PTS 10Q 2010 Q2 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 June 30, 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 August 20, 2010, the issuer had 2,544,391,439 shares of its common stock issued and outstanding.

PTS, INC.

Report on Form 10-Q

For the Quarter Ended June 30, 2010

INDEX


		PAGE
PART I
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of June 30, 2010 (Unaudited) and December 31, 2009	5
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2010 and 2009, and for the Period from February 24, 2010 (Inception of Development Stage) to June 30, 2010 (Unaudited)	7
	Condensed Consolidated Statement of Changes in Stockholders’ Deficit for the Period from February 24, 2010 (Inception of Development Stage) to June 30, 2010 (Unaudited)	9
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2010 and 2009, and for the Period from February 24, 2010 (Inception of Development Stage) to June 30, 2010 (Unaudited)	11
	Notes to Unaudited Financial Statements as of June 30, 2010	13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	32
Item 4T.	Controls and Procedures.	35
PART II
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Submission of Matters to a Vote of Security Holders	37
Item 5.	Other Information	38
Item 6.	Exhibits	39
	Signatures	40

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.


PTS, INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED BALANCE SHEETS
	June 30,	December 31,
	2010	2009
	(Unaudited)	(Audited)
ASSETS

Current assets
Cash	$ 255	$ 2,363
Prepaid expense	1,125	-
Current assets of discontinued operations	-	467,010
Total current assets	1,380	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	$ 2,255	$ 1,683,687

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable	$ 123,990	$ 151,669
Accrued expenses	8,334	436,431
Due to related party	9,500	-
Advances payable	22,539	21,500
Convertible notes payable, current portion, and related accrued interest, net of unamortized discount of $4,795 and $3,856, respectively	119,939	34,809
Convertible notes payable - related party	-	153,117
Notes payable, related party	-	3,000
Advances payable - related party	-	14,500
Current liabilities of discontinued operations	-	597,638
Total current liabilities	284,302	1,412,664

Convertible notes payable, long term portion, and related accrued interest, net of unamortized
discount of $0 and $6,365, respectively	195,362	416,990
Convertible notes payable and related accrued interest - related party	13,477	210,816

Total liabilities	493,141	2,040,470

Stockholders' deficit
Preferred stock, Series A, $0.001 par value; 20,000,000 shares authorized, no shares and 11,448,933 shares issued and outstanding	-	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
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 June 30, 2010 and 2,800,000,000 shares authorized as of December 31, 2009, 2,406,240,088 and 1,349,491,276 shares issued and outstanding	24,062	13,495
Additional paid-in capital	20,027,864	19,757,911
Accumulated deficit prior to the development stage	(20,392,287)	(20,352,700)
Deficit accumulated during the development stage	(165,525)	-
Total PTS, Inc. stockholders' deficit	(490,886)	(550,808)
Noncontrolling interest	-	194,025

Total stockholders' deficit	(490,886)	(356,783)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 2,255	$ 1,683,687

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

PTS, INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009 AND FROM FEBRUARY 24, 2010 (INCEPTION OF DEVELOPMENT STAGE) TO JUNE 30, 2010 (Unaudited)
	Three Months Ended June 30,		Six Months Ended June 30,		INCEPTION OF DEVELOPMENT STAGE (February 24, 2010) TO June 30, 2010
	2010	2009	2010	2009
Sales	$ -	$ -	$ -	$ -	$ -
Cost of sales	-	-	-	-	-

Gross profit	-	-	-	-	-

Selling expense	-	-	-	-

General and administrative expense	79,144	-	156,554	-	156,554

Total operating expense	79,144	-	156,554	-	156,554

Loss from continuing operations before
Interest and other expense	(79,144)	-	(156,554)	-	(156,554)

Finance cost	-	-	(314)	-	(314)
Interest expense, net	(5,885)	-	(8,657)	-	(8,657)

Income (loss) from continuing operations	85,029	-	(165,525)	-	(39,587)

Income (loss) from discontinued operations	-	(199,239)	(39,587)	(305,387)	-

Deemed dividend on preferred stock	-	-	-	(10,090)	-

Net (loss)	$ (85,029)	$ (199,239)	$ (205,112)	$ (315,477)	$ (205,112)


Net income (loss) per basic share: Continuing operations	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)
Discontinued operations	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)
Net income (loss) per diluted share: Continuing operations	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)
Discontinued operations	0.00	0.00	0.00	0.00	0.00
	$ 0.00	$ (0.00)	$ 0.00	$ 0.00	$ 0.00
Weighted average shares outstanding,
Basic	2,291,281,945	1,255,945,222	2,291,281,945	2,427,791,388	2,291,281,945
Diluted	2,406,240,088	1,255,945,222	2,406,240,088	2,660,085,419	2,406,240,088

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


PTS, INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT FOR THE PERIOD FROM FEBRUARY 24, 2010 (INCEPTION OF DEVELOPMENT STAGE) TO JUNE 30, 2010 (Unaudited)
								Equity (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	2,097,808,278	$ 20,978	$19,453,926	$ -	$(20,392,287)	$ -	$ (900,445)

Shares sold for cash	-	-	20,000,000	200	19,800	-	-	-	20,000

Shares for services	-	-	40,000,000	400	63,600		-	-	64,000

Common shares subscribed	-	-	-	-	-	15,689	-	-	15,689

Net (loss) for the period from February 24, 2010 (Inception of Development Stage) to March 31, 2010	-	-	-	-	-	-	-	(80,496)	(80,496)

Balance, March 31, 2010	16,937,500	$ 16,938	2,157,808,278	$ 21,578	$19,537,326	$ 15,689	$ (20,392,287)	$ (80,496)	$ (881,252)

Shares for services	-	-	15,000,000	150	20,850	-	-	-	21,000

Shares sold for cash	-	-	15,689,400	157	15,532	(15,689)	-	-	-

Shares issued in conversion of debt	-	-	98,186,090	982	140,112	-	-	-	141,094

Shares issued in conversion of debt	-	-	91,238,800	912	160,849	-	-	-	161,761


Shares issued in settlement of debt	-	-	28,317,520	283	27,468	-	-	-	27,751

Liabilities contributed to capital	-	-	-	-	123,789	-	-	-	123,789

Shares cancelled	(1,937,500)	(1,938)	-	-	1,938	-	-	-	-

Net loss for the three months ended June 30, 2010	-	-	-	-	-	-	-	(85,029)	(85,029)

Balance June 30, 2010	15,000,000	$ 15,000	2,406,240,088	$ 24,062	$20,027,864	$ -	$ (20,392,287)	$ (205,112)	$ (490,886)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


PTS, INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009 AND FROM FEBRUARY 24, 2010 (INCEPTION OF DEVELOPMENT STAGE) TO JUNE 30, 2010 (Unaudited)
	JUNE 30, 2010	JUNE 30, 2009	INCEPTION OF DEVELOPMENT STAGE (FEBRUARY 24, 2010) TO JUNE 30, 2010

Cash flows from operating activities:
Net income (loss)	$ (165,525)	$ (315,447)	$ (165,525)
Loss from discontinued operations	(39,587)	-	(39,587)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization	-	54,402	-
Issuance of shares for services	85,000	25,225	85,000
Amortization of beneficial conversion feature (finance costs)	5,426	17,544	5,426
(Gain) loss on extinguishment of debt	-	8,204	-
Loss attributable to minority interest	-	(48,299)	-
Decrease (increase) in assets:
Accounts receivable	-	183,555	-
Other current assets	(1,125)	6,210	(1,125)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses	(102,855)	62,095	(102,855)
Due to related party	9,500	-	9,500
Advances payable	22,539	957	22,539

Cash provided by (used in) operating activities	(186,627)	4,506	(186,627)

Cash flows from investing activities:
Cash paid for fixed assets	-	(18,743)	-

Cash used in investing activities	-	(18,743)	-

Cash flows from financing activities:
Sale of common stock	35,690	-	35,690
Payments on notes and leases	-	(6,913)	-
Payments on related party notes	-	(23,002)	-
Payments on notes payable	-	25,000	-
Advances payable	-	10,000	-


Advances payable - related party	-	6,000	-

Cash provided by financing activities	35,690	11,085	35,690

Net increase (decrease) in cash	(150,937)	(3,152)	(1,607)
Cash, beginning of period	151,192	116,987	1,862
Cash, end of period	$ 255	$ 113,835	$ 255

Supplemental Schedule of Cash Flow Information:
Cash paid for interest	$ 2,030	$ 9,576	$ -

Non-Cash Financial Activity:

Debt and liabilities settled with common stock	$ 429,997	$ -	$ -
Subsidiary debenture assumed	141,606	-	-
Accrued interest expense added to principal amount of debt	54,799	35,853	-
Increase in conversion of note payable upon extinguishment of debt	8,204	8,204	-
Conversion of notes payable and accrued interest to common stock	-	26,404	-
Beneficial conversion feature of convertible note	-	10,714	-

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

PTS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 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 of development stage to date financial statement information from February 24, 2010 to June 30, 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 Company has not earned any revenue from operations since inception of the development stage on February 24, 2010. Accordingly, the Company's activities have been accounted for as those of a "Development Stage Enterprise" as set forth in ASC 915, "Development Stage Entities." Among the disclosures required by ASC 915, are that the Company's financial statements be identified as those of a development stage company, and that the statements of operations, stockholders' equity and cash flows disclose activity since the date of the Company's inception. The Company has elected a fiscal year ending on December 31.

PTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)

NOTE 1- ORGANIZATION AND NATURE OF OPERATIONS AND BASIS OF PRESENTATION (continued)

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for financial information and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for smaller reporting companies. In the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations for the period from February 24, 2010 (Inception of development stage) to June 30, 2010 have been reflected herein. The results of operations for the period from February 24, 2010 (Inception of development stage) to June 30, 2010 are not necessarily indicative of the results to be expected in the future.

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 $282,922 as of June 30, 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.

PTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.)

Revenue Recognition

DAC generated revenue from services regarding compliance with state, federal and local accessibility codes. Services included 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 varied 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 did 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 invoiced the client when it had 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, revenue was not recognized until this criteria was 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. At June 30, 2010, there were no sources of revenue.

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 six months ended June 30, 2010 since the effect would be anti-dilutive. There were 821,445,350 and 4,134,935,464 common stock equivalents outstanding at June 30, 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.

PTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.)

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.

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 June 30, 2010:



	Fair Value at		Fair Value Measurement Using
	June 30, 2010		Level 1		Level 2		Level 3

Convertible notes payable	$	328,778	$	—	$	—	$	328,778
	$	328,778	$	—	$	—	$	328,778

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.

PTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.)

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.

During February of 2010 we recorded a gain on disposition of the subsidiaries in the amount of $893,191. Due to the related party nature of the disposition, the previously recognized gain has been reclassified as Additional Paid-in Capital (see Note 7 - Restated Financial Statements). The previously recognized gain, now recognized as Additional Paid-In Capital 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)
Non-Controlling interest at deconsolidation	148,342

	1,561,682
Net assets of DBYC/DAC	(668,491)

Increase in Additional Paid-in Capital	$ 893,191

PTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)

NOTE 3 – SALE OF SUBSIDIARIES AND DISCONTINUED OPERATIONS (cont'd.)

During the three month period ending June 30, 2010, we found additional amounts included on the Company’s books that related to the disposition of the subsidiaries in February of 2010. These amounts were calculated and during the three month period ending June 30, 2010 we recorded an additional gain on disposition of the subsidiaries in the amount of $123,789 as a credit to Additional Paid-in Capital. The aggregate amount of the increase in Additional Paid-in Capital gain on disposition of the subsidiaries for the six month period ending June 30, 2010 is $1,016,980. The portion of the gain recorded during the three month period ending June 30, 2010 has been calculated as follows:



Accounts Payable	$ 55,759
Accrued Payroll	45,462
Accrued Payroll Taxes	22,568

Gain	$ 123,789

The following is a summary of discontinued operations for the three and six months ended June 30, 2010 and 2009:


	Three Months Ended June 30,			Six Months Ended June 30,
	2010	2009	2010		2009
Sales	$ -	$ 165,935	$ -		$ 449,091
Cost of sales	-	127,421	-		253,626
Gross profit	-	38,514	-		195,465

Selling expense	-	19,500	-		39,500
General and administrative expense	-	230,154	10,028		447,047
Total operating expense	-	249,654	10,028		486,547
Loss from continuing operations before
Interest and other expense	-	(211,140)	(10,028)		(291,082)
Finance cost	-	(13,243)	(4,327)		(17,544)
Interest expense, net	-	(18,285)	(2,022)		(36,856)
Gain (loss) on extinguishment of debt	-	-	66,430		(8,204)
Gain (loss) from continuing operations	-	(242,668)	50,053		(353,686)
Gain (loss) from discontinued operations	-	-	(89,640)		-
Income attributable to the noncontrolling interest	-	43,429	-		48,299
Net income (loss)	$ - -	$(199,239)	$(39,587)		$(305,387)

PTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)

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.

At June 30, 2010, the amount of $9,500 is recorded as Due to related party. This amount consists of the compensation due our Chief Executive Officer, Marc Pintar, pursuant to his agreement with the Company for the period from April 1, 2010 to June 30, 2010. The compensation consists of $1,000 in cash to be paid and 5,000,000 shares of common stock valued at $8,500 to be issued to Mr. Pintar.

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”.

PTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)

NOTE 5 – STOCK TRANSACTIONS (cont'd.)

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.

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.

During the three months ended June 30, 2010:

The 15,689,400 shares sold for proceeds of $15,689 in March of 2010 were issued and this amount was reclassified in equity from common stock subscribed to common stock.

We issued 15,000,000 restricted shares of common stock valued at $21,000 for consulting services to a non-affiliated party.

The Company cancelled 1,937,500 shares of Series A preferred stock in agreement with the shareholder.

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.

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.

We settled $14,000 of advances payable with payments aggregating $300 and we recorded a gain of $13,700 upon extinguishment of debt.

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.

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.

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.

During the three months ended June 30, 2010:

We issued 217,742,410 shares of common stock upon conversion and in settlement of convertible notes and accrued interest aggregating $330,606. The shares were valued at $190,031.

PTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)

NOTE 7 – RESTATED FINANCIAL STATEMENTS

During the review of our quarter ended June 30, 2010, it became apparent that the gain on disposal of discontinued operations from the prior quarter had been recorded improperly. The gain was initially recorded to the income statement. The transaction involving the disposal of our discontinued operations on February 23, 2010 was with a related party. Based on further review of the facts, we should not have recognized a gain on extinguishment of debt, but should have instead credited Additional Paid-in Capital, due to the related party nature of the transaction.

In addition to the above misstatement, we discovered that the beginning balance of our Statement of Changes in Stockholders’ Deficit was incorrect. The inception of our development stage was February 24, 2010 and we issued 40,000,000 shares valued at $64,000 on this date. The shares and related value were incorrectly included in the opening balance of February 23, 2010. We have reclassed the presentation of the share issuance in order to show the activity occurring during our development stage in the period ending March 31, 2010.

We have restated the financial statements for the three month period ending March 31, 2010 and have presented a summary of the changes made to the financial statements previously filed for the period.


As of March 31, 2010 (Unaudited)	As Originally Reported	Adjustment		As Restated
Cash	$ 16,095	$ -		$ 16,095
Prepaid expense	39,111	-		39,111
Deposits	875	-		875

Accounts payable	(180,904)	-		(180,904)
Accrued expenses	(106,384)	-		(106,384)
Advances payable	(2,100)	-		(2,100)
Convertible notes payable	(647,945)	-		(647,945)
Preferred stock	(1,938)	-		(1,938)
Common stock	(21,578)	-		(21,578)
Additional paid-in capital	(18,644,135)	(893,191)	[1]	(19,537,326)
Common stock subscribed	(15,689)	-		(15,689)
Accumulated deficit	19,499,096	893,191		20,392,287
Deficit accumulated during development stage	(80,496)	-		(80,496)


For the three months ended March 31, 2010 (Unaudited)	As Originally Reported	Adjustment		As Restated
Sales	$ -	$ -		$ -
Cost of sales	-	-		-
Total operating expense	87,438	-		87,438
Finance and interest expense	9,435	-		9,435
Gain on extinguishment of debt	(66,430)	-		(66,430)
Loss from discontinued operations	89,640	-		89,640
Gain on disposal of discontinued operations	(893,191)	893,191	[1]	-
Net (income) loss	$ (773,108)	$ 893,191		$ 120,083

Basic and diluted
Net (income) loss per common share	$ (0.00)	$ 0.00		$ 0.00

Adjustment Entry Description for March 31, 2010

[1] Reclassify gain on disposal of discontinued operations as credit to Additional Paid-in Capital instead of the income statement in accordance with treatment of related party transaction.


As of February 23, 2010 (Unaudited)	As Originally Reported	Adjustment		As Restated
Preferred stock shares	16,937,500	-		16,937,500
Preferred stock par value	$ 16,938	-		$ 16,938
Common stock shares	2,137,808,278	(40,000,000)	[2]	2,097,808,278
Common stock par value	$ 21,378	$ (400)	[2]	$ 20,978
Additional paid-in capital	$ 18,624,335	$ (63,600)	[2]	$ 18,560,735
Common stock subscribed	$ -	-		$ -
Accumulated deficit	$ 19,499,096)	-		$ (19,499,096)
Deficit accumulated during development stage	$ -	-		$ -
Total stockholders’ deficit	$ (836,445)	$ (64,000)		$ (900,445)

Adjustment Entry Description for February 23, 2010

[2] Deduct 40,000,000 shares and related value from Inception of Development Stage balance on February 23, 2010 to properly reflect issuance during the period ended March 31, 2010, instead of in the beginning balance.

NOTE 8 - CONTINGENT LIABILITY

During March of 2005, PTS, Inc. adopted an Employee Stock Incentive Plan for the Year 2005, which was filed with the Commission on Form S-8. Per the terms of the Plan, PTS, Inc. granted common stock awards to employees. The purchase price of the shares of common stock was 85% of the fair market value of the common stock on the date of exercise. During the period from March 2005 until February of 2008, PTS, Inc. realized $1,182,630 in proceeds from the exercise of these stock awards. These proceeds were immediately reinvested into PTS to sustain the operating activities of the Company in its business pursuits and no one was ungainly enriched by the administration of the plan. After being made aware of a potential violation of the federal securities laws in the administration of this Plan, management of PTS, Inc. has come to the conclusion that there indeed was potentially a violation of federal securities laws in the administration of the pla n. Further, this potential violation of federal securities laws creates a contingent liability for PTS, Inc., which might equal the amount of money realized by PTS, Inc. in the administration of the plan. Upon further analysis management is unable to estimate if any additional amounts would be due. Additionally, as of this date, no enforcement action has been threatened or instituted by the Securities and Exchange Commission, or any other state or federal regulatory body regarding this potential violation of the federal securities laws. Due to these uncertainties and that Management has determined this contingent liability to be remote; we have not recorded a liability in our financial statements and are providing this disclosure due to the material nature of this event.

NOTE 9 - SUBSEQUENT EVENTS

The Company has performed an evaluation of subsequent events as required by ASC 855. Other than the events noted below, the Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements.

On July 14, 2010, the Company accepted the resignation of Marc Pintar as the Company’s interim chairman of the board of directors. Mr. Pintar will continue to serve as interim chief executive officer, interim chief financial officer and interim member of the Board of Directors. Effective as of the same date, Teresa Rubio was elected and appointed as chairman of the board of directors and treasurer of the Company. The Company and Ms. Rubio are currently in the processes of finalizing an employment agreement; however, as of the date hereof there is not a written employment agreement in place.

In July 2010, the Company issued 113,151,351 shares of common stock upon conversion and in settlement of convertible notes and accrued interest aggregating $141,607.

In July 2010, the Company issued 5,000,000 common stock shares to its Chief Executive Officer pursuant to the compensation agreement relating to the three month period ending June 30, 2010. The shares were valued at $8,500.

In July 2010, the Company issued an aggregate of 20,000,000 common stock shares to two non-affiliated parties for consulting services. Each consultant received 10,000,000 common stock shares valued at $25,000.

Item 2.

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

Cautionary Forward - Looking Statement

The following discussion should be read in conjunction with our financial statements and related notes.

Certain matters discussed herein may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties include, but are not limited to, the following:

the volatile and competitive nature of our industry,

the uncertainties surrounding the rapidly evolving markets in which we compete,

the uncertainties surrounding technological change of the industry,

our dependence on its intellectual property rights,

the success of marketing efforts by third parties,

the changing demands of customers and

the arrangements with present and future customers and third parties.

Should one or more of these risks or uncertainties materialize or should any of the underlying assumptions prove incorrect, actual results of current and future operations may vary materially from those anticipated.

Company Overview

RECENT DEVELOPMENTS:

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. (see Note 7 - Restated Financial Statements).

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

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

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.

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.

CONTINGENT LIABILITY

During March of 2005, PTS, Inc. adopted an Employee Stock Incentive Plan for the Year 2005, which was filed with the Commission on Form S-8. Per the terms of the Plan, PTS, Inc. granted common stock awards to employees. The purchase price of the shares of common stock was 85% of the fair market value of the common stock on the date of exercise. During the period from March 2005 until February of 2008, PTS, Inc. realized $1,182,630 in proceeds from the exercise of these stock awards. These proceeds were immediately reinvested into PTS to sustain the operating activities of the Company in its business pursuits and no one was ungainly enriched by the administration of the plan. After being made aware of a potential violation of the federal securities laws in the administration of this Plan, management of PTS, Inc. has come to the conclusion that there indeed was potentially a violation of federal securities laws in the administration of the p lan. Further, this potential violation of federal securities laws creates a contingent liability for PTS, Inc., which might equal the amount of money realized by PTS, Inc. in the administration of the plan. Upon further analysis management is unable to estimate if any additional amounts would be due. Additionally, as of this date, no enforcement action has been threatened or instituted by the Securities and Exchange Commission, or any other state or federal regulatory body regarding this potential violation of the federal securities laws. Due to these uncertainties and that Management has determined this contingent liability to be remote; we have not recorded a liability in our financial statements and are providing this disclosure due to the material nature of this event.

Biographical information for officer and directors:

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.

Teresa Rubio:

Ms. Rubio brings over 40 years of entrepreneurial experience in financial markets with focus on business management, administration and accounting in Canada, Spain and Argentina. At a young age of 19, Ms. Rubio began working at one of the top retail stores in Argentina while continuing her studies in the field of Accounting; where she gained experience in the areas of bookkeeping, accounting, and controlling.

From 1974 to 1980 Ms. Rubio, after graduating as an accountant, moved to Canada to pursue her career in her field of specialty by working at a Technology and Consulting Firm, where she gained technical experience and acquired a high degree of management as well as organizational skills. From 1980 to 1983 Ms. Rubio moved to Spain to be with her family and worked for a food manufacturing plant doing accounting. From 1980 to 2000 Ms. Rubio went off to pursue other interest in the Ministry of Education. Ms. Rubio’s ability to meet deadlines, manage projects, multitask and implement bookkeeping systems has made her a top Finance and Administration Manager. From 2005 to 2009 Ms. Rubio was asked to run a construction company as Chief Executive Officer her previous experience in management, accounting, technical experience as well as her ability to speak four (Spanish, Italian, Portuguese, and Englis h) languages has helped the company with foreign clients.

Ms. Rubio currently offers consulting to various companies in need for good accounting processes, and business management in various business operations sectors.

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 CORPORATION (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.

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.

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.

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.

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 interim chief executive officer, interim chief financial officer and interim member of the Board of Directors and Ms. Teresa Rubio, our chairman of the board of directors and treasurer Mr. Pintar and Ms. Rubio will begin the implementation of a comprehensive restructuring plan to help improve the dynamics of the Company. Together, they bring worldwide business exposure, creative developments and a new dynamic to the future of PTSH. Their skills, experience, and connections should provide PTSH with a new vision and opportunities that should position the company for new levels of growth. They 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 or Ms. Rubio could have an adverse effect on our business and our chances for profitable operations. While we intend to employ additional management and marketing personal, there can be no 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.

Potential Derivative Instruments

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

Comparison of the Three-Month Periods Ended June 30, 2010 and 2009

Revenue

We had no revenue from continuing operations for the three months ended June 30, 2010 due to the disposition of our operating subsidiary described elsewhere in this quarterly report and the revenue of $165,935 for the three months ended June 30, 2009 related to the disposed of operating subsidiary.

Cost of Revenue

We had no cost of revenue from continuing operations for the three months ended June 30, 2010 due to the disposition of our operating subsidiary described elsewhere in this quarterly report and cost of revenue of $127,421 for the three months ended June 30, 2009 related to the disposed of operating subsidiary.

Operating Expenses

Total operating expenses from continuing operations decreased by $151,010 or 66%, to $79,144 for the three months ended June 30, 2010 from $230,154 for the three months ended June 30, 2009. The primary components of our operating expenses are general and administrative expenses, consisting of consulting costs and professional fees. The decrease in general and administrative expenses resulted primarily from the disposition of our operating subsidiary during the three month period ending March 31, 2010.

Interest Expense, Finance Costs and Gain (Loss) on Extinguishment of Debt

Other expense for the three months ended June 30, 2010 was consisting of interest expense of $5,885.

Discontinued Operations and Non-Controlling Interest

As presented in Note 3 of the financial statements, the gain from discontinued operations was $123,789 for the three months ended June 30, 2010 and consisted of an additional gain on the disposal of discontinued operations. This gain was booked as a credit to Additional Paid-in Capital due to the related party nature of the disposition of discontinued operations (see Note 7 – Restated Financial Statements). For the three months ended June 30, 2009, the loss from discontinued operations amounted to $199,239, as presented in Note 3 of the financial statements. The discontinued operations reflect the operations of our subsidiaries which will no longer be a part of our operations subsequent to the divestiture.

Comparison of the Six-Month Periods Ended June 30, 2010 and 2009

Revenue

We had no revenue from continuing operations for the six months ended June 30, 2010 due to the disposition of our operating subsidiary described elsewhere in this quarterly report and the revenue of $449,091 for the six months ended June 30, 2009 related to the disposed of operating subsidiary.

Cost of Revenue

We had no cost of revenue from continuing operations for the six months ended June 30, 2010 due to the disposition of our operating subsidiary described elsewhere in this quarterly report and cost of revenue of $253,626 for the six months ended June 30, 2009 related to the disposed of operating subsidiary.

Operating Expenses

Total operating expenses from continuing operations decreased by $329,993 or 68%, to $156,554 for the six months ended June 30, 2010 from $486,547 for the six months ended June 30, 2009. The primary components of our operating expenses are general and administrative expenses, consisting of consulting costs and professional fees. The decrease in general and administrative expenses resulted primarily from the disposition of our operating subsidiary during the three month period ending March 31, 2010.

Interest Expense, Finance Costs and Gain (Loss) on Extinguishment of Debt

Other expense for the six months ended June 30, 2010 was $8,971 and consisted of interest expense of $8,657 and finance cost of $314.

Discontinued Operations and Non-Controlling Interest

As presented in Note 3 to the financial statements, the loss from discontinued operations was $39,587 for the six months ended June 30, 2010 and a loss of $305,387 for the six months ended June 30, 2009.

Liquidity and Capital Resources

As of June 30, 2010, we had a deficiency in working capital of $282,922. Cash used in operations was $186,627 during the six months ended June 30, 2010, comprised primarily of a decrease in accrued expenses of $102,855 and a loss from discontinued operations of $39,587. Net cash used in investing activities totaled $218,020 for the six months ended June 30, 2010, which represents cash retained by our former subsidiary. Cash provided by financing activities for the six months ended June 30, 2010 was $35,690, resulting from proceeds from the sale of common stock of $35,690.

As of June 30, 2009, we had a deficiency in working capital of $943,291. During the six months ended June 30, 2009, cash provided by operations was $4,506, cash used in investing activities was $18,743 and cash provided by financing activities was $11,085.

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 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.

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.

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.

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

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving i ts stated goals under all potential future conditions.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, management concluded that our disclosure controls and procedures are not effective as of June 30, 2010, to cause the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by SEC, and that such information is accumulated and communicated to management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Evaluation of and Report on Internal Control over Financial Reporting

As of June 30, 2010, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.


	1.	As of June 30, 2010, effective controls over the control environment were not maintained. Specifically, management has not developed and effectively communicated to its employees its accounting policies and procedures. This has resulted in inconsistent practices and the restatement of the March 31, 2010 financial statements, which are included in this Form 10-Q filing. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d) (5) (ii) of Regulation S-X. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.
	2.	As of June 30, 2010, effective controls over financial statement disclosure were not maintained. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.
	3.	The Company has retained outside securities counsel to assist management in developing procedures and guidelines to rectify the above deficiencies and develop safeguards to prevent such deficiencies to reoccur in the future. The Company with the assistance of its outside securities counsel is also developing procedures to insure that disclosure controls are in effect to provide for timely reporting and disclosure of material information and events. In addition, on July 14, 2010 an additional board member, with a strong accounting background, was elected and appointed to the board of directors and as treasurer of the Company.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009, and again on June 30, 2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.

Based on its assessment, management concluded that, as of June 30, 2010, the Company’s internal control over financial reporting is not effective based on those criteria.

This quarterly report does not include an attestation report of the Company’s registered accounting firm regarding internal control over financial reporting. Management’s report is not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission.

Changes in Internal Control over Financial Reporting

The Company anticipates that when the procedures referred to above are in place, that it will be in compliance with all disclosure requirements of the Exchange Act and its rules and regulations.

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 six months ended June 30, 2010:

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.

We sold 35,689,400 shares of restricted common shares for proceeds aggregating $35,689.

We issued 15,000,000 restricted shares of common stock valued at $21,000 for consulting services to non-affiliated party.

We issued 217,742,410 shares of common stock upon conversion and in settlement of convertible notes and accrued interest aggregating $330,606. The shares were valued at $190,031.

Subsequent to June 30, 2010:

During July 2010, the Company issued an aggregate of 138,151,351 common stock shares to various entities and individuals as a result of the conversion and settlement of convertible notes and accrued interest, as compensation and for consulting services.

Except for the above shares issued under the Form S-8 registration statement, the other shares were issued in transactions exempt from registration pursuant to section 4(2) of the Securities Act of 1933, as amended.

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.
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.
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	Exchange and Settlement Agreement	Incorporated by reference from PTS, Inc.'s Current Report on Form 8-K filed March 1, 2010
31.1	Certification of Chief Executive 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.

SIGNATURES

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

PTS, INC.

Date: August 23, 2010

/s/Marc Pintar

Marc Pintar

Interim President, Chief Executive Officer

and Chief Financial Officer

(Principal Accounting, Executive and Financial Officer)

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PTS (PTSH) Inactive 10-Q2010 Q2 Quarterly report

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