At&s 10QSB/A 2006 Q1 Quarterly report (small business) (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

--------------------------

FORM 10-QSB/A

[x]	AMMENDED QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2006
[ ]	TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission file number _________

Commission file No. 333-111715

AT&S HOLDINGS, INC.

(Name of Small Business Issuer in Its Charter)

NEVADA	20-0472144
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3505 Manchester Trafficway

Kansas City, Missouri 64129

(Address of Principal or

Executive Offices)

(816) 765-7771

(Issuer’s Telephone Number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. Yes [X] No [_]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12-b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes [ ] No [X]

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

Date Class  ;   Shares Outstanding

08/15/2006        Common stock - $ .001 par value         1,084,167

Transitional Small Business Disclosure Format (Check one): Yes [_] No [X]

AT&S HOLDINGS, INC.

EXPLANATORY NOTE

This amendment No. 1 to our Quarterly Report on Form 10-QSB for the quarter ended March 31, 2005 initially filed with the Securities and Exchange Commission (SEC) on May 15, 2006 is being filed to reflect changes to the Management Discussion and Analysis of Financial Condition and Results of Operation and Risk Factors sections requested by SEC staff. The primary changes involve additional disclosure of certain risk factors, discussion of S corporation tax status, expanded discussion of certain business relationships, and clarification of our banking arrangements. These changes were requested during a staff review of a post-effective amendment filed on Form SB-2/A on June 5, 2006 to our registration of callable subordinated notes on Form SB-2 on May 10, 2005. Except with respect to these matters, the Financial Statements in this Form 10-QSB/A do not reflect any events that have occurred after the 2005 Form 10-QSB was filed.

AT&S HOLDINGS, INC.

TABLE OF CONTENTS

Item Number	Page
ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets as of December 31, 2005 (audited) and March 31, 2006 (unaudited)	3
Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2006 and 2005	5
Unaudited Condensed Consolidated Statements of Stockholders’ Equity as of March 31, 2006	6
Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2006 and 2005	7
Notes to Condensed Consolidated Financial Statements	8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS Of FINANCIAL CONDITION AND RESULTS OF OPERATIONS	9
ITEM 3 - CONTROLS AND PROCEDURES	21
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS	22
ITEM 2 - UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS	22
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES	22
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	22
ITEM 5 - OTHER INFORMATION	22
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K	22
SIGNATURES	24

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS:

AT&S HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS:

	December 31, 2005		March 31, 2006
	(Audited)		(Unaudited)
CURRENT ASSETS
Cash	$	244,908	$	85,933
Accounts and notes receivable
Customers		634,742		422,394
Other		10,182		4,972
		644,924		427,366
Allowance for doubtful accounts		86,300		86,300
		558,624		341,066
Inventory		18,392		50,322
Prepaid Advertising		32,422		28,417
Other Prepaid Expenses		199,329		275,325
Total Current Assets		1,053,675		781,063
PROPERTY AND EQUIPMENT - AT COST
Revenue equipment		4,502,442		4,594,390
Delivery equipment		278,377		278,377
Vehicles		109,621		109,621
Information systems and equipment		207,854		207,854
Office equipment		20,222		20,222
Leasehold improvements		66,011		66,011
		5,184,527		5,276,475
Accumulated depreciation		1,633,110		1,694,418
		3,551,417		3,582,057
OTHER ASSETS
Deposits		10,110		10,110
Deferred loan fees		50,000		50,000
Accumulated amortization		35,996		38,955
		14,004		11,045
		24,114		21,155
Total Assets	$	4,629,206	$	4,384,275

The accompanying notes are an integral part of these statements.

3

AT&S HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	THREE MONTHS ENDED
REVENUE:		March 31, 2005			March 31, 2006
Equipment sales	$	160,300		$	156,011
Equipment rental		426,447			865,404
Drayage		110,223			95,579
Maintenance		5,797			52,984
Other		8,994			11,159
Total revenue		711,761			1,181,137
COST OF SALES:
Equipment		80,149			90,879
Equipment rental		74,743			310,864
Depreciation		76,374			86,263
Drayage		83,834			85,066
Maintenance		4,958			8,153
Total cost of sales		320,058			581,225
Gross profit		391,703			599,912
COSTS AND EXPENSES:
Selling, general and administrative expenses		346,882			431,307
Depreciation expense		21,986			13,616
		368,868			444,923
Operating profit		22,835			154,989
OTHER INCOME (EXPENSE):
Interest expense - related party		(15,848	)		(11,921	)
Interest expense - other		(43,359	)		(49,168	)
Gain (Loss) on sale of non-revenue equipment		451			0
Other income		1,017			1,512
		(57,739	)		(59,577	)
Net Earnings (Loss)	$	(34,904)		$	95,412
BASIC net earnings (loss) per share	$	(0.04)		$	0.09
Weighted average shares outstanding		984,167			1,084,167
DILUTED net earnings (loss) per share	$	(0.04)		$	0.09
Weighted average shares outstanding		984,167			1,084,167

The accompanying notes are an integral part of these statements.

LIABILITIES AND STOCKHOLDERS' EQUITY:

	December 31, 2005		March 31, 2006
CURRENT LIABILITIES	(Audited)		(Unaudited)
Current maturities of long-term debt - related party	$
Current maturities of long-term debt - other		325,166	$	387,370
Line of credit		516,704		0
Accounts payable
Trade		398,430		277,290
Sales tax payable		7,783		9,518
		406,213		286,808
Accrued liabilities
Salaries		49,978		29,764
Payroll taxes and other		1,314		2,277
Interest payable		2,476		1,979
Security deposits		500		500
Property taxes		-		4,500
		54,268		39,020
Total Current Liabilities		1,302,351		713,198
LONG-TERM DEBT, less current maturities
Related party		309,264		278,858
Subordinated debentures - related party		45,000		45,000
Other		1,855,461		2,093,677
Subordinated debentures - other		-		41,000
		2,209,725		2,458,535
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock - authorized 30,000,000 shares of
$.001 par value; issued and outstanding
1,084,167 shares		1,084		1,084
Additional paid-in capital		1,081,690		1,081,690
Retained earnings		34,356		129,768
		1,117,130		1,212,542
Total Liabilities and Stockholders’ Equity	$	4,629,206	$	4,384,275

The accompanying notes are an integral part of these statements.

6

AT&S HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

MARCH 31, 2006.

	Common		Stock
	Shares		Amount		Additional Paid In Capital		Retained Earnings		Total
Balance at January 1, 2006	$	1,084,167	$	1,084	$	1,081,690	$	34,356	$	1,117,130
Net earnings for the period (unaudited)		-		-		-	$	95,412	$	95,412
Balance at March 31, 2006 (unaudited)	$	1,084,167	$	1,084	$	1,081,690	$	129,768	$	1,212,542

 The accompanying notes are an integral part of these statements.

AT&S HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2005 AND 2006

	THREE MONTHS ENDED
	March 31, 2005			March 31, 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)		($34,904	)		$95,412
Adjustments to reconcile net earnings (loss) to cash provided (used) by operating activities:
Gain on sale of equipment		(55,713	)		(43,607)
Depreciation		98,360			99,879
Provision for losses on accounts receivable		1,172			4,254
Change in operating assets and liabilities:
Decrease in accounts and notes receivable		141,253			213,303
(Increase) decrease in prepaid expenses		3,287			(103,921)
Decrease in deferred loan fees (net)		3,314			2,959
(Decrease) in accounts payable and accrued liabilities		(140,305	)		(134,652)
Net cash and cash equivalents provided by operating activities		16,464			133,627
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment		128,050			105,161
Purchase of property and equipment		(107,450)			(192,073)
Net cash and cash equivalents provided (used) by investing activities		20,600			(86,912)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from new financing		66,792			41,000
Principal payments on long and short-term debt		(133,440	)		(246,690)
Net cash and cash equivalents (used) by financing activities		(66,648)			(205,690)
(DECREASE) IN CASH		(29,584)			(158,975)
Cash - beginning of period		55,690			244,908
Cash - end of period	$	26,106		$	85,933
Interest paid during the period:
Related party	$	15,934		$	12,584
Other		46,212		$	45,678
Total interest	$	62,146		$	58,262

The accompanying notes are an integral part of these statements.

7

AT&S HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FINANCIAL STATEMENT PRESENTATION

We are providing herein the unaudited historical financial statements of AT&S HOLDINGS, INC. as of March 31, 2006, and for the three months ended March 31, 2006 and 2005. The interim financial statements presented herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The interim financial statements should be read in conjunction with our annual financial statements, notes and accounting policies included in the Company's most recent annual report on Form 10-KSB as filed with the Securities and Exchange Commission.

The information furnished in this report reflects all adjustments (consisting of only normal recurring accruals), which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. The results of operations for the three month period ended March 31, 2006, are not necessarily indicative of results that may be expected for the fiscal year ending December 31, 2006.

The effects of inter-company transactions on current assets, current liabilities, revenue, and cost of sales for periods presented and on retained earnings at the beginning of the periods presented have been eliminated.

BANKING ARANGEMENTS

On March 28, 2006, we changed the terms of our lines of credit and signed an additional term loan with our current bank. The interest rate on our reducing revolving line of credit was reduced to 6.70% per annum. Our operating line of credit was extended to March 30, 2007 and its interest rate was reduced to prime. The balance of the equipment purchase line of credit, $584,771 was transferred to a new term loan with terms described below. The equipment purchase line of credit’s maturity date was extended to March 30, 2007 and its interest rate was reduced to prime. The new term loan is a fixed interest rate loan in the amount of $584,771.00 dated March 28, 2006 with a maturity date of March 30, 2009. This loan requires 35 consecutive monthly payments of interest and principal of $8,904.71 each, beginning April 30, 2006 with interest on the unpaid balances at an interest rate of 7.15%, and one principal and interest payment of $378,849.70 on March 30, 2009, with interest on the unpaid balances at an interest rate of 7.15%. This loan had a balance of $584,771.00 on March 31, 2006.

SUBORDINATED NOTES

We filed a Registration Statement on Form SB-2 with the Securities and Exchange Commission, whereby we registered subordinated notes at $1,000 par for up to $5,000,000 for sale to the public. The net proceeds of these notes (approximately $4,700,000 assuming all notes are sold and after offering expenses) are intended to fund the purchases of revenue equipment. The Commission declared the registration statement effective on May 13, 2005. The offering of notes is not underwritten and is being sold on a best-efforts basis. From May 13, 2005 to March 31, 2006, we sold six notes in the aggregate principal amount of $86,000. For the quarter ended March 31, 2006 we sold four notes in the aggregate principal amount of $41,000. Costs incurred with the preparation of the initial registration statement were approximately $100,000. Our expenses incurred in connection with the issuance and distribution of the notes from the date our registration statement became effective, May 13, 2005 through March 31, 2006 were approximately $126,000.

FORWARD-LOOKING STATEMENTS

THIS FORM 10-QSB CONTAINS FORWARD-LOOKING STATEMENTS INVOLVING RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS IN THE FUTURE COULD DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED OR IMPLIED IN SUCH FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED, IN THE SECTION CAPTIONED "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS FILING.

8

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this item to the report, references to “AT&S,” the “Company,”“we,”“us,” and “our” refer to AT&S Holdings, Inc., a Nevada corporation, and our subsidiary American Trailer & Storage, Inc., a Missouri corporation (“American Trailer”). The following discussion of our financial condition and results of operations should be read together with the financial statements and the accompanying notes included elsewhere in this quarterly report on Form 10-QSB.

Overview

American Trailer was formed on May 15, 1994 under the laws of the State of Missouri under the name Financial Credit Corporation. Financial Credit Corporation conducted business under the fictitious names of Commercial Trailer and American Trailer & Storage. On December 9, 2003, the name was officially changed to American Trailer & Storage, Inc. American Trailer has been engaged solely in the business of renting and leasing storage containers and semi-trailers since inception and does not have any subsidiaries.

On December 31, 2003, we re-organized in a holding company structure. At that time AT&S became the parent of American Trailer. The Management’s Discussion and Analysis of Financial Condition and Results of Operations contained herein discusses the historical operations of American Trailer prior to December 31, 2003 and includes the consolidated financial information for American Trailer and AT&S thereafter.

We are a provider of portable storage and transportation solutions through our rental fleet of over 1,800 portable storage and transportation units through our subsidiary American Trailer. We currently have two branches and operate in Missouri, Kansas, Illinois, Nebraska and Iowa. We primarily concentrate on the Kansas City and St. Louis metropolitan regions. We phased out of actively competing in other markets to focus on these core regions because we felt our resources could be more profitable focusing our efforts in the larger markets of Kansas City and St. Louis. We feel there are opportunities for growth in other Midwestern markets when our capital and human resources are adequate to handle external branch expansion.

Our rental equipment provides secure, accessible temporary storage and transportation for a diversified client base of over 600 customers in 76 different industries. Our customers use our products for a wide variety of storage and transportation applications, including the storage of retail and manufacturing inventory, protection of construction materials and equipment, handling peaks in shipping cycles and transporting material to and from customers’ or their construction job sites. Our largest customer, Satellite Specialized Transportation (“SST”), constituted 29% of our revenues in 2005 and 6% of our revenues in 2004. SST rents our equipment on a unit-by-unit, short-term basis. SST uses our equipment to haul cargo and freight long distances. In particular, SST has rented our equipment for transportation and storage of disaster relief supplies to victims of hurricanes and other disasters. In general, SST rents equipment for $500 per unit per month. We anticipate that SST will be our second largest customer after Wal-Mart for 2006 due to the continued large number of units rented to support the recent hurricane relief efforts. Because the disaster relief business is mainly short term, we do not purchase equipment specifically for this purpose and should not, therefore, have material amounts of idle equipment should natural disasters not occur in any given year. We mainly rent equipment owned by other entities under agreement with the other entities to supply SST with trailers. The trailers are turned back over to the other entities when SST is finished using them for disaster relief duties.

Our second largest customer, Wal-Mart, accounted for 10% of our revenue in 2005, 22% in 2004 and 27% in 2003. Wal-Mart rents our storage equipment on a store-by-store, unit-by-unit, short-term basis. Rental and trucking (delivery and pick-up of storage equipment) rates vary by store location. No single store accounts for more than 5% of our revenues. In general, a Wal-Mart store rents equipment on a four-week minimum term for $90-$135 per four weeks, depending on the type of unit and the quantity of containers rented by the particular store. The store also pays delivery and pick-up charges between $75-$400 each way, depending on the distance of the store from our location. We believe that year-to-year reduction in revenues from Wal-Mart may be indicative of a trend resulting from improvements by Wal-Mart in its inventory management.

Aside from Wal-Mart, our other largest customers tend to vary significantly from year to year. Our third largest customer in 2005, Mobile Storage Group (“MSG”) accounted for 5% of our revenues that year and 9% of our revenues in 2004. MSG rents equipment from American Trailer and then re-rents the equipment to other companies, primarily in the retail industry. MSG rents our equipment on a unit-by-unit; short-term basis; rental and trucking rates vary by location of rental. No single MSG rental location constitutes more than 1% of our revenue. In general, MSG rents equipment on a four-week minimum term, to service their customers, for $90-$135 per four weeks, depending on the type of unit and the quantity of units rented at each location. MSG also pays delivery and pick-up charges between $75 and $400 each way, depending on the distance of the customer from one of our locations. Rental and trucking rates are quoted and confirmed at issuance of purchase order by MSG. Because MSG competes with our business, we do not necessarily expect them to remain a major customer every year. Our business with MSG is dependent on MSG being unable to meet its customers’ demand for storage units from within its own inventory and, thus, leasing from us to fill the shortfall.

We do not expect our largest customers to continue to represent such a significant share of our revenues. Indeed, SST rental demand is driven by its disaster relief activities and revenue from Wal-Mart has decreased on a year-to-year basis over the last three years as a result of its improved inventory management. Our third largest customer, Mobile Storage Group, is in all likelihood transitioning from a customer to a competitor. If we are unable to replace business from our significant customers from year to year, our business would be negatively affected. The loss of or diminution of these businesses as customers or the inability to continually replace business from them and our other significant customers would require immediate and substantial overhead cost reductions together with the disposal of excess equipment to mitigate the effects and prevent failure of our business. There can be no assurance that we would be able to effectively respond to any such customer loss. Management views this risk as very significant and should management not immediately implement overhead cost reductions and equipment dispersals, we would not be able to meet our obligations. We do not expect a significant impact to our financial condition in the next 12 months resulting from a decrease in business from our largest customers. We expect SST to continue to rent equipment on a seasonal, on-going basis for disaster preparedness; and disaster relief efforts, should conditions warrant such. We do not expect Wal-Mart’s demand for equipment to decrease in a significantly short period of time. We also anticipate the demand for equipment in other industries to cyclically increase from year to year, as had occurred in the past, and we anticipate that these increases will be substantial enough to replace revenues from industries that demand has declined in a given year.

We primarily obtain our portable storage units by purchasing new and used ocean-going containers and purchasing new and used trailers from the trucking industry. We offer a wide range of products in varying lengths and widths with an assortment of differentiated features such as security systems, multiple doors, electrical wiring and shelving. In addition to our rental operations, we sell new and used portable storage units and provide ancillary services. Although our primary business is rental of storage units and trailers, we sell units from time to time when the customer demand for purchase exists and we are able to sell at prices that exceed our cost of replacing the unit, or when we have excess inventory.

Our primary revenue source is the rental and sale of portable storage and transportation units with our focus being on the rental rather than sale of such equipment.

As noted above, our discussion and analysis in this report, and other reports that we file with the Securities and Exchange Commission, in our press releases and in public statements of our officers and corporate spokes-persons contain forward-looking statements. In this report, we have used words such as “anticipate,” “believe,” “estimate,” “may,” “intend,” “expect” and other similar expressions, which identify forward-looking statements. Forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. We undertake no obligation to update any forward-looking statement. We provide the following discussion of risks and uncertainties relevant to our business. These risk factors and uncertainties include:

·   Our significant dependence on several key customers;

·   The highly competitive nature of our business;

·   The supply and price of used ocean-going containers and storage trailers;

·   Significant changes in interest rates;

·   Seasonal fluctuation in our business;

·   Our continued ability to access bank debt; and

·   Our dependence on third parties to lease us containers and trailers on favorable terms.

Many of these factors are beyond our control.

Three months ended March 31, 2006 versus March 31, 2005

Our revenues totaled $1,181,137 for the three months ended March 31, 2006. The increase of $469,376 versus the same period in 2005 represents a 65.9% increase. Approximately 86.8%, of total revenues were derived from equipment rental and related service revenues (delivery, pick-up, maintenance revenues, etc.).

Approximately 13.2%, or $156,011, of total revenues was derived from the sale of equipment, compared to $160,300, or 22.5% of total revenues during the same period in 2005. Revenues from equipment sales decreased during the period due to a general decrease in demand for equipment purchases from companies in varied industries. Because we routinely sell rental equipment as a course of our business, equipment sales includes both units sold from the rental fleet (revenue producing equipment / fixed assets) and units purchased for re-sale (sale inventory). The cost of the equipment (included in the cost of goods sold) was the net book value, after depreciation, of the equipment at the time of sale. (The line item “Gain on Sale of Equipment” on the Statement of Cash Flows is the net gain on the sale of rental equipment and is deducted from our net income when calculating “Net Cash Provided by Operating Activities.” The proceeds from the sale of the rental equipment is then included in the “Proceeds from the Sale of Equipment,” together with the proceeds from the sale of non-revenue producing equipment, when used to calculate “Net Cash Used by Investing Activities” on the Statement of Cash Flows.

We generated rental revenues of $865,404 during the three month period ending March 31, 2006 versus $426,447 during the same period in 2005. The increase in rental revenue of $438,957, or 102.9%, was a result of an increase in demand for our equipment, particularly from the trucking and construction industries, offsetting decreases in demand from the retail and wholesale distribution industries. Drayage (trucking) revenue decreased $14,644, or 13.3%, to $95,579 during the three-month period versus the previous year. This decrease is due to a decrease in the numbers of rentals requiring pick-up as more units stayed on rent compared to the previous period and a slight decrease in pricing of delivery and pick-up services. We anticipate that drayage rates will hold steady. Maintenance revenues, charges to customers for customer related equipment damages the cost of which are included in maintenance expenses, increased $47,187, or 814%, to $52,984 during the period due to the general increase in rental activity.

Other revenues, which consist primarily late fees, damage-waiver fees and property tax fees increased $2,165, or 24.1%, to $11,159 due primarily to a general increase in rental activity, which increases ancillary revenues such as damage waiver and property tax fees.

Cost of sales for the three months ended March 31, 2006 totaled $581,225, an increase of 81.6%, as compared to the same period in 2005. Cost of sales represented 49.2% of total revenues for the period versus 44.9% during the same period 2005. The cost of equipment sold increased $10,730 or 13.39% due to the increase our cost to purchase equipment. Gross margins on equipment sales, as a result, decreased from 50.0% to 41.7% as we were not able to marginally increase our prices commensurate with our costs. We expect that availability of used trailers and containers will remain limited as the shipping industries continue to experience high demand. Equipment rental expense, which includes rent paid to third parties for equipment re-rented to our customers, and licensing and titling fees, increased by $236,121, or 315.9%, for the period. The increase was primarily due to the increase in number of over-the-road semi-trailers and over-the-road refrigerated semi-trailers rented from third parties and then rented to customers in the trucking industry versus the same period in 2005. We significantly increased the amount of trailers rented to one customer in particular, who is engaged in hauling cargo and disaster relief supplies to areas affected by the recent hurricanes. We expect the equipment rental expense to decline over the next six months as the need for trailers used in relief efforts of the 2005 hurricane season units diminishes. We will, however, continue to re-rent over-the-road equipment for customers when profitable opportunities present themselves. Maintenance expenses increased $3,195 or 64.4% during the period to $8,153. This increase is primarily the result of an increase in the number of owned and re-rented over-the-road semi-trailers in the fleet versus the same period in 2005 and turnover in rentals of semi-trailers, requiring additional maintenance to ensure rental worthiness for the new customers. These costs are recouped from customers as shown in the maintenance revenue line item.

Depreciation expense increased $9,889, or 12.9%, due to an increase of owned units in the rental fleet. Depreciation expense will further increase as a result of purchasing more equipment as the fleet continues to grow. Drayage expenses increased $1,232, or 1.5% during the period due to an increase in fuel, but offset by a reduction in drayage expenses paid to third parties because of our increase in the number of owned delivery semi-tractors compared to 2005. Drayage expenses will likely increase during the upcoming 12 months due to rising fuel expenses. Our three semi-tractors do not typically require significant repair expenses.

Gross profits increased by $208,209, or 53.5%, during the three months ended March 31, 2006 versus 2005, representing 50.8% of total revenues and totaling $599,912. The increase in gross profits is mainly due to the increase in equipment rental revenue. As the availability of new and used shipping containers decreases, we should to be able to continue to command higher prices for our equipment, however, this will also cause us to pay higher prices for our equipment sold and additions to our rental fleet. We anticipate that our gross profit margin will be approximately 50% for the 12 months of 2006, as the third and fourth quarters typically has higher utilization and profitability.

Operating expenses increased $76,055, or 20.6%, during the three month period ended March 31, 2006 versus the same period in 2005. Operating expenses represented 37.7% of total revenues versus 51.8% for the same period in 2005. The increase is primarily due to increases in salaries, employee benefits including health insurance, and advertising. Depreciation expense (on non-revenue equipment) decreased by $8,370, or 38.1% due to a decrease in company automobiles. We expect operating expenses to be under 40% of total revenues for 2006, as the third and fourth quarters have historically seen increases in demand for rental equipment, without marginally increasing operating expenses.

Overall, interest expense increased $1,882 or 3.2%, during the three months ended March 31, 2006 versus the same period in 2005 to $61,089. Interest expense constituted 5.17% of total revenues versus 8.32% during the same period in 2005. This increase is primarily due to an increase in the amount of our bank debt for purchases of new equipment and to an increase in subordinated debt. “Interest Expense - Other” (primarily interest accrued to our bank) increased $5,809, or 13.4% due primarily to increased balances owed to our bank and increased interest rates on our floating lines of credit, and due, to a much lesser extent, issuance of subordinated debt. We expect interest expenses to increase as we expand our fleet through increases in borrowing and as interest rates continue to increase over the previous year.

We had a net income of $95,412 for the three-month period ended March 31, 2006 versus a net loss of $34,904 for the same period in 2005. This net income represents 8.1% of total revenues for the period versus a net loss of 4.9% of total revenues during the same period in 2005. The increase in net income is primarily attributable to the increase in rental revenues without marginal increases in expenses as described above. We anticipate a positive net income for 2006 as gross profits historically increase each quarter and operating expenses should not marginally increase.

Liquidity and Capital Resources

Growing our rental fleet is very capital intensive. The amount of capital needed is dependent on the number of units we plan to purchase in a given period to continue growth and on building the infrastructure to support such growth. Over the year, our fleet size has been steadily increasing in size as we focused on purchasing newer equipment and selling, older, non-utilized units. Purchases of new equipment and additional staff have primarily been funded through the issuance of subordinated debt to our principal owner and equipment financing on a collateralized basis.

A note payable to the majority shareholder had a balance of $309,264 at December 31, 2005 and $419,827 at December 31, 2004, and is subordinate to our bank loans. This note was originally due January 1, 2004 and then extended to January 1, 2005. On July 15, 2004, other loans to shareholder (which originally had due dates of August 15, 2004 and September 20, 2004) were combined with this loan, and the due date of the new loan, which required monthly payments of principal and interest, was February 15, 2008. This loan agreement was amended on March 15, 2005. The amended agreement required monthly payments of interest only and the principal amount was due April 15, 2006. That agreement was further amended on September 30, 2005 by changing the maturity date to April 15, 2007. Our majority shareholder also purchased 2005 series subordinated notes in 2005 totaling $45,000. Due to bank financing covenants, the principal owner cannot be repaid the balance of the subordinated notes if the total debt to net worth ratio exceeds the bank’s maximum limit after any such repayment.

Operating Activities: Cash provided by operating activities for the twelve-month period ended December 31, 2005 was approximately $489,000 compared to $376,000 during 2004. This increase was mainly due to an increase in revenues in 2005 over 2004. We had a gain on sale of revenue equipment of $43,607 during the period versus $55,713 in 2005. This was the net gain, after depreciation, on the sale of equipment from our rental fleet. Cash provided by operating activities for the three month period ended March 31, 2006 was approximately $133,627 compared to $16,464 during the same period in 2005. The increase is primarily due to an increase in net earnings and a decrease in accounts and notes receivable.

Investing Activities: Net cash used by investing activities during the 2005 was approximately $388,000. This was the net result of the purchase of $924,000 of equipment and proceeds from the sale of equipment of $535,000. Proceeds from the sale of equipment include proceeds from both the rental fleet (revenue equipment) and non-revenue equipment. This compares to approximately $962,000 net cash used by investing activities during 2004 as a result of net purchase of equipment versus proceeds received from the sale of equipment, $1,271,000 versus $309,000 respectively. Net cash used by investing activities during the three month period ended March 31, 2006 was approximately $86,912. This was the net result of proceeds received from the sale of equipment versus the purchase, $105,161 versus $192,073 respectively. This compares to approximately $20,600 net cash provided by investing during the same period in 2005 as a net result of proceeds received from the sale of equipment versus the purchase, $128,050 versus $107,450 respectively. We plan to continue selling non-utilized or under-utilized equipment and purchase more equipment to meet the demands of our customers. We anticipate that the purchase of new equipment will continue to outpace sales by approximately $200,000 during the remainder of 2006.

Financing Activities: Net cash provided by financing activities was $89,000 during 2005 versus $400,000 in 2004. Approximately $822,000 provided from proceeds of new financing and $50,000 provided from the sale of common stock supplemented cash generated from operations to provide funds for the purchase of equipment. Approximately $783,000 was used to pay down principal of long-term senior and subordinated debt. Net cash provided by financing activities was $205,690 during the three month period ended March 31, 2006 versus $66,648 provided during the same period in 2005. $41,000 was provided from proceeds of new financing used to supplement the purchase of equipment from cash generated from operations during the three months ended March 30, 2006. $246,690 and $133,440 in the first three months of 2006 and 2005, respectively, was used to pay down principal of long-term senior and subordinated debt.

Banking Arrangements:

We have entered into a financing agreement with Bank of the West, Lee’s Summit, Missouri. The financing agreement provides us with a reducing revolving line-of-credit, an equipment purchase line-of-credit, a working capital line-of-credit, an automobile line-of-credit, and a fixed interest rate term loan.

·   Reducing Revolving Line-of-Credit -- The current maturity date of our reducing revolving line-of-credit is March 31, 2008. The monthly reduction in availability is $26,690 with an interest rate of 6.70%. As of March 31, 2006, the outstanding balance on this line of credit was $1,896,275.71 with $371,620 available funds.

·   Equipment Purchase Line-of-Credit - The equipment purchase line-of-credit provides us with capital to purchase revenue producing equipment. The interest rate on this line of credit is prime (7.75% as of March 31, 2006). As of March 31, 2006, the outstanding balance on this line-of-credit was $0 with $750,000 available. This line of credit expires March 28, 2007.

·   Working Capital Line-of-Credit - The working capital line-of-credit provides capital to cover short-term cash flow needs. The interest rate on this line of credit is prime (7.75% as of March 31, 2006). As of March 31, 2006, the outstanding balance on this line-of-credit was $0 with $250,000 available.

·   Automobile Line-of-Credit - The automobile line-of-credit is to be used for purchasing corporate automobiles. The interest rate is the bank’s auto rate at the closing date. As of March 31, 2006, the outstanding balance on this line-of-credit was $0 with $150,000 available to be drawn down.

·   Fixed Interest Rate Term Loan - On March 28, 2006, $584,771 was transferred from the equipment purchase line of credit to a fixed interest rate term loan with a maturity date of March 31, 2009. This loan requires 35 consecutive monthly payments of interest and principal of $8,904.71 each beginning April 30, 2006 and one principal and interest payment of $378,849.70 to be made on March 30, 2009. The interest rate on the unpaid balance is 7.15%. As of March 31, 2006, this loan had a balance of $584,771 and we were current on all payments.

The following table summarizes our banking lines-of-credit and term loans:

Credit Facility	Interest Rate	Amount Available as of March 31, 2006	Balance outstanding as of March 31, 2006
Reducing Revolving Line-of-Credit	6.70%	$371,620	$1,896,275.71
Equipment Purchase Line-of-Credit	prime*	$750,000	$0.00
Working Capital Line-of-Credit	prime*	$250,000	$0.00
Automobile Offering Line-of-Credit	Variable	$150,000	$0.00
Fixed Interest Rate Term Loan	7.15%	$0	$584,771.00

*7.75% as of March 31, 2006.

The reducing revolving line of credit, the two lines of credit and the offering line of credit are subject to the provisions of a Security Agreement dated September 18, 2003. Covenants of this agreement provide for the personal guarantees of our majority shareholder and his wife as well as subordination of our debt obligations to the majority shareholder.

The agreement also requires us to meet certain financial covenants.

FINANCIAL COVENANTS

Compliance with our financial covenants under our financing agreement is determined as of December 31 of each year. We were in compliance with all restrictive covenants as of December 31, 2005 and we anticipate remaining in compliance as of December 31, 2006. Per the terms of our business loan agreements, we must comply with the following three financial covenants and ratios:

1. Debt Service Coverage Ratio. Maintain a ratio of Debt Service Coverage in excess of 1.250 to 1.000. The term “Debt Service Coverage Ratio” means our Net Operating Income (Net Income + Depreciation + Amortization + Interest Expense) divided by our required principal payments (or Prior year CMLTD) + Interest Expense. This coverage ratio will be evaluated as of year-end.

The formula is EBITDA/CMLTD + interest expense. EBITDA (Earnings before interest, taxes, depreciation, and amortization) will be calculated as operating income (before interest and taxes) plus any depreciation or amortization expenses. CMLTD (current maturities of long term debt plus interest expense) will be computed as: the current maturities (principle payments due within the following 12 months) of all term debt plus all interest expenses from the previous 12 months associated with all debt (term, lines of credit, subordinated, etc.) plus any lease payments due within the following 12 months.

The current principle balances of any other lines of credit or subordinated debt will not be included in CMLTD. This is tested annually from audited financial statements.

2. Debt / Worth ratio. Maintain a ratio of Debt / Worth not in excess of 4.0 to 1.0. The ratio “Debt / Worth” means our Total Liabilities (less any subordinated debt) divided by our Tangible Net Worth (plus any subordinated debt). This leverage ratio will be evaluated as of year-end.

3. Maintain a positive current ratio. Current ratio to be calculated based on current assets divided by current liabilities less current maturities of subordinated debt less any outstanding balance on the equipment purchase Line of Credit.

If we fail to meet the required covenants or ratios, we would be in default under our business loan agreement and, at the lender’s option, all indebtedness under the agreement would immediately become due and payable.

Our trailing twelve month debt service coverage ratio for the period ended March 31, 2006 is 1.72 : 1. We project this ratio to be greater than 1.33 for year-end.

As of March 31, 2006, our working capital ratio was 2.72.

As of March 31, 2006, our debt-to-equity ratio was 1.78.

We are in compliance with all restrictive covenants as of the most recent date required to be tested; the audited financial statements as of and for the year ended December 31, 2005.

All three financial covenants are tested annually using our audited year-end financial statements.

The reducing line-of-credit is collateralized by a blanket lien on our assets as well as the personal guarantee by the principal owner, Richard G. Honan, and his wife, Kathleen M. Honan.

We believe our credit facilities provide us with both short and long-term liquidity, the flexibility to acquire revenue equipment on an as needed basis, and lower our overall capital costs.

We expect to acquire at least $500,000 of additional revenue equipment during the upcoming 12 months. As of April 27, 2006 we have agreements to purchase $205,000 of equipment in the third and fourth quarter of 2006.

We believe that our working capital, together with our cash flows from operations, borrowings under our working capital and equipment purchase lines-of-credit and other available funding sources will be sufficient to fund our operations and planned growth for at least 12 months.

Seasonality

Demand for our equipment is somewhat seasonal. This is due mainly to the seasonal demands of the retail industry. Retailers demand more equipment in the third and fourth quarters of each year to handle peak inventory demands of the holiday shopping season. Most of the equipment rented by the retailers is returned early in January of each year, resulting in decreased cash flow from operations for the company during the first half of every year. We expect this trend to continue.

Off-Balance Sheet Arrangements

The company does not engage, nor plans to engage, in any off-balance sheet financing arrangements.

S Corporation Status

We have elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. As such, we have not provided any income tax provision in the financial statements because, as an S corporation, net earnings and losses are passed-through to the shareholders. Provided below is a pro forma condensed consolidated income statement of earnings for the most recent fiscal year and subsequent interim period that depicts our financial results of operations to the extent that we would no longer meet the requirements of an S corporation.

Pro Forma Condensed Consolidated Statements Of Earnings
	Year Ended	Three Months Ended
	December 31, 2005	March 31, 2006
Revenues	$4,086,560	$1,181,137
Cost of Sales	1,954,803	581,225
Gross profit	2,131,757	599,912
Selling , general and administrative expenses	1,585,137	444,923
Operating Profit	546,620	154,989
Other (Expense)	(232,245)	(59,577)
Earnings before income taxes	314,375	95,412
Income taxes
Currently payable	0	0
Deferred	122,195	37,390
	122,195	37,390
Net Earnings	$192,180	$58,022
BASIC Earnings per share	$0.19	$0.05
Weighted average number of shares	998,688	1,084,167
DILUTED Earnings per share	$0.19	$0.05
Weighted average number of shares	998,688	1,084,167

We currently have three shareholders. We chose S Corporation status because the significant tax losses generated due to the equipment depreciation on a tax basis are passed through to the shareholders. This has allowed our shareholders to defer some personal taxes and invest those saving into the business. Current S corporation rules limit the number of shareholders allowed in an S corporation to 100 and only allow one class of stock. In the future, these limitations may limit our ability to raise equity funds and expand our operations. We do not feel these limitations are a significant risk to internally growing our current operations, however, we may miss out on a significant and/or sizable future acquisition opportunity if we could not raise enough equity capital within the constraints of S corporation rules.

Should we decide to change our tax status to that of a C-Corporation, it would not have an immediate impact on our financial condition, results of operations, or cash flows. If we curtailed our equipment purchases, we would incur tax liabilities at the then-current corporate tax rate.

Critical Accounting Policies and Estimates

Our significant accounting policies are disclosed in Note B to our audited financial statements included in the Company’s last annual report on Form 10-KSB as filed with the SEC. The following discussion addresses our most critical accounting policies, some of which require significant judgment.

The preparation of the financial statements in conformity with generally accepted accounting principles requires our management to make estimates and assumptions that affect the amounts reported in the financial statements and the notes to those statements. These estimates and assumptions are based upon our evaluation of historical results and anticipated future events. Actual results could differ from those estimates. For purposes of this section, critical accounting policies are those that are, in our management’s view, most important to our financial condition and results of operations and that require significant judgments and estimates. Our management believes our most critical accounting policies relate to the following:

We recognize revenue from the sale of equipment upon delivery. Lease and lease ancillary revenues and related expenses generated under portable storage units and trailers are recognized monthly which approximates a straight-line basis. The company recognizes revenue from delivery, pick-up and other rental-related activities when the service is provided.

We depreciate our rental equipment on a 10 or 15-year term with 20% residual values. Trailers are depreciated over a 10-year period and containers are depreciated over a 15-year period using the straight-line method. Our management periodically evaluates our depreciation policy against several factors including appraisals from independent parties, profit margins from the sale of depreciated assets, and larger competitor’s depreciation policies.

ITEM 3. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This evaluation was done under the supervision and with the participation of the Company's Principal Executive Officer and Principal Financial Officer. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company's accounting controls and procedures are effective in gathering, analyzing and disclosing information needed to satisfy the Company's disclosure obligations under the Exchange Act.

CHANGES IN INTERNAL CONTROLS

There were no significant changes in the Company's internal controls or in other factors that could significantly affect those controls since the most recent evaluation of such controls.

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

None

ITEM 2 -UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company did not sell any unregistered securities during the period covered by the report. 

The Company has filed a Registration Statement on Form SB-2 with the Securities and Exchange Commission, whereby the Company registered subordinated notes at $1,000 par for up to $5,000,000 for sale to the public. The net proceeds of these notes (approximately $4,700,000 assuming all notes are sold and after offering expenses) are intended to fund the purchases of revenue equipment. The Commission declared the registration statement effective on May 13, 2005. The offering of notes is not underwritten and is being sold on a best-efforts basis. From May 13, 2005 to March 31, 2006, we sold six notes in the aggregate principal amount of $86,000. For the quarter ended March 31, 2006 we sold four notes in the aggregate principal amount of $41,000. Costs incurred with the preparation of the initial registration statement were approximately $100,000. Our expenses incurred in connection with the issuance and distribution of the notes from the date our registration statement became effective, May 13, 2005 through March 31, 2006 were approximately $126,000.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5 - OTHER INFORMATION

None

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)   Index to Exhibits

EXHIBIT NUMBER	DESCRIPTION
10.18*	Change in Terms Agreement between AT&S Holdings, Inc. and American Trailer & Storage, Inc. and Bank of the West dated March 28, 2006 relating to the promissory note in the principal amount of $750,000 dated March 30, 2005 of AT&S Holdings, Inc. and American Trailer & Storage, Inc. and related documents.
10.19*	Change in Terms Agreement between AT&S Holdings, Inc. and American Trailer & Storage, Inc. and Bank of the West dated March 28, 2006 relating to the promissory note in the principal amount of $2,534,795.71 dated March 30, 2005 of AT&S Holdings, Inc. and American Trailer & Storage, Inc. and related documents.
10.20*	Change in Terms Agreement between AT&S Holdings, Inc. and American Trailer & Storage, Inc. and Bank of the West dated March 28, 2006 relating to the promissory note in the principal amount of $250,000 dated March 30, 2005 of AT&S Holdings, Inc. and American Trailer & Storage, Inc. and related documents.
10.21*	Business Loan Agreement between AT&S Holdings, Inc. and American Trailer & Storage, Inc. and Bank of the West dated March 28, 2006 relating to the promissory note in the principal amount of $584,771 dated March 38, 2006 of AT&S Holdings, Inc. and American Trailer & Storage, Inc. and related documents.
10.22*	Promissory Note from AT&S Holdings, Inc. and American Trailer & Storage, Inc. to Bank of the West dated March 28, 2006 in the principal amount of $584,771 dated March 38, 2006.
31.1	Certification of Chief Executive Officer pursuant to rule 15a-14(a)
31.2	Certification of Principal Financial and Accounting Officer pursuant to Rule 15d-14(a).
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2	Certification of Principal Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350.

---------------------------

* Previously filed with the Commission.

(b) Reports on Form 8-K

None

SIGNATURES

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

AT&S HOLDINGS, INC.
August 15, 2006	//s// Richard G. Honan
	Richard G. Honan, Chief Executive Officer and Chairman of the Board of Directors (PRINCIPAL EXECUTIVE OFFICER)
August 15, 2006	//s// Richard G. Honan, II
	Richard G. Honan II, Chief Financial Officer, Director and President (PRINCIPAL ACCOUNTING OFFICER)