quarter of 2005, ADB held cash and marketable securities totaling $291,000.

- more -

ADB reports Q1 results/2

Operating highlights

In addition to its financial performance, ADB completed a number of operating activities in the period, including:

– The Company’s joint venture, GE Asset Manager LLC, signed a customer agreement with GE Infrastructure to provide asset management capabilities.

– ADB raised gross proceeds of $755,000 through the issuance of convertible debentures to a group of private and institutional investors.

“Our Q1 results show evidence of some favorable trends,” Mr. Lymburner said. “In particular, we are encouraged by the number of financial, client and partnership arrangements that we have recently made.”

ADB will hold a conference call at 10:00 a.m. (Eastern time) on Tuesday, May 16 to discuss its financial results and review operational activities. Investors and followers of ADB can listen to a live broadcast of the call from the investor relations section of the company’s website, www.adbsys.com.

Annual general meeting scheduled

ADB also announced that it will hold its annual general meeting of shareholders on June 21, at 4:00 p.m. at the Holiday Inn on King, located at 370 King Street West, Toronto. The meeting will be open to registered shareholders, accredited media and financial analysts. Interested individuals unable to attend the meeting will be able to listen to a live web-cast on the Company’s website, www.adbsys.com.

About ADB Systems International Ltd.

ADB Systems International delivers asset lifecycle management solutions that help organizations source, manage and sell assets for maximum value. ADB works with a growing number of customers and partners in a variety of sectors including oil and gas, government, healthcare, manufacturing and financial services. Current customers include BP, GE Commercial Financing, Halliburton Energy Resources, the National Health Service, Paramount Resources, Star Energy, Talisman Energy, and Vesta Insurance.

Through its wholly owned subsidiary, ADB Systems USA Inc., ADB owns a 50 percent interest in GE Asset Manager, a joint business venture with GE. ADB has offices in Toronto (Canada), Stavanger (Norway), Tampa (U.S.), Dublin (Ireland), and London (U.K.). The company's shares trade on both the Toronto Stock Exchange (TSX: ADY) and the OTC Bulletin Board (OTCBB: ADBYF).

This news release may include comments that do not refer strictly to historical results or actions and may be deemed to be forward-looking within the meaning of the Safe Harbor provisions of the U.S. federal securities laws. These include, among others, statements about expectations of future revenues, cash flows, and cash requirements. Forward-looking statements are subject to risks and uncertainties that may cause ADB’s ("the Company") results to differ materially from expectations. These risks include the Company’s ability to raise additional funding, develop its business-to-business sales and operations, develop appropriate strategic alliances and successful development and implementation of technology, acceptance of the Company's products and services, competitive factors, new products and technological changes, and other such risks as the Company may identify and discuss from time to time, including those risks disclosed in the Company’s Form 20-F filed with the Securities and Exchange Commission. Accordingly, there is no certainty that the Company's plans will be achieved.

Contact:

At ADB Systems International Ltd.

Joe Racanelli, Chief Marketing Officer

Tel: (416) 640-0400 ext. 273

E-mail: jracanelli@adbsys.com

(financial tables follow)

EX-2

Exhibit 2

ADB Systems International Ltd.

Consolidated Balance Sheets

(expressed in thousands of dollars)

(Canadian GAAP, Unaudited) 

	March 31			March 31			December 31
	2006			2006			2005
	(unaudited)			(unaudited)			(audited)
	(in $C)			(in $US)			(in $C)
				1.1670
				translated
				into $US at
				Cdn$ 1.1670
				for
				convenience
Cash	$	863		$	740		$	278
Restricted Cash	$	-		$	-		$	-
Marketable securities		13			11			13
Other current assets		1,510			1,295			1,295
Other assets		221			189			257
Total assets	$	2,607		$	2,234		$	1,843
Accounts payable and accrued liabilities	$	2,105		$	1,804		$	2,129
Due to related parties		92			79			137
Deferred revenue		490			420			141
Current portion of secured subordintated notes		356			305			343
Non-current portion of secured subordintated notes		2,112			1,810			1,800
Minority interest		3			3			3
Total shareholders' deficiency		(2,551	)		(2,187	)		(2,710	)
Total liabilities and shareholders' equity (deficiency)	$	2,607		$	2,234		$	1,843

ADB Systems International Ltd.

Consolidated Statements of Operations

(expressed in thousands of dollars, except per share amounts)

(Canadian GAAP, Unaudited)

	Three Months Ended
	March 31
	2006			2006			2005
	($C)			($US)			($C)
				translated
				into US$ at
				1.1670
				Cdn$ 1.1670
				for
				convenience
Revenue	$	1,722		$	1,476		$	1,536
Operating expenses
General and administrative		841			721			1,026
Customer service and technology		884			757			929
Sales and marketing costs		142			122			137
Employee stock options		47			40			23
Depreciation and amortization		36			31			33
Other income		-			-			(42	)
Total operating expenses		1,950			1,672			2,106
Loss from operations		(228	)		(196	)		(570	)
Interest expense
Cash interest expense		107			92			71
Accretion of secured subordinated notes		145			124			95
		252			216			166
Net loss for the period	$	(480	)	$	(412	)	$	(736	)
Net loss per share, basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.01	)
Weighted average common shares		74,208			74,208			71,370

RECONCILIATION OF NET LOSS TO EBITDA

	Three Months Ended
	March 31
	2006			2006			2005
	($C)			($US)			($C)
				translated
				into US$ at
				1.1670
				Cdn$ 1.1670
				for
				convenience
Net loss for the period, as per above	$	(480	)	$	(411	)	$	(736	)
Reconciling items:
Employee stock options		47			40			23
Interest expense:
Cash interest expense		107			92			71
Accretion of secured subordinated notes		145			124			95
Depreciation and amortization		36			31			33
Other income		-			-			(42	)
EBITDA		(145	)		(124	)		(556	)

EX-3

Exhibit 3

Maximizing

The Value of Assets

First Quarter 2006 Report

PROFILE

ADB Systems International Ltd. (“ADB” or the “Company”) delivers asset lifecycle optimization solutions that help organizations source, manage and sell assets for maximum value. ADB works with a growing number of customers and partners in a variety of sectors including government, healthcare, manufacturing, financial services, and oil and gas. Current customers and partners include GE Commercial Finance, Commercial Equipment Financing (“GE CEF”), BP, the National Health Service (UK), Talisman Energy, Vesta Insurance, Mesta AS, and Star Energy HG Gas Storage Limited.

Through its wholly owned subsidiary, ADB Systems USA Inc., ADB owns a 50 percent interest in GE Asset Manager, LLC (also referred to as “GE’s Asset Manager”), a joint venture launched with GE CEF.

ADB is headquartered in Toronto (Canada) and maintains offices in Stavanger (Norway), and London (U.K.). The Company's shares trade on both the Toronto Stock Exchange (TSX: ADY) and the OTC Bulletin Board (OTCBB: ADBYF).

For more information, please visit www.adbsys.com.

LETTER TO SHAREHOLDERS

Dear Shareholders,

In the past quarter, ADB has seen meaningful progress on several fronts. We have deepened our strategic relationship with GE, completed a financing, and generated record Q1 revenues while reducing expenses.

Revenues for the first quarter were $1.72 million. This compares to $1.54 million in Q1 of 2005 and represents an increase of 12 percent. We continue to see year-over-year revenue growth that is indicative of the steady improvements we are making as a result of growing customer relationships and the continued focus on key industry sectors.

In accordance with generally accepted accounting principles (GAAP), we recorded a net loss for the period of $480,000 or $0.01 per basic share. This compares to a net loss of $736,000 or $0.01 per basic share in the first quarter of 2005. In the fourth quarter of 2005, we recorded a net loss of $785,000 or $0.01 per basic share. Loss from operations improved to $228,000 in the first quarter of 2006 from $570,000 in Q1 2005.

In concert with our revenue growth, we continue to reduce our expenses in all facets of our operations. This improved bottom-line performance provides further evidence of the progress we continue to make.

Operating highlights

There were a number of noteworthy achievements and events in the first quarter:

• We signed a customer agreement with GE Infrastructure, which will result in the deployment of our technology across such GE businesses as: Energy; Aviation; Oil and Gas; Rail and Water.

• We raised gross proceeds of $755,000 through the issuance of convertible debentures to a group of institutional and private investors.

• We entered into extended services and licensing arrangements with the NHS, which solidifies business flow in the UK in upcoming quarters.

Outlook and guidance

Our Q1 results show evidence of some favorable trends. In particular, we are encouraged by the number of financial, client and partnership arrangements that we have recently made

Yours truly,

Jeff Lymburner, CEO

May 2006

1

CONSOLIDATED BALANCE SHEETS (in thousands of Canadian dollars) (Unaudited)
	March 31			December 31
	2006			2005
ASSETS
CURRENT
Cash	$	863		$	278
Marketable securities		13			13
Accounts receivable		1,307			1,154
Deposits and prepaid expenses		203			141
		2,386			1,586
CAPITAL ASSETS (Note 3)		86			101
DEFERRED CHARGES		135			156
	$	2,607		$	1,843
LIABILITIES
CURRENT
Accounts payable	$	1,085		$	1,218
Accrued liabilities		1,020			911
Due to related parties (Note 4)		92			137
Deferred revenue		490			141
Current portion of secured subordinated notes (Note 5)		356			343
		3,043			2,750
SECURED SUBORDINATED NOTES (Note 5)		2,112			1,800
		5,155			4,550
NON-CONTROLLING INTEREST		3			3
SHAREHOLDERS’ DEFICIENCY
Share capital (Note 6)		100,907			100,859
Contributed surplus (Note 7)		1,551			1,555
Warrants (Note 8)		298			278
Stock options (Note 9)		1,138			1,091
Other options		271			271
Conversion feature on secured subordinated notes (Note 5)		2,024			1,513
Cumulative translation account		107			90
Deficit		(108,847	)		(108,367	)
		(2,551	)		(2,710	)
	$	2,607		$	1,843

Continuation of business (Note 2)

See accompanying notes to unaudited interim consolidated financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements.

2

CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of Canadian dollars, except per share amounts) (Unaudited)
	Quarter ended March 31
	2006			2005
License revenue	$	145		$	-
Service revenue		1,577			1,536
Total revenue		1,722			1,536
Operating expenses:
General and administrative		841			1,026
Customer service and technology		884			929
Sales and marketing		142			137
Employee stock options		47			23
Depreciation and amortization		36			33
Other income (Note 10)		-			(42	)
Total operating expenses		1,950			2,106
Loss from operations		(228	)		(570	)
Interest expense:
Cash interest expense		107			71
Accretion of secured subordinated notes		145			95
		252			166
NET LOSS FOR THE PERIOD	$	(480	)	$	(736	)
NET LOSS PER SHARE, BASIC AND DILUTED	$	(0.01	)	$	(0.01	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED (000’s)		74,208			71,370

CONSOLIDATED STATEMENTS OF DEFICIT (in thousands of Canadian dollars) (Unaudited)
	Quarter ended March 31
	2006			2005
DEFICIT, BEGINNING OF PERIOD	$	(108,367	)	$	(104,866	)
NET LOSS FOR THE PERIOD		(480	)		(736	)
DEFICIT, END OF PERIOD	$	(108,847	)	$	(105,602	)

See accompanying notes to unaudited interim consolidated financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements.

3

CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of Canadian Dollars) (Unaudited)
	Quarter ended March 31
	2006			2005
NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES
OPERATING
Net loss for the period	$	(480	)	$	(736	)
Items not affecting cash:
Depreciation and amortization		36			33
Employee stock options		47			23
Accretion of secured subordinated notes		145			95
		(252	)		(585	)
Changes in non-cash operating working capital (Note 12)		132			1,000
		(120	)		415
INVESTING
Capital assets		-			(18	)
		-			(18	)
FINANCING
Secured subordinated notes, net (Note 5)		705			-
Issuance of common shares		-			570
		705			570
NET CASH INFLOW DURING THE PERIOD		585			967
CASH, BEGINNING OF PERIOD		278			440
CASH, END OF PERIOD	$	863		$	1,407
SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS
Interest paid	$	10		$	11

See Note 5 for disclosure of non-cash transactions regarding secured subordinated notes.

See accompanying notes to unaudited interim consolidated financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements.

4

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

For the Three-Month Periods Ended March 31, 2006 and 2005

(in Canadian dollars)

1. SIGNIFICANT ACCOUNTING POLICIES

The unaudited interim consolidated financial statements of ADB Systems International Ltd. (“ADB” or the "Company") should be read in conjunction with the Company's most recent annual audited consolidated financial statements. The accompanying unaudited interim consolidated financial statements include all subsidiaries and have been prepared in accordance with Canadian generally accepted accounting principles (‘‘GAAP’’) for the purposes of interim financial information. Accordingly, they do not include all information and notes as required by Canadian GAAP in the preparation of annual consolidated financial statements. The accounting policies used in the preparation of the accompanying unaudited interim consolidated financial statements are the same as those described in the Company’s audited consolidated financial statements prepared in accordance with Canadian GAAP for the three years ended December 31, 2005.

2. CONTINUATION OF THE BUSINESS

While the accompanying unaudited interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, certain adverse conditions and events cast substantial doubt upon the validity of this assumption. The going concern basis of presentation assumes that the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The Company has not yet realized profitable operations and has relied on non-operational sources of financing to fund operations. The Company’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan including a substantial increase in revenue as well as maintaining operating expenses at or near the same level as 2005. Management’s 2006 business plan includes a significant increase in revenue and operating cash flow primarily from major new contracts in North America. Management believes that it has the ability to raise additional financing if required. The Company cannot provide assurance that it will be able to execute on its business plan or assure that efforts to raise additional financings will be successful.

These unaudited interim consolidated financial statements do not include adjustments or disclosures that may result from the Company’s inability to continue as a going concern. If the going concern assumption were not appropriate for these unaudited interim consolidated financial statements, then adjustments would be necessary in the carrying values of assets and liabilities, the reported net losses and the balance sheet classifications used.

Management believes that continued existence beyond Q1 of 2006 is dependent on its ability to increase revenue from existing products, and to expand the scope of its product offering which entails a combination of internally developed software and partnerships with third parties.

5

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

For the Three-Month Periods Ended March 31, 2006 and 2005

(in Canadian dollars) 

3. CAPITAL ASSETS

	March 31, 2006						December 31, 2005
	Cost		Accumulated Amortization		Net Book Value		Cost		Accumulated Amortization		Net Book Value
	(in thousands)
Computer hardware	$	2,522	$	2,475	$	47	$	2,522	$	2,470	$	52
Computer software		13		13		-		13		11		2
Furniture and fixtures		384		365		19		384		358		26
Leasehold improvements		27		7		20		27		6		21
	$	2,946	$	2,860	$	86	$	2,946	$	2,845	$	101

4. DUE TO RELATED PARTIES

During the quarter ended March 31, 2006, the Company repaid advances from directors and/or officers totaling $45,000 through the issuance of Series J notes. The total advances outstanding at March 31, 2006 include $61,000 comprised of two loan agreements that pay interest at a rate of 12 percent per annum, are secured by a general security agreement on the assets of the Company and mature as follows:

• $44,000 maturing on July 29, 2006, and

• $17,000 maturing on August 15, 2006.

The remaining amount of $31,000 is interest free and has no specific terms of repayment.

As at March 31, 2006, accrued liabilities included $6,000 (December 31, 2005 - $5,000) in interest payable on the above amounts due to related parties. During the quarter ended March 31, 2006, interest expense on advances from related parties was $2,000 (March 31, 2005 - $nil).

5. SECURED SUBORDINATED NOTES

a) During the quarter ended March 31, 2006, the Company issued Series J secured subordinated notes with a face value of $755,000. The Series J notes were issued to private investors including an amount totaling $105,000 issued to three directors/officers of the Company. The Series J notes mature February 8, 2011, have an annual interest rate of 11 percent and are convertible into equity units at a price of $0.15 per unit. Interest for the first year is payable in shares of the Company with the provision that the total number of shares issued as interest payment cannot exceed 6,529,959 shares. Interest payable for the remaining term of the notes is payable in cash upon the earlier of maturity and conversion. Each equity unit consists of one common share and one share-purchase warrant with an exercise price of $0.20 per warrant. The warrants expire on the earlier of (i) February 8, 2009 and (ii) the date which is sixty days following the issuance of a notice by the Company to holders confirming that the closing price of the Company’s common shares, on the Toronto Stock Exchange, was greater than or equal to $0.35 for any 10 consecutive trading days. The afore-mentioned conversion provisions are subject to a four month and one day holding period. The Series J notes are secured by a general security agreement on the assets of the Company, subordinated to the security claims provided to the holders of previously issued notes.

6

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

For the Three-Month Periods Ended March 31, 2006 and 2005

(in Canadian dollars)

As required by Canadian GAAP, the Company separated the liability and equity components of the Series J secured subordinated notes. The Company determined the fair value of the liability component of the Series J notes by calculating the present value of the associated cash flows, using a discount rate that reflects the Company’s underlying rate of borrowing. The Company determined the fair value of the conversion feature at the issue date of the Series J notes using the Cox-Rubinstein binomial valuation model. The resulting pro rata fair values of the liability component of the notes and the conversion features of the units, comprised of shares and attached warrants, was $202,000, $353,000 and $200,000, respectively. The liability component will be accreted to $755,000 over the term of the Series J notes through the recording of a non-cash interest expense until such date at which the underlying notes are converted into common shares.

b) During the quarter ended September 30, 2005, the Company issued Series I secured subordinated notes with a face value of $1,200,000. The Series I notes were issued to private investors including an amount totaling $110,000 issued to four directors/officers of the Company. The Series I notes mature September 12, 2010, have an annual interest rate of 11 percent and are convertible into equity units at a price of $0.15 per unit. Interest for the first year is payable in shares with the provision that the total number of shares issued as interest payment cannot exceed 974,000 shares. Any of the first year interest not paid through the issuance of shares will be paid in cash. Interest payable for the remaining term of the notes is payable in cash upon the earlier of maturity and conversion. Each equity unit consists of one common share and one share-purchase warrant with an exercise price of $0.20 per warrant. The warrants expire on September 12, 2010. The Series I notes are secured by a general security agreement on the assets of the Company, subordinated to the security claims provided to the holders of previously issued notes.

As required by Canadian GAAP, the Company separated the liability and equity components of the Series I secured subordinated notes. The Company determined the fair value of the liability component of the Series I notes by calculating the present value of the associated cash flows, using a discount rate that reflects the Company’s underlying rate of borrowing. The Company determined the fair value of the conversion feature at the issue date of the Series I notes using the Cox-Rubinstein binomial valuation model. The resulting pro rata fair values of the liability component of the notes and the conversion features of the units, comprised of shares and attached warrants, was $280,000, $472,000 and $448,000, respectively. The liability component will be accreted to $1,200,000 over the term of the Series I notes through the recording of a non-cash interest expense until such date at which the underlying notes are converted into common shares.

Cash financing costs in the amount of $137,000 were incurred in the issuance of the Series I notes. A portion of these financing costs, in the amount of $32,000, attributed to the liability component of the notes was allocated to deferred charges. The remaining financing costs of $105,000 attributed to the equity portions of the notes were recorded as a reduction to the conversion feature on secured subordinated notes amount within shareholders’ deficiency.

In addition to the financing costs described above, the Company issued to the financing agent, PowerOne Capital Markets Limited (“PowerOne”), an option to purchase up to 747,000 equity units at a purchase price of $0.15 per unit. The option expires on September 12, 2010. Each equity unit consists of one common share and one share-purchase warrant with an exercise price of $0.20 per warrant. The share-purchase warrants expire on September 12, 2010. Using the Cox-Rubinstein binomial valuation model, the Company has determined the fair value of these equity units to be $193,000 and included this amount in other options. The portion of the fair value of this option, in the amount of $45,000, attributable to the liability component of the notes was allocated to deferred charges. The remaining portion, in the amount of $148,000, attributable to the equity components of the notes was recorded as a reduction to the conversion feature on secured subordinated notes amount within shareholders’ deficiency.

7

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

For the Three-Month Periods Ended March 31, 2006 and 2005

(in Canadian dollars) 

During the quarter ended March 31, 2006, $75,000 (face value) of the Series I notes (book value of $22,000) were converted into 500,000 equity units represented by 500,000 common shares valued at $22,000 and 500,000 warrants valued at $20,000 (See table below).

c) During the year ended December 31, 2004, the Company issued Series H secured subordinated notes with a face value of $520,000. The Series H notes were issued to private investors including an amount totaling $270,000 issued to directors of the Company. The Series H notes mature October 21, 2007, have an annual rate of interest of 11 percent payable upon the earlier of maturity and conversion and are convertible into equity units at a price of $0.20 per unit. Each equity unit consists of one common share and one half of a share-purchase warrant with an exercise price of $0.40 per warrant. The share-purchase warrants expire on October 21, 2008. The Series H secured subordinated notes will automatically convert into units when the share price of the Company closes at or above $0.45 for 10 consecutive trading days during the term. Holders may convert the notes into units at anytime following a four-month hold period. If the holder does not convert and no automatic conversion takes place, the Company must repay the principal amount in cash. In order to obtain the required approvals to issue the Series H notes, the Company retroactively increased the interest rate on the Series G notes from an annual rate of 7 percent to an annual rate of 11 percent. The Series H notes are secured by a general security agreement on the assets of the Company, subordinated to the security claims provided to the holders of previously issued notes.

As required by Canadian GAAP, the Company separated the liability and equity components of the Series H secured subordinated notes. The Company determined the fair value of the liability component of the Series H notes by calculating the present value of the associated cash flows, using a discount rate that reflects the Company’s underlying rate of borrowing. The Company determined the fair value of the conversion feature at the issue date of the Series H notes using the Cox-Rubinstein binomial valuation model. The resulting pro rata fair values of the liability component of the notes and the conversion features of the units, comprised of shares and attached warrants, was $282,000, $184,000 and $54,000, respectively. The liability component will be accreted to $520,000 over the term of the Series H notes through the recording of a non-cash interest expense until such date at which the underlying notes are converted into common shares.

Financing costs in the amount of $43,000 were incurred in the issuance of the Series H notes. Included in the financing costs was the incremental interest expense associated with the retroactive increase of the interest rate on the Series G notes. Financing costs of $23,000 attributed to the liability component of the notes were allocated to deferred charges. Financing costs of $20,000 attributed to the equity portions of the notes were recorded as a reduction to the conversion feature on secured subordinated notes amount within shareholders’ deficiency.

d) During the quarter ended June 30, 2004, the Company issued Series G secured subordinated notes with a face value of $1,710,000. The Series G notes were issued to private investors including an amount totaling $170,000 issued to directors of the Company. The Series G notes mature June 15, 2007, have an annual rate of interest of 7 percent payable upon the earlier of maturity and conversion and are convertible into equity units at a price of $0.31 per unit. Each equity unit consists of one common share and one half of a share-purchase warrant with an exercise price of $0.50 per warrant. The share-purchase warrants expire on June 15, 2008. The Series G secured subordinated notes will automatically convert into units when the volume-weighted average share price of the Company closes above $0.70 for 20 consecutive trading days during the term. Holders may convert the notes into units at anytime following a four-month hold period. If the holder does not convert and no automatic conversion takes place, the Company must repay the principal amount in cash. The Series G notes are secured by a general security agreement on the assets of the Company, subordinated to the security claims provided to the holders of previously issued notes.

8

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

For the Three-Month Periods Ended March 31, 2006 and 2005

(in Canadian dollars) 

As required by Canadian GAAP, the Company separated the liability and equity components of the Series G secured subordinated notes. The Company determined the fair value of the liability component of the Series G notes by calculating the present value of the associated cash flows, using a discount rate that reflects the Company’s underlying rate of borrowing. The Company determined the fair value of the conversion feature at the issue date of the Series G notes using the Cox-Rubinstein binomial valuation model. The resulting pro rata fair values of the liability component of the notes and the conversion features of the units, comprised of shares and attached warrants, was $959,000, $539,000 and $212,000, respectively. The liability component will be accreted to $1,710,000 over the term of the Series G notes through the recording of a non-cash interest expense until such date at which the underlying notes are converted into common shares.

Financing costs in the amount of $230,000 were incurred in the issuance of the Series G notes. Financing costs of $129,000 attributed to the liability component of the notes were allocated to deferred charges. Financing costs of $101,000 attributed to the equity portions of the notes were recorded as a reduction to the conversion feature on secured subordinated notes amount within shareholders’ deficiency.

In addition to the financing costs described above, the Company issued to First Associates Investment Inc. (“First Associates”) an option to purchase up to 485,000 equity units at a purchase price of $0.31 per unit. The option expires on June 15, 2006. Each equity unit consists of one common share and one half of a share-purchase warrant with an exercise price of $0.50 per warrant. The share-purchase warrants expire on June 15, 2008. Using the Cox-Rubinstein binomial valuation model, the Company has determined the fair value of these equity units to be $59,000. The portion of the fair value of these options, in the amount of $33,000, attributable to the liability component of the notes was allocated to deferred charges. The remaining portion, in the amount of $26,000, attributable to the equity components of the notes was recorded as a reduction to the conversion feature on secured subordinated notes amount within shareholders’ deficiency.

Subsequent to the issuance of the Series G notes, the interest rate payable on the notes was retroactively increased to 11 percent. The increase in the interest rate was a condition of the issuance of the Series H notes (See (c) above).

e) During the quarter ended June 30, 2004, the Company issued Series F secured subordinated notes with a face value of $500,000. The Series F notes had an annual rate of interest of 7 percent paid quarterly in arrears, matured May 19, 2007 and were convertible into equity units at a price of $0.31 per unit. Each equity unit consisted of one common share and one half of a share-purchase warrant with an exercise price of $0.50 per warrant. The share-purchase warrants expire on May 19, 2007. The Series F secured subordinated notes would have automatically converted into units when the share price of the Company closed above $0.70 for five consecutive trading days during the term. Holders could convert the notes into units at anytime following a four-month hold period. If the holder did not convert and no automatic conversion took place, the Company would have repaid the principal amount in cash upon maturity. The Series F notes were secured by a general security agreement on the assets of the Company, subordinated to the security claims provided to the holders of previously issued notes.

9

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

For the Three-Month Periods Ended March 31, 2006 and 2005

(in Canadian dollars) 

During 2004, all of the Series F notes were converted into equity units.

As required by Canadian GAAP, the Company separated the liability and equity components of the Series F secured subordinated notes. The Company determined the fair value of the liability component of the Series F notes by calculating the present value of the associated cash flows, using a discount rate that reflects the Company’s underlying rate of borrowing. The Company determined the fair value of the conversion feature at the issue date of the Series F notes using the Cox-Rubinstein binomial valuation model. The resulting pro rata fair values of the liability component of the notes and the conversion features of the units, comprised of shares and attached warrants, was $286,000, $159,000 and $55,000, respectively. The liability component would have been accreted to $500,000 over the term of the Series F notes through the recording of a non-cash interest expense until such date at which the underlying notes were converted into common shares.

Financing costs in the amount of $26,000 were incurred in the issuance of the Series F notes. Financing costs of $15,000 attributed to the liability component of the notes were allocated to deferred charges. Financing costs of $11,000 attributed to the equity portions of the notes were recorded as a reduction to the conversion feature on secured subordinated notes amount within shareholders’ deficiency.

f) During the quarter ended March 31, 2006, the Company recorded cash interest expense of $107,000 (March 31, 2005 - $71,000) and interest accretion of $145,000 (March 31, 2005 - $95,000).

g) As at March 31, 2006, accrued liabilities include $453,000 (December 31, 2005 - $363,000) of unpaid interest payable relating to the secured subordinated notes.

h) Accrued liabilities include accrued interest payable to related parties as follows:

(In thousands of dollars)	March 31, 2006		December 31, 2005
Series E	$	1	$	1
Series G		34		29
Series H		3		1
Series I		7		3
Series J		2		-
Total	$	47	$	34

i) Interest payments relating to the secured subordinated notes totaling $1,000 were made to related parties in the three-month period ended March 31, 2006 (March 31, 2005 - $1,000).

10

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

For the Three-Month Periods Ended March 31, 2006 and 2005

(in Canadian dollars)

j) The following summarizes the face and fair values of the liability and the equity components of the secured subordinated notes.

Secured subordinated notes	Three Months Ended March 31, 2006						Year Ended December 31, 2005
	Face Value			Fair Value			Face Value			Fair Value
	(in thousands)
Opening balance	$	3,455		$	2,143		$	2,605		$	1,684
Issuance of notes:
Series I		-			-			1,200			280
Series J		755			202
Accreted (non-cash) interest		-			145			-			405
Conversion of notes:
Series H		-			-			(350	)		(226	)
Series I (Note 5 (b))		(75	)		(22	)
Closing balance	$	4,135		$	2,468		$	3,455		$	2,143
Current portion of notes - Series E	$	375		$	356		$	375		$	343
Long-term portion of notes		3,760			2,112			3,080			1,800
	$	4,135		$	2,468		$	3,455		$	2,143

Conversion features on secured subordinated notes including conversion feature of attached warrants	Three Months Ended March 31, 2006						Year Ended December 31, 2005
	Common Shares			Fair Value			Common Shares			Fair Value
	(in thousands)
Opening balance		27,156		$	1,513			13,781		$	992
Issuance of notes:
Series I		-			-			16,000			668
Series J		10,067			553
Conversion of notes:
Series H		-			-			(2,625	)		(147	)
Series I (Note 5 (b))		(1,000	)		(42	)
Closing balance		36,223		$	2,024			27,156		$	1,513

11

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

For the Three-Month Periods Ended March 31, 2006 and 2005

(in Canadian dollars)

6. SHARE CAPITAL

a)Authorized

Unlimited number of common shares

Unlimited number of preference shares - issuable in series

b)Outstanding
Common Shares	Three Months Ended March 31, 2006				Year Ended December 31, 2005
	Shares		Amount		Shares		Amount
	(in thousands of shares and dollars)
Opening balance		74,120	$	100,859		69,870	$	100,052
Shares issued pursuant to:
Private placement (Note 6 (c))		-		-		2,500		468
Conversion of debentures (Note 5)		500		44		1,750		339
Payment of interest		28		4		-		-
Closing balance		74,648	$	100,907		74,120	$	100,859

c) Private Placement

On February 23, 2005, the Company completed a transaction resulting in the issuance of 2.5 million common shares at a price of $0.23 per share and 1.25 million share-purchase warrants, exercisable into one common share at a price of $0.40, for gross proceeds of $575,000 and net proceeds of $570,000. Net proceeds of $444,000 were allocated to the common shares and the balance of $126,000 to warrants. The warrants expire on February 23, 2009.

A reduction to the financing costs related to a private share placement in December 2004, resulted in a $24,000 increase to the amount of share capital in the third quarter of 2005.

7. CONTRIBUTED SURPLUS

The following table summarizes the transactions within contributed surplus.

(In thousands of dollars)	March 31, 2006			December 31, 2005
Opening balance	$	1,555		$	1,282
Allocation of unamortized deferred charges upon conversion of secured subordinated notes		(4	)		(13	)
Allocation of recorded value of expired warrants		-			286
Closing balance	$	1,551		$	1,555

12

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

For the Three-Month Periods Ended March 31, 2006 and 2005

(in Canadian dollars) 

8. WARRANTS

a) A summary of the changes in the warrants issued and outstanding is as follows:

	March 31, 2006				December 31, 2005
	Number		Amount		Number			Amount
	(in thousands of shares and dollars)
Opening balance		8,854	$	278		11,512		$	405
Warrants issued pursuant to:
Private placement (Note 6 (c))		-		-		1,250			126
Conversion of debentures (Series I - Note 5 (b), Series H - Note 8 (c))		500		20		875			33
Warrants exercised		-		-		-			-
Warrants cancelled (Note 8 (b))		-		-		(4,783	)		(286	)
Closing balance		9,354	$	298		8,854		$	278

b) On December 13, 2002, the Company issued 2 million warrants, with an exercise price of $0.45 per warrant, to a key customer as part of a strategic marketing agreement. These warrants, of which 1.25 million had vested, expired on January 5, 2005. Accordingly, these warrants were cancelled.

On April 25, 2002, the Company issued 50,000 warrants, with an exercise price of $US 0.35 per warrant, as partial consideration for funding and due diligence services. These warrants expired on April 25, 2005, and were accordingly cancelled.

On June 13, 2005, the Company extended the expiry date of the 2,733,000 warrants, with an exercise price of $0.40 per warrant, that were issued on June 26, 2003. The original expiry date of June 26, 2005 was extended to September 26, 2005. These warrants expired unexercised on September 26, 2005 and, as a result, were cancelled.

c) During 2005, the Company issued a total of 875,000 common share-purchase warrants with an exercise price of $0.40 and an expiry date of October 21, 2008, as the result of the conversion of Series H notes.

9. STOCK OPTIONS

a) As at March 31, 2006, 2.897 million stock options were outstanding to employees and directors of which 1.906 million were exercisable. As at December 31, 2005, 2.997 million stock options were outstanding to employees and directors, of which 1.498 million were exercisable.

b) On January 25, 2005, the Company granted 1.5 million stock options to employees, officers and directors. The options have an exercise price of $0.22 and expire on January 25, 2010. The options are comprised of two categories: non-performance based options and performance based options. The non-performance based options account for 1,361,000 of the options granted. Approximately 182,000 of these options vested in the first quarter of 2006 (Q1 of 2005 - 227,000), with the same number of options expected to vest in the subsequent quarter. The remaining 139,000 performance-based options were granted to certain Company officers and will vest upon the achievement of specific Company performance objectives. None of the performance-based options have vested as at March 31, 2006.

13

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

For the Three-Month Periods Ended March 31, 2006 and 2005

(in Canadian dollars) 

On December 22, 2005, the Company granted 1.0 million stock options to certain employees, officers and directors of the Company. The options have an exercise price of $0.16 and expire on December 22, 2008. The options are comprised of two categories: non-performance based options and performance based options. The non-performance based options account for 500,000 of the options granted. Of these options, 400,000 vest quarterly over a four-quarter period and 100,000 were cancelled in the quarter ended March 31, 2006. During the first quarter of 2006, 100,000 of the non-performance options vested. The remaining 500,000 performance-based options were granted to an officer and director of the Company and will vest upon the achievement of specific Company performance objectives. During the first quarter of 2006, 100,000 of these performance-based options vested.

The Company records a compensation expense for stock options granted to employees and directors based on the fair value method of accounting. For the three-month periods ended March 31, 2006 and March 31, 2005, the employee stock option expense was $47,000 and $23,000, respectively.

The Company determined the fair value of employee stock option grants using the Cox-Rubinstein binomial valuation model with the following assumptions on a weighted average basis:

	Three Months Ended March 31
	2006		2005
Dividend yield		-		-
Risk free interest rate		N/A		3.86	%
Expected volatility		N/A		96.60	%
Expected term, in years		N/A		4.83

10. OTHER INCOME

During the quarter ended March 31, 2005, the Company received non-recurring proceeds in the amount of $42,000, related to on-line retail activities that had been carried out prior to October 2000.

11. SEGMENTED INFORMATION

The Company operates in a single reportable operating segment, that is, the design and delivery of software solutions for use by its customers. The single reportable operating segment derives its revenues from the sale of software and related services. Sales for each regional segment are based on the location of 3^rd party customer.

The Company operates in several reportable geographic segments: North America, Ireland and the United Kingdom, and Norway. Information about the Company’s geographical net revenues and assets is set forth below:

14

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

For the Three-Month Periods Ended March 31, 2006 and 2005

(in Canadian dollars)

Assets by Geographic Region:	March 31, 2006				December 31, 2005
	Capital Assets		Other Assets		Capital Assets		Other Assets
	(in thousands)
North America	$	36	$	135	$	42	$	156
Ireland and U.K.		3		-		3		-
Norway		47		-		56		-
	$	86	$	135	$	101	$	156

Net Revenue by Geographic Region:	Three Months Ended March 31
	2006		2005
	(in thousands)
North America	$	170	$	207
Ireland and U.K.		202		63
Norway		1,350		1,266
	$	1,722	$	1,536

12. CHANGES IN NON-CASH OPERATING WORKING CAPITAL

The following table sets forth the changes in non-cash working capital items resulting from the inflow (outflow) of cash in the period.

	Three Months Ended March 31
	2006			2005
	(in thousands)
Accounts receivable	$	(153	)	$	122
Deposits and prepaid expenses		(62	)		70
Accounts payable		(133	)		98
Accrued liabilities		109			5
Deferred revenue		349			725
Effect of currency translation		22			(20	)
	$	132		$	1,000

The following table summarizes the non-cash financing activities of the Company.

	Three Months Ended March 31
	2006			2005
	(in thousands)
Issuance of common shares in settlement of interest payments (Note 6(b))	$	4		$	-
Reduction in advances from related parties from conversion of secured subordinated notes (Note 4)		(45	)		-

15

MANAGEMENT’S DISCUSSION AND ANALYSIS

Dated: May 12, 2006

OVERVIEW

ADB Systems International Ltd. (“ADB” or the “Company”) provides asset lifecycle optimization solutions that help organizations source, maintain and sell assets for maximum value. Through our technology offerings and services, we enable organizations across a variety of sectors to generate improved efficiencies and reduced operating costs.

Our integrated solutions are designed to help our customers get full value from their capital assets by helping to:

• Streamline sourcing/procurement activities while reducing purchasing costs

• Schedule preventative and corrective maintenance activities, eliminating unnecessary operational downtimes and reducing maintenance costs

• Manage inventory of materials more effectively, resulting in reduced purchase costs, improved access to supplies, and easier tracking of assets regardless of their location

• Generate higher yield for surplus assets that are disposed or sold on-line

We work with a growing number of customers and partners in a variety of industry verticals including government, healthcare, manufacturing, financial services, and oil and gas.

Our current customers and partners include GE Commercial Finance, Commercial Equipment Financing (“GE CEF”), BP, the National Health Service (UK), Talisman Energy, Vesta Insurance, Mesta AS and Star Energy HG Gas Storage Limited.

Through our wholly owned subsidiary, ADB Systems USA, Inc., ADB owns a 50 percent interest in GE Asset Manager, LLC (also referred to as “GE’s Asset Manager”), a joint business venture launched with GE CEF.

ADB has offices in Toronto (Canada), Stavanger (Norway), and London (U.K.).

Our shares trade on both the Toronto Stock Exchange (TSX: ADY) and the OTC Bulletin Board (OTCBB: ADBYF).

DEVELOPMENTS OF THE FIRST QUARTER OF 2006

We experienced a number of operational and customer-related accomplishments in the first quarter:

• We signed a customer agreement with GE Infrastructure, which will result in the deployment of our technology across such GE businesses as Energy; Aviation; Oil and Gas; Rail and Water.

• We raised gross proceeds of $755,000 through the issuance of convertible debentures to a group of institutional and private investors.

• We entered into extended services and licensing arrangements with the NHS, which solidifies business flow in the UK in upcoming quarters.

16

MANAGEMENT’S DISCUSSION AND ANALYSIS

Dated: May 12, 2006 

Information Regarding Forward-looking Statements

Statements contained in this report may include comments that do not refer strictly to historical results or actions and may be deemed to be forward-looking within the meaning of the Safe Harbor provisions of the U.S. federal securities laws. These risks include, among others, statements about expectations of future revenues, cash flows, and cash requirements. Forward-looking statements are subject to risks and uncertainties that may cause our results to differ materially from expectations.

These risks include:

• our ability to raise additional funding if needed;

• our ability to repay our debt to lenders;

• volatility of the stock markets and fluctuations in the market price of our stock;

• risks associated with international operations;

• our ability to develop appropriate strategic alliances and successfully develop and implement technology;

• our ability to gain acceptance of our products and services;

• our ability to respond to competitive factors and technological changes;

• our ability to introduce new technology offerings and services;

Other such risks as we may identify and discuss from time to time, including those risks disclosed in the Company’s Form 20-F filed with the Securities and Exchange Commission, Annual Information Form, and Management Information Circular, may also cause our results to differ materially from expectations. Additional information relating to the Company, including the Annual Information Form, is available on SEDAR at www.sedar.com.

We encourage you to carefully review these risks, as outlined, to evaluate your existing or potential investment in our securities.

RESULTS OF OPERATIONS

Comparison of the Quarters Ended March 31, 2006 and March 31, 2005.

This section compares the unaudited consolidated financial results for the three-month periods ending March 31, 2006 and March 31, 2005 and analyzes significant changes in the consolidated statement of operations and consolidated statements of cash flows.

Overview: Net loss for the first quarter of 2006 was $480,000, or $0.01 per share, compared to net loss of $736,000, or $0.01 per share, for the same quarter of 2005. Total expenses decreased by $156,000 or 8 percent this quarter, when compared to the same quarter last year. Loss from operations improved by $342,000 or 60 percent this quarter, when compared to the same quarter last year.

Revenue: Revenue is comprised of software license sales and service fees for software implementation, consulting, application hosting, support and training. Overall revenue increased by 12 percent or $186,000 to $1.72 million for the quarter ended March 31, 2006 from $1.54 million for the quarter ended March 31, 2005. The increase in revenue was driven primarily by an increase in license revenue. This increase is attributable to the expanded relationships with customers in Ireland and UK and Norway, resulting in revenue increases of $139,000 and $84,000 respectively.

17

MANAGEMENT’S DISCUSSION AND ANALYSIS

Dated: May 12, 2006 

General and Administrative: General and administrative expenses declined by $185,000 to $0.84 million for the quarter ended March 31, 2006 from $1.03 million for the quarter ended March 31, 2005. The decrease in expenses was primarily the result of a decrease in payroll expenses in North America and Ireland due to a reduction in work force, savings in occupancy costs due to the closure of the Irish office, and lower expenses in investor relations and professional fees. The lower expenses for the first quarter of 2006 were partially offset by increased in office expenses in Norway and foreign currency exchange losses.

Customer Service and Technology: Customer service and technology costs include all salaries and related expenses associated with the provision of implementation, consulting, application hosting, support and training services. For the quarter ended March 31, 2006 these costs amounted to $884,000 compared with $929,000 for the first quarter of 2005, a decrease of $45,000. The decrease in costs is primarily due to the reduction of work force in Ireland.

Sales and Marketing:Sales and marketing costs include all salaries and related expenses for our sales and marketing personnel as well as business development expenses such as advertising, sales support materials, and trade show costs. For the quarter ended March 31, 2006 sales and marketing costs amounted to $142,000, consistent with $137,000 for the quarter ended March 31, 2005.

Employee Stock Options: The 2006 employee stock option expense represents the fair value of the stock options vesting from the January 25, 2005 and December 22, 2005 grants of 1.5 million and 1.0 million stock options respectively. For the quarter ended March 31, 2006 employee stock option expense amounted to $47,000, as compared to $23,000 in the same period of 2005, an increase of $24,000. This increase was due to the expenses associated with the December 22, 2005 grant.

Depreciation and Amortization: Depreciation and amortization expense was $36,000 for the quarter ended March 31, 2006, consistent with $33,000 for the quarter ended March 31, 2005.

Other Income: During the quarter ended March 31, 2005, the Company received non-recurring proceeds in the amount of $42,000, related to on-line retail activities that had been carried out prior to October 2000.

Interest Expense: Interest expense was $252,000 for the quarter ended March 31, 2006, compared to $166,000 for the same quarter of 2005. The interest expense for 2006 included a cash interest expense of $107,000 and a non-cash interest expense of $145,000 related to the Series E, G, H, I and J secured subordinated notes. The interest expense for 2005 included a cash interest expense of $71,000 and a non-cash interest expense of $95,000 related to the Series E, G and H secured subordinated notes.

Cash Flows from Operating Activities: Operating activities resulted in cash outflows of $120,000 for the first quarter of 2006, as compared to cash inflows of $415,000 generated from operating activities in the first quarter of 2005. During the first quarter of 2006, a significant portion of the maintenance fees were being billed on a quarterly basis, as compared to an annual basis in the first quarter of 2005.

Investing Activities: There were no investing activities during the first quarter of 2006, as compared to outflows of $18,000 for the same quarter of 2005. Cash flows from investing activities were the result of acquisition of new capital assets for the first quarter of 2005.

Financing Activities: Financing activities generated net cash inflows of $705,000 for the first quarter of 2006, as compared to cash inflows of $570,000 for the same quarter of 2005. Issuance of the Series J convertible notes in February of 2006 produced cash inflows of $750,000, net of $5,000 in financing costs. A portion of the financing in the amount of $45,000 was a result of the conversion of advances from related parties. The issuance of common shares and common share-purchase warrants through a private placement in February of 2005, produced net cash inflows from financing activities of $570,000 during the quarter ended March 31, 2005.

18

MANAGEMENT’S DISCUSSION AND ANALYSIS

Dated: May 12, 2006 

Summary of Quarterly Results

The following table sets forth certain unaudited consolidated statements of operations data for each of the eight most recent quarters that, in management’s opinion, have been prepared on a basis consistent with the unaudited consolidated financial statements contained elsewhere in this interim report and include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the information presented. These operating results are not necessarily indicative of results for any future period. You should not rely on them to predict future performance.

Quarter ended	Mar 31 2006			Dec 31 2005			Sep 30 2005			June 30 2005			Mar 31 2005			Dec 31 2004			Sep 30 2004			Jun 30 2004
(In thousands of Canadian dollars, except per share amounts)
Revenue	$	1,722		$	1,830		$	1,119		$	1,290		$	1,536		$	1,529		$	886		$	1,331
Operating expenses:
General and administrative		841			1,159			862			1,157			1,026			1,047			1,092			1,274
Customer service and technology		884			965			718			975			929			853			647			872
Sales and marketing		142			149			122			126			137			149			149			168
Employee stock options		47			85			22			24			23			-			-			11
Depreciation and amortization		36			35			32			32			33			94			374			366
Losses (gains) on disposal of capital assets		-			2			-			(2	)		-			-			-			-
Other income		-			-			-			-			(42	)		-			-			-
Total operating expenses		1,950			2,395			1,756			2,312			2,106			2,143			2,262			2,691
Loss from operations		(228	)		(565	)		(637	)		(1,022	)		(570	)		(614	)		(1,376	)		(1,360	)
Interest expense:
Cash interest expense		107			98			73			70			71			68			52			25
Accretion of secured subordinated notes		145			128			91			91			95			94			93			40
Interest income		-			(6	)		(1	)		(3	)		-			(3	)		-			(2	)
		252			220			163			158			166			159			145			63
Net Loss for the Period	$	(480	)	$	(785	)	$	(800	)	$	(1,180	)	$	(736	)	$	(773	)	$	(1,521	)	$	(1,423	)
Basic and Diluted Net Loss Per Share	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.02	)

RELATED PARTY TRANSACTIONS

During the quarter ended March 31, 2006, the following related party transactions occurred:

• The Company issued $105,000 of Series J notes to three directors and/or officers, of which, $45,000 was for the settlement of short-term advances from directors and/or officers.

• The Company accrued $2,000 in interest payable relating to amounts due to related parties.

• The Company paid $1,000 in interest relating to the secured subordinated notes to related parties.

19

MANAGEMENT’S DISCUSSION AND ANALYSIS

Dated: May 12, 2006 

LIQUIDITY AND CAPITAL RESOURCES

The Company has been funded to date primarily through a series of private placements of equity and convertible debentures, sales of equity to and investments from strategic partners, gains from investments and option exercises. Since inception, the Company has received aggregate net proceeds of $90.1 million from debt and equity financing and has realized $23.7 million in gains on investment disposals. The Company has not earned profits to date and, at March 31, 2006, has an accumulated deficit of $108.8 million. The Company expects to incur losses further into 2006 and there can be no assurance that it will ever achieve profitability. Operating results have varied on a quarterly basis in the past and may fluctuate significantly in the future as a result of a variety of factors, many of which are outside of the Company’s control.

The Company has incurred negative annual cash flows from operations since inception and expects to continue to expend substantial funds to continue to develop technology, build an infrastructure to support business development efforts and expand other areas of business including the acquisition of, or strategic investments in, complementary products, businesses or technologies. The Company has historically relied on non-operational sources of financing to fund its operations. The Company’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan. That business plan had included a significant increase in revenue and operating cash flow primarily from major new contracts in Norway, the UK and North America as well as maintaining operating expenses at or near the same level as 2005. The Company cannot provide assurance that it will be able to execute on its business plan or assure that efforts to raise additional financings would be successful.

Current assets of $2.39 million were exceeded by current liabilities (excluding deferred revenue) of $2.55 million at the end of the first quarter of 2006 by $167,000. Current assets of $1.59 million were exceeded by current liabilities (excluding deferred revenue) of $2.61 million by $1.02 million at the end of the fourth quarter of 2005. Deferred revenue has been excluded from current liabilities as it is expected to be settled by resources other than cash.

Cash and cash equivalents increased by $585,000 to $863,000 as at March 31, 2006 from $278,000 as at December 31, 2005. This increase in cash and cash equivalents was the result of the activities described in the Results From Operations section above.

CONTRACTUAL OBLIGATIONS

As at March 31, 2006, the Company's contractual obligations, including payments due by periods over the next five fiscal years, are as follows:

(In thousands of Canadian dollars)	Total		Remainder of 2006		2007		2008		2009		2010		2011 and thereafter
Operating leases	$	1,597	$	305	$	386	$	336	$	278	$	146	$	146
License agreements		351		88		117		117		29		-		-
Secured subordinated notes -principal repayment (a)		4,135		375		1,880		-		-		1,125		755
Secured subordinated notes - interest payment (a),(b)		1,722		158		704		-		-		528		332
	$	7,805	$	926	$	3,087	$	453	$	307	$	1,799	$	1,233

(a) These amounts assume that the notes will be held to maturity.

(b) Assumes first year of Series I and J interest payable, can be fully settled by the issuance of shares.

20

MANAGEMENT’S DISCUSSION AND ANALYSIS

Dated: May 12, 2006 

CRITICAL ACCOUNTING ESTIMATES

While the accompanying unaudited interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, certain adverse conditions and events cast substantial doubt upon the validity of this assumption. The Company has not yet realized profitable operations and has relied on non-operational sources of financing to fund operations. The Company’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan. That business plan had included a significant increase in revenue and operating cash flow primarily from major new contracts in Norway, the UK and North America as well as maintaining operating expenses at or near the same level as 2005. The Company cannot provide assurance that it will be able to execute on its business plan or assure that efforts to raise additional financings would be successful.

CRITICAL ACCOUNTING POLICIES

We periodically review our financial reporting and disclosure practices and accounting policies to ensure that they provide accurate and transparent information relative to the current economic and business environment. As part of this process, we have reviewed our selection, application and communication of critical accounting policies and financial disclosures. We have determined that the critical accounting policies related to our core ongoing business activities are primarily those that relate to revenue recognition. Other important accounting policies are described in Note 3 to our audited annual consolidated financial statements for the year ended December 31, 2005.

REVENUE RECOGNITION

The Company’s revenues are derived from software license fees, implementation, training and consulting services, product maintenance and customer support, and software development, and hosting fees. Fees for services are billed separately from licenses of the Company’s product. The Company recognizes revenue in accordance with Canadian GAAP, which in the Company’s circumstances, are not materially different from the amounts that would be determined under provisions of the American Institute of Certified Public Accountants Statements of Position (SOP) No. 97-2, “Software Revenue Recognition”, and as amended by Statement of Position 98-9, “Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions”. The Company also considers the provisions of CICA EIC 141, which is analogous to Staff Accounting Bulletin (SAB) 104, “Revenue Recognition in Financial Statements”, and CICA EIC 142, which is analogous to the Emerging Issues Task Force consensus on EITF 00-21, “Accounting for Revenue Arrangements with Multiple Elements,” in determining the appropriate revenue recognition methodology.

Software License Revenue

The Company recognizes software license revenue in accordance with the terms of the license agreement and when the following criteria as set out in SOP No. 97-2 are met:

• persuasive evidence of an arrangement exists;

• delivery has occurred;

• the fee is fixed or determinable; and

• collectibility is probable.

Software license revenue consists of fixed license fee agreements involving perpetual licenses.

21

MANAGEMENT’S DISCUSSION AND ANALYSIS

Dated: May 12, 2006 

Software license agreements may be part of multiple element arrangements that include consulting and implementation services. When these services are considered essential to the functionality of the license, the associated revenue is recognized on the basis of the percentage of completion method as specified by contract accounting principles. When these services are not considered essential to the functionality of the license, the entire arrangement fee is allocated to each element in the arrangement based on the respective vendor specific objective evidence (“VSOE”) of the fair value of each element. VSOE used in determining the fair value of license revenues is based on the price charged by the Company when the same element is sold in similar quantities to a customer of a similar size and nature. VSOE used in determining fair value for installation, implementation and training based on the standard daily rates for the type of service being provided multiplied by the estimated time to complete each task. VSOE used in determining the fair value of maintenance and support is based on the annual renewal rates. The revenue allocable to the software license is recognized when the revenue criteria are met. The revenue allocable to the consulting services is recognized as the services are performed.

Service Revenue

Service revenue consists of the following types of revenues:

Implementation, Training & Consulting Service Fees

The Company receives revenue from implementation of its product offerings, consulting services and training services. Customers are charged a fee based on time and expenses. Revenue from implementation, consulting service and training fees is recognized as the services are performed or deferred until contractually defined milestones are achieved or until customer acceptance has occurred, as the case may be, for such contracts.

Product Maintenance & Customer Support Fees

The Company receives revenue from maintaining its products and the provision of on-going support services to customers. The maintenance and support fees are typically equal to a specified percentage of the customers’ license fee. If associated with the fixed fee license model, the maintenance revenues received are recorded as deferred revenue and recognized on a straight-line basis over the contract period.

Services revenue from maintenance and support is recognized when the services are performed. Maintenance and support revenues paid in advance are non-refundable and are recognized on a straight-line basis over the term of the agreement, which typically is 12 months.

Software Development Fees

Typically, development of software for our customers is provided based on a predetermined fixed rate basis. Revenue is recognized as time is incurred throughout the development process.

Hosting Fees

The Company earns revenue from the hosting of customer websites. Under our existing hosting contracts, we charge customers a recurring periodic flat fee. The fees are recognized as the hosting services are provided.

22

CORPORATE DIRECTORY 

Directors T. Christopher Bulger ^{(1), (2), (3)} CEO, Megawheels   Duncan Copeland ^{(1), (2), (3)} President, Copeland and Company   David Gelineau ^{(2), (3)} Account Executive, Donna Cona   Jeffrey Lymburner CEO   Jim Moskos President, ADB Technologies Group   Rick Robertson ⁽¹⁾ Associate Professor of Business Richard Ivey School of Business, The University of Western Ontario     Officers Jeffrey Lymburner Chief Executive Officer   Jim Moskos President, ADB Technology Group   Jan Pedersen President ADB Systems, European Operations                     (1)Member of the Audit Committee (2)Member of the Management Resources and   Compensation Committee (3)Member of the Corporate Governance Committee ADB Systems Offices North America Corporate Headquarters ADB Systems International Ltd. 302 The East Mall, Suite 300 Toronto, Ontario M9B 6C7 1 888 287 7467   Europe ADB Systemer International ASA Vingveien 2, N-4050 Sola, Norway + 47 51 64 71 00   ADB Systems International Ltd. 3000 Cathedral Hill Guildford, Surrey GU2 7YB UK + 44 (0) 1483 243 577     Additional Shareholder Information www.adbsys.com investor-relations@adbsys.com   Registrar and Transfer Agent Equity Transfer Services 120 Adelaide Street West Suite 420, Toronto, ON M5W 4C3   Auditors KPMG LLP Toronto, Ontario, Canada   Lawyers Brown Raysman Millstein  Felder & Steiner LLP, New York Gowling Lafleur Henderson LLP, Toronto   Stock Exchange Listings Toronto Stock Exchange  Symbol: ADY OTC Bulletin Board Symbol: ADBYF Shares Outstanding Issued: 74,647,732 March 31, 2006                                                                 ADB Systems, Dyn@mic Buyer, ProcureMate, WorkMate and Dyn@mic Seller are trademarks of ADB Systems International Ltd. and its affiliates.     © 2006 ADB Systems International Ltd.

23

EX-4

Exhibit 4

Form 52-109F2 - Certification of Interim Filings

I, Jeff Lymburner, Chief Executive Officer of ADB Systems International Ltd., certify that:

1. I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) of ADB Systems International Ltd. (the issuer), for the interim period ended March 31, 2006;

2. Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings;

3. Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the interim filings.

4. The issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures for the issuer, and we have:

a)designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the interim filings are being prepared.

Date: May 12, 2006

“Jeff Lymburner”

___________________

Jeff Lymburner

Chief Executive Officer

Form 52-109F2 - Certification of Interim Filings

I, Tam Nguyen, Corporate Controller of ADB Systems International Ltd., certify that:

1. I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) of ADB Systems International Ltd. (the issuer), for the interim period ended March 31, 2006;

2. Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings;

3. Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the interim filings.

4. The issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures for the issuer, and we have:

a) designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the interim filings are being prepared.

Date: May 12, 2006

“Tam Nguyen”

___________________

Tam Nguyen

Corporate Controller