UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-QSB



(Mark One)



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



For the quarterly period ended March 31, 2007



[  ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT



For the transition period from _______ to _______



Commission file number: 000-25523



| |                                                                   | 
| | ----------------------------------------------------------------- | 
| | PBS Holding, Inc.                                                 | 
| | (Exact name of small business issuer as specified in its charter) | 



|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|NEVADA                                                         |  | 86-0857752                       
|(State or other jurisdiction of incorporation of organization) |  | (IRS Employer Identification No.)



| |                                                              | 
| | ------------------------------------------------------------ | 
| | 433 Kitty Hawk Drive, Suite 226, Universal City, Texas 78148 | 
| | (Address of principal executive office)                      | 



| |                             | 
| | --------------------------- | 
| | (210) 658-4675              | 
| | (Issuer's telephone number) | 



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 [  ]



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



The number of outstanding shares of the issuer's common stock, $0.001 par value (the only class of voting stock), as of March 31, 2007 was 11,769,539.



Transitional Small Business Disclosure Format  Yes [  ] No [X]







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PBS HOLDING, INC.

TABLE OF CONTENTS



|                               |                                                             |   
|------------------------------ | ----------------------------------------------------------- | --
|PART I  FINANCIAL INFORMATION
|                               |                                                             |   
|Item 1.                        | Financial Statements                                        |   
|                               | a.        Basis of Presentation                             | 1 
|                               | b.       Balance Sheet                                      | 3 
|                               | c.        Statements of Operations and Comprehensive Income | 5 
|                               | d.       Interim Statement of Stockholders Equity          | 6 
|                               | e.        Statements of Cash Flows                          | 7 
|                               | f.         Notes to Interim Financial Statements            | 8 
|Item 2.                        | Managements Discussion and Analysis or Plan or Operations  | 11
|Item 3.                        | Controls and Procedures                                     | 16
|                               |                                                             |   
|PART II  OTHER INFORMATION   
|                               |                                                             |   
|Item 1.                        | Legal Proceedings                                           | 18
|Item 2.                        | Unregistered Sales of Equity Securities and Use of Proceeds | 18
|Item 3.                        | Defaults upon Senior Securities                             | 18
|Item 4.                        | Submissions of Matters to a Vote of Security Holders        | 18
|Item 5.                        | Other Information                                           | 18
|Item 6.                        | Exhibits and Reports on Form 8-K                            | 18







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PART I - FINANCIAL INFORMATION



ITEM 1.

FINANCIAL STATEMENTS



Basis of Presentation

As used herein, the term the Company refers to PBS Holding, Inc., a Nevada corporation, its subsidiaries and predecessors unless otherwise indicated.  Unaudited consolidated condensed interim financial statements including a Consolidated Balance Sheet for the Company as of the quarter ended March 31, 2007 and Consolidated Statements of Operations and Comprehensive Income, and Consolidated Statements of Cash Flows for the interim period up to the date of such balance sheet and the comparable period of the preceding year for the statement of operations are attached hereto and are incorporated herein by this reference.



The accompanying unaudited Consolidated Financial Statements are presented in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions for Form 10-QSB and Item 310(b) of Regulation S-B.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  The accompanying statements should be read in conjunction with the audited financial statements for the years ended December 31, 2006 and December 31, 2005.  In the opinion of management, all adjustments (consisting only of normal occurring accruals) considered necessary in order to make the financial statements not misleading have been included.  Operating results for the three months ended March 31, 2007 are not necessarily indicative of results that may be expected for the year ended December 31, 2007.  The financial statements are presented on the accrual basis with significant inter-company transactions and balances eliminated.





1



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PBS Holding Inc.



Unaudited Financial Statements



March 31, 2007



2



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PBS Holding Inc. & Subsidiaries

Unaudited Consolidated Condensed Interim

Balance Sheet

As of March 31, 2007



|                                     |   |          
|------------------------------------ | - | ---------
|ASSETS                               |   |          
|                                     |   |          
|Current assets                       |   |          
|                                     |   |          
|Cash                                 | $ | 48,916   
|Notes receivable - related party     |   | 188,420  
|Client accounts receivable           |   | 42,794   
|Worker compensation prepaid premiums |   | 229,220  
|Employee Advances                    |   | 9,511    
|Prepaid expenses                     |   | 5,037    
|                                     |   |          
|Total Current Assets                 |   | 523,899  
|                                     |   |          
|Property & Equipment                 |   |          
|                                     |   |          
|Furniture & Fixtures                 |   | 60,111   
|Computer equipment                   |   | 103,116  
|Vehicles                             |   | 103,319  
|Payroll software                     |   | 43,724   
|                                     |   |          
|                                     |   | 310,270  
|(Less) accumulated depreciation      |   | (218,119)
|                                     |   |          
|Total Property & Equipment           |   | 92,151   
|                                     |   |          
|Other assets                         |   |          
|                                     |   |          
|Security deposits                    |   | 545      
|Customer list, net of amortization   |   | 3,600    
|                                     |   |          
|Total Other Assets                   |   | 4,145    
|                                     |   |          
|Total Assets                         | $ | 620,195  





3



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PBS Holding Inc. & Subsidiaries

Unaudited Consolidated Condensed Interim

Balance Sheet

As of March 31, 2007



|                                                                |   |            
|--------------------------------------------------------------- | - | -----------
|LIABILITIES                                                     |   |            
|                                                                |   |            
|Current liabilities                                             |   |            
|                                                                |   |            
|Accounts payable                                                | $ | 82,315     
|Checks drawn on uncollected payroll                             |   | 237,397    
|Deferred revenue on payrolls                                    |   | 26,351     
|Client payroll tax payable                                      |   | 901,348    
|Client payroll amount withheld                                  |   | 59,314     
|Workers comp payable                                            |   | 86,129     
|Current maturities on long term debt                            |   | 25,941     
|Due to shareholder/officer                                      |   | 79,970     
|                                                                |   |            
|Total Current Liabilities                                       |   | 1,498,765  
|                                                                |   |            
|Other liabilities                                               |   |            
|                                                                |   |            
|Note payable, net of current portion                            |   | 49,424     
|                                                                |   |            
|Total Liabilities                                               |   | 1,548,189  
|                                                                |   |            
|Stockholders' Equity (Deficiency)                               |   |            
|                                                                |   |            
|Common stock, - $.001 par value authorized - 750,000,000 shares |   |            
|Issued and outstanding 11,769,539  Shares                       |   | 11,769     
|Paid in excess of par                                           |   | 1,226,550  
|Accumulated (deficit)                                           |   | (2,166,312)
|                                                                |   |            
|Total Stockholders' Equity (Deficiency)                         |   | (927,993)  
|                                                                |   |            
|Total Liabilities and Stockholders' Equity (Deficiency)         | $ | 620,195    





4



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PBS Holding Inc. & Subsidiaries

Unaudited Consolidated Condensed Interim

Statement of Operations

For the  Three Months Ended March 31, 2007 and 2006



|                                                      |                 |            |      |   |           
|----------------------------------------------------- | --------------- | ---------- | ---- | - | ----------
|                                                      | Current Quarter
|                                                      | 2007            |            | 2006
|                                                      |                 |            |      |   |           
|Revenues                                              | $               | 1,241,681  |      | $ | 1,229,840 
|Cost Of Revenues                                      |                 | 858,596    |      |   | 836,969   
|Gross Profit                                          |                 | 383,085    |      |   | 392,871   
|                                                      |                 |            |      |   |           
|Operating Expenses                                    |                 |            |      |   |           
|General and Administrative                            |                 | 284,648    |      |   | 333,423   
|Wages, commissions & salaries                         |                 | 263,548    |      |   | 146,304   
|Officers' compensation                                |                 | 117,028    |      |   | 80,553    
|                                                      |                 | 665,224    |      |   | 560,280   
|                                                      |                 |            |      |   |           
|(Loss) from Operations                                |                 | (282,139)  |      |   | (167,409) 
|                                                      |                 |            |      |   |           
|Other Income & Expense                                |                 |            |      |   |           
|Consulting expenses                                   |                 | -          |      |   | (21,600)  
|Acquisition costs                                     |                 | -          |      |   | (28,800)  
|Employee services paid with stock warrants            |                 | -          |      |   | (7,480)   
|Non employee services paid with stock warrants        |                 | -          |      |   | (36,706)  
|Non employee services paid with stock                 |                 | -          |      |   | (136,176) 
|                                                      |                 |            |      |   |           
|Total Other Income & (Expenses)                       |                 | -          |      |   | (230,762) 
|                                                      |                 |            |      |   |           
|(Loss) Before Provision For Income Tax                |                 | -          |      |   | (398,171) 
|                                                      |                 |            |      |   |           
|Provision For Income Taxes                            |                 | -          |      |   | -         
|                                                      |                 |            |      |   |           
|Net (Loss)                                            | $               | (282,139)  |      | $ | (398,171) 
|                                                      |                 |            |      |   |           
|Basic & Diluted Net (loss) Per Share                  | $               | (0.0240)   |      | $ | (0.0359)  
|                                                      |                 |            |      |   |           
|Basic and Diluted Weighted Average Shares Outstanding |                 | 11,769,539 |      |   | 11,092,540





5



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PBS Holding Inc. & Subsidiaries

Unaudited Consolidated Condensed Interim

Statement of Stockholders' Equity (Deficiency)

For the Period Ended March 31, 2007



|                          |              |  |          |        |             |            |              |  |              |             |  |   |          
|------------------------- | ------------ |  | -------- | ------ | ----------- | ---------- | ------------ |  | ------------ | ----------- |  | - | ---------
|                          |              |  |          |        |             | Additional |              |  |              |             |  |  
|                          | Common Stock |  | Paid-In- |        | Accumulated |            | Total Equity
|                          | Shares       |  | Amount   |        | Capital     |            | (Deficit)    |  | (Deficiency)
|                          |              |  |          |        |             |            |              |  |              |             |  |   |          
|                          |              |  |          |        |             |            |              |  |              |             |  |   |          
|Balance December 31, 2006 | 11,769,539   |  | $        | 11,769 |             | $          | 1,226,550    |  | $            | (1,884,173) |  | $ | (645,854)
|                          |              |  |          |        |             |            |              |  |              |             |  |   |          
|Net (Loss)                |              |  |          |        |             |            |              |  |              | (282,139)   |  |   | (282,139)
|                          |              |  |          |        |             |            |              |  |              |             |  |   |          
|Balance March 31, 2007    | 11,769,539   |  | $        | 11,769 |             | $          | 1,226,550    |  | $            | (2,166,312) |  | $ | (927,993)





6



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PBS Holding Inc. & Subsidiaries

Statements Of Cash Flow

For The Quarter Ended March 31, 2007 and 2006



|                                                                                                   |      |           |      |   |          
|-------------------------------------------------------------------------------------------------- | ---- | --------- | ---- | - | ---------
|                                                                                                   | 2007 |           | 2006
|Net Income                                                                                         | $    | (282,139) |      | $ | (398,171)
|Adjustments to reconcile net income (loss) to net cash provided by (used by) operating activities: |      |           |      |   |          
|Depreciation and amortization                                                                      |      | 9,307     |      |   | 8,846    
|(Increase) decrease in accounts receivable                                                         |      | 71,535    |      |   | 13,219   
|(Increase) decrease in prepaid expense                                                             |      | (5,037)   |      |   | 174      
|(Increase) decrease in other current assets                                                        |      | (34,589)  |      |   | 43,712   
|Deposit Received from Heart acquisition                                                            |      | 25,000    |      |   |          
|(Increase) decrease in other assets                                                                |      | 315       |      |   | -        
|Increase (decrease) in accounts payable                                                            |      | (30,689)  |      |   | 82,935   
|Increase (decrease) in client payroll tax liability                                                |      | 79,940    |      |   | 153,390  
|Deferred revenue on payrolls                                                                       |      | 8,628     |      |   | 229      
|Increase (decrease) in other current liabilities                                                   |      | 14,922    |      |   | (34,052) 
|Checks drawn on uncollected payrolls                                                               |      | 157,749   |      |   | (29,635) 
|Non cash expense for consulting services                                                           |      | -         |      |   | 172,882  
|Non cash expense for employee services                                                             |      | -         |      |   | 7,480    
|Total Adjustments                                                                                  |      | 297,072   |      |   | 419,180  
|                                                                                                   |      |           |      |   |          
|Net cash provided by (used in) operating activities                                                |      | 14,933    |      |   | 21,009   
|                                                                                                   |      |           |      |   |          
|Cash flows from investing activities                                                               |      |           |      |   |          
|Payments for the purchase of property                                                              |      | -         |      |   | (3,394)  
|                                                                                                   |      |           |      |   |          
|Net cash provided by  (used in) investing activities                                               |      | -         |      |   | (3,394)  
|                                                                                                   |      |           |      |   |          
|Cash flows provided by (used in) from financing activities                                         |      |           |      |   |          
|Net borrowings under line of credit                                                                |      | -         |      |   | (7,898)  
|Principal payments on short-term debt                                                              |      | (9,570)   |      |   | (6,250)  
|Due to shareholders/officers                                                                       |      | -         |      |   | -        
|Stock sales                                                                                        |      | -         |      |   | 40,000   
|                                                                                                   |      |           |      |   |          
|Net cash provided by (used in) financing activities                                                |      | (9,570)   |      |   | 25,852   
|                                                                                                   |      |           |      |   |          
|Net increase (decrease) in cash and cash equivalents                                               |      | 5,363     |      |   | 43,467   
|Cash and cash equivalents at beginning of year                                                     |      | 43,553    |      |   | 84,712   
|                                                                                                   |      |           |      |   |          
|Cash and Cash equivalents at end of quarter                                                        | $    | 48,916    |      | $ | 128,179  
|                                                                                                   |      |           |      |   |          
|Supplemental Information                                                                           |      |           |      |   |          
|                                                                                                   |      |           |      |   |          
|Cash payments for interest expense                                                                 | $    | 1,409     |      | $ | 754      
|Cash payments for income taxes                                                                     |      | -         |      |   | -        
|                                                                                                   |      |           |      |   |          
|Non cash items                                                                                     |      |           |      |   |          
|Warrants exercised in current quarter                                                              | $    | -         |      | $ | 15,676   
|Stock issued for consulting services                                                               |      | -         |      |   | 120,500  
|Stock warrants granted:                                                                            |      |           |      |   |          
|For non employee services                                                                          |      | -         |      |   | 36,706   
|For employee services                                                                              |      |           |      |   | 7,480    
|Total Non Cash Items                                                                               | $    |           |      | $ | 180,362  



7



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PBS Holding Inc. and Subsidiaries

Notes to Unaudited Consolidated Condensed Interim Financial Statements

March 31, 2007





NOTE 1  BASIS OF PRESENTATION



The condensed interim financial statements at March 31, 2007 are unaudited, but include all adjustments which the Company considers necessary for a fair presentation.



The accompanying unaudited financial statements are for the interim periods and do not include all disclosures normally provided in annual financial statements, and should be read in conjunction with the Companys Form 10-KSB for the year ended December 31, 2006. The accompanying unaudited interim financial statements for the current quarter and year to date ended March 31, 2007, are not necessarily indicative of the results which can be expected for the entire year.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.



NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



The Company has consolidated the financial statements of its wholly owned subsidiaries, Primary Business Systems, LLC, Primary HR Services, LLC and AHJR Inc., dba/Concord Staffing Services in these financial statements.  All significant intercompany transactions have been eliminated.



All significant accounting policies as previously disclosed with the annual financial statements for the years ended December 31, 2006 and 2005 remain unchanged.



NOTE 3  CHANGE IN STOCKHOLDERS EQUITY

The statement of changes in stockholders equity is reported in these financial statements and discloses the transactions as they were incurred in the nine months ended September 30, 2006.  These warrants and stock transactions are issued in reliance upon the exemption provided by Section 4(2) of the Securities Act and/or Rule 506 of Regulation D.

Stock Issued and Warranted Granted

The fair values of the warrants granted are reported as equity grants using the guidance of SFAS 123R and are computed using the Black-Scholes Model.  The fair values of the restricted stock issued are reported using the guidance of SFAS 123R and are computed using the fair market value of non restricted common stock at the times of issue reduced by what management recognizes as a fair consideration based on the nature of the restriction placed on the stocks issued.  Warrants granted are remeasured at the end of each reporting period and recorded based on the intrinsic value determined by management as of the end of the period.

No stock or warrants were granted or issued to employees or non employees for services for the period ended March 31, 2007.  The total warrants granted that remain outstanding as of March 31, 2007 are for the possible conversion of warrants for 1,522,500 shares of common stock.



8



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Stock Options Awarded

On March 29, 2006 the Company entered into a five year contract with Patrick Matthews, CEO, which was effective January 2006.  The stock options are made available on a monthly basis in a value equal to the difference of the base salary and monies actually paid.  Mr. Matthews earned 7,032 shares of common stock each month for three months ended March 31, 2007 for a total of 21,096 for the period then ended.  The total options awarded and not exercised as of March 31, 2007 total 105,480 options exercisable for shares of common stock.  None of these options have been exercised as of March 31, 2007.



On March 29, 2006 the Company entered into a five year contract with Amanda Sinclair, COO, which was effective January 2006.  The stock options are made available on a monthly basis in a value equal to the difference of the base salary and monies actually paid.  Mrs. Sinclair earned 1,549 shares of common stock each month for three months ended March 31, 2007 for a total of 4,647 for the period then ended.  The total options awarded and not exercised as of March 31, 2007 total 23,235 options exercisable for shares of common stock.  None of these options have been exercised as of March 31, 2007.



The total options granted that remain outstanding as of March 31, 2007 are for the possible conversion of options to stock of 128,715 shares of common stock.



In accordance with FASB no. 123R the expense reported for the stock option based compensation is re-measured at the end of each reporting period and any changes in the fair market value of the compensation will be reported in the period in which the change occurs.  For the period ended March 31, 2007 management determined that there was no intrinsic value of the options granted as of March 31, 2007 and have not recognized any expense.



The statement of changes in stockholders equity is reported in these financial statements and discloses that no other transactions were incurred in the three months ended March 31, 2007.



NOTE 4  RELATED PARTY TRANSACTIONS



Notes Receivable reported as a current asset of $188,420 is due from Consumers Insurance Agency, LLC.  The primary member of the LLC is Patrick Matthews who is the majority shareholder in the Company.  The notes receivable are made up of revolving cash advances to the LLC and expenses paid on behalf of the LLC by the Company.



These revolving notes receivable were part of the 2002 acquisition of the present operations of the Company.  At the time of acquisition these revolving notes receivable were for an amount greater than presently reported in the financial statements as of March 31, 2007.



NOTE 5  HEART ACQUISION DEPOSIT AND SETTLEMENT



During the quarter ended March 31, 2007 the Company settled a dispute over the $50,000 deposit made in connection with the acquisition of Heart Inc.  The terms of the acquisition have been disclosed in prior quarters 10Q and in the audited financial statements for the years ended December 31, 2006 and 2005.  The settlement with Heart Inc. was for a return of $25,000 of the acquisition deposit of $50,000 and recognition of $25,000 of acquisitions costs reported in the Statement of Income for the year ended December 31, 2006.  The deposit amount refunded of $25,000 was received during the quarter ended March 31, 2007.





9



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NOTE 6  CLIENT PAYROLL TAX PAYABLE

Timing differences occur between when the client pays the related invoices for payroll services and when the related payroll tax deposits are due, which can result in payroll tax deposit penalties.  Besides this, the Company incurred significant litigation costs and costs associated with the letter of intent to purchase Heart Employee Leasing Services, Inc.  This contributed to the Companys lack of sufficient working capital to cover all of its obligations.

Consequently, certain payroll tax liabilities have not been paid timely and the Company has incurred payroll tax penalties.  The total penalties paid during 2006 were $159,101 while the penalties paid for the quarter ended March 31, 2007 total $59,710.

The Company believes it has stabilized its cash outflow demands and anticipates the ongoing late payment of payroll taxes and its related penalties should show improvement in 2007.

NOTE 7  GOING CONCERN ISSUES

The Company continues suffering losses and working capital reflects more current liabilities than current assets.  Unless sufficient additional cash flows come into the Company, either through equity financing, profits, or a reduction of cash expenses, the Company could be in jeopardy of continuing operations.  Management has developed a strategy, which it believes will accomplish this objective through additional long and short-term loans and sale of Common Stock of the Company.



10



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ITEM 2.

MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION



Forward Looking and Cautionary Statements

The following discussion contains forward-looking statements.  The Companys actual results could differ materially from those discussed in such forward-looking statements.  Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Form 10-QSB.  See Cautionary Note Regarding Forward-Looking Statements.  The following discussion should be read in conjunction with the Companys condensed consolidated financial statements and notes thereto included elsewhere in this filing and in conjunction with Form 10-KSB including risk factors stated therein.  Historical results are not necessarily indicative of trends in operating results for any future period.



Critical Accounting Policies and Estimates

The Company believes its significant critical accounting policies have not changed since fiscal year ended December 31, 2006.  See Note 2 of the Companys annual report on Form 10-KSB as well as "Critical Accounting Policies" contained therein for a detailed discussion on the application of these and other accounting policies.



Revenue Recognition

The gross billings of each of PBS LLC, Primary HR, and AHJR (sometimes hereinafter collectively referred to as the Subsidiaries) consists of charges to its clients under its Client Service Agreement including each worksite employees gross wages, a service fee and, to the extent elected by the clients, health and welfare benefit plan costs.  The service fees, which are computed as a percentage of gross wages, are intended to yield a profit to the Subsidiaries and cover the cost of certain employment-related taxes, workers compensation insurance coverage, and administrative and field services provided by the Subsidiaries to the client, including payroll administration, record keeping, safety/risk management, human resources, and regulatory compliance consultation.  The component of the service fee related to administration varies according to the size of the client, the amount and frequency of payroll payments and the method of delivery of such payments.  The component of the service fee related to workers compensation and unemployment insurance is based, in part, on the clients historical claims experience.  All charges by the Subsidiaries are invoiced along with each periodic payroll delivered to the client.

The Company reports revenues from service fees in accordance with Emerging Issues Task Force (EITF) No. 99-19, reporting revenue gross as a principal versus net as an agent.  The Company reports as revenues, on a gross basis, the total amount billed to clients for service fees, health and welfare benefit plan fees, workers compensation and unemployment insurance fees.  The Company reports revenues on a gross basis for these fees because PBS LLC and Primary HR are the primary obligors and deemed to be the principal in these transactions under EITF No. 99-19.  The Company reports revenues on a net basis for the amount billed to clients for worksite employee salaries, wages and certain payroll-related taxes less amounts paid to worksite employees and taxing authorities for these salaries, wages and taxes.  The Company accounts for its revenues using the accrual method of accounting.  Under the accrual method of accounting, the Company recognizes its revenues in the period in which the worksite employee performs work.  The Company accrues revenues and unbilled receivables for service fees relating to work performed by worksite employees but unpaid at the end of each period.  In addition, the related costs of services are accrued as a liability for the same period.  Subsequent to the end of each period, such costs are paid and the related Professional Employer Organization service fees are billed.

Overview

The business of the Company is to operate in the Professional Employer Organization industry and the Temporary Staffing Services industry and operates through the Subsidiaries and as economies of scale can be realized, combine the individual entities in each sector.



11



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PBS LLC and Primary HR are regional Professional Employer Organizations committed to providing human capital management solutions.  PBS LLC and Primary HR offer clients, which are typically small to medium-sized businesses with between five and fifty employees, a broad range of products and services that provide a complete solution for the clients human resources outsourcing needs.  PBS LLCs products and services include benefits administration, payroll administration, governmental compliance, risk-management, unemployment administration, health, and welfare and retirement benefits.

AHJR is a regional temporary staffing service company helping business meet their staffing needs while minimizing their employee acquirement cost.  AHJR offers qualified screened employees to clients that meet their employment needs on temporary bases.  AHJR provides all payroll administration, unemployment administration and assignment administration of the temporary staff.

Revenues

Revenues consist of service fees charged by the Subsidiaries to cover the costs of certain employment-related taxes, workers compensation insurance coverage and administrative and field services provided to clients.  The service fee charged is invoiced along with each periodic payroll delivered to the client.  The clients portion of health plan costs is charged separately and is not included in the service fee.  Service revenues are recognized in the period in which the worksite employee works.  Under this accrual method of accounting, service fees relating to worksite employees with earned but unpaid wages at the end of each period are recognized as unbilled revenues and the related payroll costs for such wages are accrued as a liability during the period in which the worksite employee earns wages.  Subsequent to the end of each period, such wages are paid and the related service fees are billed.



Cost of Services

Cost of services includes all direct costs associated with revenue generating activities as well as employee benefit costs, workers compensation insurance and state unemployment taxes.



Employee benefit costs are comprised primarily of medical benefit costs, but also include costs of other employee benefits such as dental, disability and group life insurance.  Benefit claims incurred by worksite employees under the benefit plans are expensed as incurred according to the terms of each contract.



In certain instances, PBS LLC chooses to make a contribution toward the cost of the worksite employees medical benefit costs.  In most small group health markets, medical benefit plan rates vary based on the medical participants demographics.  In order to offer a competitively priced business solution, PBS LLC may offer reduced medical benefit plan rates to worksite employees with positive risk characteristics.  The additions of these selected worksite employees offsets potential adverse selection and helps to stabilize the overall medical benefit plan risk to PBS LLC.



PBS LLC offers its medical benefit plans through partnerships with premier health care companies.  These companies have extensive provider networks and strong reputations in the markets in which PBS LLC operates.



All of PBS LLCs healthcare providers offer preferred provider organization (PPO) coverage.



PBS LLCs workers compensation program since November 18, 2000 is with Texas Mutual Insurance Company.  In November 2006 PBS LLC renewed its workers compensation program which is a guaranteed cost program.  Under this program PBS LLC has no liability beyond the premiums of the policy.  The current policy term expires in November 2007.



Primary HR obtained workers compensation from the AMFED Companies LLC effective July 2006 through July 2007. The program is a guaranteed cost program where the company has no liability beyond the premiums of the policy.



State unemployment tax rates vary from state to state and are based upon the employers claims history.  PBS LLC aggressively manages its state unemployment tax exposure by contesting unwarranted claims.





12



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Operating Expenses

Operating expenses consist primarily of salaries, wages and commissions associated with the Subsidiaries internal employees, and general and administrative expenses.  Sales and marketing commissions and client referral fees are expensed as incurred.  The Company expects that future revenue growth will result in increased operating leverage, as the Subsidiaries fixed operating expenses are leveraged over a larger revenue base.



Income Taxes

The Company records income tax expense using the asset and liability method of accounting for deferred income taxes.  The Companys effective tax rate for 2006 was 0%.



Profitability

Profitability is largely dependent upon the Subsidiaries success in generating revenues for their services and managing the costs that are within its control.  Revenues and costs of service primarily relate to workers compensation coverage, health benefit plans and state unemployment taxes.  The Subsidiaries seek to manage these costs through the use of (a) workers compensation arrangements with carriers who efficiently manage claims administration, internal risk assessment and client risk management programs, (b) appropriately designed health benefit plans that encourage worksite employee participation, and (c) aggressive management of its state unemployment tax exposure.



Results of Operations

The following discussion should be read in conjunction with the Company's Annual Report on Form 10-KSB for the year ended December 31, 2006, including all amendments thereto, as well as the consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-QSB.



The following table presents the Companys results of operations for the three months ended March 31, 2007 and 2006, expressed as a percentage of revenues:



|                                  |                    |  |        
|--------------------------------- | ------------------ |  | -------
|                                  | Three Months Ended
|                                  | March 31          
|                                  | 2007               |  | 2006   
|Revenues                          | 100.00             |  | 100.00 
|Cost of Services                  | 69.15              |  | 68.06  
|                                  |                    |  |        
|Gross Profit                      | 30.85              |  | 31.94  
|Operating Expenses:               |                    |  |        
|General and administrative        | 22.92              |  | 27.11  
|Salaries, wages and commissions   | 21.23              |  | 11.90  
|Officers compensation            | 9.42               |  | 6.55   
|                                  |                    |  |        
|Total operating costs             | 55.37              |  | 45.56  
|                                  |                    |  |        
|Operations (loss) income          | (22.72)            |  | (13.61)
|Other income & (expenses)         | -                  |  | (18.76)
|                                  |                    |  |        
|(Loss) income before income taxes | (22.72)            |  | (32.38)
|Income tax (benefit) provision    | -                  |  | -      
|                                  |                    |  |        
|Net income (loss)                 | (22.72)            |  | (32.38)



Quarter ended March 31, 2007 compared to March 31, 2006

For the quarter ended March 31, 2007, net revenues increased $11,841 or .96% from 2006, totaling $1,241,681 in 2007 compared to $1,229,840, for 2006.  The three-month increase reflects our focus on sales and our ability to replace our largest client who left December 31 due to the sale of their business to a firm out of state.





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Cost of services, which includes the cost of medical benefit plans, workers compensation insurance, 401K administration cost, state unemployment taxes and other costs for the quarter ended March 31, 2006 totaled $858,596 or 69.15% of net revenues for 2007, compared to $836,969 or 68.06% for 2006.  The increase in cost is consistent with the addition of new clients and leased employees that are affected by an increase of our state unemployment rate which is realized through the first $9,000 of employee wages.



Gross profit for the quarter ended March 31, 2007 was $383,085 or 30.85% of net revenue compared to $392,871 or 31.94% for 2006.



Operating expenses for the quarter ended March 31, 2007 was $665,224 or 53.57 % of net revenue compared to $560,280 or 45,56% of net revenues for 2006 the break out of expenses is as follows.



Salaries, wages and commissions for the quarter ended March 31, 2006, were $263,548 or 21.23% of net revenue compared to $146,304 or 11.90% for 2006.  The majority of the increase is attributable to the increase in commissions paid on new business throughout the quarter.



Officers compensation for the quarter ended March 31, 2007 was $117,028 or 9.42% of net revenue compared to $80,553 or 6.55% for 2006.



General and administrative expenses for the quarter ended March 31, 2007 was $284,684, or 22.92% of net revenue compared to $333,423, or 27.11 % of net revenue in 2006, representing an increase of $167,866 in general and administrative expenses.



The results of operations excluding other income and expenses for the quarter ended March 31, 2007 resulted in a loss of $(282,139) or 13.61% as compared to a loss of $(167,409) or (13.67) % for 2006.  Most of this expense is attributable to increases in payroll expenses from commissions paid and the results of the employment contracts with the officers which was entered into in 2006 and went in effect during March 2006.



Total other income and expenses for the quarter ended March 31, 2006 was $0 or 0% of net revenue compared to $(230,762) or (18.76) % for 2006.   As a result of our evaluation of the effectiveness of those consultants hired to affect our acquisition strategy we determined the expenses were not justified at this time and thus eliminated.



Consulting expenses for the quarter ended March 31, 2007 was $0 compared to $21,600 for the same period in 2006.



Acquisition costs for the quarter ended March 31, 2007 were $0 compared to $28,800 for the same period in 2006.



Employee services paid with common stock warrants for the quarter ended March 31, 2007 were $0 compared to $7,480 for the same period in 2006.



Non-employee services paid with common stock warrants for the quarter ended March 31, 2007 were $0 compared to $28,800 for the same period in 2006.



Non-employee services paid with stock for the quarter ended March 31, 2007 were $0 compared to $136,176 for the same period in 2006.



We experienced a net loss from operations for the quarter ended March 31, 2007 of $(282,139) or 22.72% of net revenue as compared to a net loss of $(398,171) or (32.38)% of net revenue for 2006.  This represents a decrease in losses of $116,032 or 29.14% for the quarter.  The reduction in losses is attributable to the reduction in expenses associated with acquisitions, consultants, litigation costs and accruals for stock paid for services.  We believe by focusing on the growth of the company and reducing non-productive costs we will continue to decrease our losses. Our sales and marketing efforts will continue to improve our revenues and our management team will endeavor to provide the best service possible at the lowest cost. Our focus is and will remain providing value to our share holders.





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Liquidity and Capital Resources

The Company had $48,916 in cash and cash equivalents March 31, 2007. Additionally the Company had $229,220 in restricted cash and restricted deposits. The Company is required to collateralize its obligations under its workers compensation coverage.  The Company uses its cash as well as certificates of deposits to collateralize these obligations as more fully described below.



On November 18, 2006, PBS LLC had deposited $229,220, as collateral with PBS LLCs workers compensation plans upon renewal of its plan for 2006/2007.  PBS LLCs workers compensation programs for the November 2000 through November 2006 program years are subject to no further collateral adjustments.



The Company has long-term debt as of March 31, 2007 of $79,970 to its largest shareholder, who is an officer and director of the Company.



The charges to clients by PBS LLC, Primary HR and AHJR derived from salaries, wages and payroll taxes is managed from a cash flow perspective so that a matching exists between the time that the funds are received from a client to the time that the funds are paid to the worksite employees and to the appropriate tax jurisdictions.  As co-employers, and under the terms of their Client Service Agreements, PBS LLC, Primary HR and AHJR are obligated to make certain wage, tax and regulatory payments.  Because of this requirement, the objective of each subsidiary is to minimize the credit risk associated with remitting the payroll and associated taxes before receiving from the client the service fees charged by PBS LLC.



PBS LLCs primary short-term capital requirements relate to the payment of accrued payroll and payroll taxes of its internal and worksite employees, accounts payable for capital expenditures and the payment of accrued workers compensation expense and health benefit plan premiums.



Going Concern Issues

We expect to spend significant amounts to expand domestic sales and operations through mergers and acquisitions.  As a result, we will need to generate significant additional revenue to achieve profitability based on such planned expenditures and expansion.  Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.  If we do not achieve and maintain profitability, the market price for our common stock may decline.



If we do not receive additional capital when and in the amounts needed in the near future, our ability to continue as a going concern is in substantial doubt. We have limited revenue and limited cash assets, and will require additional equity or capital investments.



Obtaining future financing may be costly and will likely be dilutive to existing stockholders.  If we are not able to obtain financing when and in the amounts needed, and on terms that are acceptable, our operations, financial condition and prospects could be materially and adversely affected, and we could be forced to curtail our operations or sell part or all of our assets.  Management continually is seeking additional sources of capital to maintain the ongoing operations of the Company.



Material Commitments for Capital Expenditures

Neither the Companys Board of Directors nor Management has made any commitments for capital expenditures.



Inflation

The Company believes that inflation in salaries and wages of worksite employees have a positive impact on its results of operations, as its service fee is proportional to such changes in salaries and wages.



Off-balance Sheet Arrangements

The Company does not currently have any off-balance sheet arrangements.



Purchase of Registrants Securities

The Company did not purchase any of its securities during the quarter ended March 31, 2007.





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ITEM 3.

CONTROLS AND PROCEDURES



Our management, under the supervision and with the participation of our Chief Executive Officer and Controller, conducted an evaluation of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c)) as of the end of the period covered by this Report on Form 10-QSB.  Based on their evaluation, our Chief Executive Officer and Chief Financial Officer (who is also our controller and principal accounting officer) have concluded that as of the date of the end of the period covered by this Report on Form 10-QSB, our disclosure controls and procedures are effective to ensure that all information required to be filed in this Report on Form 10-QSB is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.



Changes in Internal Controls

There have been no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls or in other factors that could significantly or materially, or have materially or are reasonably likely to materially affect these controls over financial reporting.



Cautionary Note Regarding Forward Looking Statements

The statements contained in this filing, including under the section titled Managements Discussion and Analysis or Plan or Operations, and other sections of the filing that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including without limitation, statements regarding the Companys expectations, hopes, beliefs, intentions or strategies regarding the future. Words such as may, will, should, could, would, predicts, potential, continue, expects, anticipates, future, intends, plans, believes, estimates, and similar expressions, as well as statements in future tense, identify forward-looking statements.  These forward-looking statements are based on the Companys current expectations and beliefs concerning future developments and their potential effects on the Company.  There can be no assurance that future developments affecting the Company will be those that the Company has anticipated.  These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the Companys control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements.  These risks and uncertainties include, but are not limited to, those factors listed below:





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§

Potential liability as a co-employer as a result of acts or omissions by the Company's clients or client employees;

§

Exposure to client credit risk as a result of the Company's obligation to make certain payments in respect of client employees;

§

Unfavorable determinations under certain laws and regulations regarding the Company's status as an "employer" of client employees;

§

Inadequacy of the Company's insurance-related loss reserves to cover its ultimate liability for losses;

§

Unavailability of insurance coverage for workers' compensation, medical benefits and general liability on financial terms and premium rates acceptable to the Company;

§

Significant collateral requirements in respect to the Company's obligations to its insurance carriers and the potential for those requirements to increase in the future;

§

The Company's failure to comply with applicable laws and regulations in a complex regulatory environment;

§

Inexperience of a large portion of the Company's sales staff;

§

The Companys failure to properly manage its growth and to successfully integrate acquired companies, including risks of client attrition and the risks associated with assumed employee benefit plans;

§

Risks associated with geographic market concentration;

§

Risks associated with expansion into additional states with varying state regulatory requirements;

§

The impact of competition from existing and new businesses offering human resource outsourcing services;

§

The ability of the Company's clients to terminate their relationship with the Company upon 30 days notice;

§

Errors or omissions by the Company in performing its services;

§

The Company's dependency on key personnel and potential difficulties and expenses in the recruitment and retention of key employees;

§

The Company's inability to attract and retain qualified human resource consultants;

§

Risks associated with the Company's dependency on technology services and third party licenses of technology;

§

The Company's inability to use the Internet as a means of delivering human resource services;

§

Fluctuation in interest rates and the associated effect on the Company's investments;

§

The Company's failure to adequately protect its proprietary rights;

§

The Company's reliance on one financial institution to transfer its payroll funds;

§

Other factors which are described in further detail in the Companys Form 10-KSB, and in other filings with the Securities and Exchange Commission; and

§

The Companys need for capital.



The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as may be required under applicable securities laws.  The Company cautions that the factors described above could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company.  Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.  New factors emerge from time to time, and it is not possible for management to predict all of such factors.  Further, management cannot assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.





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PART II  OTHER INFORMATION



ITEM 1.

LEGAL PROCEEDINGS



The Company currently is not engaged in any legal proceedings.



Changes in Securities and Purchases of Securities

The Company has not undertaken any purchases of its securities in the last fiscal quarter or the current fiscal quarter as of the date of this Report.



Our transfer agent is Registrar and Transfer Company located at 10 Commerce Drive, Cranford, New Jersey 07016.  The telephone number of Registrar and Transfer is 800-866-1340.



ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



None



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)

Exhibits

i.

Exhibit 31., Certification of Chief Executive Officer and Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

ii.

Exhibit 32.1, Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

b)

Reports on Form 8-K during the quarter:

None





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SIGNATURES



In accordance with the requirements of Section 13 or 15 (d) of the Exchange Act, the Registrant caused this Report to be on its behalf by the undersigned, thereunto dully authorized, this 18th day of May, 2007.



| |  |                                                                                                
| |  | -----------------------------------------------------------------------------------------------
| |  | /s/ Patrick Matthews                                                                           
| |  | Patrick Matthews                                                                               
| |  | President, Chief Executive Officer and Chief Financial Officer and Principal Accounting Officer
| |  | PBS Holding, Inc.                                                                              

















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