PTS (PTSH) 10-Q 2010 Q1 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 March 31, 2010

[   ]

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) 997-3347  
(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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes¨       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).  Yesx       No¨

    State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:  As of May 2, 2010, the issuer had 2,188,497,678 shares of its common stock issued and outstanding.

2

TABLE OF CONTENTS

PART I
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4T.	Controls and Procedures	29
PART II
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	31
Item 4.	[Removed and Reserved]	31
Item 5.	Other Information	31
Item 6.	Exhibits	31
	Signatures	34

3

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

4

PTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,	December 31,
	2010	2009
	(unaudited)
ASSETS
Current assets
Cash	$            16,095	$              2,363
Prepaid expense	39,111	��             -
Current assets of discontinued operations	-	467,010
Total current assets	55,206	469,373
Property and equipment of discontinued operations, net of accumulated depreciation of $289,973	-	300,342
Goodwill of discontinued operations	-	908,712
Deposits	875	875
Deposits from discontinued operations	-	4,385
TOTAL ASSETS	$            56,081	$        1,683,687
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable	$          180,904	$          151,669
Accrued expenses	106,384	436,431
Advances payable	2,100	21,500
Convertible notes payable, current portion, net of unamortized  discount of $5,580 and $3,856, respectively	117,954	34,809
Convertible notes payable - related party	159,360	153,117
Notes payable, related party	-	3,000
Advances payable - related party	-	14,500
Current liabilities of discontinued operations	-	597,638
Total current liabilities	566,702	1,412,664
Convertible notes payable, long term portion, net of unamortized
discount of $0 and $6,365, respectively	357,588	416,990
Convertible notes payable - related party	13,043	210,816
Total liabilities	937,333	2,040,470
Stockholders' deficit
Preferred stock, Series A, $0.001 par value; 20,000,000 shares authorized, 1,937,500 and 11,448,933 shares issued and outstanding	1,938	11,449
Preferred stock, Series B, $0.001 par value; 20,000,000 shares authorized, no shares issued and outstanding	-	-
Preferred stock, Series C, $0.001 par value; 7,500,000 shares authorized,  no shares and 3,000,000 shares issued and outstanding	-	3,000

5

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, no shares and 1,037,350 shares issued and outstanding	-	1,037
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; 4,800,000,000 shares authorized as of March 31, 2010 and 2,800,000,000 shares authorized as of December 31, 2009, 2,157,808,278 and 1,349,491,276 shares issued and outstanding	21,578	13,495
Additional paid-in capital	18,644,135	19,757,911
Common stock subscribed	15,689	-
Accumulated deficit	(19,499,096)	(20,352,700)
Deficit accumulated during the development stage	(80,496)	-
Total PTS, Inc. stockholders' deficit	(881,252)	(550,808)
Noncontrolling interest	-	194,025
Total stockholders' deficit	(881,252)	(356,783)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$            56,081	$        1,683,687

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

6

PTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009 AND FROM INCEPTION OF DEVELOPMENT STAGE (FEBRUARY 24, 2010) TO MARCH 31, 2010
(Unaudited)

	MARCH 31, 2010	MARCH 31, 2009	INCEPTION OF DEVELOPMENT STAGE (FEBRUARY 24, 2010) TO MARCH 31, 2010
Sales	$                 -	$                 -	$                 -
Cost of sales	-	-	-
Gross profit	-	-	-
General and administrative expense	87,438	67,339	77,410
Total operating expense	87,438	67,339	77,410
Loss from continuing operations before
interest and other expense	(87,438)	(67,339)	(77,410)
Finance cost	(4,641)	(4,301)	(314)
Interest expense, net	(4,794)	(10,571)	(2,772)
Gain (loss) on extinguishment of debt	66,430	(8,204)	-
Loss from continuing operations	(30,443)	(90,415)	(80,496)
Discontinued operations:
Loss from discontinued operations	(135,323)	(20,603)	-
Gain on disposal of discontinued operations	893,191	-	-
Discontinued operations attributable to noncontrolling interest	45,683	4,870	-
Discontinued operations attributable to PTS, Inc. common stockholders	803,551	(15,733)	-
Net income (loss) attributable to PTS, Inc. common stockholders	$      773,108	$ (106,148)	$           (80,496)
Net income (loss) per basic share: Continuing operations	$         (0.00)	$         (0.00)
Discontinued operations	0.00	(0.00)

7

	$            0.00	$         (0.00)
Net income (loss) per diluted share: Continuing operations	$         (0.00)	$         (0.00)
Discontinued operations	0.00	(0.00)
	$            0.00	$         (0.00)
Weighted average shares outstanding,
Basic	1,713,146,727	1,182,210,295
Diluted	2,460,028,079	1,182,210,295

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

8

PTS, INC. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE PERIOD FROM FEBRUARY 24,2010 (Inception of DEVELOPMENT STAGE) to MARCH 31, 2010 (Unaudited)
								Deficit
								Accumulated
					Additional	Common		During The
	Preferred Stock		Common Stock		Paid-In	Stock	Accumulated	Development
	Shares	Par Value	Shares	Par Value	Capital	Subscribed	Deficit	Stage	Total
Balance, February 23, 2010	16,937,500	$      16,938	2,137,808,278	$      21,378	$18,624,335	$        -	$ (19,499,096)	$               -	$    (836,445)
Shares sold for cash	-	-	20,000,000	200	19,800		-	-	20,000
Common shares subscribed	-	-	-	-	-	15,689	-	-	15,689
Net loss	-	-	-	-	-		-	(80,496)	(80,496)
Balance, March 31, 2010	16,937,500	$      16,938	2,157,808,278	$      21,578	$18,644,135	$  15,689	$ (19,499,096)	$        (80,496)	$    (881,252)

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

9

PTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009 AND FROM

INCEPTION OF DEVELOPMENT STAGE (FEBRUARY 24, 2010) TO MARCH 31, 2010

(Unaudited)

	MARCH 31, 2010	MARCH 31, 2009	INCEPTION OF DEVELOPMENT STAGE (FEBRUARY 24, 2010) TO MARCH 31, 2010
Cash flows from operating activities:
Net income (loss)	$        773,108	$       (106,148)	$  (80,496)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization	17,594	27,415	-
Issuance of shares for services	24,889	25,225	24,889
Amortization of beneficial conversion feature (finance costs)	4,641	4,300	314
(Gain) loss on extinguishment of debt	(66,430)	8,204	-
Loss attributable to minority interest	(45,683)	(4,870)	-
Gain on disposition of subsidiary	(893,191)	-	-
Decrease (increase) in assets:
Accounts receivable	241,822	39,467	-
Other current assets	2,294	(457)	-
Increase (decrease) in liabilities:
Accounts payable and accrued expenses	(983)	4,817	33,837
Advances payable	-	(174)	-
Cash provided by (used in) operating activities	58,061	(2,221)	(21,456)
Cash flows from investing activities:
Cash retained by subsidiary	(218,020)	-	-
Cash paid for fixed assets	-	(18,743)	-
Cash used in investing activities	(218,020)	(18,743)	-
Cash flows from financing activities:
Sale of common stock	35,689	-	35,689
Payments on notes and leases	(2,627)	(3,300)	-
Payments on related party notes	(10,000)	(8,002)	-
Advances payable	2,000	10,000	-
Advances repaid	(200)	-	-
Advances payable - related party	-	9,000	-
Cash provided by financing activities	24,862	7,698	35,689
Net increase (decrease) in cash	(135,097)	(13,266)	14,233
Cash, beginning of period	151,192	116,987	1,862

10

Cash, end of period	$          16,095	$        103,721	$       16,095
Supplemental Schedule of Cash Flow Information:
Cash paid for interest	$            2,030	$            9,355	$                 -
Non-Cash Financial Activity:
Debt and liabilities settled with common stock	$  239,966	$                 -
Subsidiary debenture assumed	141,606	-
Accrued interest expense added to principal amount of debt	18,946	35,853
Increase in conversion of note payable upon extinguishment of debt	-	8,204

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

11

PTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2010

(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.

PTS Card Solutions, Inc., Glove Box, Inc., PTS Global Capital, Inc., PTS Technologies, Inc. and PTS Group Limited are all inactive subsidiaries and the Company has discontinued all activities, past and prospective, for the following inactive subsidiaries: PTS Card Solutions, Inc., Glove Box, Inc., PTS Global Capital, Inc., PTS Technologies, Inc. and PTS Group Limited.

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 and other accessibility standards, DAC has dev eloped  proprietary software that is a management tool to simplify and streamline the accessibility compliance process. DAC has offices in Nevada, Northern California and Florida.

During 2010 PTS divested itself of its ownership in DBYC and DAC. Effective February 23, 2010, our board of directors determined that the implementation of our business plan was no longer financially feasible.  At such time, we discontinued the implementation of our prior business plan and are now pursuing an acquisition strategy, whereby we will seek to either acquire undervalued businesses and/or merge with businesses with a history of operating revenues in markets that provide room for growth (“Acquisition Strategy”). The assets, liabilities and operations of DBYC and DAC have been presented as discontinued operations in the financial statements.

Upon the divestiture of DBYC and DAC, the Company re-entered development stage and has presented inception to date financial statement information from February 24, 2010 to March 31, 2010.

Our Acquisition Strategy is focused on pursuing a strategy of growth by acquiring both undervalued businesses and/or merging with businesses with a history of operating revenues. We will utilize several criteria to evaluate prospective acquisitions including whether the business to be acquired  (1) is an established business with viable services  or products,  (2) has an experienced and qualified management  team, (3)  has room for growth and/or expansion into other markets, (4) is  accretive to earnings, (5) offers the opportunity to achieve and/or enhance profitability,  and  (6)  increases  shareholder value.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of March 31, 2010 and for the three month periods ended March 31, 2010 and 2009 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 audited financial s tatements and explanatory notes for the year ended December 31, 2009 as disclosed in the company's 10-K for that year as filed with the SEC, as it may be amended.

12

The results of the three months ended March 31, 2010 are not necessarily indicative of the results to be expected for the pending full year ending December 31, 2010.

Going Concern

The accompanying consolidated 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, have no current source of revenue and have a working capital deficiency of $511,496 as of March 31, 2010. 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.

We will need additional capital to continue our operations and will endeavor to raise funds through the sale of equity shares.

We believe that our future is dependent upon the consummation of a merger, acquisition or other business combination between us and a viable operating entity. There can be no assurance that we will be able to complete any merger, acquisition or other business combination between us and a viable operating entity. Additionally, management believes that we may need to raise additional funds through equity or debt financing to complete a merger, acquisition or other business combination between us and a viable operating entity.  There can be no assurance that we will be able to successfully complete an equity or debt financing to complete an acquisition, merger or other business combination between us and a viable operating entity.

Furthermore, debt financing, if available, will require payment of interest and may involve restrictive covenants that could impose limitations on our operating flexibility.  Our failure to successfully obtain additional future funding may jeopardize our ability to continue our business and operations.

If we raise additional funds by issuing equity securities, existing stockholders may experience a dilution in their ownership.  In addition, as a condition to giving additional funds to us, future investors may demand, and may be granted, rights superior to those of existing stockholders.

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.

13

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, and review of policies and procedures of the client. In all cases, revenue is recognized as earned by the Company. Though contracts may vary between a progress-basis and completed project basis, as the client becomes liable to the Company for services provided, as defined in the agreement, the client is then invoiced and revenue is accordingly recognized and recorded.  The Company does not recognize or record any revenues for which it does not have a legal basis for invoicing or legally collecting. For progress-basis contracts, the Company invoices the client when it has completed the specified portion of the agreement, there by, ensuring the client is legally liable to the Company for payment of the invoice. On progress-basis contracts, revenu e is not recognized until this criteria is met. The Company generally seeks progress-based agreements when the length of engagement will exceed two months and the size of contract exceeds $25,000.

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 FASB ASC Topic 260,“Earnings Per Share”. The assumed exercise of common stock equivalents was not utilized for the three months ended March 31, 2009 since the effect would be anti-dilutive. There were 746,881,352 and 5,304,490,281 common stock equivalents outstanding at March 31, 2010 and 2009, respectively.

Income Taxes

We utilize ASC 740“Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.

Stock Based Compensation

We account for our stock based compensation under ASC 718“Compensation – Stock Compensation” using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period.  This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.

We use the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options. 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.

Potential Derivative Instruments

We periodically assess our financial and equity instruments to determine if they require derivative accounting. Instruments which may potentially require derivative accounting are conversion features of debt and common stock equivalents in excess of available authorized common shares.

We have determined that the conversion features of our debt instruments are not derivative instruments because they are not readily convertible to cash based on our historical trading volume.

14

Fair Value of Financial Instruments

Our short-term financial instruments, including cash, accounts payable and other liabilities, consist primarily of instruments without extended maturities, the fair value of which, based on management’s estimates, reasonably approximate their book value. The fair value of short term and long term convertible notes is based on management estimates and reasonably approximates their book value after comparison to obligations with similar interest rates and maturities.

Fair Value Measurements

ASC 820 defines fair value as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes the following three levels of inputs that may be used:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Level 3: Unobservable inputs when there is little or no market data available, thereby requiring an entity to develop its own assumptions. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The table below summarizes the fair values of our financial liabilities as of March 31, 2010:

	Fair Value at		Fair Value Measurement Using
	March 31, 2010		Level 1		Level 2		Level 3
Convertible notes payable	$	647,945	$	—	$	—	$	647,945
	$	647,945	$	—	$	—	$	647,945

Reclassifications

Certain prior period items have been reclassified to conform to the current period presentation. The reclassifications had no impact on net loss. The reclassifications relate to discontinued operations.

Recent Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06 to amend the disclosure requirements related to recurring and nonrecurring fair value measurements found in ASC Topic 820“Fair Value Measurements and Disclosure”. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1 (quoted prices in active market for identical assets or liabilities) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. The guidance became effective for the Company beginning January 1, 2010. The adoption of this guidance does not have a material impact on the Company’s consolidated financial statements.

In February 2010, the FASB issued ASU 2010-09 which amends guidance on ASC Topic 855“Subsequent Events”. This guidance alleviates potential conflicts between FASB guidance and SEC requirements. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. This guidance was effective immediately and we adopted these new requirements for the period ended March 31, 2010. The adoption of this guidance did not have a material impact on our financial statements.

15

Issued

In October 2009, the FASB issued ASU 2009-13 which changes ASC Topic 506“Revenue Recognition” for revenue recognition for multiple-deliverable arrangements. These changes require separation of consideration received in such arrangements by establishing a selling price hierarchy (not the same as fair value) for determining the selling price of a deliverable, which will be based on available information in the following order: vendor-specific objective evidence, third-party evidence, or estimated selling price; eliminate the residual method of allocation and require that the consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the arrangement to each deliverable on the basis of each deliverable’s selling price; require that a vendor determine its best estimate of selling price in a manner that is consistent with that used to de termine the price to sell the deliverable on a standalone basis; and expand the disclosures related to multiple-deliverable revenue arrangements. These changes become effective on January 1, 2011. The Company has determined that the adoption of these changes will not have an impact on the consolidated financial statements, as the Company does not currently have any such arrangements with its customers.

In January 2010, the FASB issued ASU 2010-06 to amend the disclosure requirements related to recurring and nonrecurring fair value measurements found in ASC Topic 820“Fair Value Measurements and Disclosures”. The guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance will become effective for the Company with the reporting period beginning July 1, 2011. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future consolidated financial statements.

NOTE 3 – SALE OF SUBSIDIARIES AND DISCONTINUED OPERATIONS

During February of 2010 the Company undertook reorganization and restructuring efforts which resulted in the divestiture of the Company’s interest in Disability Access Corporation and in Disability Access Consultants Inc. through an exchange agreement with the Company’s former CEO Peter Chin.  More particularly, on February 23, 2010, PTS, Inc., entered into an Exchange and Settlement Agreement (the “Agreement”) with Mr. Peter Chin to resolve mutual obligations and liabilities.  The effect of the agreement was that Mr. Peter Chin would resign from all positions and appointments in PTS, Inc. as of the close of business on February 23, 2010 and the Board would accept such resignation, and that further Peter Chin would forgive $502,699 of collective accumulated obligations for salary, advances and expenses from PTS, Inc. and would further exchange 4,863,333 PTS, Inc. Series A preferred shares (worth approximately $328,275 based on closing bid pric e at February 12, 2010) in exchange for 10,000,000 Series A preferred shares in Disability Access Corporation, held by PTS, Inc. plus 1,175,126,879 common shares in Disability Access Corporation  held by PTS, Inc. plus all notes receivable and notes payable (including debentures) held by PTS, Inc. or owed by PTS to Disability Access Corporation and/or its subsidiary Disability Access Consultants, Inc. The net exchange eliminated PTS, Inc.’s interest in Disability Access Corporation as well as Disability Access Consultants, Inc.   This event was not entered into or contemplated by management, nor committed to by management until after December 31, 2009. The assets, liabilities and operations of DBYC and DAC have been presented as discontinued operations in the financial statements.

We have recorded a gain on disposition of the subsidiaries in the amount of $893,191. The gain has been calculated as follows:

Fair value of consideration:
Series E shares	$                     1,000,000
Series A Shares	328,275
Accrued Payroll	273,500

Convertible Debenture	210,816
Accrued Interest	18,973
Advances	2,000
DBYC Payable	188,193
DAC Receivable	(608,417)
NonControlling interest at deconsolidation	148,342
	1,561,682
Net assets of DBYC/DAC	(668,491)
Gain	$                     893,191

16

NOTE 4 – RELATED PARTY TRANSACTIONS

Due to Related Parties

On January 1, 2010, a note and related accrued interest payable to Peter Chin were combined into a single convertible note in the principal amount of $84,276. The note bears interest at 8%, is due on December 31, 2010 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, 2010, a note, advances payable and related accrued interest payable to Sandy Chin were combined into a single convertible note in the principal amount of $13,043. The note bears interest at 8%, is due on December 31, 2011 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.

In February 2010 a convertible debenture and related accrued interest payable to Peter Chin aggregating $229,789 was cancelled in connection with his purchase of DBYC and DAC described in Note 3.

In February 2010 accrued salary payable to Peter Chin aggregating $273,500 was cancelled in connection with his purchase of DBYC and DAC described in Note 3.

NOTE 5 – STOCK TRANSACTIONS

The Company amended its Articles of Incorporation on May 19, 2010 (with Board approval February 25, 2010) to authorize Five Billion (5,000,000,000) shares of capital stock, of which Four Billion Eight Hundred Million (4,800,000,000) shares with a par value of $0.00001 par share, is designated, “Common Stock,” and of which Two Hundred Million (200,000,000) shares with a par value of $0.001 per share, is designated “Preferred Stock”.

During the three months ended March 31, 2010:

We issued 442,277,141 shares of common stock pursuant to the conversion of 4,585,600 shares of Series A preferred stock, 3,000,000 shares of Series C preferred stock and 37,350 shares of Series E preferred stock. The Company cancelled 62,500 Series A preferred stock in agreement with the shareholder as the shareholder could not locate the physical certificate to convert. All converted Series E preferred stock were converted at a negotiated conversion rate and not the rate stated in the Company’s designation for the series.  

We issued 306,039,861 shares for payment of debt and accrued interest reduction aggregating $184,187. The shares were valued at $131,457 and we recorded a gain of $52,730 upon extinguishment of debt.

We issued Peter Chin 40,000,000 S-8 shares of common stock for consulting services after his resignation as Chief Executive Officer. These shares were valued at $0.0016 per share, or $64,000.

17

We sold 35,689,400 shares of restricted common shares for proceeds aggregating $35,689. Of this amount, 15,689,400 shares sold for proceeds of $15,689 were not issued at March 31, 2010 and this amount is classified in equity as common stock subscribed at March 31, 2010. 

NOTE 6 – CONVERTIBLE DEBENTURES, NOTES PAYABLE AND OTHER PAYABLES

During the three months ended March 31, 2010 we issued 241,754,147 shares of common stock in settlement of $148,187 of debentures, notes and accrued interest. The shares were valued at $104,457 and we recorded a gain of $43,730 upon extinguishment of debt.

During the three months ended March 31, 2010 we amended all remaining notes from December 31, 2009 that were not converted into common stock during the first quarter. These notes aggregate to approximately $288,000, of which, $84,276 matures on December 31, 2010 and $203,533 mature in 2011. These notes bear an 8% interest rate per annum and are convertible into common stock at a 50% discount to the current market price of our stock at the date of conversion.

During the three months ended March 31, 2010 we settled $14,000 of advances payable with payments aggregating $300 and we recorded a gain of $13,700 upon extinguishment of debt.

During the three months ended March 31, 2010 we issued 13,392,857 shares of common stock in settlement of $7,500 of advances payable. The shares were valued at $5,625 and we recorded a gain of $1,875 upon extinguishment of debt.

During the three months ended March 31, 2010 we issued 50,892,857 shares of common stock in settlement of $28,500 of accrued compensation. The shares were valued at $21,375 and we recorded a gain of $7,125 upon extinguishment of debt.

During the three months ended March 31, 2010 we assumed a debenture payable by DBYC in the amount of $141,606. The debenture matures on December 31, 2011, bears an 8% interest rate per annum and is convertible into common stock at a 30% discount to the current market price of our stock at the date of conversion.

NOTE 7 - SUBSEQUENT EVENTS

Subsequent to the quarter ended March 31, 2010, the Company issued 15,689,400 shares for cash totaling $15,689 and 15,000,000 shares were issued to non-affiliated party for consulting services totaling $21,000. These shares were issued based upon the exemption from registration found in Section 4(2) of the Securities Act.

18

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.

Company Overview

RECENT DEVELOPMENT-ELIMINATE PTS, INC’S INTEREST IN DISABILITY ACCESS CORPORATION AND DISABILITY ACCESS CONSULTANTS, INC.

During February of 2010 the Company undertook reorganization and restructuring efforts which resulted in the divestiture of the Company’s interest in Disability Access Corporation and in Disability Access Consultants Inc. through an exchange agreement with the Company’s former CEO Peter Chin.  More particularly, on February 23, 2010, PTS, Inc., entered into an Exchange and Settlement Agreement (the “Agreement”) with Mr. Peter Chin to resolve mutual obligations and liabilities.  The effect of the agreement was that Mr. Peter Chin would resign from all positions and appointments in PTS, Inc. as of the close of business on February 23, 2010 and the Board would accept such resignation, and that further Peter Chin would forgive $502,699 of collective accumulated obligations for salary, advances and expenses from PTS, Inc. and would further exchange 4,863,333 PTS, Inc. Series A preferred shares (worth approximately $328,275 based o n closing bid price at February 12, 2010) in exchange for 10,000,000 Series A preferred shares in Disability Access Corporation, held by PTS, Inc. plus 1,175,126,879 common shares in Disability Access Corporation  held by PTS, Inc. plus all notes receivable and notes payable (including debentures) held by PTS, Inc. or owed by PTS to Disability Access Corporation and/or its subsidiary Disability Access Consultants, Inc. The net exchange eliminated PTS, Inc.’s interest in Disability Access Corporation as well as Disability Access Consultants, Inc.   This event was not entered into or contemplated by management, nor committed to by management until after December 31, 2009. The assets, liabilities and operations of DBYC and DAC have been presented as discontinued operations in the financial statements.

A copy of the Exchange and Settlement Agreement was filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 1, 2010.

RECENT DEVELOPMENT – ELIMINATE ONE MILLION DOLLAR PREFERRED SERIES E SHARES OBLIGATION TO BARBARA THORPE.

19

On February 1, 2010, Barbara Thorpe entered into an employment agreement with DAC, as a part of the agreement Ms. Thorpe was required to exchange her one million dollars worth of preferred series E shares in PTS for one million dollars worth of DBYC preferred series B shares.  DBYC subsequently in settlement of its obligations to PTS, Inc for past management services, allocable fees, federal tax benefits and any other and all past present and/or future obligations of DBYC and DAC to PTS, Inc. exchanged the PTS, Inc preferred series E shares for such obligations.

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 and other accessibility stan dards, 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

MATERIAL EVENT

During the quarter ended March 31, 2010 the Company undertook reorganization and restructuring efforts which resulted in the divestiture of the Company’s interest in Disability Access Corporation and in Disability Access Consultants Inc. through an exchange agreement with the Company’s former CEO Peter Chin.  Please see the Recent Development above for additional details.

On February 23, 2010, the Registrant accepted the resignations of Peter Chin as the Registrant’s chief executive officer, chief financial officer and chairman of the board of directors. Mr. Chin’s resignations were in connection with the consummation of the Exchange and Settlement Agreement as set forth above and do not arise from any disagreement on any matter relating to the Registrant’s operations, policies or practices, nor regarding the general direction of the Registrant.  Effective as of the same date the Registrant elected and appointed Marc Pintar as interim chief executive officer, interim chief financial officer and interim chairman of the board of directors of the Registrant.

The Company retained Mr. Chin as a consultant to ensure an easy transition. Mr. Chin received compensation of 40,000,000 shares of S-8 shares of the Company’s common stock to prepare and facilitate transition.

On February 28, 2010, the Registrant accepted the resignation from Connie Kim as the secretary and a member of the board of directors of the Registrant. Effective as of the same date, to fill the vacancy created by Ms. Kim’s resignation, Marc Pintar was appointed interim secretary. At this time, no one has been chosen to fill the vacancy on the board of directors left by Ms. Kim.

20

It should also be noted that the Company has discontinued all activities, past and prospective, for the following inactive subsidiaries: PTS Card Solutions, Inc., Glove Box, Inc., PTS Global Capital, Inc., PTS Technologies, Inc. and PTS Group Limited.

Biographical information for Marc Pintar

With over 15 years of business experience Marc Pintar began his career at Farmers Insurance as the youngest member of the management team in the company’s history.  Marc went on to train divisions at GE in 2001-2003 and American Family Insurance in 2003-2006, resulting in a 5%-8% increase in recovery.  In late 2006 Marc focused on his MBA.  Marc has traveled extensively, world-wide, and lived overseas for nine months in 2007.  While abroad he gained knowledge in global economics and international finance working as an independent consultant.  He has proven abilities in analysis, negotiations, strategic management and leadership. After receiving his MBA in 2008 Marc worked as an independent management consultant where he decreased overall costs by $1,200,000 annually for his client.  Over the years Marc has been a key member of several start-up companies including a private Arizona consulting firm in 2009 as the COO, wher e he increased workforce productivity, influenced growth, and reduced turnover.  In 2009 Marc continued to work as an independent consultant and assisted in bringing public companies current and holds officer and director positions in several public companies including Reynaldo’s Mexican Food Company, Inc., Videolocity International, Inc., Zamage Digital Art Imaging, Inc., Eline Entertainment Group, Inc. Global MedicalProducts Holdings, Inc., and Skybridge Technology Group, Inc. Marc holds a Bachelor of Science degree in Management Systems (operation management) from Arizona State University, a MBA degree, with honors, from Regis University, and received his Six Sigma Greenbelt Certification.

  Post the divestiture, Management’s focus is to identify and enter into a business combination for the best interest of the Company and its shareholders.  During the initial post divestiture period the company will become a development stage company and seek, amongst its business opportunities an agreement with the best possible acquisition and/or candidate, in the opinion of Management and the Board of Directors, for the company and its shareholders.  

Business Plan and Acquisition Strategy

The following discussion and analysis provides information which our management believes to be relevant to an assessment and understanding of our results of operations and financial condition. This discussion should be read together with our financial statements and the notes to financial statements, which are included in this report.THE FOLLOWING SHOULD BE READ WITH CAUTION. THE COMPANY EFFECTED THE DIVESTITURE OF DISABILITY ACCESS CORPORATON (DBYC) AND IT’S WHOLLY OWNED SUBSIDIARY DISABILITY ACCESS CONSULTANTS, INC. (DAC) AS DETAILED UNDER "RECENT DEVELOPMENTS-ELIMINATE PTS’S INTEREST IN DISABILITY ACCESS CORPORATION AND DISABILITY ACCESS CONSULTANTS, INC.” CONSEQUENTLY WE CURRENTLY HAVE NO OWNERSHIP INTEREST IN DBYC AND DAC. WE HAVE NO OPERATING BUSINESS AND ARE A "DEVELOPMENT" COMPANY WITH NO MATERIAL ASSETS.

Effective February 2010, our board of directors determined that the implementation of our business plan was no longer financially feasible.  At such time, we discontinued the implementation of our prior business plan and are now pursuing an acquisition strategy, whereby we will seek to either acquire undervalued businesses and/or merge with businesses with a history of operating revenues in markets that provide room for growth ("Acquisition Strategy"). While we are currently in a development stage, since the divestiture of our prior business activity on February 23, 2010, with no revenue or operations other than our acquisition activities, we have identified a number of attractive companies that we believe could qualify for strategic and viable business combinations with PTS. Therefore, we expect that we will emerge from the development stage through a business combination within a relatively short time frame.

Our Acquisition Strategy is focused on pursuing a strategy of growth by acquiring both undervalued businesses and/or merging with businesses with a history of operating revenues. We will utilize several criteria to evaluate prospective acquisitions including whether the business to be acquired  (1) is an established business with viable services  or products,  (2) has an experienced and qualified management  team, (3)  has room for growth and/or expansion into other markets, (4) is  accretive to earnings, (5) offers the opportunity to achieve and/or enhance profitability,  and  (6)  increases  shareholder value.

21

In  connection  with  our  Acquisition  Strategy,  we  expect  to encounter intense competition from other entities having business objectives similar to ours, including: venture capital firms, blind pool companies, large industrial and financial institutions, small  business investment companies  and  wealthy individuals. Many of these entities are well-established and have greater experience, financial resources and technical knowledge than us. Our limited financial resources may compel us to select certain less attractive acquisition prospects than those of our competitors.

We believe that our future is dependent upon the consummation of a merger, acquisition or other business combination between us and a viable operating entity. There can be no assurance that we will be able to complete any merger, acquisition or other business combination between us and a viable operating entity. Additionally, management believes that we may need to raise additional funds through equity or debt financing to complete a merger, acquisition or other business combination between us and a viable operating entity.  There can be no assurance that we will be able to successfully complete an equity or debt financing to complete an acquisition, merger or other business combination between us and a viable operating entity.

Business Plan Prior to February 23, 2010 Transaction

Disability Access Consultants, Inc. (“DAC”), out of an effort to create a system to facilitate and expedite the processes related to inspections based on the regulatory standards for the American with Disabilities Act (ADA), has developed a proprietary web-centric process which can be used for such purpose.  In addition to its original purpose, the process can also be adapted for other areas of regulatory inspection and requirements.  Though DAC’s original business is founded on performing ADA inspections, its efforts to automate the inspection process have resulted in an interactive system which can be readily adapted to a wide range of other regulatory required inspection areas such as but not limited to: Building Inspections, Health Inspections, Mine Safety, OSHA, Fire Inspections, etc.

DAC offers a full continuum of accessibility compliance services, software and automated solutions to comply with the requirements for mandated and recommended services for individuals with disabilities in accordance with federal, state and local laws and regulations.  Services are provided to a broad spectrum and growing number of clients as the concept of “ADA is Everyone’s Business” integrates into a large network of businesses and public entities.

Included in DAC’s automated solution for data collection, processing and reporting is compliance with state and federal accessibility regulations and codes.  DAC currently uses DACTrak by our staff to inspect sites and “process” a compliance report.  DACTrak provides a web based solution for the client to view, interact and manage their compliance data. AcTrak was originally intended to be the intake portion of the software that utilized the labtop tablet.  DACTrak was the automatically generated report and the report management features that utilized the web. Over time, AcTrak has blended into DACTrak and the terms are being used  in a similar capacity and reference. The use of AcTrak was originally designed as a term for using the software on the pc tablet for the actual inspection process.  DACTrak was designed as the data management portion of the software for the clients to update and manage their report.   ;To avoid confusion, the terms AcTrak and DACTrak were “blended” or combined to refer to the same software, regardless of their use. The software is now named DACTrak. The term DACTrak will be utilized in this document, as applicable.

Business Strategy Prior to February 23, 2010 Transaction

Long range business opportunities include potential expansion of current DAC accessibility and ADA compliance products and services into a large market arena that includes other regulatory areas in addition to the ADA.  The business strategy includes regulatory products in addition to the ADA. Our software expansion will be targeted for specific industry standards that may include, but are not limited to: building officials, code enforcement, insurance industry, risk managers, OSHA, insurance carriers, nuclear industry, FEMA, federal government, title insurance, banking and accounting.  The list of potential clients and markets represents a large market potential.  Revenue generation from the various areas of our current and new products will come from: Software licensing, Software training, Online and Telephone support, Data Storage and Client device utilization. DAC currently has insurance carriers, building officials, code enforcement, r isk managers, city and county governments, federal government as clients for ADA and state accessibility regulations, the software expansion will target content areas and other needs beyond accessibility for each industry.  We have placed on hold  development plans for products related to Fair Housing,  which are for similar product services and systems comparable in nature and method to our existing ADA software and services.  Pending resource availability, business viability and market demand the Fair Housing project will be re-evaluated and reactivated as conditions warrant.  

22

PTS, Inc. currently has one employee and will seek additional employees if and when necessary and the Company has utilized and will continue to utilize independent consultants on an as needed basis

Current Acquisition Objectives

We continue 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 our 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.

23

At the Special Meeting of Stockholders of PTS, Inc. held on February 25, 2010, a majority of the Company’s stockholders approved the proposal to increase the authorized number of shares of the Company’s Common Stock from Two Billion Eight Hundred Million (2,800,000,000) to Four Billion Eight Hundred Million (4,800,000,000).

On May 19, 2010 the Company filed a Certificate of Amendment to the Articles of Incorporation with the state of Nevada to increase the authorized Common Stock from Two Billion Eight Hundred Million (2,800,000,000) to Four Billion Eight Hundred Million (4,800,000,000). A copy of the Amendment to the Articles of Incorporation was filed as Exhibit 3.18 to the Company’s Current Report on Form 8-K filed on May 21, 2010.

Other Business Developments

Key Personnel

The Company’s future financial success depends to a large degree upon the efforts of Mr. Marc Pintar, our sole officer and director.  Mr. Pintar will begin the implementation of a comprehensive restructuring plan to help improve the dynamics of the Company.   Mr. Pintar brings worldwide business exposure, creative developments and a new dynamic to the future of PTSH.  Mr. Pintar’s skills, experience, and connections should provide PTSH with a new vision and opportunities that should position the company for new levels of growth.  Mr. Pintar will focus on improving the Company’s balance sheet by reducing/eliminating debt and streamlining the Company’s internal operations before executing any growth plan.  The loss of Mr. Pintar could have an adverse effect on our business and our chances for profitable operations.  While we intend to employee additional management and marketing personal, there can be n o assurance that we will be successful in attracting and retaining the persons needed.  

Our Financial Results May Be Affected by Factors Outside of Our Control

Our future operating results may vary significantly from quarter to quarter due to a variety of factors, many of which are outside our control.  Our anticipated expense levels are based, in part, on our estimates of future revenues and may vary from our projections.  We may be unable to adjust spending rapidly enough to compensate for any unexpected revenues shortfall.  Accordingly, any significant shortfall in revenues in relation to our planned expenditures would materially adversely affect our business, operating results, and financial condition.

We cannot predict with certainty our revenues and operating results.  Further, we believe that period-to-period comparisons of our operating results are not necessarily a meaningful indication of future performance.

Corporate Offices

Our executive office is located at 3355 Spring Mountain Road, Suite 66, Las Vegas, Nevada 89102.  For corporate information via email: mpintar@cox.net

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.

Stock-Based Compensation

We account for our stock based compensation under ASC 718 “Compensation – Stock Compensation” which was adopted in 2006, using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period.  This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.

24

Potential Derivative Instruments

We periodically assess our financial and equity instruments to determine if they require derivative accounting. Instruments which may potentially require derivative accounting are conversion features of debt and common stock equivalents in excess of available authorized common shares.

We have determined that the conversion features of our debt instruments are not derivative instruments because they are not readily convertible to cash based on our historical trading volume.

Results of Operations

Three Months Ended March 31, 2010 compared to the Three Months Ended March 31, 2009.

Revenue

We had no revenue from continuing operations for the three months ended March 31, 2010 and 2009 due to the disposition of our operating subsidiary described elsewhere in this quarterly report.

Cost of Revenue

We had no cost of revenue from continuing operations for the three months ended March 31, 2010 and 2009 due to the disposition of our operating subsidiary described elsewhere in this quarterly report.

General and Administrative Expenses

Total general and administrative expenses from continuing operations for the three months ended March 31, 2010 increased by $20,099 or 30%, to $87,438 for the three months ended March 31, 2010 from $67,339 for the three months ended March 31, 2009. The primary components of our general and administrative expenses are compensation and consulting costs and professional fees. The increase in general and administrative expenses resulted primarily from stock based compensation incurred during 2010 of $24,889.

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

Other income/expense and finance cost from continuing operations for the three months ended March 31, 2010 was net income of $56,995 as compared to net expense of $23,076 for the three months ended March 31, 2009. We had a gain on extinguishment of debt of $66,430 in 2010, compared with a loss on extinguishment of $8,204 in 2009.

Discontinued Operations

We had income from discontinued operations was $803,551 for the three months ended March 31, 2010 and a loss from discontinued operations of $15,733 for the three months ended March 31, 2009. The main component of the 2010 income was a gain on the disposition of our subsidiaries described previously. The discontinued operations reflect the operations of our subsidiaries which will no longer be a part of our operations subsequent to the divestiture.

25

Liquidity and Capital Resources

As of March 31, 2010, we had a deficiency in working capital of $511,496. Cash provided by operations was $58,061 during the three months ended March 31, 2010. A loss of $185,072 (after adjustments for noncash items) was offset by collection on accounts receivable of $241,822. Net cash used in investing activities totaled $218,020 for the three months ended March 31, 2010, which represents cash retained by our former subsidiary. Cash provided by financing activities for the three months ended March 31, 2010 was $24,862, resulting from proceeds from the sale of common stock, offset by payments on notes and advances payable.

   Our independent certified public accountants have stated in their report, included in our Form 10-K, 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, 2010. 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 opportunities or respond to competi tive 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.

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, 2009. 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.

26

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 2009 and 2008, our common stock was sold and purchased at prices that ranged from a high of $0.002 to a low of $0.0006 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.

27

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 in PTS, 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.

28

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.

29

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 Marc Pintar, 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 three-month period ended March 31, 2010.  Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective as of March 31, 2010 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 three-month period ended March 31, 2010.  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 three months ended March 31, 2010 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 March 31, 2010:

We issued 343,920,000 shares of common stock pursuant to the conversion of 4,585,600 shares of Series A preferred stock.

We issued 45,000,000 shares of common stock pursuant to the conversion of 3,000,000 shares of Series C preferred stock.

We issued 25,678,571 shares of common stock pursuant of the conversion of 17,975 shares of Series E preferred stock

We issued 7,142,857 shares of common stock pursuant of the conversion of 5,000 shares of Series E preferred stock.

We issued 6,250,000 shares of common stock pursuant of the conversion of 4,375 shares of Series E preferred stock.

We issued 2,857,142 shares of common stock pursuant of the conversion of 2,000 shares of Series E preferred Stock.

We issued 11,428,571 shares of common stock pursuant of the conversion of 8,000 shares of series E preferred Stock.

30

We cancelled 62,500 Series A preferred stock as the shareholder could not locate the physical certificate to convert. All converted Series E preferred stock were converted at a negotiated conversion rate and not the rate stated in the Company's designation for the series.

We issued 227,711,361 shares for debt and interest reduction of $128,557.

We issued 14,042,786 shares of common stock upon conversion of $5,897 of debt and accrued interest.

We issued 13,392,857 shares of common stock upon conversion of $7,500 of debt.

We issued 50,892,857 shares of common stock upon conversion of $28,500 of debt.

We issued 20,000,000 shares of restricted common shares for an investment of $20,000.

We amended all remaining notes from December 31, 2009 that were not converted into common stock to extend maturity date of December 31, 2009 to December 31, 2011. The amended notes total approximately $287,809.

Subsequent to the quarter ended March 31, 2010:

We issued 15,689,400 shares of restricted common shares for an investment of $15,689.40

We issued 15,000,000 shares of restricted common shares for consulting services.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

[Removed and Reserved]

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.

31

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.
3.18	Certificate of Amendment to Articles of Incorporation, dated May 19, 2010	Incorporated by reference from PTS, Inc.’s Current Report on Form 8-K filed on May 21, 2010.
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.

32

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.
10.6	Employment Agreement with Peter Chin dated July 1, 2009	Filed herewith.
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.

33

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: May 24, 2010

PTS, Inc.

By: /s/ Marc Pintar

Marc Pintar, Interim Chief Executive Officer, Interim Chief Financial Officer and Interim Chairman  of the Board of Directors

34