U.S.
Securities and Exchange Commission


Washington,
D.C. 20549
 FORM
10-Q
 
 (Mark
      One)xQuarterly
      Report Pursuant to Section 13 or 15(d) ofthe
      Securities Exchange Act of 1934For
      the quarterly period ended March 31, 2010 ̈Transition
      Report Pursuant to Section 13 or 15(d)of
      the Securities Exchange ActFor
      the transition period from N/A to N/A


Commission File No.000-53013
 
 
 Pro-Tech
Industries, Inc.
 (Name of
small business issuer as specified in its charter)
 Nevada
                  
                  20-8758875State
      of Incorporation
                  
                  IRS
      Employer Identification
No.
 8550
Younger Creek DR, #2
 Sacramento,
CA 95828
 (Address
of principal executive offices)
 
 (916)
388-0255
 (Issuer’s
telephone number)
 
 (Meltdown
Massage & Body Works, Inc.)
 (Former
name or Former Address if Changes Since Last Report)
 
 Securities
registered under Section 12(b) of the Exchange Act:
 None
 Securities
registered under Section 12(g) of the Exchange Act:
 Common
Stock, $0.001 par value per share
 (Title
of Class)
 
 
 Indicate
by check mark whether the Registrant (1) has filed all reports required by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports) and (2) has been subject to such filing requirements
for the past 90 days:  Yes  x
    No   ̈
  Indicate
by check mark whether the Registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No o
  Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non–accelerated filer. See definition of “accelerated
filer large accelerated filer” and “Smaller reporting company”in Rule 12b–2 of the
Exchange Act. (Check one):
 
 Large
accelerated filer   ̈Accelerated filer   ̈Non–Accelerated filer   ̈Smaller reporting companyx
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b–2 of the Exchange Act).  Yes   ̈    No  x
 
 Transitional
Small Business Disclosure Format (check one): Yes  ̈ No x
 
 Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
 
 Class
                
                Outstanding atMay24, 2010Common
      stock, $0.001 par value
                
                18,074,852
  
  PRO-TECH
INDUSTRIES, INC.
 
 INDEX
TO FORM 10-Q FILING
 MARCH
31, 2010
 
 TABLE
OF CONTENTS
 
 PART
I
 FINANCIAL
INFORMATION
 
 Page
                                          NumbersPART
      I - FINANCIAL INFORMATIONItem 1.
                                        Condensed
      Consolidated Financial Statements (unaudited)
                                        3Condensed
      Consolidated Balance Sheets
                                        4Condensed
      Consolidated Statements of Operations
                                        5Condensed
      Consolidated Statement of Cash Flows
                                        6Notes
      to Condensed Consolidated Financial Statements
                                        8Item 2.
                                        Management
      Discussion & Analysis of Financial Condition and Results of
      Operations
                                        20Item 3
                                        Quantitative
      and Qualitative Disclosures About Market Risk
                                        26Item 4.
                                        Controls
      and Procedures
                                        26PART
      II - OTHER INFORMATIONItem1
                                        Legal
      Proceedings
                                        27Item1A
                                        Risk
      Factors
                                        27Item 2.
                                        Unregistered
      Sales of Equity Securities and Use of Proceeds
                                        30Item 3.
                                        Defaults
      Upon Senior Securities
                                        30Item 4.
                                        Removed
      and Reserved
                                        30Item 5
                                        Other
      information
                                        30Item 6.
                                        Exhibits
                                        30Signature
                                        32CERTIFICATIONSExhibit
      31 – Management certificationExhibit
      32 – Sarbanes-Oxley Act
  2
  PART
      I
              FINANCIAL
      INFORMATION
 
 Item 1.
              Interim Unaudited
      Condensed ConsolidatedFinancial Statements and Notes
      toInterim
      Unaudited Condensed ConsolidatedFinancial
      Statements
  Pro-Tech
Industries, Inc.
  (Formerly
Meltdown Massage and Body Works, Inc.)
  General
 
 The
accompanying reviewed interim consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q.  Therefore, they
do not include all information and footnotes necessary for a complete
presentation of financial position, results of operations, cash flows, and
stockholders' equity in conformity with generally accepted accounting
principles.  Except as disclosed herein, there has been no material change
in the information disclosed in the notes to the consolidated financial
statements included in the Company's annual report on Form 10-K for the year
ended December 31, 2009.  In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature.  Operating results for the three months ended March 31,
2010 are not necessarily indicative of the results that can be expected for the
year ending December 31, 2010.
 
 Index
to Financial Statements
 
 PageCondensed
      Consolidated Balance Sheets as of March 31, 2010 (Unaudited) and December
      31, 2009
                            4Unaudited
      Condensed Consolidated Statements of Operations for the three months
      ended March 31, 2010 and 2009
                            5Unaudited
      Condensed Consolidated Statement of Cash Flows for the three months
      ended March 31, 2010 and 2009
                            6Notes
      to Unaudited Condensed Consolidated Financial Statements
                            8
      ~20
  3
  PRO-TECH
INDUSTRIES, INC.
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 
 March 31, 2010
                  
                  
                  December31,2009(unaudited)ASSETSCurrent
      Assets:Cash
      and cash equivalents
                  
                  $
                  152,210
                  
                  
                  $
                  172,490Contract
      receivable, net of allowance for doubtful accounts  as of March
      31, 2010 and December 31, 2009, of $110,000 and $60,000,
      respectively
                  
                  
                  3,720,887
                  
                  
                  
                  3,850,051Costs
      and estimated earnings in excess of billings
                  
                  
                  396,230
                  
                  
                  
                  306,073Note
      receivable – related party
                  
                  
                  77,000
                  
                  
                  
                  77,000Inventory
                  
                  
                  248,968
                  
                  
                  
                  273,968Other
      current assets
                  
                  
                  158,537
                  
                  
                  
                  155,386Total
      current assets
                  
                  
                  4,753,832
                  
                  
                  
                  4,834,968Property
      and equipment:
                  
                  
                  874,041
                  
                  
                  
                  874,041Less:
      accumulated depreciation
                  
                  
                  600,578
                  
                  
                  
                  571,394Net
      property and equipment
                  
                  
                  273,463
                  
                  
                  
                  302,647Other
      Assets:Intangibles,
      net of  accumulated amortization as of  March 31, 2010
      and December 31, 2009, of $228,761 and $181,431,
    respectively
                  
                  
                  55,218
                  
                  
                  
                  102,548Goodwill
                  
                  
                  331,075
                  
                  
                  
                  331,075Deposits
                  
                  
                  10,856
                  
                  
                  
                  10,856Total
      assets
                  
                  $
                  5,424,444
                  
                  
                  $
                  5,582,094LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)Current
      Liabilities:Accounts
      payable and accrued expenses
                  
                  $
                  3,519,602
                  
                  
                  $
                  2,713,840Notes
      payable – others –current portion
                  
                  
                  216,728
                  
                  
                  
                  213,394Accruals
      on uncompleted contracts
                  
                  
                  445,781
                  
                  
                  
                  244,763Reserve
      for loss on uncompleted contracts
                  
                  
                  -
                  
                  
                  
                  90,514Deferred
      tax liability
                  
                  
                  -
                  
                  
                  
                  80,490Line
      of credit
                  
                  
                  1,000,000
                  
                  
                  
                  900,000Total
      current liabilities
                  
                  
                  5,182,111
                  
                  
                  
                  4,243,000Long
      -Term Liabilities:Notes
      payable- others  – long term portion
                  
                  
                  358,527
                  
                  
                  
                  414,071LT
      Deferred tax liability
                  
                  
                  -
                  
                  
                  
                  -Commitments
      and contingencies
                  
                  
                  -
                  
                  
                  
                  -Stockholders'
      Equity (Deficit):Common
      Stock, $0.001 par value; 70,000,000 shares authorized; 18,074,852 and
      17,997,213 shares issued and outstanding at March 31, 2010 and
      December 31, 2009, respectively
                  
                  
                  18,594
                  
                  
                  
                  18,594Paid
      in capital
                  
                  
                  1,432,866
                  
                  
                  
                  1,421,467Accumulated deficit
                  
                  
                  (1,567,654
                  )
                  
                  
                  (515,038
                  )Total
      stockholders’ equity (deficit)
                  
                  
                  (116,194
                  )
                  
                  
                  925,023Total
      liabilities and stockholders' equity (deficit)
                  
                  $
                  5,424,444
                  
                  
                  $
                  5,582,094
 
 The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
  4
  PRO-TECH
INDUSTRIES, INC.
 CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
 (UNAUDITED)
 
 Three Months Ended
                    March 31, 2010
                  
                  
                  Three Months Ended
                    March 31, 2009Net revenue
                  
                  $
                  4,109,946
                  
                  
                  $
                  4,405,174Cost
      of sales
                  
                  
                  3,724,156
                  
                  
                  
                  2,592,028Gross
      profit
                  
                  
                  385,790
                  
                  
                  
                  1,813,146Operating
      Expenses:Selling,
      general and administrative
                  
                  
                  1,403,193
                  
                  
                  
                  1,571,857Depreciation
      and amortization
                  
                  
                  76,514
                  
                  
                  
                  36,623Total
      Operating Expenses
                  
                  
                  1,479,707
                  
                  
                  
                  1,608,480(Loss)
      Income from Operations
                  
                  
                  (1,093,917
                  )
                  
                  
                  204,666Other
      Income (Expense):Interest
      income(expense), net
                  
                  
                  (39,190
                  )
                  
                  
                  (22,020
                  )Total
      Other Expenses
                  
                  
                  (39,190
                  )
                  
                  
                  (22,020
                  )(Loss)
      Income before income taxes
                  
                  
                  (1,133,107
                  )
                  
                  
                  182,646Income
      taxes (benefit)
                  
                  
                  (80,490
                  )
                  
                  
                  60,316Net
      Income (Loss)
                  
                  $
                  (1,052,617
                  )
                  
                  $
                  122,330Net
      income (loss) per common shareBasic
                  
                  $
                  (0.06
                  )
                  
                  $
                  0.01Diluted
                  
                  $
                  (0.06
                  )
                  
                  $
                  0.01Weighted
      average common shares outstanding
                  
                  
                  18,022,600
                  
                  
                  
                  17,933,333
 
 The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
  5
  PRO-TECH
INDUSTRIES, INC.
 CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 (UNAUDITED)
 
 2010
                  
                  
                  2009Cash
      Flows From Operating Activities:Net
      income (loss) from operations
                  
                  $
                  (1,052,617
                  )
                  
                  $
                  122,330Adjustments
      to reconcile net  income (loss) to net cash provided by
      operating activities:Depreciation
      and amortization
                  
                  
                  76,514
                  
                  
                  
                  36,623Bad
      debt write off
                  
                  
                  35,314
                  
                  
                  
                  4,828Accrual
      for bad debt allowance
                  
                  
                  50,000
                  
                  
                  
                  -Deferred
      tax liability, net
                  
                  
                  (80,490
                  )
                  
                  
                  (21,363
                  )Stock
      issued to employees and board of directors
                  
                  
                  11,400
                  
                  
                  
                  -Stock
      issued for services
                  
                  
                  -
                  
                  
                  
                  12,000Accruals
      (reversal) of loss against uncompleted contracts
                  
                  
                  (90,514
                  )
                  
                  
                  (6,576
                  )(Increase)
      decrease in:Contract
      receivable
                  
                  
                  43,851
                  
                  
                  
                  (147,928
                  )Inventory
                  
                  
                  25,000
                  
                  
                  
                  -Other
      current assets, net
                  
                  
                  (3,152
                  )
                  
                  
                  130,862Costs
      and estimated earnings in excess of billings
                  
                  
                  (90,157
                  )
                  
                  
                  46,826Billings
      in excess of costs and estimated earnings
                  
                  
                  201,018
                  
                  
                  
                  (122,581
                  )Increase
      (decrease) in:Accounts
      payable and accrued expenses, net
                  
                  
                  809,097
                  
                  
                  
                  (261,231
                  )Net
      Cash Used In Operating Activities
                  
                  
                  (64,736
                  )
                  
                  
                  (206,210
                  )Cash
      Flows From Investing Activities:Cash
      received on purchase of subsidiary
                  
                  
                  -
                  
                  
                  
                  9,043Purchase
      of property and equipment
                  
                  
                  -
                  
                  
                  
                  (10,520
                  )Net
      Cash Used In Investing Activities
                  
                  
                  -
                  
                  
                  
                  (1,477
                  )Cash
      Flows From Financing Activities:Payments
      of long term debt
                  
                  
                  (55,544
                  )
                  
                  
                  (45,205
                  )Net
      proceeds from line of credit
                  
                  
                  100,000
                  
                  
                  
                  181,227Net
      Cash Provided by Financing Activities
                  
                  
                  44,456
                  
                  
                  
                  136,023Net
      Decrease in Cash And Cash Equivalents
                  
                  
                  (20,280
                  )
                  
                  
                  (71,664
                  )Cash
      and cash equivalents at beginning of period
                  
                  
                  172,490
                  
                  
                  
                  86,895Cash
      and cash equivalents at the end of period
                  
                  $
                  152,210
                  
                  
                  $
                  15,232Supplemental
      Disclosures of Cash Flow Information:Cash
      paid during period for interest
                  
                  $
                  30,808
                  
                  
                  $
                  20,936Cash
      paid during period for taxes
                  
                  $
                  -
                  
                  
                  $
                  -
 
 The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
  6
  PRO-TECH
INDUSTRIES, INC.
 CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
 (UNAUDITED)
 (continued)
 
 2010
                  
                  
                  2009Non-cash
      Investing and Financing Activities:Shares
      issued for compensation
                  
                  $
                  11,400
                  
                  
                  $
                  12,000Acquisition:Current
      assets acquired
                  
                  $
                  -
                  
                  
                  $
                  338,435Equipment
      and other assets acquired
                  
                  
                  -
                  
                  
                  
                  6,505Intangible
      assets acquired
                  
                  
                  -
                  
                  
                  
                  615,054Liabilities
      assumed
                  
                  
                  -
                  
                  
                  
                  (578,994
                  )Shares
      issued as consideration
                  
                  $
                  -
                  
                  
                  $
                  381,000
 
 The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
  7
  PRO-TECH
INDUSTRIES, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 March
31, 2010
 (Unaudited)
 
 NOTE
A - SUMMARY OF ACCOUNTING POLICIES
 
 A summary
of the significant accounting policies applied in the preparation of the
accompanying condensed consolidated financial statements follows.
 
 Business and Basis of
Presentation
 
 Pro-Tech
Fire Protection Systems Corp. (“Pro-Tech”) was incorporated on May 4, 1995 under
the laws of the State of California to engage in any lawful corporate
undertaking, including, but not limited to; installation, repair and inspections
of fire protection systems in commercial, military and industrial
settings.
 
 Pro-Tech
Fire Protection Systems is a full-service contractor serving the western United
States, with offices in California and Nevada. Services include estimating,
designing, fabricating, and installing all types of standard and specialty
water-based fire protection systems. In addition, the company offers “Day Work”
services, including inspecting, testing, repairing and servicing of
same.
 
 The
Company serves the new construction market, as well as customers retro-fitting,
upgrading or repairing their existing facilities, bringing existing facilities
to current standards (for example, installing sprinklers at a customer’s
expanded storage warehouse, etc.).
 
 NOTE
B - MERGER AND CORPORATE RESTRUCTURE
 
 On
December 31, 2008, the stockholders of Pro-Tech Fire Protection Systems Corp.
(“Pro-Tech”) entered into an agreement for the exchange of common stock
(“Acquisition Agreements”, “the Transaction”, or “Merger”) with the Company. The
Company had a total of 70,000,000 authorized shares with a par value of $0.001
per share and 3,500,000 shares issued and outstanding as of December 31,
2008.
 
 The
Company’s year end for accounting purposes was December 31, 2008. As a result of
the Merger, there was a change in control of the public entity. In accordance
with Statement of Financial Accounting Standards 141, Pro-Tech is deemed to be
the acquiring entity. While the transaction is accounted for using the purchase
method of accounting, in substance the Merger is a recapitalization of
Pro-Tech’s capital structure
 
 For
accounting purposes, the Company accounted for the transaction as a reverse
acquisition and Pro-Tech is the surviving entity. The total purchase price and
carrying value of net assets acquired was $3,500. The Company did not recognize
goodwill or any intangible assets in connection with the transaction. As of the
date of the Agreement, the Company was an inactive corporation with no
significant assets and liabilities.
 
 Effective
with the Acquisition Agreements, all previously outstanding common stock owned
by Pro-Tech’s stockholders were exchanged for an aggregate of 10,100,000 shares
of the Company’s common stock, $0.001 par value (“the Common Stock”).  As
part of the Transaction it was agreed that, all outstanding shares would remain
outstanding. The effect of the Transaction was that 3,500,000 shares of Common
Stock would be retained.
 
 The value
of the stock issued was the historical cost of the Company's net tangible assets
of $3,500, which did not differ materially from their fair value. The total
consideration paid of $3,500 is summarized further below.
 
 December 31, 2008Common
      stock retained
                    
                    $
                    3,500Assets
      acquired
                    
                    
                    (-
                    )Liabilities
      assumed
                    
                    
                    -Total
      consideration paid
                    
                    $
                    3,500
  8
  In
accordance with Statement of Position 98-5 (“SOP 98-5”), the Company expensed
$3,500 as organization costs.
 
 On May 8,
2009, the Company’s stockholders approved a name change from Meltdown Massage
and Body Works, Inc. to Pro-Tech Industries, Inc. which became effective with
the filing of an amendment to the our Articles of Incorporation on May 11,
2009.  The Company is now known as Pro-Tech Industries, Inc. and the new
ticker symbol is PTCK.
 
 NOTE
C - SUMMARY OF ACCOUNTING POLICIES
 
 Revenue
Recognition
 
 The
Company recognizes revenues from fixed-price and modified fixed-price
construction contracts on the percentage-of-completion method, measured by the
percentage of cost incurred to date to estimated total cost for each contract.
That method is used because management considers total cost to be the best
available measure of progress on the contracts. Because of inherent
uncertainties in estimating costs, it is at least reasonably possible that the
estimates used will change within the near term. The Company also recognizes
revenue from non-fixed price (time and materials) contracts.  The revenue
from these contracts is billed monthly and is based on actual time and material
costs which have occurred on the job for the billing period.
 
 Contract
costs include all direct material and labor costs and those indirect costs
related to contract performance, such as indirect labor, supplies, tools,
repairs, and depreciation. Selling, general, and administrative costs are
charged to expense as incurred. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are determined. Changes in
job performance, job conditions, and estimated profitability may result in
revisions to costs and income, which are recognized in the period in which the
revisions are determined. Changes in estimated job profitability resulting from
job performance, job conditions, contract penalty provisions, claims, change
orders, and settlements, are accounted for as changes in estimates in the
current period.
 
 Revenue
on contracts can be derived from different disciplines and is accounted for on a
consolidated basis by job to see overall performance, as well as the ability to
break the job down by discipline to see how each contributes to the overall
performance of the job.
 
 The
asset, “Costs and estimated earnings in excess of billings on uncompleted
contracts”, represents revenues recognized in excess of amounts billed. The
liability, “Billings in excess of costs and estimated earnings on uncompleted
contracts,” or “accruals on uncompleted contracts” represents billings in excess
of revenues recognized.
 
 Contract
Receivables
 
 Contract
receivables are recorded when invoices are issued and are presented in the
balance sheet net of the allowance for doubtful accounts. Contract receivables
are written off when they are determined to be uncollectible. The allowance for
doubtful accounts is estimated based on the Company’s historical losses, the
existing economic conditions in the construction industry, and the financial
stability of its customers.
 
 Inventory
 
 The
Company maintains an inventory which primarily consists of small parts such as
sprinkler heads, gaskets, pipe joints, junction boxes, outlets, etc. which comes
from closed jobs or economical buying opportunities.  They get used for
repair work or filler when jobs run short. The inventory on hand was $248,968
and $273,968 at March 31, 2010 and December 31, 2009,
respectively.
 
 Advertising
 
 The
Company follows the policy of charging the costs of advertising to expenses
incurred. The Company incurred $10,166 and $10,997, of advertising costs for
the three months ended March 31, 2010 and 2009,
respectively.
  9
  Income
Taxes
 
 In
accordance with Accounting Standards Codification subtopic 740-10, Income Taxes
(“ASC 740-10”) deferred income taxes are the result of the expected future tax
consequences of temporary differences between the financial statement and tax
basis of assets and liabilities. Generally, deferred income taxes are classified
as current or non-current in accordance with the classification of the related
asset or liability. Items that are not related to an asset or liability are
classified as current or non-current depending on the periods in which the
temporary differences are expected to reverse. A valuation allowance is provided
against deferred income tax assets in circumstances where management believes
the recoverability of a portion of the assets is not reasonably assured. Losses
incurred, if any, are carried forward as applicable Accounting Standards
Codification subtopic 740-10, Income Taxes (“ASC 740-10”) and the Internal
Revenue Code and potentially may be used to offset taxable net income generated
in the future. The Company had previously elected to be treated as a subchapter
“S” corporation for federal tax purposes.  The reverse merger caused the
Company to lose its subchapter “S” corporation status.  The Company became
responsible for $849,628 in deferred income that carried forward from 2007 when
Pro-Tech was forced to change from cash to accrual based taxpayer. 
Pro-Tech took a 481a election to spread the acceleration over 4 years.  The
Company provides for income taxes based on pre-tax earnings reported in the
consolidated financial statements. Certain items such as depreciation are
recognized for tax purposes in periods other than the period they are reported
in the consolidated financial statements.  Following the reverse merger
status, beginning, January 1, 2009, the Company became a C-Corp and subject to
standard quarterly taxes provisions.  Results of operations may not be
comparable to prior results.
  Cash
Equivalents
 
 For
purposes of the Statements of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity date of three months or less
to be cash equivalents.
 
 Property and
Equipment
 
 Property
and equipment are stated at cost and depreciated over their estimated useful
lives of 3 to 10 years using the straight-line method as follows:
 
 Construction
      equipment
                        5-7yearsAutomobiles
                        5
      yearsComputer
      Software
                        3
      yearsOffice
      equipment and furniture
                        3-7yearsLeasehold
      improvements
                        life
      of the lease agreement where
appropriate
 
 Maintenance
and repairs to automobiles, equipment, furniture and computers is expensed as
incurred.  There is no re-evaluation of useful life as most of the assets
are short term in nature and the repairs or maintenance are in the normal course
of the operating life of the asset.  Upon disposal of assets, the Company
reduces the asset account and the accumulated depreciation account for the
balances at that point in time.  The difference between the amounts
received greater than the book value is recognized as a gain and if the
amount is less than the book value is recognized as a loss.  Depreciation
is not included in cost of goods sold.
 
 Long-Lived
Assets
 
 The
Company has adopted Accounting Standards Codification subtopic 360-10, Property,
Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets
and certain identifiable intangibles held and used by the Company be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Events relating to
recoverability may include significant unfavorable changes in business
conditions, recurring losses, or a forecasted inability to achieve break-even
operating results over an extended period.  The Company evaluates the
recoverability of long-lived assets based upon forecasted undiscounted cash
flows. Should any impairment in value be indicated, the carrying value of
intangible assets will be adjusted, based on estimates of future discounted cash
flows resulting from the use and ultimate disposition of the asset.  ASC
360-10 also requires assets to be disposed of be reported at the lower of the
carrying amount or the fair value less costs to sell.
 
 Concentrations of Credit
Risk
 Financial
instruments and related items, which potentially subject the Company to
concentrations of credit risk, consist  primarily of cash, cash equivalents
and receivables.  The Company places its cash and temporary cash
investments with credit quality institutions.  At times, such investments
may be in excess of the FDIC insurance limit. The Company periodically reviews
its contract receivables in determining its allowance for doubtful accounts. The
allowance for doubtful accounts was $110,000 and $60,000 as of March 31, 2010
and December 31, 2009, respectively.
  10
  Basic and Diluted Earnings
(Loss) Per Share
  Basic and
diluted income or loss per common share is based upon the weighted average
number of common shares outstanding during the three months ended March 31, 2010
and 2009, under the provisions of Accounting Standards Codification subtopic
260-10, Earnings Per Share (“ASC 260-10”), “Earnings Per Share” and as
amended/superseded in “Compensation” (“ASC 718-10”). As the Company had net loss
for the three months ended March 31, 2010 and net income for the three months
ended March 31, 2009. The Company did not have any common stock equivalents
issued or outstanding as of March 31, 2010 or for any other earlier
period.  Non-vested shares have been excluded as common stock equivalents
in the diluted earnings per share because they are either anti-dilutive, or
their effect is not material.
 
 Stock Based
Compensation
 
 The
Company adopted Accounting Standards Codification subtopic 718-10, Compensation
(“ASC 718-10”), Accounting for Stock-Based Compensation, to account for
compensation costs under our stock option plans. In adopting ASC 718-10, company
elected to use the modified prospective method to account for the transition
from the intrinsic value method to the fair value recognition method. Under the
modified prospective method, compensation cost is recognized from the adoption
date forward for all new stock options granted and for any outstanding unvested
awards as if the fair value method had been applied to those awards as of the
date of grant. We had no outstanding unvested awards at the adoption date or
earlier period. The Company uses the fair value method for equity
instruments granted to non-employees and uses the Black Scholes model for
measuring the fair value. The stock based fair value compensation is determined
as of the date of the grant or the date at which the performance of the services
is completed (measurement date) and is recognized over the periods in which the
related services are rendered.
 
 Comprehensive
Income
 
 The
Company adopted Accounting Standards Codification subtopic 220-10, Comprehensive
Income (“ASC 220-10”). ASC 220-10 establishes standards for the reporting and
displaying of comprehensive income and its components. Comprehensive income is
defined as the change in equity of a business during a period from transactions
and other events and circumstances from non-owners sources. It includes all
changes in equity during a period except those resulting from investments by
owners and distributions to owners. ASC 220-10 requires other comprehensive
income (loss) to include foreign currency translation adjustments and unrealized
gains and losses on available for sale securities.
 
 Segment
Information
 
 Accounting
Standards Codification subtopic Segment Reporting 280-10 (“ASC 280-10”)
establishes standards for reporting information regarding operating segments in
annual financial statements and requires selected information for those segments
to be presented in interim financial reports issued to stockholders. ASC 280-10
also establishes standards for related disclosures about products and services
and geographic areas. Operating segments are identified as components of an
enterprise about which separate discrete financial information is available for
evaluation by the chief operating decision maker, or decision-making group, in
making decisions how to allocate resources and assess performance. The
information disclosed herein materially represents all of the financial
information related to the Company’s principal operating segment.
 
 Use of
Estimates
 
 The
preparation of consolidated financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly
actual results could differ from those estimates.
 
 Fair
Value
  In
January 2008, the Company adopted the Accounting Standards Codification subtopic
825-10, Financial Instruments (“ASC 825-10”) which defines fair value for
accounting purposes, establishes a framework for measuring fair value and
expands disclosure requirements regarding fair value measurements. The Company’s
adoption of ASC 825-10 did not have a material impact on its consolidated
financial statements. Fair value is defined as an exit price, which is the price
that would be received upon sale of an asset or paid upon transfer of a
liability in an orderly transaction between market participants at the
measurement date. The degree of judgment utilized in measuring the fair value of
assets and liabilities generally correlates to the level of pricing
observability. Financial assets and liabilities with readily available, actively
quoted prices or for which fair value can be measured from actively quoted
prices in active markets generally have more pricing observability and require
less judgment in measuring fair value. Conversely, financial assets and
liabilities that are rarely traded or not quoted have less price observability
and are generally measured at fair value using valuation models that require
more judgment. These valuation techniques involve some level of management
estimation and judgment, the degree of which is dependent on the price
transparency of the asset, liability or market and the nature of the asset or
liability. At March 31, 2010 and December 31, 2009 the Company did not have any
financial assets measured at fair value on a recurring basis.
  11
  Reclassifications
 
 Certain
reclassifications have been made to conform prior period data to the current
presentation. These reclassifications had no effect on reported
income.
 
 New Accounting
Pronouncements
 
 On
February 24, 2010, Financial Accounting Standards Board  (“FASB”)
the FASB issued guidance in the “Subsequent Events” topic of the FASC to provide
updates including: (1) requiring the company to evaluate subsequent events
through the date in which the financial statements are issued; (2) amending
the glossary of the “Subsequent Events” topic to include the definition of “SEC
filer” and exclude the definition of “Public entity”; and (3) eliminating
the requirement to disclose the date through which subsequent events have been
evaluated. This guidance was prospectively effective upon issuance. The adoption
of this guidance did not impact the Company’s results of operations of financial
condition.
 
 In
January 2010, the FASB issued FASB ASU 2010-06, “Improving Disclosures about Fair
Value Measurements”, FASB to amend the disclosure requirements related to
recurring and nonrecurring fair value measurements. The guidance requires
new disclosures on the transfers of assets and liabilities between Level 1
(quoted prices in active market for identical assets or liabilities) and Level 2
(significant other observable inputs) of the fair value measurement hierarchy,
including the reasons and the timing of the transfers. Additionally, the
guidance requires a roll forward of activities on purchases, sales, issuance,
and settlements of the assets and liabilities measured using significant
unobservable inputs (Level 3 fair value measurements). The guidance became
effective for us with the reporting period beginning January 1, 2010,
except for the disclosure on the roll forward activities for Level 3 fair value
measurements, which will become effective for us with the reporting period
beginning July 1, 2011. Other than requiring additional disclosures,
adoption of this new guidance did not have a material impact on our financial
statements.
  In
October 2009, the FASB issued FASB ASU No. 2009-13, Revenue Recognition (Topic
605): “Multiple Deliverable
Revenue Arrangements – A Consensus of the FASB Emerging Issues Task
Force.” This standard provides application guidance on whether multiple
deliverables exist, how the deliverables should be separated and how the
consideration should be allocated to one or more units of accounting. This
update establishes a selling price hierarchy for determining the selling price
of a deliverable. The selling price used for each deliverable will be based on
vendor-specific objective evidence, if available, third-party evidence if
vendor-specific objective evidence is not available, or estimated selling price
if neither vendor-specific or third-party evidence is available. ASU 2009-13 may
be applied retrospectively or prospectively for new or materially modified
arrangements in fiscal years beginning on or after June 15, 2010, with early
adoption permitted.  The Company is currently assessing the impact on its
consolidated financial position and results of operations
  12
  Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not, or are not believed by
management to, have a material impact on the Company’s present or future
consolidated financial statements.
  NOTE D – CONTRACT
RECEIVABLES
  Contract
receivables consist of the followings:
 
 March 31, 2010
                    
                    
                    December 31,2009Contracts
      receivables
                    
                    $
                    3,250,537
                    
                    
                    $
                    3,245,701Retention
      receivables
                    
                    
                    580,349
                    
                    
                    
                    664,350Less:
      Allowance for doubtful Accts
                    
                    
                    (110,000
                    )
                    
                    
                    (60,000
                    )$
                    3,720,886
                    
                    
                    $
                    3,850,051
  NOTE E – UNCOMPLETED
CONTRACTS
  At March
31, 2010 and December 31, 2009, costs, estimated earnings, and billings on
uncompleted contracts are summarized as follows:
  March31,2010
                    
                    
                    December31,2009Costs
      incurred to date on uncompleted contracts
                    
                    $
                    8,153,160
                    
                    
                    $
                    19,169,775Estimated
      earnings
                    
                    
                    1,176,529
                    
                    
                    
                    3,422,9319,329,689
                    
                    
                    
                    22,592,706Less:
      billed revenue to date
                    
                    
                    (9,379,240
                    )
                    
                    
                    (22,531,396
                    )Net
                    
                    $
                    (49,551
                    )
                    
                    $
                    61,310Costs
      and estimated earnings in excess of billings
                    
                    $
                    396,230
                    
                    
                    $
                    306,073Less:
      accruals on uncompleted contracts
                    
                    
                    (445,781
                    )
                    
                    
                    (244,763
                    )Net
                    
                    $
                    (49,551
                    )
                    
                    $
                    61,310
  NOTE
F – BACKLOG
  The
following schedule summarizes changes in backlog on contracts from January 1,
2009 through March 31, 2010. Backlog represents the amount of revenue the
Company expects to realize from work to be performed on uncompleted contracts in
progress at year end and from contractual agreements on which work has not yet
begun.
 
 Backlog
      balance at January 1, 2009
                    
                    $
                    4,089,892New
      contracts for the year ended December 31, 2009
                    
                    
                    23,556,981Add:
      contract adjustments
                    
                    
                    1,672,307Less:
      revenue for the year ended December 31, 2009
                    
                    
                    (18,609,920
                    )Backlog
      balance at December 31, 2009
                    
                    $
                    10,709,260New
      contracts for the quarter ended March 31, 2010
                    
                    
                    2,454,515Add:
      contract adjustments
                    
                    
                    373,413Less:
      revenue for the quarter ended March 31, 2010
                    
                    
                    (4,109,946
                    )Backlog
      balance at March 31, 2010
                    
                    $
                    9,427,242
 13
  NOTEG– PROPERTY AND
EQUIPMENT
  Major
classes of property and equipment at March 31, 2010 and December 31, 2009
consist of the followings:
 
 March 31, 2010
                    
                    
                    December 31,2009Vehicles
                    
                    $
                    196,948
                    
                    
                    $
                    196,948Leasehold
      improvements
                    
                    
                    232,629
                    
                    
                    
                    232,629Office
      equipments
                    
                    
                    215,792
                    
                    
                    
                    215,792Tools
      and other equipment
                    
                    
                    228,672
                    
                    
                    
                    228,672874,041
                    
                    
                    
                    874,041Less:
      accumulated depreciation
                    
                    
                    (600,578
                    )
                    
                    
                    (571,394
                    )Net
      Property and Equipment
                    
                    $
                    273,463
                    
                    
                    $
                    302,647
 
 Depreciation
expense was $29,184 and $10,998 for the three months ended March 31, 2010 and
2009, respectively.
 
 NOTE
H – INTANGIBLE ASSETS AND GOODWILL
 
 Total
identifiable intangible assets acquired and their carrying values at March 31,
2010 are:
 
 Gross
                          Carrying
                          Amount
                        
                        
                        Accumulated
                          Amortization/
                          Impairment
                        
                        
                        Net
                        
                        
                        Residual
                          Value
                        
                        
                        Weighted
                          Average
                          Amortization
                          Period (Years)Amortized
      Identifiable Intangible
                          Assets:
      Jones Fire non compete
                        
                        $
                        20,000
                        
                        
                        $
                        (20,000
                        )
                        
                        $
                        -
                        
                        
                        
                        -
                        
                        
                        
                        5.0Total
      Amortized identifiable Intangible Assets
                        
                        
                        20,000
                        
                        
                        
                        (20,000
                        )
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        
                        5.0Total
                        
                        $
                        20,000
                        
                        
                        $
                        (20,000
                        )
                        
                        $
                        -
                        
                        
                        $
                        -
 
 Total
identifiable intangible assets acquired and their carrying values at March 31,
2010 are:
 
 Gross
                          Carrying
                          Amount
                        
                        
                        Accumulated
                          Amortization/
                          Impairment
                        
                        
                        Net
                        
                        
                        Residual
                          Value
                        
                        
                        Weighted
                          Average
                          Amortization
                          Period (Years)Intangible
      Assets and Goodwill:Amortized
      Identifiable Intangible Assets: Conesco backlog, customer
      lists
                        
                        $
                        283,979
                        
                        
                        $
                        (228,761
                        )
                        
                        $
                        55,218
                        
                        
                        $
                        -
                        
                        
                        
                        1.5Total
      Amortized identifiable Intangible Assets
                        
                        
                        283,979
                        
                        
                        
                        (228,761
                        )
                        
                        
                        55,218
                        
                        
                        
                        
                        
                        
                        
                        1.5Goodwill
      - Conesco
                        
                        
                        331,075
                        
                        
                        
                        -
                        
                        
                        
                        331,075
                        
                        
                        
                        -Total
                        
                        $
                        615,054
                        
                        
                        $
                        (228,761
                        )
                        
                        $
                        386,293
                        
                        
                        $
                        -
 
 Total
amortization expense charged to operations for the three months ended March
31, 2010 and 2009 was $47,330 and $25,625, respectively. Estimated amortization
expense as of March 31, 2010 is as follows:
 
 Period
      Ended December 31, 2010
                      
                      $
                      55,218Total
                      
                      $
                      55,218
 
 The
Company does not amortize goodwill. The Company recorded goodwill in the amount
of $331,075 as a result of the acquisitions of Conesco, Inc. during the year
ended December 31, 2009.   The Company evaluates goodwill for
impairment based on the fair value of the operating business units to which this
goodwill relates at least once a year. The Company generally determines the fair
value of a reporting unit using a combination of the income approach, which is
based on the present value of estimated future cash flows, and the market
approach, which compares the business unit's multiples to its competitors. At
March 31, 2010, the Company has determined that the value of Conesco’s goodwill
is fairly valued.
  14
  The
estimated fair value of our goodwill could change if the Company is unable to
achieve operating results at the levels that have been forecasted, the market
valuation of our business decreases based on transactions involving similar
companies, or there is a permanent, negative change in the market demand for the
services offered by the Company. These changes could result in a further
impairment of the existing goodwill balance that could require a material
non-cash charge to our results of operations.
 
 On
January 16, 2009, the Company entered in to an agreement for the exchange of
common stock (“merger”) with the shareholders of Conesco (“Conesco
Shareholders”) and Conesco, Inc. (“Conesco”).  The Company issued 3,000,000
restricted shares of its common stock valued at $381,000 in exchange for all
outstanding shares of Conesco. Conesco became a wholly owned subsidiary of the
Company.
 
 The total
purchase price and carrying value of net assets acquired was $381,000.  The
Company recognized customer list as intangible assets in connection with
the transaction. At the time of the acquisition, there was no active market for
the Company’s common stock. As a result, the Company’s management estimated
the fair value of the shares issued based on a valuation model, which
management believes approximates the fair value of the net assets
acquired.
 
 In
accordance with Financial Accounting Standard (SFAS) No. 141, Business
Combinations, the total purchase price was allocated to the estimated fair value
of assets acquired and liabilities assumed. The estimate of fair value of the
assets acquired was based on management’s estimates.  The Company plans to
utilize a valuation specialist to re-estimate these values in the near future
and accordingly, these value estimates may change in the near future.  The
total purchase price was allocated to the assets and liabilities acquired as
follows:
 
 Cash
      and other current assets
                    
                    $
                    338,435Equipment
      and other assets
                    
                    
                    6,505Intangible
      assets
                    
                    
                    615,054Liabilities
                    
                    
                    (578,994
                    )Total
      purchase price
                    
                    $
                    381,000
 
 Intangibles
of $615,054 represented the excess of the purchase price over the fair value of
the net tangible assets acquired.  The Company will amortize the
intangibles over 5 years and will review the value of the intangibles to
account for any possible impairment as per guidance in SFAS 142 during the
twelve months ended December 31, 2009 and beyond until the value of the asset is
deemed impaired.
 
 The
following data presents unaudited pro forma revenues, net loss and basic and
diluted net loss per share of common stock for the Company as if the
acquisitions discussed above, had occurred on January 1, 2008.  The Company
has prepared these pro forma financial results for comparative purposes
only.  These pro forma financial results may not be indicative of the
results that would have occurred if the Company had completed these acquisitions
at the beginning of the periods shown below or the results that will be attained
in the future.
 
 Year Ended December 31, 2008As Reported
                  
                  
                  Pro Forma
                    Adjustments
                  
                  
                  Pro FormaRevenues
                  
                  $
                  16,487,525
                  
                  
                  $
                  1,016,187
                  
                  
                  $
                  17,503,712Net
      income (loss)
                  
                  $
                  6,578
                  
                  
                  $
                  (123,681
                  )
                  
                  $
                  (117,103
                  )Net
      loss per common share outstanding - basic & diluted
                  
                  $
                  .00
                  
                  
                  $
                  .00
                  
                  
                  $
                  (.01
                  )Weighted
      average common shares outstanding - basic & diluted
                  
                  
                  10,100,000
                  
                  
                  
                  
                  
                  
                  
                  10,100,000
  15
  NOTE
I – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
 
 Accounts
payable and accrued liabilities at:
 
 March 31, 2010
                    
                    
                    December 31,2009Accounts
      payable
                    
                    $
                    3,372,694
                    
                    
                    $
                    2,674,443Accrued
      payroll and vacation
                    
                    
                    (7,999
                    )
                    
                    
                    (16,343
                    )Accrued
      payroll taxes
                    
                    
                    63,851
                    
                    
                    
                    74Other
      liabilities
                    
                    
                    91,056
                    
                    
                    
                    55,666Total
                    
                    $
                    3,519,602
                    
                    
                    $
                    2,713,840
  NOTE
J – BANK LINE OF CREDIT
  The
Company has a line of credit with Westamerica Bank in the amount of
$1,000,000.  The line of credit is secured by substantially all of the
assets of the Company and guaranteed by the Company’s principal stockholders. In
addition, entities owned and controlled by the Company’s principal stockholders
are co-makers of the line of credit and have pledged substantially all of the
assets as security for the line of credit (see Note N).  The line of credit
bears interest at the Bank rate minus 0.5%, per annum, with interest due and
payable monthly and expires on June 30, 2010.  The balance outstanding
under the line of credit at March 31, 2010 and December 31, 2009 amounted to
$1,000,000 and $900,000 respectively, leaving a balance available on the line of
$0 and $100,000, respectively. The Company is required to maintain certain bank
loan covenants.  At March 31, 2010 and December 31, 2009, the Company
was not in compliance with certain bank loan covenants.
  NOTE
K – NOTES PAYABLE
  Notes
payable at March 31, 2010 and December 31, 2009 are as
follows:
 March 31,
                    2010
                  
                  
                  December 31,
                    2009Note
      payable to Bank, interest at 7.76% per annum; secured by substantially all
      of the Company’s assets; with monthly principal and interest payments of
      $13,133.99, due February, 2012. The Note is guaranteed by the Company’s
      principal stockholders. In addition, entities owned and controlled by the
      Company’s principal stockholders are co-makers of the Note and have
      pledged substantially all of their assets as security for the Note (see
      Note N).
                  
                  $
                  278,583
                  
                  
                  $
                  312,009Note
      payable to Bank, interest at 5.5% per annum; secured by substantially all
      of the Company’s assets; with monthly principal and interest payments of
      $4,785.24, due December, 2013. The Note is guaranteed by the Company’s
      principal stockholders. In addition, entities owned and controlled by the
      Company’s principal stockholders are co-makers of the Note and have
      pledged substantially all of their assets as security for the Note (see
      Note N).
                  
                  
                  193,519
                  
                  
                  
                  205,083Note
      payable to Bank, interest at 8.0% per annum; secured by substantially all
      of the Conesco assets; with monthly principal and interest payments of
      $3,766.86, due August, 2012. The Note is guaranteed by the Company’s
      principal stockholders.
                  
                  
                  103,152
                  
                  
                  
                  110,373Total
      note payable
                  
                  
                  575,254
                  
                  
                  
                  627,465Less:
      current portion
                  
                  
                  (216,728
                  )
                  
                  
                  (213,394
                  )Notes
      payable – long term
                  
                  $
                  358,526
                  
                  
                  $
                  414,071
 
 Aggregate
maturities of long-term debt as of March 31, 2010 are as follows:
 
 Year
      ended
                    
                    AmountMarch
      31, 2011
                    
                    $
                    216,728March
      31, 2012
                    
                    
                    217,791March
      31, 2013
                    
                    
                    98,732March
      31, 2014
                    
                    
                    42,003Total
                    
                    $
                    575,254
  NOTE
L – CAPITAL STOCK
  T he
Company is authorized to issue 70,000,000 shares of common stock with $0.001 par
value per share. As of March 31, 2010 and December 31, 2009, the Company had
18,074,852 shares of common stock issued and outstanding.  During the
three months ended March 31, 2010, the Company recorded compensation cost of
approximately $11,400 relating to shares issued during the year ended December
31, 2009 and vested during the quarter ended March 31, 2010, after adjustments
for the termination and service changes etc .
 
 NOTE
M - RELATED PARTY TRANSACTIONS
  Two
primary stockholders of the Company are co-owners of an entity that provides
charter air services, and on occasion, the Company utilizes this entity for air
travel services in connection with the Company’s contracting.  During
the three months ended March 31, 2010 and 2009, the Company incurred
and charged to operations $2,311 and $23,457, respectively, in connection with
air travel services provided by the entities to the Company. There were no
payables owed to the entities at March 31, 2010 and December 31, 2009,
respectively.
  16
  The
entities are co-makers of a line of credit and a note payable and have pledged
substantiality all of their assets to secure the line of credit (See Note J) and
note payable (see Note K).
  NOTE
N - COMMITMENTS AND CONTINGENCIES
 
 Operating Lease
Commitments
 
 The
Company leases office space under non-cancelable operating leases that expire
through November 2011.
 The
Company also leases vehicles from Enterprise Fleet Services under non-cancelable
operating leases expiring through March 2013.
 
 Future
minimum lease payments for the above leases over the next four years are as
follows:
 
 2010
                    
                    $
                    268,6082011
                    
                    
                    139,1122012
                    
                    
                    16,4952013
                    
                    
                    4,489Total
                    
                    $
                    428,704
  For the
three months ended March 31, 2010 and 2009, rent expense was $40,332 and
$40,837, respectively.  For the three months ended March 31, 2010 and 2009,
vehicle lease expense was $55,444 and $75,024, respectively.
 
 Litigation
 
 The
Company is not currently in any litigation.
 
 Surety
Bonds
 
 A certain
number of our construction projects require us to maintain a surety bond. 
The bond surety company requires additional guarantees for issuance of the
bonds.  The two officers (former owners) of Pro-Tech have both personally
guaranteed these bonds.  There is currently not remuneration to the
officers for these guarantees.
  NOTE
O – SEGMENT INFORMATION
 
 The
Company is managed by specific lines of business including fire protection and
alarm and detection, electrical, telecommunications and flooring. The Company’s
management makes financial decisions and allocates resources based on the
information it receives from its internal management system on each of its lines
of business. Certain other expenses associated with the public company status
are reported at the Meltdown parent company level, not within the subsidiaries.
These expenses are reported separately in this footnote. The Company’s
management relies on the internal management system to provide sales and cost
information by line of business.
 
 Summarized
financial information by line of business for the three months ended March 31,
2010 and 2009, as taken from the internal management system previously
discussed, is listed below.
 
 RevenueMarch 31,2010
                    
                    
                    March 31,2009Fire
      Protection/Alarm & Detection
                    
                    $
                    1,563,000
                    
                    
                    $
                    3,238,000Telecommunications
                    
                    
                    1,245,000
                    
                    
                    
                    712,000Flooring
                    
                    
                    657,000
                    
                    
                    
                    327,000Electrical
                    
                    
                    645,000
                    
                    
                    
                    128,000Total
                    
                    $
                    4,110,000
                    
                    
                    $
                    4,405,000
 
 Gross ProfitMarch 31,2010
                    
                    
                    March 31,2009Fire
      Protection/Alarm & Detection
                    
                    $
                    553,000
                    
                    
                    $
                    1,446,000Telecommunications
                    
                    
                    258,000
                    
                    
                    
                    219,000Flooring
                    
                    
                    (158,000
                    )
                    
                    
                    142,000Electrical
                    
                    
                    (265,000
                    )
                    
                    
                    6,000Total
                    
                    $
                    388,000
                    
                    
                    $
                    1,813,000
  17
 
 Operating Income (Loss)March31,2010
                    
                    
                    March31,2009Fire
      Protection/Alarm & Detection
                    
                    $
                    (149,000
                    )
                    
                    $
                    453,000Telecommunications
                    
                    
                    139,000
                    
                    
                    
                    130,000Flooring
                    
                    
                    (278,000
                    )
                    
                    
                    99,000Electrical
                    
                    
                    (367,000
                    )
                    
                    
                    (50,000
                    )Corporate
                    
                    
                    (440,000
                    )
                    
                    
                    (427,000
                    )Total
                    
                    $
                    (1,095,000
                    )
                    
                    $
                    205,000
  Depreciation/AmortizationMarch 31,2010
                    
                    
                    March 31,2009Fire
      Protection/Alarm & Detection
                    
                    $
                    7,000
                    
                    
                    $
                    7,000Telecommunications
                    
                    
                    5,000
                    
                    
                    
                    -Flooring
                    
                    
                    1,000
                    
                    
                    
                    -Electrical
                    
                    
                    -
                    
                    
                    
                    -Corporate
                    
                    
                    64,000
                    
                    
                    
                    30,000Total
                    
                    $
                    77,000
                    
                    
                    $
                    37,000
 
 InterestMarch 31,2010
                    
                    
                    March 31,2009Fire
      Protection/Alarm & Detection
                    
                    $
                    -
                    
                    
                    $
                    -Telecommunications
                    
                    
                    -
                    
                    
                    
                    -Flooring
                    
                    
                    5,000
                    
                    
                    
                    5,000Electrical
                    
                    
                    -
                    
                    
                    
                    -Corporate
                    
                    
                    34,000
                    
                    
                    
                    17,000Total
                    
                    $
                    39,000
                    
                    
                    $
                    22,000
 
 Assets
                    
                    As
      of
                    
                    
                    As
      ofMarch31,2010
                    
                    
                    December31,2009Fire
      Protection/Alarm & Detection
                    
                    $
                    2,978,000
                    
                    
                    $
                    2,435,000Telecommunications
                    
                    
                    883,000
                    
                    
                    
                    609,000Flooring
                    
                    
                    787,000
                    
                    
                    
                    1,059,000Electrical
                    
                    
                    323,000
                    
                    
                    
                    721,000Corporate
                    
                    
                    453,000
                    
                    
                    
                    758,000TOTAL
                    
                    $
                    5,424,000
                    
                    
                    $
                    5,582,000
  Capital Expenditures
                    
                    As
      of
                    
                    
                    As
      ofMarch 31,2010
                    
                    
                    December 31,2009Fire
      Protection/Alarm & Detection
                    
                    $
                    -
                    
                    
                    $
                    11,000Telecommunications
                    
                    
                    -
                    
                    
                    
                    -Flooring
                    
                    
                    -
                    
                    
                    
                    -Electrical
                    
                    
                    -
                    
                    
                    
                    -Corporate
                    
                    
                    -
                    
                    
                    
                    11,000TOTAL
                    
                    $
                    -
                    
                    
                    $
                    11,000
 
 NOTE
P- MAJOR CUSTOMERS AND SUPPLIERS
  The
Company had one customer who accounted for $1,236,367 or 30% of the billings for
the three months ended March 31, 2010 two customers who accounted for $1,168,954
or 27% of revenue for the three months ended March 31, 2009.
  The
Company had two vendors who accounted for $416,293 or 33% of the
materials purchases for the three months ended March 31, 2010 and two
vendors who accounted for $390,574 or 44% of material costs for the
three months ended March 31, 2009.
 18
  NOTE
Q – EMPLOYEE BENEFITS PLAN
  The
Company sponsors a defined contribution 401(k) plan covering substantially all
full-time employees, which provides for the Company matching the participant's
elective deferral up to 3% of their annual gross income. The Company's expense
for the plan was $13,298 and $20,122, for the three months ended March 31, 2010
and 2009, respectively.
 
 NOTE
R - SUBSEQUENT EVENTS
 
 NONE
  19
  Unless
otherwise noted, references in this Form 10-Q to “Pro-Tech”, “we”, “us”, “our”,
and the “Company” means Pro-Tech Industries, Inc., a Nevada corporation. 
Our principal place of business is located at 8550 Younger Creek Drive #2,
Sacramento, CA 95828.  Our telephone number is (916) 388-0255.
 
 ITEM
2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 
 The
following discussion and analysis should be read in conjunction with our
consolidated financial statements and related notes thereto included
elsewhere in this registration statement. Portions of this document that are not
statements of historical or current fact are forward-looking statements that
involve risk and uncertainties, such as statements of our plans, objectives,
expectations and intentions. The cautionary statements made in this registration
statement should be read as applying to all related forward-looking statements
wherever they appear in this registration statement. From time to time, we may
publish forward-looking statements relative to such matters as anticipated
financial performance, business prospects, technological developments and
similar matters. The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements. All statements other than statements
of historical fact included in this section or elsewhere in this report are, or
may be deemed to be, 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. Important factors that could cause actual
results to differ materially from those discussed in such forward-looking
statements include, but are not limited to, the following: changes in the
economy or in specific customer industry sectors; changes in customer
procurement policies and practices; changes in product manufacturer sales
policies and practices; the availability of product and labor; changes in
operating expenses; the effect of price increases or decreases; the variability
and timing of business opportunities including acquisitions, alliances, customer
agreements and supplier authorizations; our ability to realize the anticipated
benefits of acquisitions and other business strategies; the incurrence of debt
and contingent liabilities in connection with acquisitions; changes in
accounting policies and practices; the effect of organizational changes within
the Company; the emergence of new competitors, including firms with greater
financial resources than ours; adverse state and federal regulation and
legislation; and the occurrence of extraordinary events, including natural
events and acts of God, fires, floods and accidents.
  Forward-looking
statements involve risks, uncertainties and other factors, which may cause our
actual results, performance or achievements to be materially different from
those expressed or implied by such forward-looking statements. Factors and risks
that could affect our results and achievements and cause them to materially
differ from those contained in the forward-looking statements include those
identified in the section titled “Risk Factors” in the Company’s Annual Report
on Form 10-K for the period ended December 31, 2009, as well as other factors
that we are currently unable to identify or quantify, but that may exist in the
future.
  In addition, the foregoing factors
may affect generally our business, results of operations and financial position.
Forward-looking statements speak only as of the date the statement was made. We
do not undertake and specifically decline any obligation to update any
forward-looking statements.
 
 OVERVIEW
 
 On
December 31, 2008, we executed an agreement with Pro-Tech Fire Protection
Systems Corp (“Pro-Tech Fire” or “Pro-Tech Fire Protection Systems”), and our
company(the
"Agreement"), whereby pursuant to the terms and conditions of
that Agreement, Pro-Tech Fire shareholders acquired ten million one
hundred thousand (10,100,000) shares of our common stock, whereby Pro-Tech
Fire would become a wholly owned subsidiary of our company.  The
predecessor to our company was incorporated in the State of Nevada on April
4, 2007, and was a development stage company with the principal business
objective of becoming a chain of professional body treatment and skin care
service centers.  On May 8, 2009 at our annual meeting, the stockholders
and board of directors approved and officially changed our name to Pro-Tech
Industries, Inc.
 
 Pro-Tech
Fire was incorporated on May 4, 1995 under the laws of the State of California
to engage in any lawful corporate undertaking, including, but not limited to;
installation, repair and inspections of fire protection systems in commercial,
military and industrial settings.
 
 PRO-TECH
FIRE PROTECTION SYSTEMS CORP
 
 Pro-Tech
Fire Protection Systems is a full-service contractor serving the western United
States, with offices in California and Nevada. Services include estimating,
designing, fabricating, and installing all types of standard and specialty
water-based fire protection systems. In addition, our company offers “Day Work”
services, including inspecting, testing, repairing and servicing of
same.
 
 We serve
the new construction market, as well as customers retro-fitting, upgrading or
repairing their existing facilities, bringing existing facilities to current
standards (for example, installing sprinklers at a customer’s expanded storage
warehouse, etc.).
  20
  Pro-Tech
Fire services include:
  ̈
              Commercial,
      Special Hazards, and Industrial Overhead Wet Pipe, Dry Pipe, Pre-Action,
      Deluge, and Foam
  ̈
              New
      Installations, Retro-Fits, Upgrades, Repairs, Design, Consultations, and
      Analysis
  ̈
              Pumps,
      Hydrants, Backflow Preventers, Underground, Design, and
      Consultation
  ̈
              5
      Year Certification, Inspections and
Testing
  ̈
              24
      Hour Service
  ̈
              Alarm
      & Detection installation, inspections and repairs, and third party
      monitoring
  ̈
                Electrical
      Services including design build, new construction, repairs, inspections
      and maintenance
  ̈
              Network
      cabling, system and structure testing and data networking and
      design
 
 Pro-Tech
Telecommunications
 
 Pro-Tech
Telecommunications provides inside/outside plant installation/implementation
services, telecommunications hardware/software deployment (voice systems),
maintenance support services, on-site technicians for telecommunications
upgrades, and cable system design services. In addition, Pro-Tech
Telecommunications also has a full data networking group that can design,
configure, and deploy custom data networking solutions based on individual
client needs.  Pro-Tech Telecommunications provides the following services
to commercial, government and other business enterprises.
 
 Services
Offered:
 Infrastructure
Systems/Services
 
  ̈
              Building
      Riser and Campus Systems
  ̈
              Cabinet
      and Rack Installation
  ̈
              Cable
      Tagging and Documentation
  ̈
              Communications
      Rooms, MDF, IDF
  ̈
              Optical
      and Copper Cable Installation
  ̈
              Raceway
      Systems
  ̈
              Wireless
      Connectivity Solutions
 
 Low
Voltage Systems
  ̈
              Security
      Systems
  ̈
              Fire
      Alarm
  ̈
              Card
      Access Control
  ̈
              CATV
  ̈
              Video
      Surveillance
 
 Network
Systems
  ̈
              Enterprise
      architecture strategy
  ̈
              Systems
      integration
  ̈
              IT
      infrastructure, implementation, and
support
  ̈
              Network
      security and remote access
solutions
  ̈
              Authentication
  Voice
Systems
   ̈
              PBX
   ̈
              Key
      system
   ̈
              VoIP
  We
differentiate ourselves through our commitment to the highest degree of
structure, efficiency and quality practices.  We are experts at providing
solutions that precisely fit our client's needs. We do not manufacture equipment
and are vendor agnostic when providing equipment solutions (i.e. we will install
customer or vendor owned/provided equipment). Our mission is to provide
cost-effective, high quality services and solutions to enhance the competitive
position of our clients, using creative and innovative
approaches.
  21
  Pro-Tech
Electrical
  Pro-Tech
Electrical Services Division is a full service Electrical contractor providing
reliable and quality workmanship throughout California. Our capacities are not
limited to commercial and industrial project but, to a vast range of electrical
construction projects.  Our primary bid focus has been in the areas of
heavy commercial such as large distribution centers, commercial retail (shopping
centers, etc.), and institutional work (schools, churches, etc.) Our Management
strives to provide competitive pricing for the commercial and industrial bid
market. We believe we furnish detailed and competitive pricing, value
engineering options, and a team approach to our clients.  Pro-Tech
Electrical provides the following services to commercial, government and other
business enterprises:
  Electrical
Services
   ̈
              Building
      riser and campus systems
  ̈
              Underground
      service upgrades and installation
  ̈
              Installation
      of power switchboards services, Motor Control Centers (MCC) and/or
      upgrades.
  ̈
              New
      emergency generators, controls and transfer
  switches.
  ̈
              UPS
      (Uninterruptible Power Systems) and
upgrades.
  ̈
              Fuse
      and Circuit Breaker upgrade and
installations
  ̈
              Interior/
      exterior Lighting and related
controls.
  ̈
              Site
      lighting installation and upgrades
  ̈
              Security
      lighting
  ̈
              Industrial
      electrical projects including explosion proof equipment and
      installations.
  ̈
              Building
      riser and campus systems
  ̈
              Load
      analysis
  ̈
              Commercial
      and industrial maintenance
 
 Conesco,
Inc.
 
 On
January 16, 2009, we issued 3,000,000 shares to shareholders of Conesco, Inc.
(“Conesco”), as part of an acquisition, whereby Conesco became our wholly owned
subsidiary.
  Since
1993, Conesco has been a provider of commercial flooring products, installation,
maintenance and design consultation services to businesses throughout Northern
California.  In management’s opinion, our work graces some of the most
prestigious properties in Northern California and beyond. Conesco’s team
approach has earned it a reputation, in management’s opinion, for leading-edge
flooring expertise, great service and first-class products.  Conesco, Inc.
offers the following products and services:
 
  ̈
              Professional
      design and specification
consultation
  ̈
              Material
      and installation of carpet, resilient, ceramic stone, and wood
      flooring
  ̈
                Material
      and installation of raised access/Clean Room
  flooring
  ̈
              Modular
      wiring and under-floor HVAC delivery
systems
  ̈
                Ongoing
      maintenance services
  ̈
              Green
      building consultation
  ̈
                Consultation
      and expertise in complex/unique flooring
  installations
  We
believe Conesco, Inc.’s expertise in the field of commercial and industrial
flooring has allowed them to work with the following premier building
contractors in Northern California:
   ̈
              Roebbelen
      Contracting
  ̈
              McCarthy
      Construction
  ̈
              Howard
      S. Wright
  ̈
              MP
      Allen
 
 Competition
 
 The
competition is divided among many players in our four markets.  The market
is highly fragmented and there is not a dominate player in any of the
markets.  Two of the larger competitors are as follows:
  22
  Cosco –
Cosco is a multifaceted, full service fire protection contractor, providing
design, fabrication, installation service and inspection of a wide variety of
automatic fire suppression systems.  The company specializes in large
construction projects including hospitals, high-rise structures, hotels, large
office and manufacturing facilities.  The company maintains experienced
staff including engineers, designers, project managers and installers. 
Cosco has offices in Los Angeles, San Francisco, Seattle, Fresno, San Diego, and
Anchorage.
 
 Tyco/Grinnell
(NYSE: TYC) - Tyco International, Ltd. operates as a diversified manufacturing
and services company. The company, through its subsidiaries, designs,
manufactures, and distributes electronic security and fire protection systems;
electrical and electronic components; and medical devices and supplies, imaging
agents, pharmaceuticals, and adult incontinence and infant care products. Tyco’s
fire and security products and services include electronic security systems,
fire detection systems and suppression systems, as well as fire extinguishers
and related products. The company’s electrical and electronic components
comprise electronic/electrical connector systems; fiber optic components; and
wireless devices, such as private radio systems, heat shrink products, circuit
protection devices, and magnetic devices.
 
 Employees
 
 We have
approximately 66 full time employees including 13 executive and administrative
staff, 4 in engineering, 7 in sales and marketing, with the balance working in
the field as superintendants, foreman, journeyman or apprentices.
 
 Recent
Developments
 None
 
 Results
of Operations
 
 Three Months Ended March 31, 2010
Compared to Three Months Ended March 31, 2009
 
 Revenue
  Revenues
were $4,109,946 for the three months ended March 31, 2010, a decrease of
$295,228, or 7%, from revenues of $4,405,174 for the three months ended March
31, 2009. This decrease was primarily the results of a slow economy and slower
than expected growth of jobs in our Fire Life Safety division.
 
 Fire Life
Safety segment revenue for the three months ended March 31, 2010 and 2009 were
approximately $1,563,000 or 35% and $3,238,000 or 73% of total revenue,
respectively.  The decrease in revenue was due to a slow economy and slower
than expected growth of jobs.  Management believes, but cannot guarantee,
that this segment’s revenues will increase steadily in the following
quarters.
 
 Telecommunication
segment revenue for the three months ended March 31, 2010 and 2009 was
approximately $1,245,000 or 30% and $712,000 or 16% of total revenue,
respectively.  The increase in revenue was due to organic revenue
growth.
 
 Specialty
construction segment revenue for the three months ended March 31, 2010 and 2009
was approximately $657,000 or 16% and $327,000 or 7% of total revenue,
respectively.  The increase in revenue was due to organic
growth.
 
 Electrical segment revenue for the
three months ended March 31, 2010 and 2009 was approximately $645,000 or 16% and
$129,000 or 3% of total revenue, respectively.  The increase in revenue was
due primarily to organic growth.
 
 Cost
of Revenue
 
 Cost of
revenue consists of direct costs on contracts such as direct labor, design,
materials, third party subcontractors, and certain other direct overhead
costs.  Our cost of revenue was $3,724,156 or 91% of revenue for the three
months ended March 31, 2010, compared to $2,592,027 or 59% for the same period
of the prior year.  The dollar increase in our total cost of revenue is due
primarily to the corresponding increase in the percentage of cost of sales
during the three months ended March 31, 2010. The increase as a percentage of
revenue is due to the blend of project revenue attributable to our existing
operations and cost overruns incurred by our Electrical and Specialty
segments.   The multi-segment history of our company is rather limited
since this is only the 5th quarter
with all of our segments up in operation. The historical trend of the last five
quarters has ranged from approximately 59% to 91%.  The cost of revenue
percentage is expected to vary depending on our mix of project revenue and
segment revenue.  Our management contends that the completion of the
“overrun” jobs in the Electrical and Specialty segments will allow us to get our
margins back in line with management’s expectations.  These areas will
continue to be monitored closely going forward, as will all of our
segments.
  23
  Fire Life
Safety segment cost of revenue and cost of revenue as a percentage of revenue
for the three months ended March 31, 2010 and 2009 was approximately $1,010,000
and 65% and $1,792,000 and 55%, respectively.  The dollar decrease in our
cost of revenue is due to the corresponding decrease in revenue during the three
months ended March 31, 2010.  This increase in cost of revenue as a
percentage of revenue was due to the blend of project revenue attributable to
our existing operations and the more competitive bid environment reducing the
margins available on work won.
 
 Wireless
communication segment cost of revenue and cost of revenue as a percentage of
revenue for the three months ended March 31, 2010 and 2009 was approximately
$987,000 and 79% and $493,000 and 69%, respectively.  The dollar increase
in our cost of revenue is due to the corresponding increase in revenue during
the three months ended March 31, 2010.  This increase in cost of revenue as
a percentage of revenue was due to the blend of project revenue attributable to
our existing operations.
 
 Specialty
construction segment cost of revenue and cost of revenue as a percentage of
revenue for the three months ended March 31, 2010 and 2009 was approximately
$815,000 and 124% and $185,000 and 57%, respectively.  As discussed above,
the dollar increase in our total cost of revenue is due to the corresponding
increase in revenue during the three months ended March 31, 2010. The increase
as a percentage of revenue is due to the blend of project revenue attributable
to our existing operations and certain cost overruns.  Management of the
Specialty segment is actively seeking change orders and reviewing certain costs
for overcharges in relation to these costs.  Management believes that all
costs have been accounted for and anticipates that closer monitoring of the jobs
will facilitate eliminating, removing or decreasing overrun potential from
future jobs.
  Electrical
power segment cost of revenue and cost of revenue as a percentage of revenue for
the three months ended March 31, 2010 and 2009 was approximately $910,000 and
141% and $122,000 and 95%, respectively.  The dollar increase in our cost
of revenue is due to the corresponding increase in revenue during the three
months ended March 31, 2010. The increase as a percentage of revenue is due
primarily to the blend of project revenue attributable to our existing
operations.  This segment had issues with cost overruns on its four primary
jobs started in the fourth quarter of 2009.  These overruns continued into
the first quarter of 2010.  Management has significantly reduced overhead
and other costs and is reviewing the viability of and/or direction to take with
this segment to insure that it can contribute to the overall success of our
company.
 
 Selling,
general and administrative
  Selling,
general and administrative expenses were $1,403,193 for the three months ended
March 31, 2010 compared to $1,571,857 for the three months ended March 31, 2009.
The selling, general and administrative cost related to revenues decreased to
34% for three months ended March 31, 2010 as compared to 36% for the three
months ended March 31, 2009, despite having a smaller revenue base in
2010.  Current year costs drop to 32% if compared to 2009
revenue.
 
 The
decrease is primarily a result of a decrease in legal and accounting expense of
approximately $120,000 due to defense of the union and bank lawsuits, for which
the union suit has been settled and decrease in accounting fees associated with
review and reporting requirements.  We had not previously had audits or
reviews done for our quarterly results, causing the reviews of 2009 to add
costs.  The remainder of the decrease was primarily attributable to
salaries and benefits of reduced staffing.
 
 Management
continues to monitor costs in these difficult economic times in order to remove
unnecessary overhead.
 
 Depreciation
and amortization
  Depreciation
and amortization expense increased to $76,514 for the three months ended March
31, 2010 compared to $36,623 in the three months ended March 31, 2009.  The
increase came primarily from the intangible amortization related to the Conesco
purchase, which was initially set up as a sixty month amortization, but was
changed to eighteen months after review and analysis by an independent third
party.  This amortization will finalize in August 2010.
 
 Interest
  Net
interest expense increased to $39,190 for the three months ended March 31, 2010
compared to $22,020 for the three months ended March 31, 2009. This increase was
primarily due to the full use of the line of credit for working capital purposes
as well as new term loans from the bank for Conesco in June 2009.
 
 Income
Tax
  Income
tax benefit increased to $80,490 for the three months ended March 31, 2010 from
an expense of $60,316 for the three months ended March 31, 2009. This is
approximately a $141,000 higher benefit due mainly to the movement of the
section 481a adjustment of $424,814 from deferred status at March 31, 2009 to
current at March 31, 2010.  This is offset by the current loss incurred in
the three months ended March 31, 2010, which eliminates any potential deferred
tax asset.
  24
  Liquidity and Capital
Resources
 
 Liquidity:
 
 For the
three months ended March 31, 2010, we experienced a net loss of
$1,052,617.  At March 31, 2010, we had $152,210 in cash.  Accounts
receivable, net of allowances for doubtful accounts, were $3,720,887 at March
31, 2010 which at approximately 78% of current assets is comparable to the 80%
it represented at December 31, 2009.
  At March
31, 2010, we had negative working capital of $428,279, compared to working
capital of $591,968 at December 31, 2009. The ratio of current assets to current
liabilities decreased to (.92):1 at March 31, 2010 compared to 1.14:1 at
December 31, 2009.  Cash flow used by operations during the three
months ended March 31, 2010 was $64,736 as compared to cash used by operations
of $206,210 for the three months ended March 31, 2009. Management anticipates,
but can provide no assurances, that that our existing capital resources will be
adequate to satisfy its capital requirements for the foreseeable
future.
  Our
principal liquidity at March 31, 2010 included cash of $152,210 and $3,720,887
of net accounts receivable. Our management believes, but can provide no
assurances, that that our liquidity position remains sufficient enough to
support on-going general administrative expense, strategic positioning, and the
garnering of contracts and relationships.
 
 Cash
Flow
 
 For the
three months ended March 31, 2010, we used net cash of $64,736 in our operating
activities, primarily as a result of our net loss of $1,052,617, an increase in
costs in excess of billings of $90,157, a decrease in deferred
tax liabilities of $80,490 and decrease in accrual for loss against
uncompleted contracts of $90,514, primarily offset by increase in billing in
excess of cost of $201,018, depreciation and amortization of $76,514, bad debt
allowance and write offs of $85,314 and by increase in accounts payable of
$809,096.  By comparison, net cash used in operating activities was
$206,210 for the three months ended March 31, 2009.
 
 There was
no investing activity during the three months ended March 31, 2010.  The
investing activity during 2009 consisted of the purchase of computers and
equipment of approximately $10,520.  This was offset by cash of $9,043
acquired in the Conesco acquisition.
 
 Financing
activity for 2010 consisted of payments on long term debt obligations of $55,544
offset by line of credit borrowings of $100,000.  This was all in the
normal course of business and note terms.  For 2009, financing activity
consisted of payments on long term debt obligations of $45,205 offset by line of
credit borrowings of $181,227.  This increase in 2010 of principal payments
was primarily due to the addition of the Conesco note payable.
 
 With
recent cuts in corporate and selling, general and administrative costs,
management anticipates, but can provide no assurances, that our cash flow will
be positive for the remainder of 2010.
 
 Capital
Resources:
 
 Line
of Credit Facility
 
 The line
of credit facility is primarily used to fund short-term changes in working
capital. The total capacity of the facility at March 31, 2010 was $1,000,000.
Our management believes that sufficient liquidity exists but may seek approval
to increase the facility or find other funding sources to increase the facility
to $1.5 million in the future.  Our management believes an increased line
of credit facility would help to provide adequate liquidity and financial
flexibility to support our expected growth beginning in the second quarter of
2010 and beyond.
 
 The
facility contains customary financial covenants requiring us to maintain certain
financial ratios, including an asset coverage ratio and dollars, debt to equity
ratio and a tangible net worth requirement. Non-compliance with any of these
ratios or a violation of other covenants could result in an event of default and
reduce availability under the facility. We are currently not in compliance with
our covenants, but have full availability under the facility.
 
 Effective
August 10, 2009, our company executed a new credit facility increasing the line
to $1,000,000.  The interest rate remains at .5% less than the lender’s
index rate, currently 4.5% and the maturity date was reset to June 30,
2010.  With the renewal of this credit facility the lender reset customary
financial covenants requiring us to maintain certain financial ratios, including
an asset coverage ratio and dollars, debt to equity ratio and a tangible net
worth requirement.
  25
  Should
the current financing arrangements prove to be insufficient for our current
needs; we are willing to go to the capital markets to raise the necessary
capital to meet these needs.
 
 Long
Term Notes
 
 Long term
notes with original principal balances totaling $900,000, were issued through
our bank on February 3, 2007 ($650,000) and December 31, 2008, ($250,000). The
notes were are payable over 5 years and will be paid off on or about February 1,
2012 and December 31, 2013.  The notes carry interest rates of 7.76% and
5.5% respectively. These notes are held by the same bank the Company uses for
its banking and where the line of credit is held.  The current balances at
March 31, 2010 on these two notes are $278,583 and $193,519,
respectively.
 
 In June
2009, Conesco’s bank termed out its line of credit, into a three year
note.  The note is for $120,000 and is due in full in July 2012.  The
note carries interest of 8%.  At March 31, 2010, the outstanding balance on
this note was $103,152.
 
 Critical
Accounting Estimates and Recently Issued Accounting Standards
 
 Please
refer to Note C to the financial statements.
 
 Inflation
 
 In the
opinion of management, inflation will not have an impact on our company’s
financial condition and results of its operations.
 
 Off-Balance
Sheet Arrangements
  We do not
have any off balance sheet arrangements that are reasonably likely to have a
current or future effect on our financial condition, revenues, and results of
operations, liquidity or capital expenditures.
 
 Other
Considerations
 
 There are
numerous factors that affect the business and the results of its
operations.  Sources of these factors include general economic and business
conditions, federal and state regulation of business activities, the level of
demand for product services, the level and intensity of competition in the media
content industry, and the ability to develop new services based on new or
evolving technology and the market's acceptance of those new services, our
ability to timely and effectively manage periodic product transitions, the
services, customer and geographic sales mix of any particular period, and our
ability to continue to improve our infrastructure including personnel and
systems to keep pace with our anticipated rapid growth.
 
 Additional
Information
 
 We file
reports and other materials with the Securities and Exchange Commission. 
These documents may be inspected and copied the Commission’s Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330.  The Commission maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the
Commission.
 
 ITEM 3.
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 We do not
hold any derivative instruments and do not engage in any hedging
activities.
 
 ITEM
4.  CONTROLS AND PROCEDURES
  Our
principal executive officer and our principal financial officer, evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures as such term is defined under Rule 13a-15(e) promulgated under
the Securities Exchange Act of 1934, as amended (Exchange Act), as of the last
day of the fiscal period covered by this report, March 31, 2010.  The term
disclosure controls and procedures means our controls and other procedures that
are designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC’s rules
and forms.  Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
accumulated and communicated to management, including our principal executive
and principal financial officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure.
  26
  Our
principal executive officer and our principal financial officer, are responsible
for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rules 13a-15(f). 
Our principal executive officer and our principal financial
officer  are required to base their assessment of the effectiveness of
our internal control over financial reporting on a suitable, recognized control
framework, such as the framework developed by the Committee of Sponsoring
Organizations (COSO).  The COSO framework, published in Internal Control-Integrated
Framework, is known as the COSO Report.  Our principal executive
officer and our principal financial officer, have chosen the COSO framework on
which to base their assessment.  Based on this evaluation, our principal
executive officer and our principal financial officer concluded that our
internal control over financial reporting was effective as of March 31,
2010.
 
 Management’s
report was not subject to attestation by our registered public accounting firm
pursuant to temporary rules of the Securities and Exchange Commission that
permit us to provide only management’s report in our annual reports on Form 10-K
for the annual reporting periods through December 31, 2009.
 
 It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable and not absolute assurance that the objectives of the
system are met. In addition, the design of any control system is based in part
upon certain assumptions about the likelihood of certain events. Because of
these and other inherent limitations of control systems, there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.
 
 b)
Changes in Internal Control over Financial Reporting.
 
 During
the Quarter ended March 31, 2010, there was no change in our internal control
over financial reporting (as such term is defined in Rule 13a-15(f) under the
Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
 
 PART
II – OTHER INFORMATION
 
 ITEM
1. LEGAL PROCEEDINGS
 
 We are
not a party to any legal proceedings, there are no known judgments against the
Company, nor are there any known actions or suits filed or threatened against it
or its officers and directors, in their capacities as such.  We are
not aware of any disputes involving the Company and the Company has no known
claim, actions or inquiries from any federal, state or other government agency.
 We are not aware of any claims against the Company or any
reputed claims against it at this time, except as follows:
  ITEM 1A
- Risk Factors
  You
should carefully consider the following risk factors together with the other
information contained in this Interim Report on Form 10-Q, and in prior reports
pursuant to the Securities Exchange Act of 1934, as amended and the Securities
Act of 1933, as amended.  If any of the risks factors actually occur, our
business, financial condition or results of operations could be materially
adversely affected. In such cases, the trading price of our common stock could
decline. We believe there are no changes that constitute material changes from
the risk factors previously disclosed in the prior reports pursuant to the
Securities Exchange Act of 1934, as amended and the Securities Act of 1933 and
include or reiterate the following risk factors:
  27
  Our
Common Stock Is Subject To Penny Stock Regulation
 
 Our
shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly
referred to as the "penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity security that has
a market price less than $5.00 per share, subject to certain exceptions. Rule
3a51-1 provides that any equity security is considered to be penny stock unless
that security is: registered and traded on a national securities exchange
meeting specified criteria set by the Commission; authorized for quotation on
the NASDAQ Stock Market; issued by a registered investment company; excluded
from the definition on the basis of price (at least $5.00 per share) or the
registrant's net tangible assets; or exempted from the definition by the
Commission. Since our shares are deemed to be "penny stock", trading in the
shares will be subject to additional sales practice requirements on
broker/dealers who sell penny stock to persons other than established customers
and accredited investors.
 
 FINRASales Practice
Requirements May Also Limit A Stockholder's Ability To Buy And Sell Our
Stock.
 
 In
addition to the “penny stock” rules described above, the Financial Industry
Regulatory Authority (FINRA) has adopted rules that require that in recommending
an investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer's financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. FINRA requirements make it more difficult
for broker-dealers to recommend that their customers buy our common stock, which
may limit your ability to buy and sell our stock and have an adverse effect on
the market for our shares.
 
 We
May Not Have Access To Sufficient Capital To Pursue Our Business And Therefore
Would Be Unable To Achieve Our Planned Future Growth:
  We intend
to pursue a growth strategy that includes development of the Company business
and technology.  Currently we have limited capital which may be
insufficient to pursue our plans for development and growth.  Our ability
to implement our growth plans may depend primarily on our ability to obtain
additional private or public equity or debt financing.  We are currently
seeking additional capital.  Such financing may not be available at all, or
we may be unable to locate and secure additional capital on terms and conditions
that are acceptable to us.  Our failure to obtain additional capital may
have a material adverse effect on our business.
 
 Nevada Law
And Our Articles Of Incorporation Protect Our Directors From Certain Types Of
Lawsuits, Which Could Make It Difficult For Us To Recover Damages From Them In
The Event Of A Lawsuit.
  Nevada
law provides that our directors will not be liable to our company or to our
stockholders for monetary damages for all but certain types of conduct as
directors. Our Articles of Incorporation require us to indemnify our directors
and officers against all damages incurred in connection with our business to the
fullest extent provided or allowed by law. The exculpation provisions may have
the effect of preventing stockholders from recovering damages against our
directors caused by their negligence, poor judgment or other circumstances. The
indemnification provisions may require our company to use our assets to defend
our directors and officers against claims, including claims arising out of their
negligence, poor judgment, or other circumstances.
  Because We Are Quoted On The OTCBB
Instead Of An Exchange Or National Quotation System, Our Investors May Have A
Tougher Time Selling Their Stock Or Experience Negative Volatility On The Market
Price Of Our Stock.
  Our
common stock is traded on the OTCBB. The OTCBB is often highly illiquid. 
There is a greater chance of volatility for securities that trade on the OTCBB
as compared to a national exchange or quotation system. This volatility may be
caused by a variety of factors, including the lack of readily available price
quotations, the absence of consistent administrative supervision of bid and ask
quotations, lower trading volume, and market conditions. Investors in our common
stock may experience high fluctuations in the market price and volume of the
trading market for our securities. These fluctuations, when they occur, have a
negative effect on the market price for our securities. Accordingly, our
stockholders may not be able to realize a fair price from their shares when they
determine to sell them or may have to hold them for a substantial period of time
until the market for our common stock improves.
  Failure To Achieve And Maintain
Effective Internal Controls In Accordance With Section 404 Of The
Sarbanes-Oxley Act Could Have A Material Adverse Effect On Our Business And
Operating Results.
  It may be
time consuming, difficult and costly for us to develop and implement the
additional internal controls, processes and reporting procedures required by the
Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal
auditing and other finance staff in order to develop and implement appropriate
additional internal controls, processes and reporting procedures. If we are
unable to comply with these requirements of the Sarbanes-Oxley Act, we may not
be able to obtain the independent accountant certifications that the
Sarbanes-Oxley Act requires of publicly traded companies.
  28
  If we
fail to comply in a timely manner with the requirements of Section 404 of
the Sarbanes-Oxley Act regarding internal control over financial reporting or to
remedy any material weaknesses in our internal controls that we may identify,
such failure could result in material misstatements in our financial statements,
cause investors to lose confidence in our reported financial information and
have a negative effect on the trading price of our common stock.
 
 Pursuant
to Section 404 of the Sarbanes-Oxley Act and current SEC regulations,
beginning with our annual report on Form 10-K for our fiscal period ended
December 31, 2009, we were required to prepare assessments regarding
internal controls over financial reporting and beginning with our annual report
on Form 10-K for our fiscal period ended December 31, 2009, furnish a report by
our management on our internal control over financial reporting. There also can
be no assurance that our auditors will be able to issue an unqualified opinion
on the effectiveness of our internal control over financial reporting
beginning with out annual report on Form 10-K for our fiscal period ending
December 31, 2010. Failure to achieve and maintain an effective internal control
environment could have a material adverse effect on our stock
price.
  In
addition, in connection with our on-going assessment of the effectiveness of our
internal control over financial reporting, we may discover “material weaknesses”
in our internal controls as defined in standards established by the Public
Company Accounting Oversight Board, or the PCAOB. A material weakness is a
significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected. The PCAOB
defines “significant deficiency” as a deficiency that results in more
than a remote likelihood that a misstatement of the financial statements
that is more than inconsequential will not be prevented or
detected.
  In the
event that a material weakness is identified, we will employ qualified personnel
and adopt and implement policies and procedures to address any material
weaknesses that we identify. However, the process of designing and implementing
effective internal controls is a continuous effort that requires us to
anticipate and react to changes in our business and the economic and regulatory
environments and to expend significant resources to maintain a system of
internal controls that is adequate to satisfy our reporting obligations as a
public company. We cannot assure you that the measures we will take will
remediate any material weaknesses that we may identify or that we will implement
and maintain adequate controls over our financial process and reporting in the
future.
  Any
failure to complete our assessment of our internal control over financial
reporting, to remediate any material weaknesses that we may identify or to
implement new or improved controls, or difficulties encountered in their
implementation, could harm our operating results, cause us to fail to meet our
reporting obligations or result in material misstatements in our financial
statements. Any such failure could also adversely affect the results of the
periodic management evaluations of our internal controls and, in the case of a
failure to remediate any material weaknesses that we may identify, would
adversely affect the annual auditor attestation reports regarding the
effectiveness of our internal control over financial reporting that are required
under Section 404 of the Sarbanes-Oxley Act. Inadequate internal controls
could also cause investors to lose confidence in our reported financial
information, which could have a negative effect on the trading price of our
common stock.
  Operating
History And Lack Of Profits Which Could Lead To Wide Fluctuations In Our Share
Price. The Price At Which You Purchase Our Common Shares May Not Be Indicative
Of The Price That Will Prevail In The Trading Market. You May Be Unable To Sell
Your Common Shares At Or Above Your Purchase Price, Which May Result In
Substantial Losses To You. The Market Price For Our Common Shares Is
Particularly Volatile Given Our Status As A Relatively Unknown Company With A
Small And Thinly Traded Public Float, Limited
  The
market for our common shares is characterized by significant price volatility
when compared to seasoned issuers, and we expect that our share price will
continue to be more volatile than a seasoned issuer for the indefinite future.
The volatility in our share price is attributable to a number of factors. First,
as noted above, our common shares are sporadically and thinly traded. As a
consequence of this lack of liquidity, the trading of relatively small
quantities of shares by our shareholders may disproportionately influence the
price of those shares in either direction. The price for our shares could, for
example, decline precipitously in the event that a large number of our common
shares are sold on the market without commensurate demand, as compared to a
seasoned issuer which could better absorb those sales without adverse impact on
its share price. Secondly, we are a speculative or “risky” investment due to our
limited operating history and lack of profits to date, and uncertainty of future
market acceptance for our potential products. As a consequence of this enhanced
risk, more risk-adverse investors may, under the fear of losing all or most of
their investment in the event of negative news or lack of progress, be more
inclined to sell their shares on the market more quickly and at greater
discounts than would be the case with the stock of a seasoned issuer. Many of
these factors are beyond our control and may decrease the market price of our
common shares, regardless of our operating performance. We cannot make any
predictions or projections as to what the prevailing market price for our common
shares will be at any time, including as to whether our common shares will
sustain their current market prices, or as to what effect that the sale of
shares or the availability of common shares for sale at any time will have on
the prevailing market price.
  29
  Shareholders
should be aware that, according to SEC Release No. 34-29093, the market for
penny stocks has suffered in recent years from patterns of fraud and abuse. Such
patterns include (1) control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer;
(2) manipulation of prices through prearranged matching of purchases and
sales and false and misleading press releases; (3) boiler room practices
involving high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (4) excessive and undisclosed bid-ask
differential and markups by selling broker-dealers; and (5) the wholesale
dumping of the same securities by promoters and broker-dealers after prices have
been manipulated to a desired level, along with the resulting inevitable
collapse of those prices and with consequent investor losses. Our management is
aware of the abuses that have occurred historically in the penny stock market.
Although we do not expect to be in a position to dictate the behavior of the
market or of broker-dealers who participate in the market, management will
strive within the confines of practical limitations to prevent the described
patterns from being established with respect to our securities. The occurrence
of these patterns or practices could increase the volatility of our share
price.
  Volatility In Our Common Share Price
May Subject Us To Securities Litigation, Thereby Diverting Our Resources That
May Have A Material Effect On Our Profitability And Results Of
Operations.
  As
discussed in the preceding risk factors, the market for our common shares is
characterized by significant price volatility when compared to seasoned issuers,
and we expect that our share price will continue to be more volatile than a
seasoned issuer for the indefinite future. In the past, plaintiffs have often
initiated securities class action litigation against a company following periods
of volatility in the market price of its securities. We may in the future be the
target of similar litigation. Securities litigation could result in substantial
costs and liabilities and could divert management’s attention and
resources.
  SHOULD ONE OR MORE OF THE FOREGOING
RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD THE UNDERLYING ASSUMPTIONS PROVE
INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE ANTICIPATED,
BELIEVED, ESTIMATED, EXPECTED, INTENDED OR PLANNED.
  ITEM
2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
SECURITIES
 
 There
were no unregistered sales of securities during the three months ended March 31,
2010.
 
 ITEM
3.  DEFAULTS UPON SENIOR SECURITIES
 
 There
were no defaults upon senior securities during the period ended March 31,
2010.
 
 ITEM
4.  REMOVED AND RESERVED
 
 ITEM
5.  OTHER INFORMATION
  None.
  ITEM
6.  EXHIBITS
  3.1
                Certificate of Incorporation (1)3.2
                Bylaws of Pro-Tech Industries, Inc. (1)14.1
                Code of Ethics (2)31.1
                Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act(3)31.2
                Certification
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act.(3)32.2
                Certification
      of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act.(3)32.2
                Certification
      of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act.(3)
 
 1)   Incorporated
by reference to the Company’s filing on Form SB-2, as filed with the Securities
and Exchange Commission on June 27, 2007.
  30
  (2)   Incorporated
by reference to the Company’s filing on Form 10-K, as filed with the Securities
and Exchange Commission on April 15, 2009.
 
 (3)  Filed
herein.
  31
  SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
 
 Registrant
                        Pro-Tech
      Industries, Inc.Date:
      May 24, 2010
                        By:
                        /s/ Donald GordonDonald
      GordonChief
      Executive
Officer
 
 Registrant
                      Pro-Tech
      Industries, Inc.Date:
      May 24, 2010
                      By:
                      /s/ Michael WalshMichael
      WalshChief
      Financial Officer (Principal Financial
Officer)
  32