UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549






FORM
10-Q






x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the Quarterly Period Ended June 30, 2008




OR




 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the Transition Period
From                            to




Commission
File Number: 333-146970






PINPOINT
RECOVERY SOLUTIONS CORP.


(Exact
name of registrant as specified in its charter)






Delaware
            
            26-2214000(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)4300
      W. Cypress Street, Suite 370
              Tampa,
      Florida
            
            33607(Address
      of principal executive offices)
            
            (Zip
      Code)




(813)
879-5000


(Registrant’s
telephone number, including area code)




None


(Former
name, former address and former fiscal year, if changed since last
report)




Indicate
by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90
days.    Yes  x    No   ̈




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.






Large
      accelerated filer o
            Accelerated filer
      oNon-accelerated filer o
            Smaller
      reporting company x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). 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
      at July 31, 2008Common
      Stock, $0.001 par value per share
            
            4,617,588
      shares















TABLE OF
CONTENTS
 Pinpoint
Recovery Solutions Corp. ∙ Form
10-Q




PART I-FINANCIAL INFORMATION
              1ITEM 1. FINANCIAL STATEMENTS.
              1CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2008 (UNAUDITED) AND
      DECEMBER 31, 2007
              1CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX
      MONTHS ENDED JUNE 30, 2008 AND 2007
              2CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED
      JUNE 30, 2008 AND 2007
              3NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
      STATEMENTS
              4ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS.
              9ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK.
              14ITEM 4T. CONTROLS AND PROCEDURES.
              14PART II-OTHER INFORMATION
              16ITEM 1. LEGAL PROCEEDINGS.ITEM 1A. RISK FACTORS.
              16ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS.
              16ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
              16ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS.
              16ITEM 5. OTHER INFORMATION.
              16ITEM 6. EXHIBITS.
              16SIGNATURES
              17


PART I-FINANCIALINFORMATION


Item
1. Financial Statements.


CONSOLIDATED
BALANCE SHEETS


Pinpoint
Recovery Solutions Corp. ∙ 10-Q




June
      30, 2008
              
              
              December
      31, 2007(unaudited)ASSETSCurrent
      assets:Cash
              
              $
              209,250
              
              
              $
              221,873Accounts
      receivable, net of allowance of $26,447
              
              
              456,315
              
              
              
              595,772Prepaid
      expenses
              
              
              50,383
              
              
              
              59,835Total
      current assets
              
              
              715,948
              
              
              
              877,480Property
      and equipment, net of accumulated depreciation of$11,150
      and $5,428, respectively
              
              
              32,284
              
              
              
              36,703Goodwill
              
              
              6,397,542
              
              
              
              6,397,542Other
      assets, net of amortization of $5,160 and $nil,
    respectivley
              
              
              25,480
              
              
              
              30,640TOTAL
      ASSETS
              
              $
              7,171,254
              
              
              $
              7,342,365LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable
              
              $
              130,902
              
              
              $
              132,266Payable
      to related party
              
              
              151,109
              
              
              
              92,490Other
      current liabilities
              
              
              6,042
              
              
              
              15,805Accrued
      interest-related party
              
              
              11,575
              
              
              
              46,423Promissory
      notes payable-related party
              
              
              1,915,904
              
              
              
              1,861,096Total
      current liabilities
              
              
              2,215,532
              
              
              
              2,148,080Commitments
      and contingenciesStockholders’
      Equity:Preferred
      stock, $.001 par value; 1,000,000 shares authorizedand
      none issued
              
              
              -
              
              
              
              -Common
      stock, $.001 par value; 15,000,000 shares authorized,4,617,588
      issued and outstanding
              
              
              4,618
              
              
              
              4,618Additional
      paid-in capital
              
              
              6,628,274
              
              
              
              6,446,335Accumulated
      deficit
              
              
              (1,677,170
              )
              
              
              (1,256,668
              )Total
      stockholders’ equity
              
              
              4,955,722
              
              
              
              5,194,285TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
              
              $
              7,171,254
              
              
              $
              7,342,365




1


CONSOLIDATED STATEMENTS OF OPERATIONS
 ∙


(Unaudited)





Three
      Months Ended
              
              
              Six
      Months EndedJune
      30,
              
              
              June
      30,2008
              
              
              2007
              
              
              2008
              
              
              2007Revenues
              
              $
              805,094
              
              
              $
              98,614
              
              
              $
              1,052,601
              
              
              $
              98,614Costs
      and Expenses:Direct
      costs
              
              
              107,095
              
              
              
              -
              
              
              
              139,271
              
              
              
              -Payroll
      and related costs
              
              
              286,710
              
              
              
              -
              
              
              
              570,335
              
              
              
              -Consulting
      fees
              
              
              5,500
              
              
              
              21,250
              
              
              
              17,915
              
              
              
              22,500Professional
      fees
              
              
              53,403
              
              
              
              510,943
              
              
              
              108,460
              
              
              
              641,296Interest
      expense-related party
              
              
              37,204
              
              
              
              1,725
              
              
              
              77,427
              
              
              
              1,725General
      and administrative
              
              
              178,095
              
              
              
              30,610
              
              
              
              559,695
              
              
              
              31,743Total
      costs and expenses
              
              
              668,007
              
              
              
              564,528
              
              
              
              1,473,103
              
              
              
              697,264Net
      income (loss)
              
              $
              137,087
              
              
              $
              (465,914
              )
              
              $
              (420,502
              )
              
              $
              (598,650
              )Earnings
      (Loss) per Share:Basic
              
              $
              0.03
              
              
              $
              (0.25
              )
              
              $
              (0.09
              )
              
              $
              (0.34
              )Diluted
              
              $
              0.02
              
              
              $
              (0.25
              )
              
              $
              (0.09
              )
              
              $
              (0.34
              )Weighted
      average number of common sharesBasic
              
              
              4,617,588
              
              
              
              1,857,613
              
              
              
              4,617,588
              
              
              
              1,759,393Diluted
              
              
              5,595,032
              
              
              
              1,857,613
              
              
              
              4,617,588
              
              
              
              1,759,393


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




2


CONSOLIDATED STATEMENTS OF CASH FLOWS
 ∙


(Unaudited)




Six
      Months Ended June 30,
              
              2008
              
              
              2007CASH
      FLOWS - OPERATING ACTIVITIESNet
      loss
              
              $
              (420,502
              )
              
              $
              (598,650
              )Adjustments
      to reconcile net loss to cash used inoperating
      activities:Non
      cash stock compensation expense
              
              
              178,000
              
              
              
              445,000Depreciation
      expense
              
              
              5,722
              
              
              
              -Amortization
      of imputed interest on payable to related party
              
              
              4,308
              
              
              
              -Amortization
      of software costs
              
              
              5,160
              
              
              
              -Changes
      in assets and liabilities:
              
              
              
              
              
              
              -Accounts
      receivable
              
              
              139,457
              
              
              
              (98,614
              )Prepaid
      expenses
              
              
              9,452
              
              
              
              (14,794
              )Accounts
      payable
              
              
              (1,364
              )
              
              
              58,513Other
      accrued expenses
              
              
              (9,763
              )
              
              
              -Accrued
      interest-related party
              
              
              19,960
              
              
              
              1,725Net
      cash used in operating activities
              
              
              (69,570
              )
              
              
              (206,820
              )CASH
      FLOWS - INVESTING ACTIVITIESCapital
      expenditures
              
              
              (1,303
              )
              
              
              -Cash
      Paid for Investment in SALT
              
              
              -
              
              
              
              (2,962,528
              )Cash
      Paid for finders’ fees to acquire SALT
              
              
              -
              
              
              
              (270,922
              )Net
      cash used in investing activities
              
              
              (1,303
              )
              
              
              (3,233,450
              )CASH
      FLOWS - FINANCING ACTIVITIESDeferred
      offering costs
              
              
              -
              
              
              
              (449,842
              )Loans
      from related party
              
              
              54,312
              
              
              
              -Proceeds
      from sale of common stock
              
              
              
              
              
              
              3,943,000Additional
      capital contributed by founder
              
              
              3,938
              
              
              
              199,925Net
      cash provided by financing activities
              
              
              58,250
              
              
              
              3,693,083Net
      increase in cash
              
              
              (12,623
              )
              
              
              252,813Cash
      - beginning of period
              
              
              221,873
              
              
              
              -Cash
      - end of period
              
              $
              209,250
              
              
              $
              252,813Supplemental
      Disclsoures of Cash Flow Information:Cash
      paid for interest
              
              $
              53,530.00
              
              
              $
              -Cash
      paid for income taxes
              
              
              -
              
              
              
              -






3


NOTES TOCONSOLIDATED FINANCIAL STATEMENTS
 ∙


(Unaudited)





1Basis of
      Presentation and
      Consolidation and Recent Accounting
  Pronouncements


Basis
of Presentation


In the
opinion of management, the accompanying consolidated balance sheets and related
consolidated interim statements of operations, and cash flows include all
adjustments, consisting only of normal recurring items, necessary for their fair
presentation in conformity with accounting principles generally accepted in the
United States of America. Preparing financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. Examples include: allowances for doubtful
accounts, estimates of lives and recoverable value of property, the valuation of
goodwill, and assumptions used to calculate stock based compensation. Actual
results and outcomes may differ from management’s estimates and
assumptions.





Interim
results are not necessarily indicative of results for a full year. The
information included in this Form 10-Q should be read in conjunction with
information included in the Pinpoint Recovery Solutions Corp. 2007 Form
10-K.





Basis
of Consolidation


The
accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, S.A.L.T. Payroll Consultants, Inc.,
(“SALT”), a Florida corporation. All intercompany transactions and balances have
been eliminated upon consolidation. SALT was acquired on June 26, 2007 and as
such, the statement of operations and cash flows for the three and six months
ended June 30, 2007 includes the accounts of SALT only from the date of the
acquisition. See Note 7 for pro forma information regarding the operations of
SALT for the three and six months ended June 30, 2007.





Recently
Adopted Accounting Standards


We
adopted the Financial Accounting Standards Board’s (FASB) Statement of Financial
Accounting Standard (SFAS) No. 157, Fair Value Measurement on
January 1, 2008. SFAS 157 defines fair value, establishes a framework for
measuring fair value and expands disclosure of fair value measurements. SFAS 157
applies under other accounting pronouncements that require or permit fair value
measurements and accordingly, does not require any new fair value measurements.
SFAS No. 157 clarifies that fair value is an exit price, representing the amount
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants. As such, fair value is a
market-based measurement that should be determined based on assumptions that
market participants would use in pricing an asset or liability. As a basis for
considering such assumptions, SFAS No. 157 established a three-tier fair value
hierarchy, which prioritizes the inputs used in measuring fair value as
follows:





·
            Level
      1. Observable inputs such as quoted prices in active
    markets;


·
            Level
      2. Inputs, other than the quoted prices in active markets, that are
      observable either directly or indirectly;
and


·
            Level
      3. Unobservable inputs in which there is little or no market data, which
      require the reporting entity to develop its own
    assumptions.





The
following table presents assets that are measure and recognized at fair value on
a non-recurring basis:





Description
              
              Level
      1
              
              
              Level
      2
              
              
              Level
      3
              
              
              Total
                  Gains(Losses)Goodwill
              
              $
              -
              
              
              $
              -
              
              
              $
              6,397,542
              
              
              $
              -





The
FASB’s SFAS No. 159, The Fair
Value Option for Financial Assets and Financial Liabilities, including an
Amendment of SFAS 115 became effective for us on January 1, 2008. SFAS
159 establishes a fair value option that permits entities to choose to measure
eligible financial instruments and certain other items at fair value at
specified election dates. A business entity shall report unrealized gains and
losses on items for which the fair value options have been elected in earnings
at each subsequent reporting date. For the six months ended June 30, 2008, there
were no applicable items on which the fair value option was elected. SFAS 159
may impact our consolidated financial statements in the future.




4
 
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 ∙
 (Unaudited)


Recent
Accounting Standards Not Yet Adopted


In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combination, which
replaces SFAS No. 141. The statement retains the purchase method of accounting
for acquisitions, but requires a number of changes, including changes in the way
assets and liabilities are recognized in the purchase accounting. It also
changes the recognition of assets acquired and liabilities assumed arising from
contingencies, requires the capitalization of in-process research and
development at fair value, and requires the expensing of acquisition-related
costs as incurred. SFAS No. 141R is effective for us beginning January 1, 2009
and will apply prospectively to business combinations completed on or after that
date.





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51 (“SFAS
160”). SFAS 160 requires: (i) the ownership interests in subsidiaries held by
parties other than the parent be clearly identified, labeled, and presented in
the consolidated statement of financial position within equity, but separate
from the parent’s equity; (ii) the amount of consolidated net income
attributable to the parent and to the noncontrolling interest be clearly
identified and presented on the face of the consolidated statement of income;
(iii) changes in a parent’s ownership interest while the parent retains its
controlling financial interest in its subsidiary be accounted for consistently;
(iv) when a subsidiary is deconsolidated, any retained noncontrolling equity
investment in the former subsidiary and any gain or loss on the deconsolidation
be initially measured at fair value; and (v), entities provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners. SFAS 160 is effective for
us as of January 1, 2009 and will apply prospectively, except for the
presentation and disclosure requirements, which will apply retrospectively. SFAS
160 is not expected to have a material impact on our consolidated financial
statements.





In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133(“SFAS No. 161”). SFAS No. 161 changes the disclosure requirements for
derivative instruments and hedging activities. Entities are required to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. SFAS No. 161 is effective for
us beginning January 1, 2009 and is not expected to have a material impact on
our consolidated financial statements





In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally AcceptedAccounting
Principles. SFAS 162 identifies the sources of accounting principles and
the framework for selecting the principles to be used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with generally accepted accounting principles (“GAAP”) in the United
States (the GAAP hierarchy). SFAS 162 becomes effective 60 days following the
SEC’s approval of the Public Company Accounting Oversight Board (“PCAOB”)
amendment to AU Section 411, “The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles” and is not expected to have a
significant impact on our consolidated financial statements.





In May
2008, the FASB issued SFAS No. 163 Accounting for Financial Guarantee
Insurance Contracts—an interpretation of FASB Statement No. 60. SFAS 163
resolves existing inconsistencies in accounting for financial guarantee
insurance contracts by insurance enterprises under FASB Statement No. 60,
“Accounting and Reporting by Insurance Enterprises”. SFAS 163 requires that
an insurance enterprise recognize a claim liability prior to an event of default
(insured event) when there is evidence that credit deterioration has occurred in
an insured financial obligation and clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement to be used to account for premium revenue and claim liabilities.
SFAS 163 also requires expanded disclosures about financial guarantee insurance
contracts. SFAS 163 is effective for financial statements issued for fiscal
years beginning after December 15, 2008, and all interim periods within those
fiscal years, except for some disclosures about the insurance enterprise’s
risk-management activities. SFAS 163 is not expected to have a significant
impact on our consolidated financial statements.





5
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 Recovery
Solutions ∙
 (Unaudited)
 2Basic and Diluted Loss Per
      Share


Basic
and diluted per share results for the three and six months ended June 30, 2008
and 2007 were computed based on the loss allocated to the common stock for the
respective periods. The weighted average number of shares of common stock
outstanding during the periods was used in the calculation of basic loss per
share. On September 14, 2007, our board of directors approved a 10% stock
dividend to all holders of record as of September 12, 2007. In determining the
weighted-average shares outstanding for the three and six months ended June 30,
2007, the shares issuable pursuant to the stock dividend and the founders’
shares were considered outstanding as of the beginning of such
period.





In
accordance with SFAS 128, “Earnings Per Share,” the weighted average number of
shares of common stock used in the calculation of diluted per share amounts is
adjusted for the dilutive effects of potential common shares including the
assumed exercise of warrants to purchase common stock based on the treasury
stock method only if an entity records earnings from continuing operations, as
such adjustments would otherwise be anti-dilutive to earnings per share from
continuing operations.





The
components of basic and diluted earnings (loss) per share were as
follows:





Three
      Months Ended
              
              
              Six
      Months EndedJune
      30, 2008
              
              
              June
      30, 2008Net
      income (loss) available forcommon
      shareholders (A)
              
              $
              137,087
              
              
              $
              (465,914
              )
              
              $
              (420,502
              )
              
              $
              (598,650
              )Weighted
      average shares of outstandingcommon
      stock (B)
              
              
              4,617,588
              
              
              
              1,857,613
              
              
              
              4,617,588
              
              
              
              1,759,393Dilutive
      effect of warrants to purchasecommon
      stock
              
              
              977,444
              
              
              
              -
              
              
              
              -
              
              
              
              -Common
      stock and common stockequivalents
      (C)
              
              
              5,595,032
              
              
              
              1,857,613
              
              
              
              4,617,588
              
              
              
              1,759,393Earings
      (Loss) per Share:Basic
              
              $
              0.03
              
              
              $
              (0.25
              )
              
              $
              (0.09
              )
              
              $
              (0.34
              )Diluted
              
              $
              0.02
              
              
              $
              (0.25
              )
              
              $
              (0.09
              )
              
              $
              (0.34
              )




The
following shares attributable to outstanding warrants to purchase common stock
were excluded from the calculation of diluted earnings per share because their
inclusion would have been anti-dilutive. Such potential common shares may dilute
earnings per share in the future.




Three
      Months Ended
              
              
              Six
      Months EndedJune
      30, 2008
              
              
              June
      30, 2008Warrants
      to purhcase common stock
              
              
              -
              
              
              
              38,879
              
              
              
              977,444
              
              
              
              19,656
  3Intangible Assets and
      Goodwill


On June
26, 2007, we acquired SALT. In determining the value attributed to the shares
issued for the SALT acquisition, we were assisted by an independent third party
who has expertise in the valuation of companies. The total consideration paid
was $6,605,922 of which $6,397,542 was in excess of the fair value of the net
assets acquired. The financial statements assume that all of the excess of the
purchase price over the net tangible assets was allocated to Goodwill in
accordance with SFAS No. 141 “Business Combinations” and SFAS No. 142 “Goodwill
and Other Intangible Assets” and accordingly, no amortization expense was
included in the statement of operations.





Under the
provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” intangible
assets are tested for impairment on an annual basis and between annual tests if
an event occurs or circumstances change in a way to indicate a potential decline
in the fair value of the reporting unit. In assessing the recoverability of the
goodwill, we must make assumptions regarding estimated future cash flows and
other factors to determine the fair value of the respective assets. This
impairment test requires the determination of the fair value of the intangible
asset. If the fair value of the intangible asset is less than its carrying
value, an impairment loss will be recognized in an amount equal to the
difference. If these estimates or their related assumptions change in the
future, the Company may be required to record impairment charges for these
assets. We re-evaluated the carrying value of the goodwill with the assistance
of the valuation expert as of December 31, 2007 and no impairment loss was
recognized.





6
 
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 Pinpoint Recovery Solutions Corp. ∙ Form 10-Q
 (Unaudited)


The
following table details the allocation of the purchase price paid for
SALT:





Accounts
      receivable
              
              $
              195,899Prepaid
      expenses
              
              
              4,523Property
      and equipment
              
              
              32,706Goodwill
              
              
              6,397,542Accounts
      payable
              
              
              (24,748
              )Total
      purchase price
              
              $
              6,605,922




4Concentrations of Credit Risk
      and Major
Clients


Financial
instruments that potentially subject us to significant concentrations of credit
risk include cash and accounts receivable. As of June 30, 2008, all of our cash
is placed with high credit quality financial institutions. The amount on deposit
in any one institution may occasionally exceed federally insured limits of
$100,000 and be subject to credit risk. We believe this risk is minimal. As of
June 30, 2008 we had $103,712 of cash in excess of federally insured
limits.





The
following table sets forth the amount and percentage of revenue from those
customers which accounted for at least 10% of revenues for the indicated
periods.




Three
      Months Ended
            
            
            Six
      Months EndedJune
      30, 2008
            
            
            June
      30, 2008Customer
      A
            
            $
            176,772
            
            
            
            22
            %
            
            $
            180,333
            
            
            
            17
            %Customer
      B
            
            
            132,585
            
            
            
            16
            %
            
            
            132,585
            
            
            
            13
            %Customer
      C
            
            
            86,105
            
            
            
            11
            %
            
            
            90,111
            
            
            
            9
            %Three
      Months Ended
            
            
            Six
      Months EndedJune
      30, 2007 (a)
            
            
            June 30, 2007(a)Customer
      F
            
            $
            80,720
            
            
            
            82
            %
            
            $
            80,720
            
            
            
            82
            %Customer
      G
            
            
            17,894
            
            
            
            18
            %
            
            
            17,894
            
            
            
            18
            %(a)
      - Includes revenues earned by SALT from June 26, 2007, the date of
      acquisition, to June 30, 2007.




The
following table sets forth the amount and percentage of accounts receivable from
customers which accounted for at least 10% of total accounts
receivable.





As
      of June 30, 2008
              
              June
      30, 2008
              
              
              December
      31, 2007Customer
      A
              
              $
              71,095
              
              
              
              15
              %
              
              $
              -
              
              
              
              0
              %Customer
      B
              
              
              79,736
              
              
              
              17
              %
              
              
              -
              
              
              
              0
              %Customer
      C
              
              
              50,669
              
              
              
              10
              %
              
              
              -
              
              
              
              0
              %Customer
      D
              
              
              55,403
              
              
              
              11
              %
              
              
              -
              
              
              
              0
              %Customer
      E
              
              
              66,793
              
              
              
              14
              %
              
              
              -
              
              
              
              0
              %Customer
      H
              
              
              -
              
              
              
              0
              %
              
              
              115,830
              
              
              
              19
              %Customer
      I
              
              
              -
              
              
              
              0
              %
              
              
              112,881
              
              
              
              18
              %Customer
      J
              
              
              -
              
              
              
              0
              %
              
              
              89,691
              
              
              
              14
              %




7




NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 ∙
 (Unaudited)


We do not
require collateral to support accounts receivable or financial instruments
subject to credit risk. Our revenue is derived solely from tax recovery services
provided to our clients. This industry is highly regulatory and any changes in
reimbursement allowances or procedures could materially impact our
business.


5Transactions with Related
      Parties
 Payable
to Related Party


On
various dates since November 2007, our founder has made advances to us
aggregating $157,311. Such advances are not interest bearing, are expected to be
repaid under unspecified terms and are recorded net of imputed interest.
Assuming an incremental borrowing rate of 7.25% and a one year repayment term,
total imputed interest on the advances was $10,935, which is being amortized
over the estimated repayment period. For the three and six months ended June 30,
2008, such amortization amounted to $2,479 and 4,308, respectively.





Promissory
Notes Payable-Related Party


In
connection with the June 26, 2007 acquisition of SALT, we issued our $1,881,550
promissory note payable to NeuCap, Inc. (“NeuCap”). NeuCap is owned by Kevin
Cappock, our chief executive officer, and Robert Neuman, our vice-president. The
promissory note may be prepaid any time without penalty. Originally, the
promissory note accrued interest at the prime rate as set by Bank of America and
all outstanding principal and interest was due six months from the date of
issuance. On January 10, 2008, the promissory note was amended whereby NeuCap
agreed to extend the maturity date of the note to March 31, 2008 for which we
paid NeuCap an additional $20,000.





On April
11, 2008, the promissory note was again amended and the maturity date was
extended to March 31, 2009, $54,808 of accrued interest was capitalized and
added to the outstanding principal resulting in the principal outstanding at
June 30, 2008 of $1,915,904.  The interest rate was set at 7.25% per
annum.  In addition, we agreed to make cash payments for both interest
and principal when our month-end checking account balance exceeds $225,000;
provided, however, that any such payment shall be limited to the amount that,
immediately after effecting such payment, would reduce our checking account
balance to not less than $200,000.





During
the three and six months ended June 30, 2008, interest expense relating to the
promissory note was $34,806 and $73,111, respectively. Accrued and unpaid
interest at June 30, 2008 is $11,575.




6Issuance of Shares for Advisory
      Services


In March
2008, an individual agreed to provide advisory services to us and in connection
therewith, our founder transferred 100,000 shares of Common Stock he owned to
such individual. Using a per share price of $1.78 as determined by an
independent valuation expert, we recorded $178,000 as a contribution of capital
for the value of the shares and an equivalent amount to stock-based compensation
expense for the six months ended June 30, 2008.




7Pro Forma Financial
      Information


As a
result of the June 26, 2007 acquisition of SALT, our on-going principal business
is providing tax recovery services to businesses that may be eligible to receive
refunds relating to federal and state payroll taxes. The following pro forma
information gives effect to the acquisition and related financings as if they
occurred as of the beginning of the three and six months ended June 30, 2007 and
have been prepared by management based upon the historical financial statements
of Pinpoint Recovery Solutions Corp. and NeuCap. This pro forma information may
not be indicative of what would have occurred if the proposed acquisition and
financings had actually occurred on the indicated dates and they should not be
relied upon as an indication of future results of operations.





8
 
  NOTESTO CONSOLIDATED FINANCIAL STATEMENTS
 ∙
 (Unaudited)


The
following table presents unaudited pro forma combined statement of operations
information for the three and six months ended June 30, 2007 as if the
transaction occurred at the beginning of such period.





Three
      Months
              
              
              Six
      MonthsEnded
              
              
              EndedJune
      30, 2007
              
              
              June
      30, 2007Revenues
              
              $
              807,025
              
              
              $
              1,158,473Costs
      and Expenses:Direct
      costs
              
              
              104,416
              
              
              
              153,619Payroll
      and related costs
              
              
              422,084
              
              
              
              552,222Consulting
      fees
              
              
              21,250
              
              
              
              22,500Professional
      fees
              
              
              510,943
              
              
              
              641,296Interest
      expense-related party
              
              
              38,810
              
              
              
              77,617General
      and administrative
              
              
              138,245
              
              
              
              235,191Total
      costs and expenses
              
              
              1,235,748
              
              
              
              1,682,445Net
      loss
              
              $
              (428,723
              )
              
              $
              (523,972
              )


8Subsequent
      Events On July
8, 2008, we entered into a strategic relationship with Cost Containment
Advisors, (CCA), a Greenwich, CT-based supplier of property tax recovery
services. The firms will have access to one another’s client base and provide
each with cross-selling opportunities.





On July
8, 2008, we entered into a strategic alliance with C&I Tax Consultants.
C&I Tax Consultants is one of the leading consultants in the niche area of
the California Enterprise Zone Tax Credits. The alliance gives us the ability to
offer our existing clients California Enterprise Zone Tax Credits recovery
services through C&I Tax Consultants.




Effective
as of August 1, 2008, Andrew Scott, Pinpoint’s Chairman, became employed by the
company as Head of Corporate Development. His primary responsibilities will be
to expand Pinpoint’s business through the development of strategic alliances,
joint ventures and the successful execution of the Company’s internal marketing
efforts.





Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.




Special Note About Forward
      Looking Statements Certain
statements in Management’s Discussion and Analysis (“MD&A”), other than
purely historical information, including estimates, projections, statements
relating to our business plans, objectives, and expected operating results, and
the assumptions upon which those statements are based, are “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements generally are
identified by the words “believe,” “project,” “expect,” “anticipate,”
“estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,”
“will be,” “will continue,” “will likely result,” and similar expressions
identify forward-looking statements, but are not the exclusive means of
identifying such statements and their absence does not mean that a statement is
not forward-looking. Forward-looking statements are based on current
expectations and assumptions that are subject to risks and uncertainties, which
may cause actual results to differ materially from the forward-looking
statements. A detailed discussion of risks and uncertainties that could cause
actual results and events to differ materially from such forward-looking
statements is included in the section titled “Risk Factors” (refer to Part I,
Item 1A of our annual report for the year ended December 31, 2007 filed on Form
10K on May 13, 2008). We undertake no obligation to update or revise publicly
any forward-looking statements, whether as a result of new information, future
events, or otherwise.




9
 
  Management’s
Discussion And Analysis
 Pinpoint
Recovery Solutions Corp. ∙ Form 10-Q


Overview The
following MD&A is intended to help the reader understand the results of
operations and financial condition of Pinpoint Recovery Solutions Corp. MD&A
is provided as a supplement to, and should be read in conjunction with, our
financial statements and the accompanying notes to the financial
statements.





From
December 4, 2006, our date of inception, until June 25, 2007, we were a
development stage enterprise, devoting substantially all of our efforts to
capital raising activities for, and planning to integrate and manage, the
acquisition of an appropriate business. On June 26, 2007 we acquired
SALT.





Subsequent
to the acquisition of SALT, our principal business focus has been to develop
additional control procedures, implement a new enterprise software company wide,
and establish an internal marketing division to continue growing the business of
SALT. We formed a new wholly owned subsidiary called “S.A.L.T. Payroll
Consultants, Inc.,” the name under which the acquired business is operated;
however, we remain the owner of the assets acquired and liabilities assumed in
the SALT acquisition.




Results of
      Operations The
following table summarizes selected unaudited financial information for the
three months ended June 30, 2008 compared to the three months ended June 30,
2007 and the six months ended June 30, 2008 compared to the six months ended
June 30, 2007 The unaudited financial information presented for the three and
six months ended June 30, 2007 was derived by combining SALT, the predecessor
company, unaudited historical results for the three and six months ended June
30, 2007, with Pinpoint’s historical results for the three and six months ended
June 30, 2007.




Three
      Months Ended June 30,
              
              
              Six
      Months Ended June 30,2008
              
              
              2007
              
              
              2008
              
              
              2007Revenues
              
              $
              805,094
              
              
              $
              807,025
              
              
              $
              1,052,601
              
              
              $
              1,158,473Direct
      costs
              
              
              107,095
              
              
              
              104,416
              
              
              
              139,271
              
              
              
              153,619Payroll
      and related costs
              
              
              286,710
              
              
              
              422,084
              
              
              
              570,335
              
              
              
              552,222General
      and administrative
              
              
              236,998
              
              
              
              138,245
              
              
              
              397,798
              
              
              
              235,191Income
      (loss) before interest expense, noncash stock-based compensation and other
      acquisition costs
              
              
              174,291
              
              
              
              142,280
              
              
              
              (54,803
              )
              
              
              217,441Interest
      expense
              
              
              37,204
              
              
              
              1,728
              
              
              
              77,427
              
              
              
              1,728Noncash
      stock-based compensation
              
              
              -
              
              
              
              445,000
              
              
              
              178,000
              
              
              
              445,000Other
      acquisition costs
              
              
              -
              
              
              
              87,193
              
              
              
              110,272
              
              
              
              218,796Net
      income (loss)
              
              
              137,087
              
              
              
              (391,641
              )
              
              
              (420,502
              )
              
              
              (448,083
              )




Our
revenues for the second quarter and first half of 2008 did not fluctuate
significantly from the 2007 comparable periods. We generally do not earn our
fees and therefore recognize the associated revenue on an engagement until our
client receives a tax refund check or a credit from the applicable taxing
authorities related to the work we performed. As a result our revenues may vary
from period to period in the future as a result of expected refunds being held
up in administrative hearings at the taxing authorities. For the second quarter
and first half of 2008, revenues from three customers accounted for an aggregate
of 49% and 39% of total revenues, respectively. For the second quarter of 2007,
revenues from four customers accounted for 74% of total revenues and for the
first half of 2007, revenues from five customers accounted for 62% of total
revenues.





Direct
costs and expenses generally vary with our revenues. Direct costs as a percent
of our revenues were 13.3% and 13%, respectively, for the second quarter of 2008
and 2007 and 13.2% for the first half of both 2008 and 2007.





Payroll
and related costs decreased $135,374 when comparing the second quarter of 2008
and 2007. This decrease is primarily the impact of discretionary bonuses that
were paid to the six non-officer employees of SALT at the time of the June 2007
acquisition somewhat offset by the addition of employees to build the
infrastructure for strategic growth goals and public reporting. When comparing
the first half of 2008 to 2007 payroll and related costs increased $18,113 which
is the net result of increases from the addition of new employees to build the
infrastructure for strategic growth goals and additional SEC compliance
reporting expenses offset by the discretionary bonuses paid in 2007 that were
not paid in 2008.





10
 
  Management’s
Discussion And Analysis
 Pinpoint
Recovery Solutions Corp. ∙ Form 10-Q


General
and administrative expenses increased $98,753 and $162, 607, respectively, when
comparing the second quarter and first half of 2008 to 2007. The general and
administrative costs for the second quarter and first half of 2008 include the
costs associated with Pinpoint as well as costs associated with providing a
benefits program to employees which was not provided by the predecessor company,
accounting and legal fees due to SEC compliance reporting and costs related to
preparing material for administrative hearings related to refund
challenges.





Substantially
all of the interest expense for the second quarter and first half of 2008
related to the $1,881,550 promissory note payable to NeuCap, Inc. issued in
connection with the acquisition of SALT. The promissory note was outstanding for
only four days during the comparable periods of 2007 and as such there is no
comparable interest expense.





During
the first half of 2008 we incurred approximately $288,000 of professional and
consulting fees related to consultants and advisors who are assisting us with
the implementation of the SALT acquisition as well as seeking and researching
other potential acquisition candidates. Included in such costs is approximately
$178,000 related to the value of stock issued to certain of such advisors and
consultants. During the first half of 2007 we incurred professional fees related
to the acquisition of approximately $664,000.




Financial
      Condition At June
30, 2008, we had working capital of $416,320 and at December 31, 2007, we had
working capital of $590,496 excluding the related party promissory note issued
in connection with the acquisition of SALT. The terms of the promissory note
were amended in April 2008 extending the repayment date to March 31, 2009. We
plan to repay the promissory note with funds generated from operations. We
believe we will have sufficient cash generated from operations and borrowing
capacity to fund our capital and operational needs for at least the next twelve
months. However, because a significant part of our growth strategy includes
growth by acquisition, we must continue to successfully target, acquire and
integrate profitable acquisition candidates, and manage related transactional
fees and expenses.





Our
source of working capital for the first half of 2008 and 2007 was $58,618 of
advances from our founder. On various dates since November 2007, our founder has
made advances to us aggregating $157,311. Such advances are not interest
bearing, are expected to be repaid under unspecified terms and are recorded net
of imputed interest.





During
the first half of 2008, we used $231,491 of working capital to fund our
operations and 1,303 for capital expenditures. During the first half of 2007 we
used $142,423 to fund our operations, $2,962,528 to acquire SALT, $449,842 in
offering cots and $270,922 for a finder fee related to the SALT
acquisition.





Significant
components of working capital at both June 30, 2008 and December 31, 2007
consist of cash and accounts receivable. As of June 30, 2008, all of our cash is
placed with high credit quality financial institutions. The amount on deposit in
any one institution may occasionally exceed federally insured limits of $100,000
and be subject to credit risk. We believe this risk is minimal. As of June 30,
2008 we had $103,712 of cash in excess of federally insured limits. As of June
30, 2008, receivables from five customers represented 67% of total accounts
receivable and as of December 31, 2007 receivables from three different
customers represented 51% of total accounts receivable.





Our
significant working capital commitment, other than to fund operations during
periods of losses, is the promissory note we issued in connection with the
acquisition of SALT. On June 26, 2007, we issued our $1,881,550 promissory note
payable to NeuCap, Inc. (“NeuCap”). NeuCap is owned by Kevin Cappock, our chief
executive officer, and Robert Neuman, our vice-president. The promissory note
may be prepaid any time without penalty. Originally, the promissory note accrued
interest at the prime rate as set by Bank of America and all outstanding
principal and interest was due six months from the date of issuance. On January
10, 2008, the promissory note was amended whereby NeuCap agreed to extend the
maturity date of the note to March 31, 2008 for which we paid NeuCap an
additional $20,000. On April 11, 2008, the promissory note was again amended and
the maturity date was extended to March 31, 2009, $54,808 of accrued interest
was added to outstanding principal and the interest rate was set at 7.25% per
annum. In addition, we agreed to make cash payments for both interest and
principal when our month-end checking account balance exceeds $225,000;
provided, however, that any such payment shall be limited to the amount that,
immediately after effecting such payment, would reduce our checking account
balance to not less than $200,000.




11
 
  Management’s
Discussion And Analysis
 Pinpoint
Recovery Solutions Corp. ∙ Form 10-Q


Recently Adopted
      Accounting Standards We
adopted the Financial Accounting Standards Board’s (FASB) Statement of Financial
Accounting Standard (SFAS) No. 157, Fair Value Measurement on
January 1, 2008. SFAS 157 defines fair value, establishes a framework for
measuring fair value and expands disclosure of fair value measurements. SFAS 157
applies under other accounting pronouncements that require or permit fair value
measurements and accordingly, does not require any new fair value measurements.
SFAS No. 157 clarifies that fair value is an exit price, representing the amount
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants. As such, fair value is a
market-based measurement that should be determined based on assumptions that
market participants would use in pricing an asset or liability. As a basis for
considering such assumptions, SFAS No. 157 established a three-tier fair value
hierarchy, which prioritizes the inputs used in measuring fair value as
follows:





·
            Level
      1. Observable inputs such as quoted prices in active
    markets;


·
            Level
      2. Inputs, other than the quoted prices in active markets, that are
      observable either directly or indirectly;
and


·
            Level
      3. Unobservable inputs in which there is little or no market data, which
      require the reporting entity to develop its own
    assumptions.


The
following table presents assets that are measure and recognized at fair value on
a non-recurring basis:




Description
                
                Level
      1
                
                
                Level
      2
                
                
                Level
      3
                
                
                Total
                  Gains
                  (Losses)Goodwill
                
                $
                -
                
                
                $
                -
                
                
                $
                6,397,542
                
                
                $
                -


The
FASB’s SFAS No. 159, The Fair
Value Option for Financial Assets and Financial Liabilities, including an
Amendment of SFAS 115 became effective for us on January 1, 2008. SFAS
159 establishes a fair value option that permits entities to choose to measure
eligible financial instruments and certain other items at fair value at
specified election dates. A business entity shall report unrealized gains and
losses on items for which the fair value options have been elected in earnings
at each subsequent reporting date. For the three months ended March 31, 2008,
there were no applicable items on which the fair value option was elected. SFAS
159 may impact our financial statements in the future.




Recent Accounting
      Standards Not Yet
Adopted In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combination, which
replaces SFAS No. 141. The statement retains the purchase method of accounting
for acquisitions, but requires a number of changes, including changes in the way
assets and liabilities are recognized in the purchase accounting. It also
changes the recognition of assets acquired and liabilities assumed arising from
contingencies, requires the capitalization of in-process research and
development at fair value, and requires the expensing of acquisition-related
costs as incurred. SFAS No. 141R is effective for us beginning January 1, 2009
and will apply prospectively to business combinations completed on or after that
date.





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51 (“SFAS
160”). SFAS 160 requires: (i) the ownership interests in subsidiaries held by
parties other than the parent be clearly identified, labeled, and presented in
the consolidated statement of financial position within equity, but separate
from the parent’s equity; (ii) the amount of consolidated net income
attributable to the parent and to the noncontrolling interest be clearly
identified and presented on the face of the consolidated statement of income;
(iii) changes in a parent’s ownership interest while the parent retains its
controlling financial interest in its subsidiary be accounted for consistently;
(iv) when a subsidiary is deconsolidated, any retained noncontrolling equity
investment in the former subsidiary and any gain or loss on the deconsolidation
be initially measured at fair value; and (v), entities provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners. SFAS 160 is effective for
us as of January 1, 2009 and will apply prospectively, except for the
presentation and disclosure requirements, which will apply retrospectively. SFAS
160 is not expected to have a material impact on our consolidated financial
statements.




12


Management’s
Discussion And Analysis
 Pinpoint
Recovery Solutions Corp. ∙ Form 10-Q


In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133(“SFAS No. 161”). SFAS No. 161 changes the disclosure requirements for
derivative instruments and hedging activities. Entities are required to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. SFAS No. 161 is effective for
us beginning January 1, 2009 and is not expected to have a material impact on
our consolidated financial statements





In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally AcceptedAccounting
Principles. SFAS 162 identifies the sources of accounting principles and
the framework for selecting the principles to be used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with generally accepted accounting principles (“GAAP”) in the United
States (the GAAP hierarchy). SFAS 162 becomes effective 60 days following the
SEC’s approval of the Public Company Accounting Oversight Board (“PCAOB”)
amendment to AU Section 411, “The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles” and is not expected to have a
significant impact on our consolidated financial statements.





In May
2008, the FASB issued SFAS No. 163 Accounting for Financial Guarantee
Insurance Contracts—an interpretation of FASB Statement No. 60. SFAS 163
resolves existing inconsistencies in accounting for financial guarantee
insurance contracts by insurance enterprises under FASB Statement No. 60,
“Accounting and Reporting by Insurance Enterprises”. SFAS 163 requires that
an insurance enterprise recognize a claim liability prior to an event of default
(insured event) when there is evidence that credit deterioration has occurred in
an insured financial obligation and clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement to be used to account for premium revenue and claim liabilities.
SFAS 163 also requires expanded disclosures about financial guarantee insurance
contracts. SFAS 163 is effective for financial statements issued for fiscal
years beginning after December 15, 2008, and all interim periods within those
fiscal years, except for some disclosures about the insurance enterprise’s
risk-management activities. SFAS 163 is not expected to have a significant
impact on our consolidated financial statements.




Application of Critical
      Accounting Policies The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires us to make assumptions,
estimates and judgments that affect the amounts reported in the financial
statements, including the notes thereto, and related disclosures of commitments
and contingencies, if any. We consider our critical accounting policies to be
those that require the more significant judgments and estimates in the
preparation of our consolidated financial statements, including the following:
allowances for doubtful accounts, estimates of lives and recoverable value of
property, the valuation of goodwill, and assumptions used to calculate
stock-based compensation. We rely on historical experience and on other
assumptions believed to be reasonable under the circumstances in making its
judgment and estimates.





Allowance
for Doubtful Accounts


Our
accounts receivable are reported at their net collectible amounts. We record
allowance against any accounts receivable as to which we believe collection may
be in doubt. The allowance for uncollectible accounts at June 30, 2008 and
December 31, 2007 was $26,447.





Intangible
Assets & Goodwill


On June
26, 2007, we acquired SALT. In determining the value attributed to the shares
issued for the SALT acquisition, we were assisted by an independent third party
who has expertise in the valuation of companies. The total consideration paid
was $6,397,542 in excess of the fair value of the net assets acquired. The
financial statements assume that all of the excess of the purchase price over
the net tangible assets was allocated to Goodwill in accordance with SFAS No.
141 Business
Combinations and SFAS No. 142 Goodwill and Other Intangible
Assets (SFAS 142) and accordingly, no amortization expense was included
in the statement of operations.




13


Management’s Discussion And Analysis
 Pinpoint
Recovery Solutions Corp. ∙ Form 10-Q


Under the
provisions of SFAS 142, intangible assets are tested for impairment on an annual
basis and between annual tests if an event occurs or circumstances change in a
way to indicate a potential decline in the fair value of the reporting unit. In
assessing the recoverability of the goodwill, we must make assumptions regarding
estimated future cash flows and other factors to determine the fair value of the
respective assets. This impairment test requires the determination of the fair
value of the intangible asset. If the fair value of the intangible asset is less
than its carrying value, an impairment loss will be recognized in an amount
equal to the difference. If these estimates or their related assumptions change
in the future, the Company may be required to record impairment charges for
these assets. We re-evaluated the carrying value of the goodwill with the
assistance of the valuation expert as of December 31, 2007 and no impairment
loss was recognized.





Stock
Options and Similar Equity Instruments


We are
required to recognize expense of options or similar equity instruments issued to
employees using the fair-value-based method of accounting for stock-based
payments in compliance with SFAS No. 123(R), Share-Based Payment (SFAS
123(R)). SFAS 123(R) covers a wide range of share-based compensation
arrangements including share options, restricted share plans, performance-based
awards, share appreciation rights, and employee share purchase plans.
Application of this pronouncement requires significant judgment regarding the
assumptions used in the selected option pricing model, including stock price
volatility and employee exercise behavior. Most of these inputs are either
highly dependent on the current economic environment at the date of grant or
forward-looking over the expected term of the award. On March 16, 2007, we
authorized our 2007 Stock Option Plan. As of June 30, 2008, we have not issued
any options pursuant to the plan.





Item
3. Quantitative and Qualitative Disclosures About Market Risk.


Not
applicable.




Item
4T. Controls and Procedures.


Disclosure
Controls and Procedures


Our
management is responsible for establishing and maintaining disclosure controls
and procedures that are designed to ensure that information required to be
disclosed in our reports under the Securities Exchange Act of 1934 (the
“Exchange Act”) is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange
Commission (the “SEC”), and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure based closely on the definition of “disclosure controls and
procedures” in Rule 15d-15(e) under the Exchange Act. In designing and
evaluating the disclosure controls and procedures, management recognized that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.





At the
end of the period covered by this Quarterly Report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based upon the foregoing, our Chief Executive Officer and Chief
Financial Officer concluded that, as of June 30, 2008, the disclosure controls
and procedures of our Company were not effective to ensure that the information
required to be disclosed in our Exchange Act reports was recorded, processed,
summarized and reported on a timely basis.





Our
evaluation and resulting ineffectiveness is due to the following material
weaknesses identified by our external auditor during the audit of the
transitional nine month period ended December 31, 2007 and not yet corrected as
of the end of this report.





·
            Our
      current closing procedures and top side journal entries were not
      appropriately posted or reconciled with our financial statement upon our
      initial closing period of the nine months ended December 31,
      2007.





·
            We
      are working to provide an appropriate reconciliation and consolidation
      process for financial reporting purposes as a result of our
      acquisition.




14
 Pinpoint
Recovery Solutions Corp. ∙ Form 10-Q


·
            We
      did not identify certain financial statement disclosures and provide the
      appropriate presentation of this report without the involvement of our
      external auditor and others.





Management’s
Report on Internal Control over Financial Reporting


Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Our internal control over financial reporting is
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Our internal control
over financial reporting includes those policies and procedures that are
intended to:





1.           Pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets;





2.           Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made
only in accordance with authorizations of our management and directors;
and





3.           Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of our assets that could have a material effect
on our financial statements.





Because
of inherent limitations, internal control over financial reporting may not
prevent or detect all misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





In 2007,
we acquired SALT, and our subsequent operation of SALT’s business currently
comprises our only operations. In connection with such acquisition, we adopted
the system of financial controls and procedures of SALT as our own.
Subsequently, we filed a registration statement under the Securities Act of
1933, as amended; as the result of that registration statement’s effectiveness
on February 8, 2008, we became a reporting company. Although SALT was not a
public reporting company, we believe that the experience and skills of SALT
management (whom we retained as our Chief Executive Officer and President, and
our Chief Operating Officer and Executive Vice President) and our other
accounting personnel, in light of the scope and nature of the operations of the
SALT business, provide us with procedures and internal controls over financial
reporting that are effective. We believe that our controls and procedures ensure
that information required to be disclosed in our periodic filings under the
Exchange Act is accumulated and communicated to our management to allow timely
decisions regarding required disclosure, and that all transactions are recorded,
accumulated and processed to permit the preparation of financial statements in
accordance with generally accepted accounting principles on a timely basis to
allow compliance with our reporting obligations under the Exchange Act. In
making this assessment, management used the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission in Internal
Control-Integrated Framework.





The
foregoing report shall not be deemed to be filed for purposes of Section 18 of
the Exchange Act or otherwise subject to the liabilities of that
section.





This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.





Changes
in Internal Control Over Financial Reporting


There
were no changes in internal controls over financial reporting that occurred
during the quarter ended June 30, 2008, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.




15


Pinpoint
Recovery Solutions Corp. ∙ Form 10-Q
 PART II-OTHER INFORMATION


Item
1. Legal Proceedings.


We, our
subsidiaries and our property are not a party to any pending legal
proceeding.





Item
1A. Risk Factors.


Not
applicable.





Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.


There
were no unregistered sales of equity securities during the quarter ended June
30, 2008.





Item
3. Defaults Upon Senior Securities.


None.





Item
4. Submission of Matters to a Vote of Security Holders.


We did
not submit any matter to a vote of our stockholders during the quarter ended
June 30, 2008.





Item
5. Other Information.


None.





Item
6. Exhibits.


31.1
            
            Certifications
      of Chief Executive Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200231.2
            
            Certifications
      of Chief Financial Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.1
            
            Certification
      of Chief Executive Officer Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 200232.2
            
            Certification
      of Chief Financial Officer Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002





16




SIGNATURES




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




PINPOINT
      RECOVERY SOLUTIONS CORP.Date
              SignatureAugust
      13, 2008
              /S/ KEVIN
      CAPPOCKKevin
      Cappock, Chief Executive Officer(principal
      executive officer) and Director
 August
      13, 2008
              /S/ JON D.
      LESLIEJon
      D. Leslie, Chief Financial Officer(principal
      financial and accounting officer)





17