UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC. 20549

FORM 10-QSB

Quarterly Report Pursuant to Section 13 or 15
(d)
of the Securities Exchange Act of 1934

|                                                                  |  |                                     
|----------------------------------------------------------------- |  | ------------------------------------
|For the quarterly period endedJune 30, 2006                       |  | Commission File Number 0-19437      
|                                                                  |  |                                     
|CELLULAR TECHNICAL SERVICES COMPANY, INC.                        
|                                                                 
|(Exact Name of Small Business Issuer as Specified in Its Charter)
|                                                                  |  |                                     
|Delaware                                                          |  | 11-2962080                          
|                                                                  |  |                                     
|(State or Other Jurisdiction of 
  Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                                 
|20 East Sunrise Highway, Suite 200, Valley
Stream, New York 11581
|                                                                 
|(Address of Principal Executive Offices) (Zip Code)              

Issuers telephone number, including area
code: (516) 568-0100

Check
whether the issuer (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. Yes x No o

Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act) Yes x No o

4,586,758 Common Shares
were outstanding as of July
11, 2006

Transitional
Small Business Disclosure Format. Yes o No x

---



CELLULAR TECHNICAL SERVICES COMPANY, INC.

TABLE OF CONTENTS FOR FORM 10-QSB

|                              |                                                           |   
|----------------------------- | --------------------------------------------------------- | --
|PART I. FINANCIAL INFORMATION |                                                          
|                             
|ITEM 1.                       | FINANCIAL STATEMENTS                                      | 3 
|                             
|ITEM 2.                       | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION | 9 
|                             
|ITEM 3.                       | CONTROLS AND
  PROCEDURES                                 | 9 
|                             
|PART II. OTHER INFORMATION    | 10                                                       
|                             
|ITEM 6.                       | EXHIBITS                                                  | 10

2

---



CELLULAR TECHNICAL SERVICES COMPANY, INC.PART I. FINANCIAL
INFORMATION

|        |                     
|------- | --------------------
|Item 1. | Financial
Statements

CONDENSED CONSOLIDATED BALANCE SHEETS
(in 000s)

|                                                                                                                                                  |  |                 |         |                   |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ------- | ----------------- | - | ------- | -
|                                                                                                                                                  |  | June 30,
  2006 |         | December 31, 2005 |  
|                                                                                                                                                  |  |                 |         |                   |  
|                                                                                                                                                  |  | (unaudited)     |         |                   |  
|ASSETS                                                                                                                                            |  |                 |         |                   |   |         |  
|                                                                                                                                                 
|CURRENT ASSETS                                                                                                                                    |  |                 |         |                   |   |         |  
|Cash and cash equivalents                                                                                                                         |  | $               | 3,537   |                   | $ | 3,555   |  
|Prepaid expenses, deposits and other
  current assets                                                                                             |  |                 |         |                   |   | 0       |  
|                                                                                                                                                  |  |                 |         |                   |   |         |  
|Total Current Assets                                                                                                                              |  |                 |         |                   | $ | 3,555   |  
|LONG-TERM INVESTMENT, net of valuation adjustment of $1,754 in
  2006 and 2005                                                                    |  |                 |         |                   |   |        |  
|                                                                                                                                                  |  |                 |         |                   |   |         |  
|TOTAL ASSETS                                                                                                                                      |  | $               | 3,563   |                   | $ | 3,555   |  
|                                                                                                                                                  |  |                 |         |                   |   |         |  
|LIABILITIES
  AND STOCKHOLDERS EQUITY                                                                                                            |  |                 |         |                   |   |         |  
|                                                                                                                                                 
|CURRENT LIABILITIES                                                                                                                               |  |                 |         |                   |   |         |  
|Accounts payable and accrued liabilities                                                                                                          |  | $               | 86      |                   | $ | 81      |  
|                                                                                                                                                  |  |                 |         |                   |   |         |  
|Total Current Liabilities                                                                                                                         |  |                 | 86      |                   |   | 81      |  
|                                                                                                                                                  |  |                 |         |                   |   |         |  
|Commitments and contingencies                                                                                                                     |  |                 |        |                   |   |        |  
|                                                                                                                                                 
|STOCKHOLDERS EQUITY                                                                                                                              |  |                 |         |                   |   |         |  
|Preferred Stock, $.01 par value per share,
  5,000 shares authorized, none issued and outstanding                                                 |  |                 |         |                   |   |         |  
|Common Stock, $.001 par value per share,
  30,000 shares authorized, 4,587 shares issued and outstanding at June 30,
  2006 and December 31, 2005 |  |                 | 5       |                   |   | 5       |  
|                                                                                                                                                 
|Additional Paid-in Capital                                                                                                                        |  |                 | 31,704  |                   |   | 31,704  |  
|Accumulated deficit                                                                                                                               |  |                 | (28,232 | )                 |   | (28,235 | )
|                                                                                                                                                  |  |                 |         |                   |   |         |  
|Total Stockholders Equity                                                                                                                        |  |                 | 3,477   |                   |   | 3,474   |  
|                                                                                                                                                  |  |                 |         |                   |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                        |  | $               | 3,563   |                   | $ | 3,555   |  
|                                                                                                                                                  |  |                 |         |                   |   |         |  



---

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


3

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CELLULAR TECHNICAL SERVICES COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in 000s, except per share amounts)
(unaudited)

|                                             |  |                                             |       |                                           |   |       |   |      |       |   |   |       |  
|-------------------------------------------- |  | ------------------------------------------- | ----- | ----------------------------------------- | - | ----- | - | ---- | ----- | - | - | ----- | -
|                                             |  | Three Months
        Ended
        June 30, |       | Six Months
        Ended
        June 30, |  
|                                             |  |                                             |       |                                           |  
|                                             |  | 2006                                        |       | 2005                                      |   | 2006  |   | 2005 |      
|                                             |  |                                             |       |                                           |   |       |   |      |      
|                                            
|REVENUES                                     |  |                                             |      |                                           |   |      |   |      |      |   |   |      |  
|                                            
|COSTS
        AND EXPENSES                   |  |                                             |       |                                           |   |       |   |      |       |   |   |       |  
|General
        and administrative           |  |                                             | 39    |                                           |   | 88    |   |      | 74    |   |   | 193   |  
|                                             |  |                                             |       |                                           |   |       |   |      |       |   |   |       |  
|Total
        Costs and Expenses             |  |                                             | 39    |                                           |   | 88    |   |      | 74    |   |   | 193   |  
|                                             |  |                                             |       |                                           |   |       |   |      |       |   |   |       |  
|                                            
|LOSS
        FROM OPERATIONS                 |  |                                             | (39   | )                                         |   | (88   | ) |      | (74   | ) |   | (193  | )
|                                            
|OTHER
        INCOME (EXPENSE), net          |  |                                             |      |                                           |   |      |   |      |       |   |   |       |  
|                                            
|INTEREST
        INCOME                      |  |                                             | 42    |                                           |   | 18    |   |      | 77    |   |   | 27    |  
|                                             |  |                                             |       |                                           |   |       |   |      |       |   |   |       |  
|                                            
|INCOME
        (LOSS) BEFORE TAX             |  |                                             | 3     |                                           |   | (70   | ) |      | 3     |   |   | (166  | )
|                                            
|PROVISION
        FOR INCOME TAX             |  |                                             |      |                                           |   |      |   |      |      |   |   |      |  
|                                             |  |                                             |       |                                           |   |       |   |      |       |   |   |       |  
|NET
        INCOME (LOSS)                    |  | $                                           | 3     |                                           | $ | (70   | ) |      | 3     |   |   | (166  | )
|                                             |  |                                             |       |                                           |   |       |   |      |       |   |   |       |  
|BASIC
        AND DILUTED SHARE DATA:        |  |                                             |       |                                           |   |       |   |      |       |   |   |       |  
|                                            
|NET
        INCOME (LOSS)                    |  | $                                           | 0.00  |                                           | $ | (0.02 | ) | $    | 0.00  |   | $ | (0.05 | )
|                                             |  |                                             |       |                                           |   |       |   |      |       |   |   |       |  
|WEIGHTED
        AVERAGE SHARES OUTSTANDING: |  |                                             |       |                                           |   |       |   |      |       |   |   |       |  
|                                            
|Basic                                        |  |                                             | 4,587 |                                           |   | 4,280 |   |      | 4,587 |   |   | 3,376 |  
|                                             |  |                                             |       |                                           |   |       |   |      |       |   |   |       |  
|Diluted                                      |  |                                             | 4,654 |                                           |   | 4,280 |   |      | 4,654 |   |   | 3,376 |  
|                                             |  |                                             |       |                                           |   |       |   |      |       |   |   |       |  



---

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


4

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CELLULAR TECHNICAL SERVICES COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(in 000s)(unaudited)

|                                                                              |  |                          |       |      |   |       |  
|----------------------------------------------------------------------------- |  | ------------------------ | ----- | ---- | - | ----- | -
|                                                                              |  | Six Months EndedJune 30, |      
|                                                                              |  |                          |      
|                                                                              |  | 2006                     |       | 2005 |  
|                                                                              |  |                          |       |      |  
|                                                                              |  |                          |       |      |   |       |  
|OPERATING ACTIVITIES                                                          |  |                          |       |      |   |       |  
|Net Income (Loss)                                                             |  | $                        | 3     |      | $ | (166  | )
|                                                                              |  |                          |       |      |   |       |  
|Adjustments to reconcile net loss to net
  cash used in operating activities: |  |                          |       |      |   |       |  
|Non cash compensation expense (restricted
  stock)                            |  |                          |      |      |   | 14    |  
|Changes in operating assets and
  liabilities:                                |  |                          |       |      |   |       |  
|Increase in prepaid expenses, deposits and
  other current assets             |  |                          | (26   | )    |   | (54   | )
|Increase in accounts payable and accrued
  liabilities                        |  |                          | 5     |      |   | 6     |  
|                                                                              |  |                          |       |      |   |       |  
|                                                                              |  |                          |       |      |   |       |  
|NET CASH USED IN OPERATING ACTIVITIES                                         |  |                          | (18   | )    |   | (200  | )
|                                                                              |  |                          |       |      |   |       |  
|NET CASH PROVIDED BY INVESTING ACTIVITIES                                     |  |                          |      |      |   |      |  
|                                                                              |  |                          |       |      |   |       |  
|FINANCING ACTIVITIES                                                          |  |                          |      |      |   |      |  
|                                                                              |  |                          |       |      |   |       |  
|Issuance of Common Stock                                                      |  |                          |       |      |   | 1,575 |  
|                                                                              |  |                          |       |      |   |       |  
|NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                        |  |                          | (18   | )    |   | 1,375 |  
|                                                                              |  |                          |       |      |   |       |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF
  PERIOD                            |  |                          | 3,555 |      |   | 2,199 |  
|                                                                              |  |                          |       |      |   |       |  
|                                                                              |  |                          |       |      |   |       |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                    |  |                          | 3,537 |      | $ | 3,574 |  
|                                                                              |  |                          |       |      |   |       |  



---

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


5

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CELLULAR TECHNICAL SERVICES COMPANY, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A  BASIS OF PRESENTATION AND LIQUIDITY:The accompanying unaudited condensed consolidated
financial statements of Cellular Technical Services Company, Inc. (CTS or the
Company) have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The operating results for the six month period ended June 30, 2006
are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 2006. For further information, refer to the
financial statements and footnotes thereto included in the Companys Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2005 and in the Companys
other filings with the Securities and Exchange Commission. Unless the context
otherwise requires, all references to CTS or the Company herein include
Cellular Technical Services Company, Inc. and any entity over which it has or
shares operational control.

CTS has no
current business. Management currently has no plan to liquidate the Company and
distribute the remaining assets to stockholders. As of early 2004, the Company
may be considered as a dormant enterprise in accordance with Statement of
Financial Accounting Standards No. 7. The Company has been and will be
evaluating alternative businesses and acquisitions. There is no assurance that
such alternative businesses and acquisitions can be accomplished before CTS
spends all of its remaining cash balances, that CTS will be able to raise money
at acceptable terms, if at all, to fund the acquisitions and/or the operating
activities of the businesses it may acquire, and that the acquired businesses
will represent viable business strategies and/or will be consistent with the
expectations and risk profiles of CTS stockholders.

Based on
management plans, these financial statements have been prepared under the
going concern assumption which presumes that the Company will continue its
existence.

Management expects that during the remaining six months of 2006
  the Company will incur costs of approximately $0.15 million, primarily related
  to costs of maintaining the business as a public entity and insurance. The Company
  does not expect to have any current source of revenues and has de minimis operations.
  Accordingly, management believes that its cash balance as of June 30, 2006 of
  approximately $3.5 million is sufficient to fund its current cash flow requirements
  through at least the next twelve months.

The value of the Common Stock shown on the Balance Sheet as of December 31, 2005 has been reduced by $41,000 and the Additional Paid-In Capital has been increased by the same amount, to correct an error made at the time of the 10 to 1 reverse stock split in 1999.

NOTE B  STOCK OPTIONSPursuant to the Companys 1991 Qualified Stock Option and 1991 Non-Qualified
  Stock Option Plans, as amended (the 1991 Plan), the Company was
  authorized to grant options to purchase up to (i) 280,000 shares of Common Stock
  to its officers and key employees, at a price not less than the fair market
  value per share of Common Stock on the date of grant; and (ii) 120,000 shares
  of Common Stock to its directors, officers, key employees and others who rendered
  services to the Company at such price as fixed by the Compensation and Stock
  Option Committee. Options granted under the 1991 Plan generally vest to the
  respective option holders at the rate of 20% per year commencing on the first
  anniversary date of the grant. No new grants may be made under the 1991 Plan.

The
Companys 1993 Non-Employee Director Stock Option Plan allows the Company to
grant options to purchase up to 70,000 shares of Common Stock. Each
non-employee director is to be granted options to purchase: (i) 2,000 shares of
Common Stock upon initial appointment as a director of the Company; and (ii) an
additional 1,200 shares, in recurring annual increments, at a price equal to
the fair market value per share of Common Stock on the date of grant. Options
under the Non-Employee Director Plan vest to the respective option holder after
one year and have a term of ten years.

The
Companys 1996 Stock Option Plan authorizes the grant of both incentive (ISO)
and non-qualified stock options up to a maximum of 335,000 shares of the Companys
Common Stock to employees (including officers and directors who are employees)
of and consultants to the Company. The exercise price, term and vesting
provision of each option grant is fixed by the Compensation and Stock Option
Committee with the provision that the exercise price of an ISO may not be less
than the fair market value of the Companys Common Stock on the date of grant,
and the term of an ISO may not exceed ten years.

6

---



Commencing
January 1, 2006, the Company adopted Statement of Financial Accounting Standard
No. 123R, Share Based Payment (SFAS 123R), which requires all share-based
payments, including grants of stock options, to be recognized in the income
statement as an operating expense, based on their fair values.

Prior to
adopting SFAS 123R, the Company accounted for stock-based employee compensation
under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued
to Employees. The company has applied the modified prospective method in
adopting SFAS 123R. Accordingly, periods prior to adoption have not been
restated. Under the modified prospective method, awards that were
granted, modified, or settled on or after January 1, 2006 are measured and accounted
for in accordance with SFAS 123R. Unvested equity-classified awards that were
granted prior to January 1, 2006 will continue to be accounted for in
accordance with SFAS 123, except that all awards are recognized in the results
of operations over the remaining vesting periods. The impact of forfeitures
that may occur prior to vesting is also estimated and considered in the amount
recognized. In addition, the realization of tax benefits in excess of amounts
recognized for financial reporting purposes will be recognized as a financing
activity in accordance with SFAS 123R.

No tax benefits were attributed to the stock-based compensation
  expense because a valuation allowance was maintained for substantially all net
  deferred tax assets. We elected to adopt the alternative method of calculating
  the historical pool of windfall tax benefits as permitted by FASB Staff Position
  (FSP) No. SFAS 123R-3, Transition Election Related to Accounting for the
  Tax Effects of Share-Based Payment Awards. This is a simplified method
  to determine the pool of windfall tax benefits that is used in determining the
  tax effects of stock compensation in the results of operations and cash flow
  reporting for awards that were outstanding as of the adoption of SFAS 123R.

The following table illustrates the effect on net income and earnings
  (loss) per share if the fair value based method had been applied to the prior
  period (in 000s, except per share amounts).

|                                                                                                                                                    |  |                                    |       |                                  |   |       |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------- | ----- | -------------------------------- | - | ----- | -
|                                                                                                                                                    |  | Three Months Ended
  June 30, 2005 |       | Six Months Ended
  June 30, 2005 |  
|                                                                                                                                                    |  |                                    |       |                                  |  
|Reported net loss                                                                                                                                   |  | $                                  | (70   | )                                | $ | (166  | )
|                                                                                                                                                    |  |                                    |       |                                  |   |       |  
|Add: Stock Based Compensation as reported                                                                                                           |  |                                    | 7     |                                  |   | 14    |  
|Deduct: Stock-based employee compensation determined under the fair
  value based method prior to adoption of SFAS 123R, net of related tax effects |  |                                    | (7    | )                                |   | (14   | )
|                                                                                                                                                    |  |                                    |       |                                  |   |       |  
|Pro Forma net loss                                                                                                                                  |  | $                                  | (70   | )                                | $ | (166  | )
|                                                                                                                                                    |  |                                    |       |                                  |   |       |  
|                                                                                                                                                    |  |                                    |       |                                  |   |       |  
|Loss per share:                                                                                                                                     |  |                                    |       |                                  |   |       |  
|Basic and diluted  as reported                                                                                                                     |  | $                                  | (0.02 | )                                | $ | (0.05 | )
|Basic and diluted  pro forma                                                                                                                       |  | $                                  | (0.02 | )                                | $ | (0.05 | )
|                                                                                                                                                    |  |                                    |       |                                  |   |       |  

Stock option
compensation expense was $0 for the six months ended June 30, 2006.

7

---



The following
summarizes the activity of the Companys stock options for the six months ended
June 30, 2006:

Shares

Weighted 
  Average 
  Exercise 
  Price

Weighted
  Average
  Remaining
  Contractual
  Term

Aggregate 
  Intrinsic 
  ValueNumber of shares under option plans:Outstanding at January 1, 2006


175

$
8.13


5.44Granted


Exercised


Canceled or expired


Outstanding at June 30, 2006


175

$
8.13


5.19

$
106Exercisable at June 30, 2006


172

$
8.24


5.18

$
103


The Company did not grant any options during the six months period
  ended June 30, 2006.

The following
summarizes the activity of the Companys stock options that have not vested for
the six months ended June 30, 2006.

|                               |  |        |   |                                         |   |      | 
|------------------------------ |  | ------ | - | --------------------------------------- | - | ---- | 
|                               |  | Shares |   | Weighted 
  Average 
  Exercise
  Price |  
|                               |  |        |   |                                         |  
|Nonvested at January 1,
  2006 |  |        | 3 |                                         | $ | 1.74 | 
|Granted                        |  |        |  |                                         |   |     | 
|Canceled or expired            |  |        |  |                                         |   |     | 
|Vested                         |  |        |  |                                         |   |     | 
|                               |  |        |   |                                         |   |      | 
|Nonvested at June
  30, 2006   |  |        | 3 |                                         | $ | 1.74 | 
|                               |  |        |   |                                         |   |      | 

As of June 30,
2006, there was $1,000 of total unrecognized compensation cost related to
nonvested share-based compensation arrangements granted under existing stock
option plans. This cost is expected to be recognized over a weighted-average
period of 1.25 years. The total fair value of shares vested during the
six-months ended June 30, 2006 was $0.

NOTE C  CONTINGENCIES:

Legal proceedings:
The Company is not currently a party to any litigation. However, from time to
time, the Company could be subject to involvement in legal actions and claims,
which management believes will be resolved without a material adverse effect on
the Companys business, financial condition or results of operations.

NOTE D  INCOME (LOSS) PER SHARE:

The calculation of basic and
diluted income (loss) per share is as follows (in 000s, except per share
amounts):

|                                                                |  |                                 |       |                               |   |       |   |      |       |   |   |       |  
|--------------------------------------------------------------- |  | ------------------------------- | ----- | ----------------------------- | - | ----- | - | ---- | ----- | - | - | ----- | -
|                                                                |  | Three
  Months Ended
  June 30, |       | Six
  Months Ended
  June 30, |  
|                                                                |  |                                 |       |                               |  
|                                                                |  | 2006                            |       | 2005                          |   | 2006  |   | 2005 |      
|                                                                |  |                                 |       |                               |   |       |   |      |      
|Net Income (Loss) (A)                                           |  | $                               | 3     |                               | $ | (70   | ) | $    | 3     |   | $ | (166  | )
|                                                                |  |                                 |       |                               |   |       |   |      |       |   |   |       |  
|Weighted average number of shares outstanding (B)               |  |                                 | 4,587 |                               |   | 4,280 |   |      | 4,587 |   |   | 3,376 |  
|                                                                |  |                                 |       |                               |   |       |   |      |       |   |   |       |  
|Add: Dilutive effect of employee options (C)                    |  |                                 | 67    |                               |   |      |   |      | 67    |   |   |      |  
|                                                                |  |                                 |       |                               |   |       |   |      |       |   |   |       |  
|Total weighted average number of shares outstanding
(C)+(B)=(D) |  |                                 | 4,654 |                               |   | 4,280 |   |      | 4,654 |   |   | 3,376 |  
|                                                                |  |                                 |       |                               |   |       |   |      |       |   |   |       |  
|Basic income (loss) per share (A)/(B)                           |  | $                               | (0.00 | )                             | $ | (0.02 | ) | $    | (0.00 | ) | $ | (0.05 | )
|                                                                |  |                                 |       |                               |   |       |   |      |       |   |   |       |  
|Diluted income (loss) per share (A)/(D)                         |  | $                               | (0.00 | )                             | $ | (0.02 | ) | $    | (0.00 | ) | $ | (0.05 | )
|                                                                |  |                                 |       |                               |   |       |   |      |       |   |   |       |  

Outstanding stock options of
107,900 at June 30, 2006 and 192,800 at June 30, 2005, were excluded from the
computation of diluted earnings per share because their effect was
anti-dilutive.

8

---



NOTE E  OTHER EVENTS

|        |                                                             
|------- | ------------------------------------------------------------
|        | NONE                                                        
|        |                                                             
|Item 2. | Managements Discussion and Analysis or
  Plan of Operations

Special Note Regarding Forward-Looking Statements

This Quarterly
Report on Form 10-QSB contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that reflect
the Companys views with respect to future events and financial performance.
The Company uses words and phrases such as anticipate, expect, intend,
the Company believes, future, and similar words and phrases to identify
forward-looking statements. Reliance should not be placed on these
forward-looking statements. These forward-looking statements are based on
current expectations and are subject to risks, uncertainties and assumptions
that could cause, or contribute to causing, actual results to differ materially
from those expressed or implied in the applicable statements. Readers should
pay particular attention to the descriptions of risks and uncertainties
described in this report and in the Companys other filings with the Securities
and Exchange Commission. All forward-looking statements included in this report
are based on information available to the Company on the date of this report.
The Company assumes no obligation or duty to update any such forward-looking
statements.

The Company files its periodic reports with the SEC in compliance with
the small business issuer provisions of Regulation S-B, under the Securities
Exchange Act of 1934 (the Exchange Act). Generally, a Small Business Issuer
cannot file under Regulation S-B if its annual revenues or public float exceed
$25.0 million for two consecutive years. The Company qualifies as a Regulation
S-B filer since its annual revenues for both 2005 and 2004 were less than $25.0
million and its public float has not exceeded $25.0 million. Regulation S-B is
tailored for the small business issuer, and although it requires accurate and
complete disclosure, it does not require certain specific disclosures which are
required under Regulation S-K and Regulation S-X.

Management
expects that during the last six months of 2006 the Company will incur costs of
approximately $0.15 million, primarily related to costs of maintaining the
business as a public entity and insurance. The Company is not expected to have
any significant revenues or operations. There can be no assurance that the
Companys operations will be profitable on a quarterly or annual basis in the
future or that revenue levels can be enhanced. Existing revenue levels should
not be considered indicative of future operating results. Accordingly, subject
to a potential acquisition or other investment, management believes that its
cash balances as of June 30, 2006 are sufficient to fund its current cash flow
requirements through at least the next twelve months; however, unanticipated
changes may require additional financing.

The Company
has no current business. It is not engaged in any planned product research and
development and it does not anticipate doing so in the future. The Company has
disposed of all of its equipment, and has one part time employee.

Effective
January 1, 2006, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 123R, Share Based Payment. The Company elected to use
the modified prospective transition method, therefore, prior period results
were not restated. Prior to the adoption of SFAS 123R, stock-based compensation
expense related to stock options was not recognized in the results of
operations if the exercise price was at least equal to the market value of the
common stock on the grant date, in accordance with Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees. As a result, the
recognition of stock-based compensation expense was generally limited to the
expense attributed to restricted share based awards. The adoption of SFAS 123R
did not have a material effect on the Companys financial statements.

At June 30,
2006, there was approximately $1,000 of unrecognized stock compensation related
to unvested awards (net of estimated forfeitures) expected to be recognized
over the weighted average period of 1.25 years.

|        |                        
|------- | -----------------------
|Item 3. | Controls and Procedures

The Company
maintains a system of disclosure controls and procedures that is designed to
provide reasonable assurance that information, which is required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act, is accumulated and communicated to management in a timely manner.
The Companys Chief Executive Officer and Chief Financial Officer have
evaluated this system of disclosure controls and procedures as of the end of
the period covered by this quarterly report, and believe that the system is
operating effectively to ensure appropriate disclosure. There have been no changes
in the Companys internal control over financial reporting during the most
recent fiscal quarter that have materially affected, or are reasonably likely
to materially affect, the Companys internal control over financial reporting.

9

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PART II. OTHER INFORMATION

Item
6. Exhibits

| |              |                                                          
| | ------------ | ---------------------------------------------------------
| | Exhibit 31.1 | Rule
  13a-14(a) Certification by Chief Financial Officer
| | Exhibit 31.2 | Rule
  13a-14(a) Certification by Chief Executive Officer
| | Exhibit 32.1 | Section 1350
  Certification                             

SIGNATURES

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

| |                                           |                                                               | 
| | ----------------------------------------- | ------------------------------------------------------------- | 
| | CELLULAR TECHNICAL SERVICES COMPANY, INC.
| |                                          
| | By:                                       | /s/ Kenneth
  Block                                           | 
| |                                           |                                                               | 
| |                                           | Kenneth
  Block                                              
| |                                           | Secretary
  and Chief Financial Officer
        July 28, 2006

10

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