PTS 10Q 2008 Q3 Quarterly report

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

FORM 10-Q

[X]

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

[ ]

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

Commission file number: 000-25485

PTS, INC.

(Exact name of registrant as specified in its charter)

Nevada
(State or other jurisdiction of incorporation or organization)

88-0380544
(I.R.S. Employer Identification No.)

3355 Spring Mountain Road, Suite 66
Las Vegas, Nevada
(Address of principal executive offices)

89102

(Zip Code)

(702) 327-7266
(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.


Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes¨ Nox

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of November 3, 2008, the issuer had 1,110,698,153 shares of its common stock issued and outstanding.

TABLE OF CONTENTS


PART I
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	23
Item 4T.	Controls and Procedures.	27
PART II
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Submission of Matters to a Vote of Security Holders	28
Item 5.	Other Information	28
Item 6.	Exhibits	28
	Signatures	30

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

PTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30,	December 31,
	2008	2007
	(Unaudited)
ASSETS

Current assets
Cash	$ 170,792	$ 142,863
Accounts receivable, net of allowance of $3,658 and $32,885	210,732	352,678
Other current assets	-	4,221
Total current assets	381,524	499,762

Property and equipment, net of accumulated
depreciation of $165,968 and $152,409	294,201	169,676

Goodwill	908,712	908,712
Deposits	5,260	10,513

TOTAL ASSETS	$ 1,589,697	$ 1,588,663

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable - trade	$ 94,637	$ 159,694
Accrued expenses	335,576	314,425
Advances payable	44,500	6,522
Advances payable - related party	3,000	-
Convertible notes payable, current portion, net of unamortized
discount of $4,850 and $14,002	401,737	335,587
Convertible notes payable - related party	342,537	220,000
Notes payable	44,583	59,609
Notes payable, related party	182,702	-
Lease payable, current portion	3,972	6,195
Total current liabilities	1,453,244	1,102,032

Note payable, related party	-	229,738
Lease payable, long term portion	-	2,244
Derivative liability	450,984	194,146

Total liabilities	1,904,228	1,528,160

Minority interest	151,467	150,608

Stockholders' deficit
Preferred stock, Series A, $0.001 par value; 20,000,000 shares authorized, 12,403,933 and 13,243,100 shares issued and outstanding	12,404	13,243


Preferred stock, Series B, $0.001 par value; 20,000,000 shares authorized, 2,250,000 shares issued and outstanding	2,250	2,250
Preferred stock, Series C, $0.001 par value; 7,500,000 shares authorized,
5,250,000 and 7,500,000 shares issued and outstanding	5,250	7,500
Preferred stock, Series D, $0.001 par value; 20,000,000 shares authorized, 15,000,000 shares issued and outstanding	15,000	15,000
Preferred stock, Series E, $0.001 par value; 5,000,000 shares authorized, 1,000,000 shares issued and outstanding	1,000	1,000
Preferred stock, Series F, $0.001 par value; 5,000,000 shares authorized, no shares issued and outstanding	-	-
Preferred stock, Series G, $0.001 par value; 3,000,000 shares authorized, no shares issued and outstanding	-	-
Preferred stock, undesignated, $0.001 par value; 119,500,000 shares authorized, no shares issued and outstanding	-	-
Common stock, $0.00001 par value; 2,800,000,000 shares authorized,1,103,698,153 and 730,057,136 shares issued and outstanding	11,037	7,301
Additional paid-in capital	19,398,750	19,008,404
Accumulated deficit	(19,911,689)	(19,144,803)

Total stockholders' deficit	(465,998)	(90,105)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 1,589,697	$ 1,588,663

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
(Unaudited)


	Three Months ended September 30,		Nine Months ended September 30,
	2008	2007	2008	2007

Sales	$ 324,973	$ 308,510	$ 1,104,595	$ 1,063,333


General and administrative expense	498,257	484,915	1,325,897	1,815,275

Total expense	498,257	484,915	1,325,897	1,815,275

Loss from operations before
interest and other expense	(173,284)	(176,405)	(221,302)	(751,942)

Interest income	-	4,000	180	4,070
(Income) loss allocated to minority interest	9,914	(10,825)	10,212	(10,825)
Finance cost	(1,944)	(20,526)	(16,867)	(61,578)
Interest expense	(19,653)	(27,175)	(63,957)	(74,076)
Loss on extinguishment of debt	-	-	(140,575)	-
Change in fair value of derivative liability	(93)	728,853	(334,577)	(280,243)

Net (loss) income	(185,060)	497,922	(766,886)	(1,174,594)


Net loss per basic and diluted share	$ (0.00)	$ 0.00	$ (0.00)	$ (0.00)

Weighted average shares outstanding,
Basic	1,056,591,416	613,177,748	934,416,827	516,092,997
Diluted	1,056,591,416	3,898,683,105	934,416,827	516,092,997

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
(Unaudited)


	2008	2007

Cash flows from operating activities:
Net loss	$ (766,886)	$ (1,174,594)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization	45,757	42,995
Bad debts	(26,278)	33,774
Issuance of shares for services	91,600	361,350
Compensation from stock awards	3,000	53,377
Amortization of beneficial conversion feature (finance costs)	16,867	61,578
Loss on extinguishment of debt	140,575	-
(Loss) income attributable to minority interest	(10,212)	10,825
Change in fair value of derivative liability	334,577	280,243
Decrease (increase) in assets:
Accounts receivable	168,224	(204,708)
Other current assets	4,221	11,917
Deposits	5,253	(14,129)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses	141,516	87,567
Advances payable	(2,022)	-

Cash provided by (used in) operating activities	146,192	(449,805)

Cash flows from investing activities:
Cash paid for fixed assets	(194,080)	(15,743)

Cash used in investing activities	(194,080)	(15,743)

Cash flows from financing activities:
Proceeds from sale of common stock to employees	9,000	318,389
Proceeds from sale of common stock	48,547	-
Payments on notes and leases	(24,492)	(24,046)
Notes payable - related parties	6,500	80,000
Payments on related party notes	(29,738)	(20,000)
Notes payable - other	23,000	150,000
Advances payable	40,000	-
Advances from (repayments to) related parties	3,000	(23,042)

Cash provided by financing activities	75,817	481,301

Net increase in cash	27,929	15,753
Cash, beginning of period	142,863	38,343
Cash, end of period	$ 170,792	$ 54,096



Supplemental Schedule of Cash Flow Information:
Cash paid for interest	$ 17,228	$ 34,577

Non-Cash Financial Activity:

Debenture principal converted to common stock	$ 55,594	$ -
Debenture principal converted to subsidiary common stock	11,071	16,167
Derivative liability reclassified to equity upon conversion of debt	77,739	41,179
Increase in carrying value of notes payable upon extinguishment
of debt	140,575	-
Accrued interest expense added to principal amount of debt	87,624	-
Equity based discount on debt	7,715	-
Distribution of fixed asset to related party as repayment of debt	23,798	-
Preferred stock issued as payment of accrued salaries	97,500	-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008 AND 2007
(Unaudited)

NOTE 1- ORGANIZATION AND NATURE OF OPERATIONS AND BASIS OF PRESENTATION

PTS, Inc. (“our”, “us”, “we”, “PTS” or the “Company”) was incorporated in the state of Nevada on November 5, 1996. Our subsidiaries include Disability Access Consultants, Inc. (“DAC”), Disability Access Corporation (“DBYC”), PTS Card Solutions, Inc., Glove Box, Inc., PTS Global Capital, Inc., PTS Technologies, Inc. and PTS Group Limited, an inactive Hong Kong corporation formed on April 17, 2008.

On November 15, 2005, we acquired 100% of the outstanding common stock of DAC, a California corporation, pursuant to a securities exchange agreement.

DAC is a corporation with an extensive history of accessibility compliance consulting. DAC provides consultation to state and local governmental entities and to commercial businesses. DAC has assisted city and county governments, the Federal government, school districts, and other public entities and municipalities. DAC has also assisted retail, commercial, recreational and corporate clients to comply with state and federal accessibility standards. DAC has developed transition/barrier removal plans, provided consultation and expert witness services. DAC offers both pro-active services as well as support and assistance for companies that are facing penalties and litigation for being out of compliance. DAC has assisted in litigation and has performed compliance audits for public entities and other businesses. To help companies and public entities meet the requirements of the Americans with Disabilities Act and other accessibility standards, DAC ha s developed proprietary software that is a management tool to simplify and streamline the accessibility compliance process. DAC has offices in Nevada, Northern California and Florida.

GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, we have experienced recurring net operating losses, had a net loss of $766,886 for the nine months ended September 30, 2008, and have a working capital deficiency of $1,071,720 as of September 30, 2008. These factors raise substantial doubt about our ability to continue as a going concern. Without realization of additional capital, it would be unlikely for us to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

INTERIM FINANCIAL INFORMATION

The accompanying unaudited condensed consolidated financial statements as of September 30, 2008 and for the three and nine month periods ended September 30, 2008 and 2007 have been prepared by PTS pursuant to the rules and regulations of the Securities and Exchange Commission, including Form 10-Q and Regulation S-X. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. The Company believes that the disclosures provided are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the a udited financial statements and explanatory notes for the year ended December 31, 2007 as disclosed in the company's 10-KSB for that year as filed with the SEC, as it may be amended.

The results of the three and nine months ended September 30, 2008 are not necessarily indicative of the results to be expected for the pending full year ending December 31, 2008.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of PTS and its subsidiaries. All significant intercompany transactions have been eliminated.

Use of Estimates

The preparation of consolidated 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Equivalents

Cash equivalents are comprised of certain highly liquid investments with maturities of three months or less when purchased. We maintain our cash in bank deposit accounts which, at times, may exceed federally insured limits. We have not experienced any losses in such account. We do not have any cash equivalents at September 30, 2008 or December 31, 2007. At September 30, 2008, deposits exceeded federally insured limits by approximately $69,000.

Loss Per Share

Basic and diluted loss per common share for all periods presented is computed based on the weighted average number of common shares outstanding during the year as defined by SFAS No. 128,"Earnings Per Share". The assumed exercise of common stock equivalents was not utilized for the three or nine month periods ended September 30, 2008 and for the nine month period ended September 30, 2007 since the effect would be anti-dilutive. There were 3,379,866,046 and 3,285,505,357 common stock equivalents outstanding at September 30, 2008 and 2007, respectively (see Note 6).

Revenue Recognition

DAC generates revenue from services regarding compliance with state, federal and local accessibility codes. Services include inspections of facilities, production of accessibility reports, consultation, expert witness services, review of policies and procedures of the client. Depending upon the contract with the client, a percentage of revenue is usually recognized upon the award of the contract or the commencement of services. Additional revenue is recognized with progress billing as the contracts are completed.

Software Development Costs

During the nine months ended September 30, 2008, we have capitalized $150,824 of costs related to the development of software products which have achieved technological feasibility.

Fair Value Accounting

In September 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 157,“Fair Value Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of FAS 157 were adopted January 1, 2008. In February 2008, the FASB staff issued Staff Position No. 157-2“Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”). FSP FAS 157-2 delayed the effective date of FAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The provisions of FSP FAS 157-2 are effective for the Company’s fiscal year beginning January 1, 2009.

FAS 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FAS 157 are described below:



	Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;



	Level 2	Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;



	Level 3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The following table sets forth the Company’s financial liabilities measured at fair value by level within the fair value hierarchy. As required by FAS 157, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company designates cash equivalents as Level 1. As of September 30, 2008, and December 31, 2007, the Company did not have any cash equivalents, therefore there were no assets measured at fair value.



	Fair Value at September 30, 2008
	Total			Level 1			Level 2			Level 3
Liabilities:
Conversion option liability	$	450,984	$		-	$		-	$		450,984

The Company’s conversion option liability is valued using pricing models and the Company generally uses similar models to value similar instruments. Where possible, the Company verifies the values produced by its pricing models to market prices. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs. These financial liabilities do not trade in liquid markets, and as such, model inputs cannot generally be verified and do involve significant management judgment. Such instruments are typically classified within Level 3 of the fair value hierarchy.

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (detachable warrants and conversion option liabilities) for the nine months ended September 30, 2008.





Balance at beginning of period	$	194,146
Change in fair value of conversion option		334,577
Reclassification to equity upon conversion		(77,739)

Balance at end of period	$	450,984

The total amount of the changes in fair value for the period was included in net loss as a result of changes in the Company’s stock price from December 31, 2007.

In February 2007, the FASB issued FASB Statement No. 159,“The Fair Value Option for Financial Assets and Financial Liabilities” (“FAS 159”). FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value, with the objective of improving financial reporting by mitigating volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The provisions of FAS 159 were adopted January 1, 2008. The Company did not elect the Fair Value Option for any of its financial assets or liabilities, and therefore, the adoption of FAS 159 had no impact on the Company’s consolidated financial position, results of operations or cash flows.

Recent Accounting Pronouncements

In March 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 161,“Disclosures About Derivative Instruments and Hedging Activities,an amendment of FASB Statement No. 133”. This new standard enhances the disclosure requirements related to derivative instruments and hedging activities required by FASB Statement No. 133. This standard is effective for fiscal years and interim periods beginning after November 15, 2008, with early adoption encouraged. The Company adopted the required provisions of SFAS 161 on January 1, 2008 and the adoption did not have a significant impact on its consolidated financial position and results of operations.

NOTE 3 - RELATED PARTY TRANSACTIONS

Due to Related Parties

On January 1, 2008, notes and related accrued interest payable to Peter Chin, our sole officer and director, were combined into a single convertible note in the amount of $72,253. The note bears interest at 8%, is due on December 31, 2008 and is convertible into our common stock, at the option of the holder, at a 30% discount to the current market price of our stock at the date of conversion.

On January 1, 2008, a debenture and related accrued interest payable to Peter Chin were combined into a single convertible debenture in the amount of $195,200. The debenture bears interest at 8%, is due on December 31, 2008 and is convertible into our common stock, at the option of the holder, at a 50% discount to the current market price of our stock at the date of conversion.

During 2008 Peter Chin’s spouse advanced to us an aggregate of $8,500 pursuant to three individual 12% demand promissory notes, for working capital purposes. One note in the amount of $2,000 was repaid. As of September 30, 2008 the principal balance of the notes was $6,500 and accrued interest on the notes payable is $673.

During 2008 Peter Chin’s spouse advanced to us $3,000 for working capital purposes. The advance bears no interest and is repayable upon demand.

On July 1, 2008 we issued 1,083,333 shares of Series A preferred stock to Peter Chin as payment of $97,500 of accrued salaries.

During 2008, we paid $53,536 of principal and $8,548 of accrued interest to an officer of DAC. The payments made included the non-cash distribution of a vehicle valued at $23,798. As of September 30, 2008 the principal balance of this note was $176,202 and accrued interest on the note payable is $5,639.

NOTE 4 - STOCK TRANSACTIONS

We are authorized to issue a total of 3,000,000,000 shares of stock, 2,800,000,000 shares of common stock and 200,000,000 shares of preferred stock.

During the nine months ended September 30, 2008:

We issued 20,000,000 shares of common stock for cash proceeds of $9,000. These shares were issued pursuant to the Company's Bonus Plan. The shares were sold below fair value; an expense for the intrinsic value of $3,000 has been recorded in the statement of operations.

We sold 51,945,587 shares of common stock for net proceeds of $48,547.

We issued 51,000,000 shares of common stock, valued at $91,600, for services.

We issued 73,507,930 shares of common stock upon conversion of $55,892 of debt and accrued interest.

We issued 144,187,500 shares of common stock pursuant to the conversion of 1,922,500 shares of Series A preferred stock.

We issued 33,750,000 shares of common stock pursuant to the conversion of 2,250,000 shares of Series C preferred stock.

We issued 1,083,333 shares of Series A preferred stock as payment of $97,500 of accrued salaries.

During 2008 we granted stock awards to employees for an aggregate of 20,000,000 shares of common stock. The awards had a weighted average fair value of $0.0006 per share. We have recorded compensation expense of $3,000 related to these awards. We also granted 51,000,000 shares, with a weighted average fair value of $0.002, to consultants and have recorded a compensation cost of $91,600 related to these grants.

During the nine months ended September 30, 2007:

We issued 141,250,000 shares of common stock for cash proceeds of $318,389. These shares were issued pursuant to the Company's Bonus Plan. The shares were sold below fair value; an expense for the intrinsic value of $53,377 has been recorded in the statement of operations.

We issued 34,500,000 shares of common stock, valued at $126,350, for services.

We issued 10,000,000 shares of Series D preferred stock, valued at $10,000, for services.

We issued 1,000,000 shares of Series A preferred stock, valued at $165,000, for services.

A subsidiary issued 2,000,000 shares of preferred stock, valued at $60,000, for services. The value of these shares has been classified as a minority interest in the financial statements at September 30, 2007.

We issued 101,437,500 shares of common stock pursuant to the conversion of 1,302,500 shares of Series A preferred stock and 250,000 shares of Series B preferred stock.

During 2007, we granted stock awards to employees for an aggregate of 141,250,000 shares of common stock. The awards had a weighted average fair value of $0.003 per share. We have recorded compensation expense of $53,377 related to these awards. We also granted 34,500,000 shares, with a weighted average fair value of $0.004, to consultants and have recorded a compensation cost of $126,350 related to these grants.

NOTE 5 - CONVERTIBLE DEBENTURES AND NOTES PAYABLE

During the quarter ended March 31, 2007, our subsidiary, Disability Access Corporation, issued a convertible debenture in the amount of $150,000. The note bears interest at the rate of 8% per year and matures on June 30, 2009. The note is convertible into DBYC common stock (ticker symbol “DBYC”) at a 50% discount to market and due to this variability the embedded conversion option is accounted for under EITF issue No. 00-19"Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock". We have accounted for the embedded conversion option as a derivative liability. Accordingly, the embedded conversion option is marked to market through earnings at the end of each reporting period. The conversion option is valued using the Black-Scholes valuation model. For the three months ended September 30, 2008 and 2007, the Company recorded an expense of $93 and income of $728,853, respectively, representing th e change in the value of the embedded conversion option. For the nine months ended September 30, 2008 and 2007, the Company recorded an expense of $334,577 and $280,243, respectively, representing the change in the value of the embedded conversion option.

During the nine months ended September 30, 2008 the holder of the debenture converted $11,071 of principal into 221,405,400 shares of the subsidiary’s common stock. This amount has been classified as a minority interest in the financial statements at June 30, 2008. As a result of the conversions, we have reclassified an aggregate of $77,739of our derivative liability to additional paid in capital. This amount represents the fair value of the derivative liability related to the conversions on the dates of the conversions.

On January 1, 2008, notes and related accrued interest payable to Peter Chin were combined into a single convertible note in the amount of $72,253. The note bears interest at 8%, is due on December 31, 2008 and is convertible into our common stock, at the option of the holder, at a 30% discount to the current market price of our stock at the date of conversion. We have recorded a loss on extinguishment of debt in the amount of $75,084, which represents the fair value on the conversion feature on January 1, 2008. This amount has been added to the carrying value of the debt.

On January 1, 2008, a note and related accrued interest were combined into a singe convertible note in the amount of $54,591. The note bears interest at 8%, is due on December 31, 2008 and is convertible into our common stock, at the option of the holder, at a 30% discount to the current market price of our stock at the date of conversion.

On January 1, 2008, a debenture and related accrued interest payable to Peter Chin were combined into a singe convertible debenture in the amount of $195,200. The debenture bears interest at 8%, is due on December 31, 2008 and is convertible into our common stock, at the option of the holder, at a 50% discount to the current market price of our stock at the date of conversion.

On January 1, 2008, a note and related accrued interest were combined into a singe convertible note in the amount of $23,133. The note bears interest at 8%, is due on December 31, 2008 and is convertible into our common stock, at the option of the holder, at a 30% discount to the current market price of our stock at the date of conversion.

On January 1, 2008, debentures and related accrued interest issued by DAC were combined into new convertible debentures in the aggregate amount of $104,821. The debentures bear interest at 8%, are due on December 31, 2008 and are convertible into our common stock, at the option of the holder, at a 30% discount to the current market price of our stock at the date of conversion. During the nine months ended September 30, 2008 $35,233 of principal was converted into 35,000,000 shares of our common stock.

On January 1, 2008, the debenture and related accrued interest issued by a subsidiary, Glove Box, Inc., were combined into a singe convertible debenture in the amount of $20,361. The debenture bears interest at 8%, is due on December 31, 2008 and is convertible into our common stock, at the option of the holder, at a 30% discount to the current market price of our stock at the date of conversion. During the nine months ended September 30, 2008 $20,361 of principal and $298 of accrued interest was converted into 38,507,930 shares of our common stock and the note was retired.

On January 1, 2008, a debenture and related accrued interest were combined into a singe convertible debenture in the amount of $63,022. The debenture bears interest at 8%, is due on December 31, 2008 and is convertible into our common stock, at the option of the holder, at a 30% discount to the current market price of our stock at the date of conversion. Prior to January 1, 2008, the conversion rate was 80%. We have recorded a loss on extinguishment of debt in the amount of $65,491, which represents the fair value on the conversion feature on January 1, 2008. This amount has been added to the carrying value of the debt.

On March 25, 2008 we executed a convertible promissory note in the amount of $8,000. The note bears interest at 8%, is due on March 24, 2009 and is convertible into our common stock, at the option of the holder, at a 30% discount to the current market price of our stock at the date of conversion. We have recognized a beneficial conversion feature of $3,429 attributable to this note which is being amortized over twelve months to maturity.

On July 1, 2008 we executed a convertible promissory note in the amount of $10,000. The note bears interest at 8%, is due on June 30, 2009 and is convertible into our common stock, at the option of the holder, at a 30% discount to the current market price of our stock at the date of conversion. We have recognized a beneficial conversion feature of $4,286 attributable to this note which is being amortized over twelve months to maturity.

During 2008 we executed a 12% demand promissory note in the amount of $5,000.

We have received advances aggregating $250,000 from an officer of DAC during the six months ended June 30, 2006. On June 30, 2006 these advances were converted to notes payable bearing interest at 9% and due June 30, 2009. At September 30, 2008 the principal balance of this note is $176,202.

NOTE 6 - CONVERTIBLE PREFERRED STOCK AND DEBENTURES

As of September 30, 2008, the common stock equivalents of the Company exceeded the total common stock available for issuance by approximately 1,684,000,000 shares. The Company’s Chief Executive Officer, Peter Chin and his spouse, hold 8,488,933 shares of Series A Preferred Stock that are convertible into 636,669,975 common shares of the Company. Peter Chin also holds debt convertible into 654,044,286 shares of common stock at September 30, 2008. Unless and until there is enough authorized common stock available to cover all common stock equivalents, Mr. Chin and his spouse will not convert any of their preferred shares or the debt.

After giving consideration to the convertible preferred stock and convertible debt held by Mr. Chin and his spouse, our remaining common stock equivalents exceed our common shares available for issuance by approximately 393,000,000. Although we are required to obtain shareholder approval to increase our authorized shares, Mr. Chin and his spouse have control of shareholder votes in excess of 50%. Therefore, the ability to increase our authorized shares is considered to be within the Company’s control and we have not accounted for these common stock equivalents as derivative instruments at September 30, 2008.

NOTE 7 – SUBSEQUENT EVENTS

Subsequent to September 30, 2008, the Company issued 7,000,000 shares of common stock under an S-8 registration.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

Much of the discussion in this Item is “forward looking” as that term is used in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. Actual operations and results may materially differ from present plans and projections due to changes in economic conditions, new business opportunities, changed business conditions, and other developments. Other factors that could cause results to differ materially are described in our filings with the Securities and Exchange Commission.

There are several factors that could cause actual results or events to differ materially from those anticipated, and include, but are not limited to, general economic, financial and business conditions, changes in and compliance with governmental laws and regulations, including various state and federal environmental regulations, our ability to obtain additional financing from outside investors and/or bank and mezzanine lenders, and our ability to generate sufficient revenues to cover operating losses and position us to achieve positive cash flow.

Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this Form 10-Q to be accurate as of the date hereof. Changes may occur after that date. We will not update that information except as required by law in the normal course of its public disclosure practices.

Additionally, the following discussion regarding our financial condition and results of operations should be read in conjunction with the financial statements and related notes contained in Item 1 of Part I of this Form 10-Q, as well as the financial statements in Item 7 of Part II of our Form 10-KSB for the fiscal year ended December 31, 2007, as it may be amended.

Our MD&A is provided as a supplement to our unaudited financial statements to help provide an understanding of our financial condition, changes in financial condition and results of operations. The MD&A section is organized as follows:



·	*Overview.* This section provides a general description of the Company's business, as well as recent developments that we believe are important in understanding our results of operations as well as anticipating future trends in our operations.
·	*Critical Accounting Policies.* This section provides an analysis of the significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosure of contingent assets and liabilities.
·	*Results of Operations.* This section provides an analysis of our results of operations for the three and nine month periods ended September 30, 2008 compared to the three and nine month periods ended September 30, 2007. A brief description of certain aspects, transactions and events is provided.
·	*Liquidity and Capital Resources.* This section provides an analysis of our financial condition and cash flows as of and for the nine months ended September 30, 2008.

PTS, Inc. (“our”, “us”, “we”, “PTS” or the “Company”) was a company in the development stage since its formation on June 12, 1996 until the second quarter of 2004. At that time the Company commenced planned operations and began generating revenue. We were originally incorporated in the State of Nevada under the name “Med Mark, Inc” on November 5, 1996. On June 29, 1998, we filed articles of amendment changing our name to “Elast Technologies, Inc.” Pursuant to a merger agreement entered into on June 11, 2001, PTS, Inc. (“PTS”), a Nevada corporation, merged with Elast Technologies, Inc. PTS was the surviving company and changed its name to PTS, Inc.

On November 15, 2005, we acquired 100% of the outstanding common stock of Disability Access Consultants, Inc., (“DAC”) a California corporation pursuant to a securities exchange agreement.

DAC is a corporation with an extensive history of accessibility compliance consulting. DAC provides consultation to numerous state and local governmental entities and businesses. DAC has assisted city and county governments, the Federal government, school districts, and other public entities and municipalities. DAC has also assisted retail, commercial, recreational and corporate clients to comply with state and federal accessibility standards. DAC has developed transition/barrier removal plans, provided consultation and expert witness services. DAC offers both pro-active services as well as support and assistance for companies that are facing penalties and litigation for being out of compliance. DAC has assisted in litigation and has performed compliance audits for public entities and other businesses. To help companies and public entities meet the requirements of the Americans with Disabilities Act an d other accessibility standards, DAC has developed proprietary software that is a management tool to simplify and streamline the accessibility compliance process. DAC has offices in Nevada, Northern California and Florida.

On October 17, 2006 DAC entered into an Agreement and Plan of Merger (the “Agreement of Merger”) with Disability Access Corporation f/k/a Power-Save Energy Corp. ("Power-Save") a Delaware corporation. Disability Access Corporation was acquired as a subsidiary of PTS. The Power-Save acquisition was completed during October, 2006. The purchase price for Power-Save of $150,000 was paid in September 2006. Since Power-Save had no assets or operations at the date of acquisition, the entire purchase price has been charged to expense during the fourth quarter.

We originally acquired 150,000,000 shares of Disability Access Corporation. We then effected a stock split of Disability Access Corporation. There are now 2,437,676,200 common shares outstanding. During December 2006, we distributed 126,189,788 shares of Disability Access Corporation to our stockholders on a pro rata basis. We now own approximately 48% of Disability Access Corporation common stock, but control a majority of voting power.

Under the terms of the Agreement of Merger, DAC was to be merged with and into Disability Access Corporation, with DAC continuing as the surviving corporation. Upon further consideration, our Board of Directors has reconsidered the structure and has decided, for various business optimization purposes that, instead of merging DAC with Disability Access Corporation, DAC will become a wholly-owned subsidiary of Disability Access Corporation.

On January 11, 2007, DAC executed a Consulting Agreement with a quick service restaurant group (“Client”). The Client's name can not be disclosed due to the confidentiality clause in the agreement. Under the terms of the Consulting Agreement, DAC will provide services to the Client including (i) comprehensive and accurate accessibility compliance survey consulting services for selected restaurant locations (ii) consulting and advising Client as an expert witness (iii) report DAC’s facts, conclusions and findings to Client (iv) inspection services (v) a license to use the DAC Software in accordance with the terms and conditions of the software license agreement(s) which will include database relation services. In consideration of DAC’s services performed, the Client will pay fees in excess of $5,000,000.

During the quarter ended June 30, 2008, the Company formed a new subsidiary, PTS Group Limited, a Hong Kong, China Company in preparations to acquire or to enter into a joint venture with a Chinese company. Management’s focus is to identify and enter into an agreement with the best possible acquisition candidate for the company and its shareholders.

On June 9, 2008, the Company entered into a Letter of Intent to acquire 51% of ChengDu PuJian Medical Equipment Manufacturing Co, Ltd. (“PuJian”). The Company intended to bring in technical support to upgrade PuJian’s current products as well to bring in more range of medical products including GloveBox™ technologies to PuJian and sell through the well established sales network that PuJian has established in the last several decades. Further, the Company intended to bring addition capital to increase the overall revenue and financial positions of PuJian. On October 15, 2008, the Company announced its decision to rescind 51% stake proposal in PuJian. After extensive research, the Company’s management consulted with various parties which included legal opinions, accountants and especially an audit firm. The opinion’s conclusion was, that due to the nature of PuJian’s business model, which is to manufactu re OEM products specializing in X-ray systems, which generally have low profit margins due to the Chinese government imposing a limit of profit that the manufacturer can make, and the cost to acquire the 51% controlling shares of PuJian, it would not be economically feasible for the Company to pursue this course.

The Company’s new intent is to form a joint venture between Glove Box Inc.™ and PuJian. The purpose of this joint venture is to develop the third generation of the Glove Box™. A preliminary research opinion regarding the third generation Glove Box™ showed that it needed to be more compact, for efficiency, and to serve as an “eco-friendly” unit. The Company believes that the joint venture for development of the third generation Glove Box™ is in the best interest of the shareholders of both companies, and this course will have the additional benefit of eliminating the highly expensive and time-consuming audit requirement of PuJian.

Current Business Plan

Our current purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to us by persons or firms who or which desire to seek the perceived advantages of a corporation which is registered under the Securities Exchange Act of 1934, as amended. We do not restrict our search to any specific business; industry or geographical location and we may participate in a business venture of virtually any kind or nature.

We may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service or for other corporate purposes. We may acquire assets and establish wholly owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.

As part of our investigation of potential merger candidates, our officers and directors will meet personally with management and key personnel, may visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check references of management and key personnel and take other reasonable investigative measures, to the extent of our financial resources and management expertise. The manner in which we participate in an opportunity will depend on the nature of the opportunity, the respective needs and desires of us and other parties, the management of the opportunity, our relative negotiation strength and that of the other management.

We intend to concentrate on identifying preliminary prospective business opportunities that may be brought to our attention through present associations of our officers and directors, or by our shareholders. In analyzing prospective business opportunities, we will consider such matters as the available technical, financial and managerial resources; Sarbanes-Oxley Act of 2002 compliance; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact our proposed activities; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services or tra des; name identification; and other relevant factors.

Our officer and director will meet personally with management and key personnel of the business opportunity as part of their investigation. We will not acquire or merge with any company for which audited financial statements cannot be obtained within a reasonable period of time after closing of the proposed transaction, as required by the Exchange Act.

We will not restrict our search to any specific kind of firms, but may acquire a venture which is in its preliminary or development stage, which is already in operation, or which is in essentially any stage of its corporate life. It is impossible to predict at this time the status of any business in which we may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded or may seek other perceived advantages which we may offer.

Effective November 8, 2004 we entered into a stock exchange agreement to acquire all of the outstanding stock of Glove Box ™, Inc. from two parties. In January, 2005 we issued 2,500,000 shares of Series B preferred stock and 7,500,000 shares of Series C preferred stock for all of the outstanding stock of The Glove Box, Inc. The preferred shares have been valued at an aggregate of $100,000. We also assumed net liabilities of $14,739. The Glove Box had no significant assets or operations, but owns the underlying technology to which we hold marketing licenses. We intend to continue to develop the technology. As a result of this acquisition, we now own the underlying Glove Box technology. The Glove Box ™ solves a long standing contamination problem in hospitals and medical offices caused by the normal retrieval and donning of the gloves from a standard glove box. With its patented, free-standing dispenser (looking much like a filing cabinet) , user selects from three glove sizes, slips their hands through sealed openings into air-filled gloves, then hits a foot switch to release the gloves onto their hands. A significant benefit of the Glove Box ™ is its unique design feature that permits the dispensing of un-powdered gloves that, without the use of the Glove Box ™, are increasingly the cause of both contamination and communicable health problems. The first prototype was finished during the first quarter of 2004 and the test was successful. On March 10, 2006, Glove Box ™, Inc., was granted U.S. Patent number 6,953,130 for the Glove Box ™ product.

On June 9, 2008, the Company entered into a Letter of Intent to acquire 51% of ChengDu PuJian Medical Equipment Manufacturing Co, Ltd. (“PuJian”). The Company intended to bring in technical support to upgrade PuJian’s current products as well to bring in more range of medical products including GloveBox™ technologies to PuJian and sell through the well established sales network that PuJian has established in the last several decades. Further, the Company intended to bring addition capital to increase the overall revenue and financial positions of PuJian. On October 15, 2008, the Company announced its decision to rescind 51% stake proposal in PuJian. After extensive research, the Company’s management consulted with various parties which included legal opinions, accountants and especially an audit firm. The opinion’s conclusion was, that due to the nature of PuJian’s business model, which is to manufact ure OEM products specializing in X-ray systems, which generally have low profit margins due to the Chinese government imposing a limit of profit that the manufacturer can make, and the cost to acquire the 51% controlling shares of PuJian, it would not be economically feasible for the Company to pursue this course.

DAC presently is devoting resources to developing alternative commercial uses for its proprietary technology and product development software. Towards this end, the Board of Director has elected to expand its software customer market base into Asia where certain parties have shown great interest in the Company’s proprietary technology. The Company’s Board feels this will maximize growth opportunities as well as yielding enhanced shareholder value for the long term. DAC has certain long term client contract relations, which provides an excellent baseline of annual revenue and continues to expand its client base among public and private entities. DAC has several contracts in the final stage of negotiations, for the current fiscal year, and will inform shareholders when finalized. In addition, pending Federal government funding and allocation, DAC is a candidate for a very significant services contract to the Federal Government. Further, the Company continues to receive solicitations from both private and state government sectors to make its proprietary software available for licensed use. Management feels strongly that it will be the same within Asia. The potential licensing of the software has been a key long-term business goal of DAC and the demand has been deemed to be large enough to warrant continued and further development of that business opportunity. The ability of DAC to continue operations is dependent upon its ability to successfully appoint key management and secure additional financing.

Critical Accounting Policies

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number of significant accounting policies affecting our consolidated financial statements, we believe the following critical accounting policies involve the most complex, difficult and subjective estimates and judgments.

Revenue Recognition

Stock-Based Compensation

On January 1, 2006, we adopted the fair value recognition provisions of SFAS No. 123(R),“Accounting for Stock-Based Compensation”, to account for compensation costs under our stock option plans. We previously utilized the intrinsic value method under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (as amended).

In adopting SFAS No. 123(R), we elected to use the modified prospective method to account for the transition from the intrinsic value method to the fair value recognition method. Under the modified prospective method, compensation cost is recognized from the adoption date forward for all new stock options granted and for any outstanding unvested awards as if the fair value method had been applied to those awards as of the date of grant. We had no outstanding unvested awards at the adoption date and we had no outstanding unvested awards during the 2007 comparative period. We did not grant any option awards during 2008 or 2007.

We use the fair value method for equity instruments granted to non-employees and will use the Black- Scholes model for measuring the fair value of options, if issued. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.

Research and Development

We expense software development costs up until the attainment of technological feasibility of our software products. During the nine months ended September 30, 2008, we have capitalized recorded $150,824 of costs related to the development of software products which have achieved technological feasibility. No software development costs have been capitalized during 2007.

Intangible and Long-Lived Assets

We follow SFAS No. 144, “Accounting for Impairment of Disposal of Long-Lived Assets”, which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Goodwill is accounted for in accordance with SFAS No. 142,"Goodwill and Other Intangible Assets". We assess the impairment of long-lived assets, including goodwill and intangibles on an annual basis or whenever events or changes in circumstances indicate that the fair value is less than its carrying value. Factors that we consider important which could trigger an impairment review include poor economic performance relative to historical or projected future operating results, significant negative industry, economic or company specific trends, changes in the manner of our use of the assets or the plans for our business, market price of our common stock, and loss of key personnel. We have determined that there was no impairment of goodwill during 2008 or 2007.

Results of Operations

Three Months Ended September 30, 2008 compared to the Three Months Ended September 30, 2007.

Revenue

Total revenue was $324,973 for the three months ended September 30, 2008 compared to $308,510 during the three months ended September 30, 2007, an increase of $16,463, or 5%. The increase in revenues was due to additional inspections that occurred during the current period.

General and Administrative Expenses

Total general and administrative expenses for the three months ended September 30, 2008 increased by $13,342, or 3%, to $498,257 for the three months ended September 30, 2008 from $484,915 for the three months ended September 30, 2007. The primary components of our general and administrative expenses are compensation costs, consulting fees, professional fees, travel and entertainment and rent. The increase in general and administrative expenses resulted from increases and decreases in the various expense categories.

We do not expect G&A expenses to increase substantially in the coming 12 months. We intend to focus on operating efficiencies, increasing revenues, and attaining profitability during this period.

Interest Expense, Income Allocated to Minority Interest, Finance Costs, Loss on Extinguishment of Debt and Fair Value of Derivative Liability (Other income/expense)

Other income/expense and finance cost for the three months ended September 30, 2008 was a net expense of $11,776 as compared to net other income of $674,327 for the three months ended September 30, 2007. The increase results primarily from the decrease in the 2007 noncash credit for the change in fair value of our derivative liability of $728,853, partially offset by decreases in finance cost and interest expense. Total noncash net other income was $7,877 and $697,502 for 2008 and 2007, respectively.

Net Loss

We reported net loss of $185,060 during the three months ended September 30, 2008 as compared with net income of $497,922 for the three months ended September 30, 2007. The change results from the various increases and decreases described above.

Nine Months Ended September 30, 2008 compared to the Nine Months Ended September 30, 2007.

Revenue

Total revenue was $1,104,595 for the nine months ended September 30, 2008 compared to $1,063,333 during the nine months ended September 30, 2007, an increase of $41,262, or 4%. The increase in revenues was due to additional inspections that occurred during the current period.

General and Administrative Expenses

Total general and administrative expenses for the nine months ended September 30, 2008 decreased by $489,378, or 27%, to $1,325,897 for the nine months ended September 30, 2008 from $1,815,275 for the nine months ended September 30, 2007. The primary components of our general and administrative expenses are compensation costs, consulting fees, professional fees, travel and entertainment and rent. The decrease in general and administrative expenses resulted primarily from decreases in consulting fees, professional fees and equity based compensation.

We do not expect G&A expenses to increase substantially in the coming 12 months. We intend to focus on operating efficiencies, increasing revenues, and attaining profitability during this period.

Interest Expense, Income Allocated to Minority Interest, Finance Costs, Loss on Extinguishment of Debt and Fair Value of Derivative Liability (Other income/expense)

Other income/expense and finance cost for the nine months ended September 30, 2008 was $545,584 as compared to $422,652 for the nine months ended September 30, 2007. The increase results primarily from a noncash loss on extinguishment of debt of $140,575 in 2008 and an increase in the noncash charge for the change in fair value of our derivative liability of $54,334, partially offset by a decrease in the noncash charge for finance cost of $44,711. Total noncash expense was $481,807 and $352,646 for 2008 and 2007, respectively.

Net Loss

We reported net loss of $766,886 during the nine months ended September 30, 2008 as compared with a loss of $1,174,594 for the nine months ended September 30, 2007. The decrease results from the various increases and decreases described above.

Liquidity and Capital Resources

As of September 30, 2008, we had a deficiency in working capital of $1,071,720. Cash provided by operations was $146,192 during the nine months ended September 30, 2008. A loss of $766,886 was offset by a decrease in accounts receivable of $168,224, an increase in accounts payable of $141,516,, and by non-cash charges of $45,757 of depreciation and amortization, $94,600 in stock based expense, $16,867 in financing expense, $140,575 of loss attributable to extinguishment of debt and a charge of $334,577 related to the change in fair value of our derivative liability. Net cash used in investing activities totaled $194,080 for the nine months ended September 30, 2008. Cash provided by financing activities for the nine months ended September 30, 2008 was $75,817. Cash proceeds from stock sold were $57,547.

In order to execute our business plan, we will need to acquire additional capital from debt or equity financing.

Our independent certified public accountants have stated in their report, included in our Form 10-KSB, that due to our net losses and negative cash flows from operations that there is a substantial doubt about our ability to continue as a going concern. In the absence of significant revenue and profits, we will be completely dependent on additional debt and equity financing arrangements. There is no assurance that any financing will be sufficient to fund our capital expenditures, working capital and other cash requirements for the fiscal year ending December 31, 2008. No assurance can be given that any such additional funding will be available or that, if available, can be obtained on terms favorable to us. If we are unable to raise needed funds on acceptable terms, we will not be able to execute our business plan, develop or enhance existing services, take advantage of future o pportunities or respond to competitive pressures or unanticipated requirements. A material shortage of capital will require us to take drastic steps such as further reducing our level of operations, disposing of selected assets or seeking an acquisition partner. If cash is insufficient, we will not be able to continue operations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157,"Fair Value Measurements". The objective of SFAS 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The Company does not expect the new standard to have any material impact on its financial statements.



	Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;



	Level 2	Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;



	Level 3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

As required by FAS 157, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company designates cash equivalents as Level 1. As of September 30, 2008, and December 31, 2007, the Company did not have any cash equivalents, therefore there were no assets measured at fair value. Our conversion option liability is designated as level 3.

In March 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 161,“Disclosures About Derivative Instruments and Hedging Activities,an amendment of FASB Statement No. 133”. This new standard enhances the disclosure requirements related to derivative instruments and hedging activities required byFASB Statement No. 133. This standard is effective for fiscal years and interim periods beginning after November 15, 2008, with early adoption encouraged. The Company adopted the required provisions of SFAS 161 on January 1, 2008 and the adoption did not have a significant impact on its consolidated financial position and results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We believe that we do not have any material exposure to interest or commodity risks. Our financial results are quantified in U.S. dollars and our obligations and expenditures with respect to our operations are incurred in U.S. dollars. Although we do not believe we currently have any materially significant market risks relating to our operations resulting from foreign exchange rates, if we enter into financing or other business arrangements denominated in currency other than the U.S. dollars, variations in the exchange rate may give rise to foreign exchange gains or losses that may be significant.

We do not use financial instruments for trading purposes and we are not a party to any leveraged derivatives.

Risks Relating to Our Business

We are subject to the requirements of section 404 of the Sarbanes-Oxley Act. If we are unable to timely comply with section 404 or if the costs related to compliance are significant, our profitability, stock price and result of operations and financial condition could be materially adversely affected.

We are required to comply with the provisions of Section 404 of the Sarbanes-Oxley Act of 2002, which require us to maintain an ongoing evaluation and integration of the internal controls of our business. We were required to document and test our internal controls and certify that we are responsible for maintaining an adequate system of internal control procedures for the year ended December 31, 2007. In subsequent years, our independent registered public accounting firm will be required to opine on those internal controls and management’s assessment of those controls. In the process, we may identify areas requiring improvement, and we may have to design enhanced processes and controls to address issues identified through this review.

We cannot be certain that we will be able to successfully complete the procedures, certification and attestation requirements of Section 404 or that our auditors will not have to report a material weakness in connection with the presentation of our financial statements. If we fail to comply with the requirements of Section 404 of if our auditors report such material weakness, the accuracy and timeliness of the filing of our annual report may be materially adversely affected and could cause investors to lose confidence in our reported financial information, which could have a negative affect on the trading price of our common stock. In addition, a material weakness in the effectiveness of our internal controls over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of whic h could have a material adverse effect on our business, results of operations and financial condition.

Further, we believe that the out-of-pocket costs, the diversion of management’s attention from running the day-to-day operations and operational changes caused by the need to comply with the requirements of Section 404 of the Sarbanes-Oxley Act could be significant. If the time and costs associated with such compliance exceed our current expectations, our results of operations could be adversely affected.

We are not likely to succeed unless we can overcome the many obstacles we face.

As an investor, you should be aware of the difficulties, delays and expenses we encounter, many of which are beyond our control, including unanticipated market trends, employment costs, and administrative expenses. We cannot assure our investors that our proposed business plans as described in this report will materialize or prove successful, or that we will ever be able to finalize development of our products or services or operate profitably. If we cannot operate profitably, you could lose your entire investment. As a result of the nature of our business, initially we expect to sustain substantial operating expenses without generating significant revenues.

Our acquisition strategy involves a number of risks.

We intend to pursue growth through the opportunistic acquisition of companies or assets that will enable us to expand our service lines to provide more cost-effective customer solutions. We routinely review potential acquisitions. This strategy involves certain risks, including difficulties in the integration of operations and systems, the diversion of our management’s attention from other business concerns, and the potential loss of key employees of acquired companies. We may not be able to successfully acquire, and/or integrate acquired businesses into our operations.

Risks Relating to Our Stock

We may need to raise additional capital. If we are unable to raise necessary additional capital, our business may fail or our operating results and our stock price may be materially adversely affected.

Due to the lack of significant revenue, we need to secure adequate funding. If we are unable to obtain adequate funding, we may not be able to successfully develop and market our products and services and our business will most likely fail. We do not have commitments for additional financing. To secure additional financing, we may need to borrow money or sell more securities, which may reduce the value of our outstanding securities. Under these circumstances, we may be unable to secure additional financing on favorable terms or at all.

Selling additional stock, either privately or publicly, would dilute the equity interests of our stockholders. If we borrow more money, we will have to pay interest and may also have to agree to restrictions that limit our operating flexibility. If we are unable to obtain adequate financing, we may have to curtail business operations which would have a material negative effect on operating results and most likely result in a lower stock price.

Our common stock has experienced in the past, and is expected to experience in the future, significant price and volume volatility, which substantially increases the risk that you may not be able to sell your shares at or above the price that you pay for the shares.

Because of the limited trading market for our common stock, and because of the possible price volatility, you may not be able to sell your shares of common stock when you desire to do so. During 2007 and 2006, our common stock was sold and purchased at prices that ranged from a high of $0.01 to a low of $0.001 per share. The inability to sell your shares in a rapidly declining market may substantially increase your risk of loss because of such illiquidity because the price for our common stock may suffer greater declines due to its price volatility.

The price of our common stock that will prevail in the market after this offering may be higher or lower than the price you pay. Certain factors, some of which are beyond our control, that may cause our share price to fluctuate significantly include, but are not limited to, the following:

Variations in our quarterly operating results;

The development of a market in general for our products and services;

Changes in market valuations of similar companies;

Announcement by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;

Loss of a major customer or failure to complete significant transactions;

Additions or departures of key personnel; and

Fluctuations in stock market price and volume.

Additionally, in recent years the stock market in general, and the OTC Bulletin Board and technology stocks in particular, have experienced extreme price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating performance of the underlying company. These market and industry factors may materially and adversely affect our stock price, regardless of our operating performance.

Over the past few months, there have been periods of significant increases in trading volume of our common stock during which the price of our stock has both increased and decreased. The historical trading of our common stock is not necessarily an indicator of how it will trade in the future and our trading price as of the date of this report does not necessarily portend what the trading price of our common stock might be in the future.

Our directors have the right to authorize the issuance of preferred stock and additional shares of our common stock.

Our directors, within the limitations and restrictions contained in our articles of incorporation and without further action by our stockholders, have the authority to issue shares of preferred stock from time to time in one or more series and to fix the number of shares and the relative rights, conversion rights, voting rights, and terms of redemption, liquidation preferences and any other preferences, special rights and qualifications of any such series. Any issuance of preferred stock could adversely affect the rights of holders of our common stock.

Should we issue additional shares of our common stock at a later time, each investor’s ownership interest inPTS, Inc. would be proportionally reduced. No investor will have any preemptive right to acquire additional shares of our common stock, or any of our other securities.

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Companies trading on the OTC Bulletin Board, such as PTS, Inc., must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Our common stock is subject to the “penny stock” rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. Inasmuch as that the current bid and ask price of common stock is less than $5.00 per share, our shares are classified as “penny stock” under the rules of the SEC. For any transaction involving a penny stock, unless exempt, the rules require:

That a broker or dealer approve a person’s account for transactions in penny stocks; and

The broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:

Obtain financial information and investment experience objectives of the person; and

Make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

Sets forth the basis on which the broker or dealer made the suitability determination; and

That the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Investors in penny stock should be prepared for the possibility that they may lose their entire investment.

Item 4T. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company’s management, including Peter Chin, the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the nine-month period ended September 30, 2008. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information requiring disclosure by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in internal controls

Our management, with the participation our Chief Executive Officer and Chief Financial Officer, performed an evaluation to determine whether any change in our internal controls over financial reporting occurred during the nine-month period ended September 30, 2008. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company's internal controls over financial reporting during the nine months ended September 30, 2008 that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings.

None.

Item 1A. Risk Factors

Not applicable.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

During the three months ended September 30, 2008:

We sold 40,716,420 shares of common stock for net proceeds of $33,981.

We issued 19,000,000 shares of common stock, valued at $26,500, for services.

We issued 15,000,000 shares of common stock upon conversion of $10,500 of debt and accrued interest.

We issued 37,500,000 shares of common stock pursuant to the conversion of 500,000 shares of Series A preferred stock.

We issued 1,083,333 shares of Series A preferred stock as payment of $97,500 of accrued salaries.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Submission of Matters to a Vote of Security Holders.

None.

Item 5.

Other Information.

None.

Item 6.

Exhibits.


Exhibit No.	Identification of Exhibit	Location
3.1	Articles of Incorporation, dated November 5, 1996.	Incorporated by reference from PTS, Inc.’s Registration Statement on Form 10-SB filed on March 3, 1999.
3.2	Certificate of Amendment to Articles of Incorporation, dated June 29, 1998.	Incorporated by reference from PTS, Inc.’s Registration Statement on Form 10-SB filed on March 3, 1999.
3.3	Articles of Exchange between the Company and Elast Technologies, Inc. dated June 11, 2001.	Incorporated by reference from PTS, Inc.’s Current Report on Form 8-K filed on June 26, 2001.
3.4	Certificate of Amendment to Articles of Incorporation, dated June 26, 2001.	Incorporated by reference from PTS, Inc.’s Current Report on Form 8-K filed on June 26, 2001.
3.5	Certificate of Amendment to Articles of Incorporation, dated March 16, 2004.	Incorporated by reference from PTS, Inc.’s Definitive Information Statement filed on March 16, 2004.
3.6	Certificate of Designation establishing our Series A Preferred Stock, filed effective July 15, 2004.	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2004 filed on May 20, 2005.
3.7	Certificate of Designation establishing our Series B Preferred Stock, filed effective September 13, 2004.	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2004 filed on May 20, 2005.
3.8	Certificate of Designation establishing our Series C Preferred Stock, filed effective November 8, 2004.	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2004 filed on May 20, 2005.
3.9	Certificate of Designation establishing our Series D Preferred Stock, filed effective January 6, 2005.	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2004 filed on May 20, 2005.


3.10	Certificate of Amendment to the Certificate of Designation establishing our Series C preferred stock, filed effective April 5, 2005.	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2004 filed on May 20, 2005.
3.11	Certificate of Amendment to the Certificate of Designation establishing our Series D preferred stock, filed effective April 5, 2005	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2004 filed on May 20, 2005.
3.13	Certificate of Amendment to the Certificate of Designation establishing our Series C preferred stock, filed effective November 10, 2005.	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2005 filed on April 20, 2006.
3.14	Certificate of Designation establishing our Series E Preferred Stock, filed effective November 15, 2005.	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2005 filed on April 20, 2006.
3.15	Certificate of Designation establishing our Series F Preferred Stock, filed effective November 15, 2005.	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2005 filed on April 20, 2006.
3.16	Certificate of Amendment to the Certificate of Designation of the Company’s Series A, Series B and Series C preferred stock, filed effective December 29, 2006.	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2006 filed on April 2, 2007.
3.17	Certificate of Amendment to Articles of Incorporation, dated October 9, 2007.	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2007 filed on March 31, 2008.
3.12	Bylaws.	Incorporated by reference from PTS, Inc.’s Registration Statement on Form 10-SB filed on March 3, 1999.
10.1	Stock exchange agreement with American Fire Retardant Corp., a Nevada corporation, dated November 29, 2004.	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2004 filed on May 20, 2005.
10.2	Stock exchange agreement with Stephen F. Owens, dated November 29, 2004.	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2004 filed on May 20, 2005.
10.3	Stock purchase agreement with Global Links Corp., a Nevada corporation, dated December 24, 2004.	Incorporated by reference from PTS, Inc.’s Annual Report on Form 10-KSB for the year ending December 31, 2004 filed on May 20, 2005.
10.4	Stock exchange agreement with Disability Access Consultants, Inc., a California corporation, dated November 15, 2005.	Incorporated by reference from PTS, Inc.’s Current Report on Form 8-K filed on November 22, 2005.
10.5	Stock purchase agreement and convertible note with James Brewer and PTS Card Solutions, Inc. dated October 10, 2006	Incorporated by reference from PTS, Inc.’s Current Report on Form 8-K filed October 19, 2006.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.

SIGNATURES

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

Dated: November 13, 2008

PTS, Inc.

By: /s/ Peter Chin

Peter Chin, Chief Executive Officer and Chairman of the Board of Directors

EXHIBIT 31.1

SECTION 302

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Peter Chin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PTS, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, the results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2008

By:/s/ Peter Chin

Peter Chin, Chief Executive Officer

EXHIBIT 31.2

SECTION 302

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Peter Chin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PTS, Inc.;

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2008

By:/s/ Peter Chin

Peter Chin, Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PTS, Inc. (the "Company") on Form 10-Q for the period ending September 30, 2008, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Peter Chin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operation of the Company.

By:/s/ Peter Chin

Peter Chin

Chief Executive Officer

November 13, 2008

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PTS, Inc. (the "Company") on Form 10-Q for the period ending September 30, 2008, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Peter Chin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operation of the Company.

By:/s/ Peter Chin

Peter Chin

Chief Financial Officer

November 13, 2008

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Good

PTS (PTSH) Inactive 10-Q2008 Q3 Quarterly report

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