UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 31, 2003

                 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
     For the transition period from -------------- to ---------------------


                          Commission File No. 000-25485

                                    PTS, INC.
        (Exact name of small business issuer as specified in its charter)



            Nevada                                         88-0380544
-------------------------------                         -----------------
(State or other jurisdiction of                         (I.R.S. Employer
organization) Identification No.)

3355 Spring Mountain Road, Suite 66, Las Vegas, NV                 89102
--------------------------------------------------               ----------
     (Address of principal executive offices)                    (Zip Code)

Issuer's telephone number, including area code:  (702) 380-3811


     Securities registered under Section 12(b) of the Exchange Act: None

     Securities registered under Section 12(g) of the Exchange Act:

     Title of class: Common Stock, $0.001 par value per share

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. [X] Yes [ ] No

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best of
registrant's   knowledge,   in  definitive   proxy  or  information   statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ ]

PTS's revenues for its most recent fiscal year (2003): $0

The aggregate  market value of the voting and  non-voting  common equity held by
non-affiliates  computed by reference to the average bid and asked price of such
common equity, as of April 12, 2004 was $.0055.

The  number of shares  outstanding  of each of the  issuer's  classes  of common
equity, as of April 12, 2004 is 259,100,505 shares.

DOCUMENTS INCORPORATED BY REFERENCE: None


<PAGE>



                                    PTS, INC.

                                TABLE OF CONTENTS

                                                                        Page
Forward Looking Statements................................................ 3

                                     PART I
Item 1.   Description of Business......................................... 4
Item 2.   Description of Properties....................................... 6
Item 3.   Legal Proceedings............................................... 6
Item 4.   Submission of Matters to a Vote of Security Holdera............. 6

                                     PART II
Item 5.   Market for Common Equity and Related Stockholder Matters
          and Small Business Purchases of Equity Securities............... 6
Item 6.   Management's Discussion and Analysis or Plan of Operation....... 7
Item 8.   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure..........................10
Item 8A.  Controls and Procedures.........................................10

                                    PART III
Item  9. Directors and Executive Officers of the Registrant...............11
Item 10. Executive Compensation...........................................11
Item 11. Security Ownership of Certain Beneficial Owners and
                 Management and Related Stockholder Matters...............12
Item 12. Certain Relationships and Related Transactions...................12
Item 13  Exhibits, Lists and Reports on Form 8-K..........................12
Item 14  Principal Accountant Fees and Services...........................13

                                       2

<PAGE>



                           FORWARD LOOKING STATEMENTS

Certain  information  contained  in this  report  may  include  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995,  and is subject to the safe  harbor  created by that act.  The  Company
cautions  readers that certain  important  factors may affect our actual results
and could  cause such  results  to differ  materially  from any  forward-looking
statements which may be deemed to have been made in this  information  statement
or which  are  otherwise  made by or on  behalf  of us.  For this  purpose,  any
statements  contained in this report that are not statements of historical  fact
may be deemed to be forward-looking statements.  Without limiting the generality
of the foregoing, words such as "may", "will", "expect",  "believe",  "explore",
"consider",  "anticipate",  "intend", "could", "estimate", "plan", or "continue"
or the negative variations of those words or comparable terminology are intended
to  identify  forward-looking  statements.  Factors  that may affect our results
include, but are not limited to, the risks and uncertainties associated with:

o    Our ability to raise capital necessary to implement our business plan.

o    Our ability to finance and complete planned product development.

o    Our ability to employ and retain qualified management and employees.

o    Changes in the demand for our products and  services,  including the impact
     from changes in governmental regulation.

o    The degree and nature of our competition.

o    Our ability to generate sufficient cash to pay our creditors.

o    Disruption  in the economic and  financial  conditions  primarily  from the
     impact of terrorist  attacks in the United States and overseas,  threats of
     future  attacks,  police  and  military  activities  and  other  disruptive
     worldwide political events.

We are  also  subject  to  other  risks  detailed  from  time to  time in  other
Securities and Exchange Commission filings and elsewhere in this report. Any one
or more of these  uncertainties,  risks and other  influences  could  materially
affect our results of operations and whether forward-looking  statements made by
us  ultimately  prove  to be  accurate.  Our  actual  results,  performance  and
achievements  could differ  materially  from those expressed or implied in these
forward-looking  statements.  We undertake no obligation  to publicly  update or
revise any  forward-looking  statements,  whether from new  information,  future
events or otherwise.


                                       3

<PAGE>

                                     PART I

Item 1. Description of Business.

Development of the Company.

PTS, Inc. (the "Company") was incorporated in the State of Nevada on November 5,
1996 under the name Med Mark, Inc. In 1998, Elast  Technologies  Corporation,  a
Delaware  corporation,  ("Elast")  merged with and into Elast  Merger,  Inc.,  a
Nevada  corporation,  which was a wholly-owned  subsidiary of the Company. On or
about June 29, 1998, the Company filed  articles of amendment  changing its name
to Elast Technologies,  Inc. Pursuant to a merger agreement entered into on June
11, 2001, PTS, Inc. ("PTS"), a Nevada corporation,  merged into the Company. The
Company  was the  surviving  company  and  changed  its  name to PTS,  Inc.  The
executive offices of the company are located at 3355 Spring Mountain Road, Suite
66, Las Vegas, Nevada 89102. The Company's telephone number is (702) 380-3811.

In 1996, the Company entered into a licensing agreement with Dr. Robert D. Milne
and acquired the rights to develop,  test,  manufacture,  and market Dr. Milne's
patented allergy-testing device ("Elast Device", U.S. Patent No. 5413113, issued
on or about May 9,  1995).  Dr.  Milne  was a  board-certified  family  practice
physician  with  extensive   experience  in  allergy  testing  and  preventative
medicine.  The  company  has not spent  significant  amounts  of time or expense
during its last two fiscal years on research and development activities relating
to the ELAST Device.

On  June  25,  2002  the  Company  and  Elast  entered  into  a  Separation  and
Distribution  Agreement,  subject to finalization of debt allocations and mutual
Board of  Directors  approval,  through  which the Company  intended to spin off
Elast by distributing to its shareholders ratably all the shares of Elast common
stock to the Company's shareholders of record on June 25, 2002.

On August 30, 2002 the Company and Elast  amended the  agreement  to clarify the
distribution  date to occur on or about  December  31,  2002.  According  to the
amended agreement, the distribution date may be delayed by the mutual consent of
the  parties.  The  distribution  date has in fact been  delayed  until  further
notice.

Effective  June 2001,  the Company  issued 450,000 shares of its common stock to
acquire all of the issued and outstanding  common shares of an inactive company,
PTS,  Inc. PTS' only asset was a note  receivable  in the amount of  $1,000,000,
which was received by PTS as consideration for the issuance of 150,000 shares of
its common stock. The note was retired through return of stock in fiscal 2004.

Effective July, 2001, the Company issued  20,000,000 shares of its common stock,
valued at $2,000,000, to acquire 70% of the issued and outstanding common shares
of PTS Hong Kong Ltd., a Hong Kong corporation  ("PTS HK"). The principal assets
of  PTS  HK  consists  of an  agreement  with  Shanghai  Information  Investment
Technology  Development,  Inc, a subsidiary of Shanghai Information  Investment,
Inc.,  to do business,  participate  with,  acquire,  and/or joint  venture with
various  business in China. The license had a fair market value of $2,000,000 at
the date of issuance and was fully  impaired at December  31,  2001,  due to the
uncertainty of the ultimate realization of the carrying amount of the asset.

On November 23, 2003,  the Company  acquired  PTS Products  International,  Inc.
("PTSPI"),  a Nevada corporation  incorporated on October 10, 2003, and, through
PTSPI, holds the non-exclusive United States patent rights to manufacture,  sell
and distribute,  under private label, an apparatus  trademarked the "Glove Box."
It has also acquired the exclusive right in China and the right of first refusal
for other  countries to manufacture,  sell and distribute,  under private label,
the Glove Box. The  development of this product has not yet reached the point of
manufacture.  The  consideration  paid was  20,000,000  shares of common  stock,
valued at $200,000.  PTSPI had no operations prior to the acquisition;  its sole
asset was the Glove Box license. The president of the Company owns a majority of
the capital stock of PTSPI.

                                       4

<PAGE>

The Glove Box(TM) solves a long-standing  contamination problem in hospitals and
medical  offices  caused by the normal  retrieval  and  donning of gloves from a
standard  glove box. With its patented,  free-standing  dispenser  (looking much
like a small filing  cabinet),  users  select from two glove  sizes,  slip their
hands through sealed openings into air-filled gloves,  then hit a foot switch to
release the gloves onto their hands.  A significant  benefit of the Glove Box is
its unique  design  feature that permits the  dispensing of  un-powdered  gloves
that,  without  use of the  Glove  Box,  are  increasingly  the  cause  of  both
contamination and communicable health problems.

Strategy

Through two key  initiatives,  PTSPI is positioned to take full advantage of its
rights to manufacture and distribute the Glove Box(TM).

o    Manufacturing  - Through an exclusive  license with Glove Box, Inc.,  PTSPI
     will  manufacture  the Glove Box(TM) in China for worldwide  use.  PTSPI is
     currently in negotiations  with  manufacturing  firms in China to join with
     the Glove  Box(TM)  design team in bringing the product from alpha and beta
     designs into full-scale production.

o    Distribution - Through its strong, established  relationships,  PTSPI seeks
     to penetrate China's rapidly  expanding  medical and dental markets.  Other
     key relationships will permit rapid deployment into other industries.

Marketing

The Company will market the Glove Box(TM) through Chinese distribution companies
with strong networks  throughout  China and active agents in the following major
application markets:

o    Medical
o    Dental
o    Laboratory
o    Manufacturing

Competition

The Glove  Box(TM)  is the only  product  that  currently  offers  contamination
reduction  through  automated  glove  dispensing.  With recent viral and medical
scares (SARS,  Anthrax,  Ebola),  the worldwide  need for protective and sterile
gloves  is rising  dramatically  fueled by  third-world  nations  with an urgent
requirement for improved sterile and protective  measures.  With its simple use,
attractive price point and the pronounced  reduction of contaminants,  the Glove
Box(TM) is well positioned as the right product at the right time.

New Business Segment

The Company recently purchased 100 Flexiciser units under an arrangement whereby
it will pay the actual  manufactured  cost of the units, will jointly market the
product and divide  profits  equally with the  manufacturer.  If the Company can
sell the first order of unit, it intends to continue this business. Designed for
the  paraplegic  and  quadriplegic  as well as  individuals  who are  unable  to
maintain  movement  through  natural  means,  the Flexiciser  provides  passive,
resistive exercise.  It is a motorized machine that works off 120 volt household
current.  The  Flexiciser  is  simple  to  use  as no  transferring  out  of the
wheelchair  is  necessary.  The  control  panel has a 60 minute  timer,  a speed
control that goes 0-60 RPM, and an on/off rocker switch.  It can be used passive
or manually up to 60 lbs of resistance on the arms for maximum strength.


                                       5

<PAGE>

Employees.

PTS currently has four  employees.  Management has and is using  consultants for
business, accounting,  engineering and legal services until anticipated revenues
become realized.  Further,  the company plans to make extensive use of licensing
and manufacturing agreements with third parties.

Available Information

The SEC  maintains an Internet  site at  www.sec.gov  that contains the reports,
proxy and  information  statements,  and other  information  regarding  PTS. The
Company also maintains a website at www.ptspi.com.

Item 2. Description of Property.

The Company does not own any real property and occupies office space from a
non-affiliated person on a month to month basis.

Item 3. Legal Proceedings.

None.

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

During the fourth quarter of the fiscal year ended December 31, 2003, no actions
were approved by the stockholders.

                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

The Company's common stock is presently quoted on the Over-the-Counter  Bulletin
Board (OTCBB) under the symbol PTSO.  The  following  table sets forth,  for the
fiscal  quarters  indicated,  the high and low close  price  quotations  for the
Company's  common  stock  as  reported  on the  OTCBB.  The  quotations  reflect
inter-dealer quotations without retail markup,  markdown or commission,  and may
not represent actual transactions.

                                                     High           Low
                                                    -------        -------
Fiscal Year Ended December 31, 2002:
   First Quarter                                      0.25           0.08
   Second Quarter                                     0.20           0.05
   Third Quarter                                      0.09           0.02
   Fourth Quarter                                     0.05           0.01
Fiscal Year Ended December 31, 2003:
   First Quarter                                      0.02           0.01
   Second Quarter                                     0.02           0.01
   Third Quarter                                      0.05           0.01
   Fourth Quarter                                     0.03           0.01


                                       6
<PAGE>

Stockholders of Record

As of April 12, 2004, the Company had approximately 271 stockholders of record.

Dividends

The Company has never  declared or paid any dividends on its common  stock.  The
Company  currently  intends to retain any  earnings  for use in the business and
therefore does not anticipate paying any dividends in the near future. Dividends
on the  Company's  common  stock can be paid  lawfully  only out of current  and
retained  earnings and surplus of the  company,  when,  and if,  declared by the
Board of  Directors.  The Company has not declared or paid any  dividends on the
common  stock;  and  there  is no  assurance  dividends  will  be  paid  in  the
foreseeable  future.  The payment of  dividends  in the future  rests within the
discretion of the Board of Directors and will depend,  among other things,  upon
the Company's earnings, its capital requirements and its financial condition, as
well as other factors, which the Board of Directors deems relevant.

Unregistered sales of securities during the past two years:

During  the year ended  December  31,2003,  the  Company  issued  the  following
unregistered  securities:  1,790,000 shares were issued for services; the shares
were valued at $15,660:  20,000,000  shares were issued for the  acquisition  of
PTSPI; the shares issued were valued at $200,000.


                                       6

<PAGE>


Item 6. Management's Discussion and Analysis of Results of Operations, Liquidity
        and Financial Condition.

Critical Accounting Policy and Estimates.

Our management's  discussion and analysis of financial  condition and results of
operations section discusses our consolidated  financial statements,  which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial  statements and the reported
amounts of revenues and expenses  during the  reporting  period.  On an on-going
basis, management evaluates its estimates and judgments, including those related
to  revenue   recognition,   accrued   expenses,   financing   operations,   and
contingencies  and litigation.  Management  bases its estimates and judgments on
historical  experience  and on various  other  factors  that are  believed to be
reasonable  under the  circumstances,  the  results  of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily  apparent  from other  sources.  Actual  results  may differ  from these
estimates  under  different  assumptions  or  conditions.  The most  significant
accounting  estimates  inherent in the  preparation of our financial  statements
include  estimates as to the  appropriate  carrying  value of certain assets and
liabilities which are not readily apparent from other sources.  These accounting
policies are described at relevant  sections in this discussion and analysis and
in the notes to them consolidated  financial  statements  included in our Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2003.


                                       7
<PAGE>

Results of Operations

Years ended December 31, 2003 and 2002

Company Overview
General Overview

The Company was engaged in the development of two separate  diagnostic tools: an
allergy  testing  device  and  an  chiropractic   outcome-measuring  instrument.
Research and development of these products has been  suspended;  and the Company
is currently  developing an apparatus  known as the Glove Box. The Glove Box(TM)
solves a  long-standing  contamination  problem in hospitals and medical offices
caused by the normal  retrieval and donning of gloves from a standard glove box.
With its  patented,  free-standing  dispenser  (looking much like a small filing
cabinet),  users select from two gloves sizes,  slip their hands through  sealed
openings into  air-filled  gloves,  then hit a foot switch to release the gloves
onto their  hands.  A  significant  benefit  of the Glove  Box(TM) is its unique
design  feature  that  permits the  dispensing  of  un-powdered  gloves that are
increasingly the cause of both contamination and communicable health problems.

As a  development  stage  company,  the Company has  incurred  net losses  since
inception through December 31, 2003 of approximately $11,888,363,  and, to date,
the  Company  has not  generated  revenues  from  the  commercialization  of any
products.

The Company anticipates significant expenditures on the development of The Glove
Box(TM)during this year.

It will be necessary to raise funds to develop The Glove Box(TM). The Company
may not able to raise the necessary funds to complete development of its
product.

On June 25, 2002 the Company and its wholly  owned  subsidiary,  Elast,  entered
into a Separation and  Distribution  Agreement,  subject to finalization of debt
allocations  and mutual Board of Directors  Approval,  through which the Company
intends to spin off Elast. As a result of this agreement, upon consummation, the
Company would no longer be involved in the development of medical  devices.  All
assets related to the  development of medical devices would be transferred to or
retained by Elast.

Going Concern

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles,  which contemplate continuation of the
Company as a going concern.  However,  the Company has no established  source of
revenue,  has experienced net operating  losses of $11,888,363  since inception,
and a current net loss from operations of $438,239, a working capital deficiency
of $652,240 and has a negative  cash flow from  operations  of  $112,854.  These
factors raise  substantial  doubt about the  Company's  ability to continue as a
going concern.  Without  realization of additional capital, it would be unlikely
for the Company to continue as a going concern.

The Company was engaged in the development of two separate  diagnostic tools: an
allergy  testing  device  and  an  chiropractic   outcome-measuring  instrument.
Research and development of these diagnostic  tools has been suspended,  and the
Company is currently developing an apparatus known as the Glove Box.

It will be  necessary to raise funds to continue  development  of the Glove Box.
The  Company  may not be able to raise the  necessary  funds to  accomplish  its
plans.

                                       8
<PAGE>

Operating results 2003 compared to 2002

Comparison of the Year Ended December 31, 2003 with the Year Ended December 31,
2002.

Overall expenses  increased by $8,516 to $483,215 in 2003 from $474,699 in 2002.
Research and  development  activities  were $11,499 in 2003,  with no comparable
expense in 2002. This increase results from the acquisition of PTSPI in 2003 and
development  activities on the Glove Box.  Changes in items  included in general
and administrative expenses are as follows:  Officers' compensation decreased by
$24,000 to 120,000 in 2003 from $144,000 in 2002. Professional fees decreased by
$113,238 to $34,415 in 2003 from  $147,654 in 2002;  other  expenses,  including
share based compensation,  investor relations,  travel, entertainment and other,
decreased by $17,136 to $117,301 in 2003 from $134,437 in 2002. The Company also
incurred merger and acquisition cost paid with stock.

Liquidity and Capital Resources

At December  31, 2003,  the Company had cash and  equivalents  of $146,179.  The
Company had no cash at December 31, 2002. Our only external  source of liquidity
has  been  from the  sale of  capital  stock.  Sales  of  capital  stock in 2003
generated cash proceeds of $259,033 in 2003, compared to none in 2002.

Over the past three years, the company incurred significant operating losses and
utilized  significant  amounts of cash to fund  operations.  The company is in a
critical stage in its  transition  from the  development of its medical  related
products to the  development of the Glove Box. The company will continue to seek
sources of financing to facilitate this development.

Impact from Recent Accounting Pronouncements

The Company  does not expect the  adoption of recent  accounting  pronouncements
will have a significant effect on the Company's financial statement presentation
or  disclosures.  See  "Recent  Accounting  Pronouncements"  in  Note  1 to  the
financial statements.

Other Considerations

The Company is subject to many risks  factors  detailed  below and  elsewhere in
this report and from time to time in other  Securities  and Exchange  Commission
filings.  Any one or more of these  uncertainties,  risks and  other  influences
could  materially  affect  results  of  operations  and  prospects  and  whether
forward-looking  statements  made by it  ultimately  prove to be  accurate.  The
following risk factors represent items that management desires to highlight,  in
addition  to forward  looking  statements  described  at the  beginning  of this
report,  to help investors better  understand the potential risks and rewards of
PTS's business.

The Company may not be able to raise  sufficient  funds to develop the Glove Box
in which case it have no business but will  continue to pay  expenses  connected
with remaining a public company..

The Glove Box may not work as planned in which case the  Company  will be unable
to market it.


                                       9
<PAGE>

The market of hospitals  and medical  officers may not be receptive to the Glove
Box in which case revenues will be low or non-existent.

Competition  may  develop  even  if  the  Glove  Box is  initially  commercially
successful and the Company may not be able to meet competition either on a price
nor technological basis.


Public   company   legislative   and  regulatory   requirements,   such  as  the
Sarbanes-Oxley Act of 2002, may lead to increased insurance,  accounting,  legal
and other costs, which may cause expenses to increase.

The Company is committed to full  regulatory  compliance  and high  standards of
corporate  governance and expects that legal,  accounting and professional  fees
could  increase in 2004.  The cost of  regulatory  compliance  could  strain its
limited resources as well as divert attention of its relatively small management
team from daily business operations.

Item 7. Financial Statements

The  financial  statements  required by this Item 7 are  included in this Annual
Report on Form 10-KSB following Item 14 hereof.

Item 8. Changes In and Disagreements with Accountants on Accounting and
        Financial Disclosure.

None.

Item 8A. Controls and Procedures

Disclosure Controls and Procedures

The  Company's  Chief  Executive  Officer  and Chief  Financial  Officer,  after
evaluating the effectiveness of the Company's disclosure controls and procedures
(as defined in Rules 13a-14(c) and 15d-14(c)  under the Securities  Exchange Act
of 1934,  as amended) as of December  31,  2003,  (the  "Evaluation  Date"),  as
concluded that, as of the Evaluation Date, the Company's disclosure controls and
procedures  were  effective  to ensure the timely  collection,  evaluation,  and
disclosure  of  information  relating to the Company that would  potentially  be
subject to disclosure under the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated under the Act.


                                       10
<PAGE>

                                    PART III

Item 9. Directors and Executive Officers of the Registrant

Directors are elected by holders of the common stock. Officers serve at the will
of the board.  The Company may indemnify  directors and officers against damages
which qualify,  in the opinion of the  disinterested  members of the board,  for
indemnification under Nevada law and its bylaws.  Insofar as indemnification for
liabilities  arising  under the  federal  securities  laws may be  permitted  to
directors,  officers or persons  controlling the Company  pursuant to Nevada law
and its  bylaws,  the  Company  has been  informed  that in the  opinion  of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the laws and is therefore unenforceable.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS

The members of the board of directors of the Company serve until the next annual
meeting of the  stockholders,  or until their successors have been elected.  The
officers serve at the pleasure of the Board of Directors.

Name                Age   Position
Peter Chin          56    President, Treasurer and Director

Peter Chin is the President, Treasurer and sole director of the Company.

In 2002,  Peter Chin became the sole  officer and  director of the  Company.  In
2001, he served as a consultant to the Company.  In 2000 and 1999,  Mr. Chin was
an  independent  business  consultant.  Since  1993,  Mr.  Chin has  served as a
director of the Golden Arrow Group of Companies,  USA,  involved  hotel and land
management in China.

Audit Committee and Code of Ethics

The Company's  Board of Director has not yet appointed an audit  committee.  The
Company is in the process of taking steps to establish a written code of ethics.


Compliance with Section 16(a) of the Exchange Act

Directors,  officers,  and  beneficial  owners of more than ten  percent  of the
Company's  common stock are required to file reports of ownership as required by
Section 16(a) of the Exchange Act.  Since the date the Company became subject to
the reporting  requirements  of the Exchange Act, the sole directors and officer
has filed Forms 3, 4 or 5 as appropriate.

Item 10. Executive Compensation.

The following table sets forth the compensation paid during the past year to the
Company's chief executive officer.  The Company did not pay any non-cash current
compensation or long term compensation to the officers during the year.

Any compensation  received by officers,  directors,  and management personnel of
the company  will be  determined  from time to time by the Board of Directors of
the company.  Officers,  directors, and management personnel of the company will
be reimbursed for any out-of-pocket  expenses incurred on behalf of the company.
Officers' compensation, in the aggregate,  decreased to $120,000 during the year
ended  2003 from  $144,000  during  the year  ended  2002.


                                       11
<PAGE>

Compensation to the Company's officers is specified on the following chart:

                           Cash         Total
                 Stock     Compensation Compensation
                 --------  ------------ ------------
Peter Chin                 120,000      120,000

Item 11. Security Ownership of Certain Beneficial Owners
         and Management and Related Stockholder Matters.


The following table sets forth each person known to the company, as of April 13,
2003,  to be a beneficial  owner of five  percent (5%) or more of the  company's
common  stock,  by  the  company's  directors  individually,  and  by all of the
company's directors and executive officers as a group.

Ownership of Officers and Directors:

Common Stock            Peter Chin (1)                     859,500      3.9%

Common Stock            All directors and officers         859,500      3.9%
                        as a group(1 person)
----------------------------------------

(1)  Shares of the Company's  common stock are held by (i) Peter Chin;  and (ii)
     Peter Chin's spouse, Sandy Chin.

Item 12. Certain Relationships and Related Transactions

Due to Related Parties

In 2003, Peter Chin paid $40,912 of operating expenses on behalf of the Company.

In 2002, Peter Chin paid $34,999 of operating expenses on behalf of the Company.

At December 31, 2003, the Company had accrued  $274,000 of compensation  expense
to two officers and  shareholders.  The amount  accrued at December 31, 2002 was
$214,000.

Item 13. Exhibits and Reports on Form 8-K

(b) Reports on Form 8-K.

PTS did not file any reports on Form 8-K during the last quarter of 2003.


                                       12
<PAGE>

Item 14. Principal Accountant Fees and Services

Audit Fees

The fees billed by the former accountant were $10,000 and $750 in 2002 and 2003,
respectively. The fees billed by Weinberg & Company in 2003 were $20,073.

Audit Related Fees

The Company's  principal  accountants did not bill it any fees during our fiscal
years ended December 31, 2003 and 2002 for any assurance and related services.

Tax Fees

The Company's principal accountants did not bill it any fees for tax compliance,
tax advice and tax planning for fiscal years ended December 31, 2003 and 2002.

Other Fees

The  Company's  accountants  did not bill us for any services or products  other
than as reported  above in this Item 14 during  fiscal years ended  December 31,
2003 and 2002 respectively.



                                       13
<PAGE>


                           PTS, INC AND SUBSIDIARIES

                         (A Development Stage Company)


                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2003 AND 2002


                                      F-1

<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
PTS, Inc. (A Development Stage Company)

We have audited the  accompanying  consolidated  balance sheets of PTS, Inc. and
Subsidiaries (A Development  Stage Company) as of December 31, 2003 and 2002 and
the related consolidated statements of operations,  stockholders' deficiency and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall consolidated financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial position of PTS,
Inc. and Subsidiaries (A Development  Stage Company) as of December 31, 2003 and
2002,  and the  results of their  operations  and their cash flows for the years
then ended in conformity with accounting  principles  generally  accepted in the
United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 3 to the
financial statements,  the Company has a net loss from operations of $438,239, a
negative  cash  flow  from  operations  of  $112,854  for 2003 and has a working
capital deficiency of $652,240 and a stockholders'  deficiency of $651,365 as of
December 31, 2003.  These factors raise  substantial  doubt about its ability to
continue as a going concern.  Management's  plans in regard to these matters are
also  described  in  Note  3.  The  financial  statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.

/s/Weinberg & Company, P.A.
Weinberg & Company, P.A.
Boca Raton, Florida
April 6, 2004



                                      F-2



<PAGE>

                                    PTS, INC.
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2003 AND 2002

                                                        December 31,
                                             ----------------------------------
                                                  2003              2002
                                             ----------------  ----------------
                                     ASSETS


CURRENT ASSETS
   Cash                                        $    146,179
   Prepaid Rent
                                                        405     $           -
                                             ----------------  ----------------
       Total current assets                         146,584                 -


Deposits                                                875                 -

                                             ----------------  ----------------
       TOTAL ASSETS                           $     147,459      $          -
                                             ================  ================

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
   Accounts payable - trade                   $     359,278      $    373,422
   Accrued payroll taxes                             79,638            79,638
   Due to related parties                           337,908           253,499
   Short-term notes payable -
     due to related party                            22,000            22,000
   Deposit payable                                        -            14,972
                                             ----------------  ----------------
       Total current liabilities
                                                    798,824           743,531
                                             ----------------  ----------------

STOCKHOLDERS' DEFICIENCY
   Common stock, $0.001 par value;
     800,000,000 shares
     authorized; 76,848,626 and
     22,058,626 shares issued and outstanding        76,849            22,059
     in 2003 and 2002, respectively
   Additional paid-in-capital                    11,506,529        11,030,914
   Additional paid-in-capital for warrants          205,000           205,000
   Deficit accumulated during the
     development stage                          (11,888,363)     ( 11,450,124)
                                             ----------------  ----------------
                                                    (99,985)         (192,151)
   Stock subscription receivable                   (551,380)         (551,380)
                                             ----------------  ----------------

       Total stockholders' deficiency              (651,365)         (743,531)
                                             ----------------  ----------------

TOTAL LIABILITIES AND
  STOCKHOLDERS' DEFICIENCY                    $     147,459      $          -
                                             ================  ================

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

                                       F-3

<PAGE>

                                    PTS, INC.
                          (A Development Stage Company)
                     CONSLOLIDATED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>

                                                                                       Period from
                                                                                      June 12, 1996
                                                           For the Year Ended         (Inception) to
                                                                December 31,           December 31,
                                                 -----------------------------------
                                                       2003              2002              2003
                                                 ----------------- ----------------- -----------------
<S>                                           <C>                   <C>              <C>

Revenue                                           $         -        $        -          $       -

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

Operating costs and expenses
     General and operating expenses                       271,716          426,091         8,647,830
     Research and development                              11,499                -           960,510
     Debt conversion expense                                    -                -           115,284
     Impairment of assets                                       -           48,608         2,048,608
     Merger and acquisition costs                         200,000                            200,000
                                                 ----------------- ----------------- ---------------
       Total operating costs and expenses                 483,215          474,699        11,972,232
                                                 ----------------- ----------------- -----------------

Other Income (Expense)
Gain on extinguishments of debt                            44,972                             44,972
Interest income                                                 4                -            63,348
Interest expense                                                -                -           (24,451)
                                                 ----------------- ----------------- -----------------

       Total other income, net                             44,976                             83,869
                                                 ----------------- ----------------- -----------------

Net loss                                          $      (438,239)    $   (474,699)    $ (11,888,363)
                                                 ================= ================= =================

Net loss per basic and diluted share              $         (0.02)      $    (0.03)
                                                 ================= =================


Weighted average shares outstanding,
     basic and diluted                                 26,413,968      22,225,293
                                                     ==============   =============

</TABLE>

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

                                       F-4

<PAGE>


                                    PTS, INC.
                          (A Development Stage Company)
               Consolidated STATEMENT OF STOCKHOLDERS' DEFICIENCY
       FOR THE PERIOD FROM JUNE 12, 1996 (INCEPTION) TO DECEMBER 31, 2003

<TABLE>
<CAPTION>


                                                                                              Deficit       Less:
                                                 Common Stock                    Detachable  Accumulated    Common
                                     -------------------------------  Additional    Stock    During the     Stock
                                                           Price per  Paid-in      Purchase  Development  Subscription
                                       Shares      Amount     Share    Capital     Warrants    Stage       Receivable        Total
                                     -----------  --------- -------- ---------  ----------- ------------  -------------   ----------
<S>                                <C>         <C>         <C>      <C>         <C>         <C>          <C>            <C>

Balance, June 12, 1996                       -      $     -        -  $        -         -  $               $      -      $      -
(inception)                                                        -                     -                         -
Shares issued for medical device       320,019          320        -         480         -            -            -
license                                                                                                                        800
Shares issued for legal services         2,133            2     3.15       6,717         -            -            -
                                                                                                                             6,719
Expenses paid by shareholder                 -            -        -       4,167         -            -            -
                                                                                                                             4,167
Shares issued in private                54,667           55     3.78     204,945         -            -      (10,000)
placement                                                                                                                  195,000
Net loss                                     -            -        -           -         -      (38,309)           -       (38,309)
                                  ------------- ------------            ----------- --------- ------------- ------------- ----------
Balance, December 31, 1996             376,819          377        -     216,309         -      (38,309)      (10,000)     168,377

Expenses paid by shareholder                 -            -        -       1,500         -            -             -
                                                                                                                             1,500
Net loss                                     -            -        -           -         -      (62,722)            -
                                                                                                                           (62,722)
                                  ------------- -------------           ----------- --------- ------------- ------------- ----------
Balance, December 31, 1997             376,819          377        -     217,809         -     (101,031)      (10,000)     107,155

Shares issued in reorganization        122,000          122        -      30,604         -            -             -
                                                                                                                            30,726
Shares sold in private placement        39,400           39     5.00     196,961         -            -             -
                                                                                                                           197,000
Payment of subscription
receivable                                   -            -        -           -         -            -        10,000       10,000

Shares issued in exercise of            50,664           51     3.75     189,939         -            -             -
warrants                                                                                                                   189,990

Shares issued to consultant            100,747          101     3.75     377,697         -            -             -
                                                                                                                           377,798
Shares issued for services              27,000           27    15.09     407,338         -            -             -
                                                                                                                           407,365
</TABLE>


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

                                      F-5






<PAGE>





                                    PTS, INC.
                          (A Development Stage Company)
               Consolidated STATEMENT OF STOCKHOLDERS' DEFICIENCY
       FOR THE PERIOD FROM JUNE 12, 1996 (INCEPTION) TO DECEMBER 31, 2003


<TABLE>
<CAPTION>


                                                                                              Deficit       Less:
                                                 Common Stock                    Detachable  Accumulated    Common
                                     -------------------------------  Additional    Stock    During the     Stock
                                                           Price per  Paid-in      Purchase  Development  Subscription
                                       Shares      Amount     Share    Capital     Warrants    Stage       Receivable        Total
                                     -----------  --------- -------- ---------  ----------- ------------  -------------   ----------
<S>                                 <C>          <C>        <C>      <C>        <C>        <C>           <C>             <C>
Shares issued to shareholder to
correct issuance error                    1,334     $    1        -    $     (1)   $      -   $         -     $     -   $         -

Net loss                                      -          -        -            -          -    (1,102,374)          -    (1,102,374)
                                     ----------- ----------            ------------ ------------- ------------- ------------ -------
Balance, December 31, 1998              717,964        718        -   1,420,347           -    (1,203,405)          -       217,660

Shares sold in private placement
                                         20,590         21    14.97     308,229           -             -           -       308,250

Shares sold in private placement
                                         50,000         50    10.00     294,932     205,000             -           -       499,982

Shares issued for consulting
services                                  2,613          2    15.36      40,150           -             -           -        40,152

Shares issued research and
development activities                    5,000          5    14.80      73,995           -             -           -        74,000

Net loss                                      -          -        -           -           -      (976,928)          -      (976,928)
                                     ----------- ----------           ------------ ------------- ------------- ------------ --------
Balance, December 31, 1999              796,167        796        -   2,137,653     205,000    (2,180,333)          -       163,116

Shares sold in registered offering       18,333         18    14.00     256,650           -             -           -       256,668

Shares sold in a registered offering      9,000          9    11.11      99,991           -             -           -       100,000

Shares issued in investor relation        5,000          5    17.69      88,445           -             -           -        88,450
services
Shares issued in investor relation        5,000          5    23.13     115,620           -             -           -       115,625
services
Shares issued in investor relation          640          -    24.38      15,600           -             -           -        15,600
services
Shares issued to officer for             12,500         13    21.25     265,613           -             -           -       265,626
compensation


</TABLE>

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

                                      F-6


<PAGE>



                                    PTS, INC.
                          (A Development Stage Company)
               Consolidated STATEMENT OF STOCKHOLDERS' DEFICIENCY
       FOR THE PERIOD FROM JUNE 12, 1996 (INCEPTION) TO DECEMBER 31, 2003

<TABLE>
<CAPTION>


                                                                                              Deficit       Less:
                                                 Common Stock                    Detachable  Accumulated    Common
                                     -------------------------------  Additional    Stock    During the     Stock
                                                           Price per  Paid-in      Purchase  Development  Subscription
                                       Shares      Amount     Share    Capital     Warrants    Stage       Receivable        Total
                                     -----------  --------- -------- ---------  ----------- ------------  -------------   ----------
<S>                               <C>        <C>       <C>          <C>         <C>         <C>          <C>         <C>


Shares issued to officer for          1,900    $     2   $  12.65     $ 24,033     $      -    $       -     $      -   $  24,035
compensation

Shares subject to litigation         26,600         27          -          (27)           -            -            -           -

Shares issued in settlement of a      4,000          4       7.10       28,396            -            -            -      28,400
dispute

Shares issued in investor relation   13,800         14       7.17       98,986            -            -            -      99,000
services

Shares issued in investor relation   30,000         30       7.23      216,870            -            -            -     216,900
services

Shares sold in private placement      5,000          5      10.00       49,995            -            -            -      50,000

Shares issued for research and       10,000         10       5.00       49,990            -            -            -      50,000
development consulting

Shares issued in investor relation   15,000         15       9.00      134,985            -            -            -     135,000
services

Shares issued for legal services     10,000         10       9.00       89,990            -            -            -      90,000

Shares issued for debt conversion    50,000         50      11.77      588,552            -           -             -     588,602

Shares sold in a registered offering 10,000         10       5.00       49,990            -           -             -      50,000

Shares issued in investor relation   40,000         40       4.20      167,960            -           -             -     168,000
services

Shares issued in investor relation   34,000         34       8.75      297,465            -           -             -     297,499
services

Shares issued in investor relation    2,500          3       7.81       19,522            -           -             -      19,525
services

Shares sold in a registered offering  6,429          6       3.50       22,494            -           -             -      22,500
</TABLE>


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

                                       F-7



<PAGE>



                                    PTS, INC.
                          (A Development Stage Company)
               Consolidated STATEMENT OF STOCKHOLDERS' DEFICIENCY
       FOR THE PERIOD FROM JUNE 12, 1996 (INCEPTION) TO DECEMBER 31, 2003
<TABLE>
<CAPTION>


                                                                                              Deficit       Less:
                                                 Common Stock                    Detachable  Accumulated    Common
                                     -------------------------------  Additional    Stock    During the     Stock
                                                           Price per  Paid-in      Purchase  Development  Subscription
                                       Shares      Amount     Share    Capital     Warrants    Stage       Receivable        Total
                                     -----------  --------- -------- ---------  ----------- ------------  -------------   ----------
<S>                               <C>        <C>       <C>          <C>         <C>         <C>          <C>         <C>

Shares sold in a registered offering    6,061   $     6  $   3.30  $    19,994   $        -  $         -  $          -  $   20,000

Shares sold in a registered            21,938        22      2.74       60,098            -            -             -      60,120
 offering, net of $10,080 commission

Shares sold in a registered             4,762         5      1.78        8,495            -            -             -       8,500
 offering, net of $1,500 commission

Shares sold in a registered            11,111        11      1.53       16,988            -            -             -      16,999
 offering, net of $3,000 commission

Shares sold in a registered             1,081         1      1.57        1,699            -            -             -       1,700
 offering, net of $300 commission

Shares sold in a registered             5,333         5      1.59        8,495            -            -             -       8,500
 offering, net of $1,500 commission

Shares issued in investor relation      7,500         8      2.50       18,742            -            -             -      18,750
 services

Shares sold in a registered            12,000        12      1.06       12,738            -            -             -      12,750
 offering, net of $2,250 commission

Shares sold in a registered            15,000        15      1.19       17,835            -            -             -      17,850
 offering, net of $3,150 commission

Shares sold in a registered           260,000       260      0.35       90,740            -            -       (91,000)          -
 offering for notes receivable

Shares sold in a registered offering   10,000        10      0.68        6,740            -            -             -       6,750

Shares sold in a registered offering   36,000        36      0.70       25,139            -            -             -      25,175

Shares sold in a registered offering    5,000         5      0.75        3,745            -            -             -       3,750

Shares sold in a registered offering   10,000        10      0.65        6,490            -            -             -       6,500

Shares issued for legal services      100,000       100      0.56       55,900            -            -             -      56,000

Net loss                                    -         -                      -            -   (3,132,112)            -
                                                                                                                         (3,132,112)
                                    -----------  -------- -------  ------------  ----------- ------------ -------------   ----------
Balance, December 31, 2000          1,611,655     1,612              5,172,611      205,000   (5,312,445)      (91,000)     (24,222)
</TABLE>

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

                                      F-8


<PAGE>



                                    PTS, INC.
                          (A Development Stage Company)
               Consolidated STATEMENT OF STOCKHOLDERS' DEFICIENCY
       FOR THE PERIOD FROM JUNE 12, 1996 (INCEPTION) TO DECEMBER 31, 2003
<TABLE>
<CAPTION>


                                                                                              Deficit       Less:
                                                 Common Stock                    Detachable  Accumulated    Common
                                     -------------------------------  Additional    Stock    During the     Stock
                                                           Price per  Paid-in      Purchase  Development  Subscription
                                       Shares      Amount     Share    Capital     Warrants    Stage       Receivable        Total
                                     -----------  --------- -------- ---------  ----------- ------------  -------------   ----------
<S>                                 <C>        <C>       <C>        <C>         <C>         <C>          <C>          <C>

Balance, December 31, 2000            1,611,655  $  1,612             $5,172,611   $ 205,000  $(5,312,445) $  (91,000)   $  (24,222)

Shares sold in a registered
offering during the three months          10,000            10     1.00        9,990                                         10,000
ended March 31, 2001

Shares sold in a registered
offering during the three months         278,000           278     0.50      138,722                                        139,000
ended March 31, 2001

Shares sold in a registered
offering during the three months         122,500           123     0.40       48,877                                         49,000
ended March 31, 2001

Shares sold in a registered
offering during the three months         128,158           128     0.35       44,727                                         44,855
ended March 31, 2001

Shares sold in a registered
offering during the three months          66,875            67     0.32       21,333                                         21,400
ended March 31, 2001

Shares sold in a registered
offering during the three months          16,667            17     0.30        4,983                                          5,000
ended March 31, 2001

Shares sold in a registered
offering during the three months         141,500           142     0.25       35,233                                         35,375
ended March 31, 2001

Shares sold in a registered
offering during the three months          60,000            60     0.17        9,942                                         10,002
ended March 31, 2001

Shares sold in a registered
offering during the three months          62,500            63     0.16        9,937                                         10,000
ended March 31, 2001

Shares issued for services during
the three months ended March 31, 2001     41,666            42     0.53       22,091                                         22,133

Shares issued for services during
the three months ended March 31, 2001    269,285           269     0.48      109,083                                        109,352

Shares issued for services during
the three months ended March 31, 2001     50,000            50     0.44       21,825                                         21,875

Shares issued for services during
the three months ended March 31, 2001    160,715           161     0.28       45,032                                         45,193

Shares issued for services during
the three months ended March 31, 2001    159,375           159     0.19       29,724                                         29,883

</TABLE>

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

                                      F-9



<PAGE>



                                    PTS, INC.
                          (A Development Stage Company)
               Consolidated STATEMENT OF STOCKHOLDERS' DEFICIENCY
       FOR THE PERIOD FROM JUNE 12, 1996 (INCEPTION) TO DECEMBER 31, 2003

<TABLE>
<CAPTION>

                                                                                              Deficit       Less:
                                                 Common Stock                    Detachable  Accumulated    Common
                                     -------------------------------  Additional    Stock    During the     Stock
                                                           Price per  Paid-in      Purchase  Development  Subscription
                                       Shares      Amount     Share    Capital     Warrants    Stage       Receivable        Total
                                     -----------  --------- -------- ---------  ----------- ------------  -------------   ----------
<S>                               <C>        <C>       <C>          <C>         <C>         <C>          <C>         <C>
Shares subscribed during the three
months ended March 31, 2001          750,000     $     750    $   0.47   $   349,250  $                  (350,000)     $         -

Shares sold in a registered
offering during the three months      66,667            67        0.15         9,933                                        10,000
ended June 30, 2001

Shares sold in a registered
offering during the three months     100,000           100        0.10         9,900                                        10,000
ended June 30, 2001

Shares sold in a registered
offering during the three months     475,000           475        0.08        37,525                                        38,000
ended June 30, 2001

Shares sold in a registered
offering during the three months     683,333           683        0.06        40,317                                        41,000
ended June 30, 2001

Shares sold in a registered
offering during the three months     100,000           100        0.05         4,900                                         5,000
ended June 30, 2001

Shares sold in a registered
offering during the three months     200,000           200        0.03         5,800                                         6,000
ended June 30, 2001

Shares issued for services during
the three months ended June 30, 2001  61,000            61        0.66        40,199                                        40,260

Shares issued for services during
the three months ended June 30, 2001 270,000           270        0.38       100,980                                       101,250

Shares issued for services during
the three months ended June 30, 2001 100,000           100        0.31        30,900                                        31,000

Shares issued for services during
the three months ended June 30, 2001 575,500           576        0.21       120,279                                       120,855

Shares issued for services during
the three months ended June 30, 2001 775,000           775        0.18       138,725                                       139,500

Shares issued for services during
the three months ended June 30, 2001 125,000           125        0.12        14,875                                        15,000

</TABLE>


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

                                     F-10



<PAGE>



                                    PTS, INC.
                          (A Development Stage Company)
               Consolidated STATEMENT OF STOCKHOLDERS' DEFICIENCY
       FOR THE PERIOD FROM JUNE 12, 1996 (INCEPTION) TO DECEMBER 31, 2003

<TABLE>
<CAPTION>

                                                                                              Deficit       Less:
                                                 Common Stock                    Detachable  Accumulated    Common
                                     -------------------------------  Additional    Stock    During the     Stock
                                                           Price per  Paid-in      Purchase  Development  Subscription
                                       Shares      Amount     Share    Capital     Warrants    Stage       Receivable        Total
                                     -----------  --------- -------- ---------  ----------- ------------  -------------   ----------
<S>                               <C>        <C>       <C>          <C>         <C>         <C>          <C>         <C>
Shares issued for services during
the three months ended June 30, 2001  225,000        225      0.10      22,275                                               22,500

Reverse Stock Split 1:20 on June
30, 2001                           (7,301,126)    (7,304)                7,304                                                    -
                                     -----------  --------- -------- ---------  ----------- ------------  -------------   ----------
Balance,  June 30, 2001 (Post
stock-split)                          384,270        384              6,657,272     205,000   (5,312,445)    (441,000)    1,109,211

Shares sold in a registered
offering during the three months       84,096         84       0.83      69,916                                              70,000
ended Sept 30, 2001

PTS - Hong Kong asset purchase
acquisition                        20,000,000     20,000       0.10   1,980,000                                           2,000,000

Shares issued for services during
the three months ended September      246,725        247       2.45     604,229                                             604,476
30, 2001

Stock subscription                    450,000        450       2.11     949,550                              (950,000)            -

Shares issued for services during
the three months ended September       50,000         50       1.01      50,450                                              50,500
30, 2001

Shares issued for services during
the three months ended September      205,333        205       0.95     194,861                                             195,066
30, 2001

Shares issued for services during
the three months ended September       25,000         25       0.85      21,225                                              21,250
30, 2001

Shares issued for services during
the three months ended September      375,000        375       0.80     299,625                                             300,000
30, 2001

Shares issued for services during
the three months ended September       10,000         10       0.72       7,190                                               7,200
30, 2001

Shares issued for services during
the three months ended September       95,000         95       0.67      63,555                                              63,650
30, 2001

Shares issued for services during
the three months ended September       60,000         60       0.55      32,940                                              33,000
30, 2001

</TABLE>

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

                                      F-11


<PAGE>



                                    PTS, INC.
                          (A Development Stage Company)
               Consolidated STATEMENT OF STOCKHOLDERS' DEFICIENCY
       FOR THE PERIOD FROM JUNE 12, 1996 (INCEPTION) TO DECEMBER 31, 2003

<TABLE>
<CAPTION>

                                                                                              Deficit       Less:
                                                 Common Stock                    Detachable  Accumulated    Common
                                     -------------------------------  Additional    Stock    During the     Stock
                                                           Price per  Paid-in      Purchase  Development  Subscription
                                       Shares      Amount     Share    Capital     Warrants    Stage       Receivable        Total
                                     -----------  --------- --------  ---------  ----------- ------------  -------------   ---------
<S>                                 <C>        <C>       <C>          <C>         <C>         <C>          <C>         <C>
Shares issued for services during
the three months ended December 31,
2001                                     20,000        20       0.45       8,980                                              9,000

Shares issued for services during
the three months ended December 31,
2001                                     50,000        50       0.43      21,450                                             21,500

Shares issued for services during
the three months ended December 31,
2001                                    220,000       220       0.40      87,780                                             88,000

Cancelled share issuances - various     (16,798)      (16)      0.70     (12,309)                                           (12,325)

Net loss                                                -                      -              (5,662,980)                (5,662,980)
Payments made to subscription
receivable                                              -                      -                              398,620       398,620

Subscription receivable written-off                     -                      -
                                                                                                               91,000        91,000
Subscription receivable settled                        -
with services                                                                                                 350,000       350,000
                                     -----------  ---------           ----------  ----------- ------------  ----------     --------
Balance,  December 31, 2001                                           11,036,714   205,000    (10,975,425)   (551,380)     (262,832)
                                     22,258,626    22,259

Cancellation of shares October 2002    (200.000)     (200)                (5,800)                                            (6,000)

Net Loss                                                                                         (474,699)                 (474,699)
                                     -----------  ---------           ----------  ----------- ------------  ----------   ----------
Balance, December 31, 2002           22,058,626    22,059             11,030,914   205,000    (11,450,124)   (551,380)     (743,531)

Shares issued for cash               33,000,000    33,000        .01     226,033                                            259,033

Employee stock compensation
                                                                          45,712                                             45,712
Shares transferred by stock
for services                                                              10,000                                             10,000

Shares issued for acquisition        20,000,000    20,000        .01     180,000                                            200,000

Shares issued for services            1,790,000     1,790        .01      13,870                                             15,660

Net loss
                                                                                                 (438,239)                 (438,239)
                                     ----------- ---------           ------------ ----------  ------------   -----------  ----------
Balance December 31, 2003            76,848,626  $ 76,849            $11,506,529  $205,000   $(11,888,363)  $(551,380)   $(651,365)
                                     =========== ========= ========  ============ ==========  ============  ===========  ===========

</TABLE>


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



                                      F-12
<PAGE>


                                       PTS, INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                              Period from
                                                                                             June 12, 1996
                                                        For the Year Ended                   (Inception) to
                                                           December 31,                        December 31,
                                                        --------------------------------
                                                             2003              2002              2003
                                                        -------------------------------------------------
<S>                                                  <C>                <C>              <C>

Cash flows from operating activities:
Net loss                                                $  (438,239)       $ (474,699)       $(11,888,363)
Adjustments to reconcile net loss to net
  cash used in operating activities:
  Depreciation and amortization                                   -            15,900              52,649
      Issuance of shares for services                        25,660            (6,000)          4,786,595
       Issuance of shares for acquisition                   200,000                               200,000
       Compensation from stock awards                        45,712                                45,712
       Impairment of assets                                       -            48,608           2,048,608
       Bad debt expense                                           -                -              104,425
       Expenses paid by officer                              40,912            34,999              80,411
       Subscription receivable settled with services              -                -              350,000
       Loss on sale of asset                                      -                -                2,608
       Debt conversion expense                                    -                -              115,284
       Gain on extinguishments of debt                      (44,972)                              (44,972)

       Decrease (increase) in assets:
       Advances to officer                                       -                 -              (26,893)
       Other assets                                              -              2,922                  -
       Prepaid rent                                            (405)                -                (405)
       Deposits                                                (875)                                 (875)
     Increase (decrease) in liabilities:
       Accounts payable - trade                              15,107           218,043             409,529
       Due to related parties                                43,497           144,000             227,497
       Accrued payroll taxes                                    749                 -             111,874
       Deposit payable                                            -            14,972              14,972
                                                          ----------       -----------        -------------
      Cash used in operating activities                    (112,854)           (1,255)         (3,411,344)
                                                          ----------       -----------        -------------
Cash flows from investing activities:
      Purchase of equipment                                      -                 -              (85,866)
      Sale of property and equipment                             -                 -                5,000
                                                         ----------       -----------        -------------
      Cash used in investing activities                          -                 -              (80,866)
                                                         ----------       -----------        -------------
Cash flows from financing activities:
      Proceeds from issuance of convertible debt                 -                 -              450,832
      Payments on capital lease obligations                      -                 -               (8,732)
      Acquisition of MedMark, Inc.                               -                 -               30,726
      Proceeds from the exercise of warrants                     -                 -              189,990
      Payment of common stock subscription receivable            -                 -              408,620
      Proceeds from issuance of common stock               259,033                 -            2,539,286
      Proceeds from issuance of note                             -                 -               25,000
      Payments on note                                           -                 -              (3,000)
      Contribution to additional paid-in capital                 -                 -               5,667
                                                         ----------       -----------        -------------
      Cash provided by financing activities                259,033                 -            3,638,389
                                                         ----------       -----------        -------------
Net increase (decrease) in cash                            146,179             (1,255)            146,179
Cash at beginning of period                                      -              1,255                   -
                                                         ----------       -----------        -------------
Cash at end of period                                    $ 146,179        $        -         $    146,179
                                                         ==========       ===========        =============

</TABLE>


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




                                      F-13

<PAGE>


                                    PTS, INC.
                          (A Development Stage Company)
                CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)

                                                                  Period from
                                                                 June 12, 1996
                                         For the Year Ended     (Inception) to
                                            December 31,         December 31,
                                        --------------------     -------------
                                             2003      2002         2003
                                        ---------- ---------      ------------


SUPPLEMENTAL SCHEDULE OF CASH FLOW
     INFORMATION:


Interest paid                             $    -    $    -      $   1,375
                                         ========= =========   =============
Income taxes paid                         $    -    $    -      $   1,973
                                         ========= =========    ============





















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


                                      F-14


<PAGE>

                                    PTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

NOTE 1 NATURE OF OPERATION

     Development Stage Operations

     PTS, Inc. (a company in the  development  stage since its formation on June
     12, 1996) (the "Company") has a limited  operating history with no revenues
     and no products or operable  technology  ready for the market.  The Company
     was engaged in the ongoing  development of its first marketable  product, a
     non-invasive medical device to test for human bio-voltage  measurement with
     real time, quantifiable,  visually displayed results.  Management's efforts
     through  October  2003 have  focused  primarily  on the  raising  of equity
     capital  through the sale of its common  stock and the  development  of the
     medical  device.  On November 23, 2003,  the Company  acquired PTS Products
     International,  Inc. ("PTSPI").  PTSPI was incorporated on October 10, 2003
     in the state of Nevada and, under a license agreement,  currently holds the
     non-exclusive  United  States  patent  rights  to  manufacture,   sell  and
     distribute,  under  private  label,  an  apparatus  known as the Glove Box,
     pursuant to a license  agreement.  It also has acquired the exclusive right
     in China and the right of first refusal for other countries to manufacture,
     sell and  distribute,  under private  label,  the Glove Box,  pursuant to a
     license agreement.  The development of this product has not yet reached the
     point of  manufacture.  As such,  the  Company  is subject to the risks and
     uncertainties  associated with a new business. The success of the Company's
     future  operations is  dependent,  in part,  upon the Company's  ability to
     raise sufficient  capital to complete  development and testing of the Glove
     Box. Management's plans are discussed further in the Going Concern Note 3.

     Background

     On June  25,  2002 the  Company  and its  wholly  owned  subsidiary,  Elast
     Technologies   Corporation  (a  Delaware  corporation)  ("Elast  Delaware")
     entered into a Separation  and  Distribution  Agreement  through  which PTS
     intends to spin off Elast Delaware by distributing to its  stockholders one
     share of Elast Delaware  common stock for every twenty shares of PTS common
     stock owned by stockholders of record on June 25, 2002.  After the spin off
     Elast  Delaware  will be a separate  company,  no longer  owned by PTS.  On
     August 30, 2002 PTS and Elast amended the original agreement to clarify the
     distribution  date to occur on or about December 31, 2002.  Pursuant to the
     amended agreement, the distribution date has been delayed by mutual consent
     of the parties,  subject to  finalization  of debt  allocations  and mutual
     Board of Directors approval.

     As a result of this  agreement,  upon  consummation  PTS would no longer be
     involved  in the  development  of its  previous  product.  Pursuant  to the
     agreement,  the Company's subsidiary,  Elast Delaware,  will assume certain
     liabilities,  the  amount  of  which  has yet to be  finalized,  which  are
     included in the December 31, 2003 consolidated balance sheet.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation

     The accompanying  consolidated financial statements include the accounts of
     PTS and its subsidiaries, Elast Delaware, PTS Hong Kong Ltd. ("PTS HK") and
     PTSPI.  All significant  intercompany  transactions  have been  eliminated.
     Elast Delaware and PTS HK were inactive in 2003.

                                      F-15


<PAGE>

                                    PTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

     Cash Equivalents

     For the purpose of the statement of cash flows,  the company  considers all
     highly  liquid debt  instruments  purchased  with the original  maturity of
     three months or less to be cash equivalents.

     Credit Concentrations

     At times,  the Company may exceed the FDIC limit of $100,000 in one banking
     institution. There was no uninsured amount at December 31, 2003.

     Equipment

     Equipment  was  recorded at cost and  depreciated  using the  straight-line
     method over the expected useful lives.  Expenditures for normal maintenance
     and  repairs are charged to  operations.  The cost and related  accumulated
     depreciation  of assets are removed from the accounts  upon  retirement  or
     other  disposition,  and the resulting profit is reflected in the statement
     of operations.  Renewals and betterments that materially extend the life of
     the assets are capitalized.  The Company's  property and equipment consists
     of equipment,  computers  and software with expected  useful lives of 3 - 5
     years.

     Impairment of Long-Lived Assets

     Long-lived assets are reviewed for impairment whenever events or changes in
     circumstances  indicate  that  the  related  carrying  amount  may  not  be
     recoverable.  Recovery  of  assets  to be held  and used is  measured  by a
     comparison  of the  carrying  amount of the  assets to the  future net cash
     flows expected to be generated by the asset.  If such assets are considered
     to be impaired,  the  impairment to be recognized is measured by the amount
     of which the  carrying  amount of the assets  exceeds the fair value of the
     assets.

     Assets to be disposed of are reported at the lower of the  carrying  amount
     or fair value less the cost to sell (see Note 3).

     Research and Development Costs

     Research  and  development  costs are  charged  to  operations  as they are
     incurred.

     Income Taxes

     The Company accounts for income taxes using the liability method. Under the
     liability method, deferred income taxes are determined based on differences
     between the financial  reporting  and tax bases of assets and  liabilities.
     They are  measured  using  the  enacted  tax rates and laws that will be in
     effect  when the  differences  are  expected  to  reverse.  The  Company is
     required  to adjust its  deferred  tax  liabilities  in the period when tax
     rates or the provisions of the income tax laws change. Valuation allowances
     are established to reduce deferred tax assets to the amounts expected to be
     realized.

     Disclosures about Fair Value of Financial Instruments

     The carrying amount of the Company's financial  instruments,  which include
     cash,  account  payable-trade,  due to related  parties,  notes payable and
     deposits  payable  approximate  their fair values at December  31, 2003 and
     2002.  The stock  subscription  receivable  included  in the  statement  of
     stockholders' equity is not considered to be a financial instrument.


                                      F-16


<PAGE>

                                    PTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

     Stock-Based Compensation

     Statement on Accounting  Financial Standards ("SFAS") No. 123,  "Accounting
     for Stock-Based  Compensation",  encourages, but does not require companies
     to record compensation costs for stock-based employee compensation plans at
     fair value. The Company has chosen to account for stock-based  compensation
     using the intrinsic value method prescribed in Accounting  Principles Board
     Opinion No. 25,  "Accounting  for Stock Issued to  Employees",  and related
     interpretations.  Accordingly,  compensation  costs  for stock  options  is
     measured as the excess, if any, of the quoted market price of the Company's
     stock at the date of the  grant  over the  amount an  employee  must pay to
     acquire the stock.  The Company  granted no stock  options in 2003 or 2002.
     Accordingly,  no  proforma  information,  as  required  by  SFAS  No.  148,
     "Accounting  for  Stock-Based  Compensation - Transition and Disclosure" is
     presented or required.

     Earnings (Loss) per Common Share

     SFAS No. 128, "Earnings Per Share" requires  presentation of basic earnings
     (loss) per share and diluted  earnings per share.  The computation of basic
     loss  per  share  is  computed  by  dividing   loss   available  to  common
     stockholders  by the weighted  average number of outstanding  common shares
     during the period.  Diluted earnings per share gives effect to all dilutive
     potential common shares  outstanding  during the period.  These potentially
     dilutive  securities were not included in the calculation of loss per share
     for the years ended December 31, 2003 and 2002 because the Company incurred
     a  loss  during  such  periods  and  thus  their  effect  would  have  been
     anti-dilutive.  Accordingly,  basic and diluted loss per share are the same
     for the years ended December 31, 2003 and 2002. As of December 31, 2003 and
     2002, potentially dilutive securities consisted of outstanding common stock
     purchase warrants to acquire 2,500 shares.

     Management Estimates

     The  presentation  of financial  statements  in conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and the  reported  amounts of revenues  and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     Comprehensive Income

     The Company has no items of other comprehensive income (loss) for the years
     ended December 31, 2003 and 2002.


                                  F-17

<PAGE>

                                    PTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

     Recent Accounting Pronouncements

     In January 2003,  (as revised in December  2003) The  Financial  Accounting
     Standards Board ("FASB") issued  Interpretation  No. 46,  "Consolidation of
     Variable  Interest  Entities",  an  interpretation  of Accounting  Research
     Bulletin   ("ARB")   No.   51,   "Consolidated    Financial    Statements".
     Interpretation  No. 46 addresses  consolidation by business  enterprises of
     variable  interest  entities,  which  have  one or  both  of the  following
     characteristics:  (i) the equity  investment  at risk is not  sufficient to
     permit the entity to finance its activities without additional subordinated
     support from other parties,  which is provided  through other interest that
     will absorb  some or all of the  expected  losses of the  entity;  (ii) the
     equity   investors   lack   one  or   more  of  the   following   essential
     characteristics of a controlling financial interest: the direct or indirect
     ability to make  decisions  about the entities  activities  through  voting
     rights or similar  rights;  or the obligation to absorb the expected losses
     of the entity if they  occur,  which  makes it  possible  for the entity to
     finance its activities;  the right to receive the expected residual returns
     of the  entity if they  occur,  which is the  compensation  for the risk of
     absorbing the expected losses.

     Interpretation  No. 46, as revised,  also requires expanded  disclosures by
     the primary  beneficiary (as defined) of a variable  interest entity and by
     an  enterprise  that holds a  significant  variable  interest in a variable
     interest entity but is not the primary beneficiary.

     Interpretation  No. 46, as revised,  applies to small  business  issuers no
     later than the end of the first  reporting  period that ends after December
     15,  2004.   This   effective   date  includes   those  entities  to  which
     Interpretation  46 had  previously  been  applied.  However,  prior  to the
     required application of

     Interpretation  No. 46, a public  entity  that is a small  business  issuer
     shall apply Interpretation 46 or this Interpretation to those entities that
     are considered to be  special-purpose  entities no later than as of the end
     of the first reporting period that ends after December 15, 2003

     Interpretation No. 46 may be applied prospectively with a cumulative-effect
     adjustment  as of the date on which it is  first  applied  or by  restating
     previously  issued  financial  statements  for  one or  more  years  with a
     cumulative-effect  adjustment  as  of  the  beginning  of  the  first  year
     restated.

     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
     derivative  Instruments  and Hedging  Activities".  SFAS No. 149 amends and
     clarifies  financial  accounting and reporting for derivative  instruments,
     including  certain  derivative  instruments  embedded  in  other  contracts
     (collectively  referred to as derivatives) and for hedging activities under
     SFAS  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
     Activities".  The changes in SFAS No. 149 improve  financial  reporting  by
     requiring that contracts with comparable  characteristics  be accounted for
     similarly.  This  statement  is  effective  for  contracts  entered into or
     modified  after June 30, 2003 and all of its  provisions  should be applied
     prospectively.

                                      F-18
<PAGE>


                                    PTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002


     In May  2003,  the  FASB  issued  SFAS No.  150,  "Accounting  For  Certain
     Financial Instruments with Characteristics of both Liabilities and Equity".
     SFAS No. 150 changes the accounting for certain financial  instruments with
     characteristics  of  both  liabilities  and  equity  that,  under  previous
     pronouncements,  issuers  could account for as equity.  The new  accounting
     guidance  contained  in SFAS No. 150  requires  that those  instruments  be
     classified as liabilities in the balance sheet.

     SFAS  No.  150  affects  the  issuer's   accounting   for  three  types  of
     freestanding  financial  instruments.  One type is  mandatorily  redeemable
     shares,  which the issuing company is obligated to buy back in exchange for
     cash or other  assets.  A second  type  includes  put  options  and forward
     purchase contracts,  which involves  instruments that do or may require the
     issuer to buy back some of its shares in exchange for cash or other assets.
     The third type of instruments that are liabilities  under this Statement is
     obligations that can be settled with shares, the monetary value of which is
     fixed,  tied solely or  predominantly to a variable such as a market index,
     or varies  inversely  with the value of the issuers'  shares.  SFAS No. 150
     does not apply to features embedded in a financial instrument that is not a
     derivative in its entirety.

     Most of the  provisions of Statement 150 are  consistent  with the existing
     definition of  liabilities  in FASB Concepts  Statement No. 6, "Elements of
     Financial  Statements".  The  remaining  provisions  of this  Statement are
     consistent  with the FASB's proposal to revise that definition to encompass
     certain  obligations  that a reporting entity can or must settle by issuing
     its own shares. This Statement shall be effective for financial instruments
     entered  into or  modified  after  May 31,  2003  and  otherwise  shall  be
     effective at the beginning of the first interim period beginning after June
     15, 2003,  except for  mandatorily  redeemable  financial  instruments of a
     non-public  entity,  as to which the effective  date is for fiscal  periods
     beginning after December 15, 2004.

     The  implementation  of  the  provisions  of  these  pronouncements  is not
     expected  to  have  a  significant  effect  on the  Company's  consolidated
     financial statement presentation or disclosures.

NOTE 3 GOING CONCERN

     The accompanying financial statements have been prepared in conformity with
     generally accepted accounting principles, which contemplate continuation of
     the Company as a going  concern.  However,  the Company has no  established
     source of revenue,  has  experienced  net operating  losses of  $11,888,363
     since  inception,  had a net loss of $438,239 and a negative cash flow from
     operations  of  $112,854  for the year ended  December  31,  2003,  and has
     working  capital and  stockholders'  deficiencies of $652,240 and $651,365,
     respectively,  as of December 31, 2003.  These  factors  raise  substantial
     doubt about the Company's  ability to continue as a going concern.  Without
     realization of additional  capital, it would be unlikely for the Company to
     continue as a going concern.  These financial statements do not include any
     adjustments  relating to the  recoverability and classification of recorded
     asset amounts,  or amounts and  classification  of  liabilities  that might
     result from this uncertainty.

                                      F-19

<PAGE>

                                    PTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

     PTS, under a license  agreement,  currently holds the non-exclusive  United
     States patent rights to  manufacture,  sell and  distribute,  under private
     label,  an  apparatus  known  as  the  Glove  Box,  pursuant  to a  license
     agreement.  It also has acquired the exclusive right in China and the right
     of first refusal for other countries to  manufacture,  sell and distribute,
     under private label, the Glove Box,  pursuant to a license  agreement.  The
     development  of this product has not yet reached the point of  manufacture.
     Management  is in the  process of raising  sufficient  capital to  complete
     development and testing of the Glove Box.


NOTE 4 - ACQUISITION

     On  November  23,  2003,  the  Company  acquired  all  of  the  issued  and
     outstanding  shares of PTSPI in a transaction  accounted for as a purchase.
     The  consideration  paid was 20,000,000  shares of common stock,  valued at
     $200,000.  PTSPI had no assets or operations prior to the acquisition;  its
     sole  asset was the  letter of intent to obtain  the  non-exclusive  United
     States patent rights to  manufacture,  sell and  distribute,  under private
     label, an apparatus known as the Glove Box. The development of this product
     has not yet  reached  the  point of  manufacture.  The  entire  cost of the
     acquisition has been charged to merger and acquisition  cost at the date of
     acquisition. The major shareholder of PTSPI is an officer of PTS, Inc.

     The  20,000,000  shares  were  issued in  February,  2004;  the  shares are
     reflected as issued and outstanding in the financial statements,  since the
     Company was  contractually  obligated  to issue those shares at the date of
     acquisition.

NOTE 5 - EQUIPMENT

     Depreciation expense for the years ended December 31, 2003 and 2002 was
     $nil and $15,900, respectively. During the year ended December 31, 2002,
     the Company recorded an impairment loss on its remaining equipment of
     $48,608.

NOTE 6 - INCOME TAXES

     Significant  components  of the  Company's  deferred  income  tax assets at
     December 31, 2003 and 2002 are as follows:

                                           2003                      2002
                                   -------------------       -------------------

 Deferred income tax asset:
 Net operating loss carry forward    $      605,000           $       547,000
 Impairment expense                         561,000                   561,000
                                   -------------------       -------------------

Total deferred income tax asset           1,166,000                 1,108,000
 valuation allowance                     (1,166,000)               (1,108,000)
                                   -------------------       -------------------

Net deferred income tax asset          $          -              $          -
                                   ===================       ===================

     The Company, based upon its history of losses during its development stage
     and management's assessment of when operations are anticipated to generate
     taxable income, has concluded that it is more likely than not that none of
     the net deferred income tax assets will be realized through future taxable
     earnings and has established a valuation allowance for them.

                                      F-20

<PAGE>

                                    PTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

     Reconciliation of the effective income tax rate to the U. S. statutory rate
     is as follows:

                                                2003                  2002
                                            --------------        -------------

 Tax expense at the U.S. statutory
  income tax rate                              (34.0)  %            (34.0)  %
 Increase in the valuation allowance            34.0                 34.0
                                            --------------        -------------

 Effective income tax rate                         -   %               -    %
                                            ==============        =============

     The  Company  has   available  net   operating   loss  carry   forwards  of
     approximately $1,778,000.There may be significant limitations on the future
     utilization of net operating loss carry forward due to ownership changes in
     the Company. The net operating loss carryforwards expire 2021 through 2023.

NOTE 7 - RELATED PARTY TRANSACTIONS

     In November,  the Company acquired all of the issued and outstanding shares
     of PTSPI, whose majority shareholder is an officer of the Company. See Note
     4

     Due to Related Parties

     In 2003 and 2002,  an officer and  stockholder  of the Company paid $40,912
     and $34,999, respectively, of operating expenses on behalf of the Company.

     At December  31,  2003 and 2002,  the  Company  had  accrued  $205,500  and
     $145,500,  respectively,  of  compensation  expense  due to an officer  and
     stockholder.

     At December 31, 2003 and 2002,  the Company owed a former  officer  $68,500
     (See Note 12).

     On November 11, 2001, an officer assumed a note of the Company. The officer
     issued 40,000  privately  owned shares as payment for the debt.  The amount
     due to the officer at December 31, 2003 and 2002 was $22,000.

     Due from Related Party

     An officer  has stock  subscriptions  due to the  Company of $551,380 as of
     December 31, 2003 and 2002 (See Note 12).

NOTE 8 - COMMITMENTS AND CONTINGENCIES

     License Agreement

     PTSPI  has  acquired  the  non-exclusive  United  States  patent  rights to
     manufacture,  sell and distribute,  under private label, an apparatus known
     as the Glove Box. It has also acquired the exclusive right in China and the
     right of  first  refusal  for  other  countries  to  manufacture,  sell and
     distribute,  under private label,  the Glove Box.  Pursuant to the license,
     the Company will pay the licensor 10% of gross  revenue of units sold.  The
     initial  license  period is through  December 31,  2005.  After the initial
     period,  the Company will pay a minimum payment based on minimum sales. The
     minimum  amounts will be established by the parties in the first quarter of
     2005.  The license  will renew  automatically  for three year terms  unless
     either  party  advises  the other 90 days  prior to the  expiration  of the
     agreement of their intent not to renew.  Also,  pursuant to the acquisition
     of PTSPI,  should PTSPI obtain the licensing  rights for China, the Company
     will pay the former PTSPI  shareholders  $500,000.  For all other contries,
     the fee is $100,000 per  license.  The fee may be paid in cash or in common
     stock.

                                      F-21

<PAGE>

                                    PTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

     Employment Taxes

     The Company,  in its  fiduciary  capacity as an  employer,  has the primary
     responsibility  for deducting and remitting  both the employer and employee
     portions of payroll related taxes to the appropriate governmental agencies.
     Since  inception,  the Company paid  $1,052,893 in compensation to three of
     its  officers  upon  which  taxes were not  withheld  nor  remitted  to the
     appropriate  governmental  authorities.  If, as a result of not withholding
     employment  taxes,  the  employees  incur  an  income  tax  liability  that
     ultimately  results  in a  deficiency,  the  Company  becomes  contingently
     responsible,  if the  employees  cannot or do not satisfy  that  liability.
     Since  inception,  the  Company is  contingently  liable  for these  taxes,
     penalties,  and interest,  which approximate $393,000. The employer portion
     of the payroll-related  taxes, $79,638, has been recorded as a liability by
     the Company as of December 31, 2003 and 2002.

     Operating Leases

     The Company is not currently  obligated  under any operating  leases.  Rent
     expense  for the two years  ended  December  31, 2003 and 2002 was $750 and
     $1,440,  respectively.  Rent was paid month to month at $250 per month (See
     Note 12).

NOTE 9 - STOCK-BASED COMPENSATION

     On October 18, 2003, the Company  established the 2003 Employee Bonus Stock
     Plan (the "Bonus Plan") and the 2003 Directors and  Consultants  Stock Plan
     (the "Stock Plan").

     Pursuant to the Bonus Plan,  the Company may grant stock options and common
     stock awards to employees.  The purchase  price (the  "Exercise  Price") of
     shares of the  common  stock  subject to an  incentive  stock  option  (the
     "Option  Shares") or of stock  awards  shall not be less than 85 percent of
     the fair  market  value of the common  stock on the date of  exercise.  The
     stock option period (the "Term") shall commence on the date of grant of the
     option and shall not exceed ten years. Payment may be made (a) in cash, (b)
     by cashier's  or certified  check,  (c) by  surrender of  previously  owned
     shares of common stock (if the Company  authorizes  payment in stock in its
     discretion),  (d)  by  withholding  from  the  option  shares  which  would
     otherwise be issuable  upon the exercise of the stock option that number of
     option  shares equal to the  exercise  price of the stock  option,  if such
     withholding is authorized by the Company in its  discretion,  or (e) in the
     discretion of the Company, by the delivery to the Company of the optionee's
     promissory note secured by the option shares.  The maximum number of shares
     which may be issued pursuant to this plan is 50,000,000.

     Pursuant to the  Directors and  Consultants  Stock Plan,  compensation  for
     service to directors or  consultants  may be payable in whole or in part in
     shares of common stock pursuant to the plan at the deemed issuance price of
     the fair market  value of the common  stock on the date of the  issuance of
     such shares.  The maximum number of shares which may be issued  pursuant to
     this plan is 10,000,000.


                                      F-22
<PAGE>

                                    PTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002


     During 1999, the Company's  Board of Directors  adopted a Stock Option Plan
     and granted options to purchase 750 shares of the Company's common stock to
     two members of the Board of Directors.

     The  following  summarizes  information  about stock options of the Company
     granted and outstanding at December 31, 2003:

                                                                        Exercise
                                             Options                   Price
                                           --------------        --------------

     Outstanding at beginning of year            500                $   300
     Granted                                       -                      -
     Exercised                                     -                      -
     Expired                                    (500)                     -
                                           --------------        --------------

     Outstanding at end of year                    -                $   300
                                           ==============        ==============

NOTE 10 - STOCK PURCHASE WARRANTS

     The Company's private placement  offering of stock in 1999 was accomplished
     with the sale of 2,500 units comprised of one share of common stock and one
     stock  purchase  warrant.  The stock  purchase  warrants  were  immediately
     exercisable.  The stock purchase  warrants provide for an exercise price of
     $480 and expire in July 2004. To date, none of the stock purchase  warrants
     have been exercised.  At December 31, 2003 and 2002, 2,500 shares of common
     stock were reserved for this purpose.

NOTE 11 - STOCK TRANSACTIONS

     During the year ended December 31, 2003 the Company:

o    Issued  33,000,000  shares of common  stock for cash  proceeds of $259,033.
     These  shares were issued  pursuant to the Bonus Plan  described in Note 9.
     The shares were sold below fair value;  an expense for the intrinsic  value
     of $45,712  has been  recorded in the  statement  of  operations.  o Issued
     20,000,000  shares of common stock for the  acquisition  of PTSPI. o Issued
     1,790,000 shares of common stock, valued at $15,660, for services.

     During the year ended  December  31,  2002 the  Company  cancelled  200,000
     shares of common stock, valued at $6,000,  which had previously been issued
     for services.

     Shares Issued for Acquisition

     Effective  June 2001,  the Company issued 450,000 shares of common stock to
     acquire  all of the  issued  and  outstanding  common  shares of PTS,  Inc.
     ("PTS").  PTS was  inactive  until  June  2001.  PTS' only asset was a note
     receivable in the amount of  $1,000,000,  with a present value of $950,000,
     which was  received  by PTS as  consideration  for the  issuance of 150,000
     shares of common stock.  The balance of the note receivable is shown in the
     consolidated  financial statements as a reduction of stockholders'  equity.
     (See Note 12.)


                                      F-23

<PAGE>

                                    PTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

NOTE12 - SUBSEQUENT EVENTS

     Subsequent to December 31, 2003 the Company:

o    Adopted the 2004 Employee  Bonus Stock Plan (the "2004 Bonus Plan") and the
     2004  Directors and  Consultants  Stock Plan (the "2004 Stock  Plan").  The
     terms of the plans are similar to those of the 2003plans  described in Note
     9. The maximum  number of shares  which may be issued  pursuant to the 2004
     Bonus  Plan and the 2004  Stock Plan are  68,000,000  shares and  2,000,000
     shares, respectively.

o    Issued 65,000,000 shares of common stock for cash proceeds of $485,000.

o    Entered into a consulting  agreement in relation to management  advisement,
     strategic  planning  and  marketing  in  connection  to the Glove Box.  The
     Company  issued  6,000,000  shares  of  common  stock in  relation  to this
     agreement.

o    Agreed to issue 3,500,000 shares of common stock, along with a cash payment
     of $10,000, to settle a related party debt of $68,500.

o    Cancelled  248,121  shares  of common  stock as  settlement  of the  unpaid
     portion of the note receivable for common stock of $551,380.

o    Amended the Articles of  Incorporation to authorize  800,000,000  shares of
     common stock and 100,000,000 shares of preferred stock.

o    Entered into a rental  agreement  with rent paid month to month at $405 per
     month.

NOTE 13 RECLASSIFICATIONS

     Certain reclassifications have been made to the prior year balance sheet to
     conform to the current year presentation. In the Company's Annual Report on
     Form 10-KSB for the year ended  December  31,  2002,  the Company  reported
     amounts payable to directors for directors fees of $9,000 as a component of
     accrued payroll taxes. In 2003, the Company  reported the directors fees in
     accounts payable.  In order to conform the prior period presentation of the
     directors  fees  to  the  current  period  presentation,  the  Company  has
     reclassified  the $9,000 of directors fees at December 31, 2002 to accounts
     payable in the consolidated balance sheet presented elsewhere herein.


                                      F-24

<PAGE>

                                   SIGNATURES

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

PTS, Inc.
(Registrant)




      /s/Peter Chin
  By: ---------------
      Peter Chin,
      President and Chief Executive Officer
      Principal Financial and Accounting Officer


Date:  April 26, 2004


         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.


     /s/Peter Chin
By: ---------------
      Peter Chin, President and Chief Executive Officer
       Principal Financial and Accounting Officer

Date:  April 26, 2004



                                       14
<PAGE>
                                                                    Exhibit 31

                                    PTS, INC.

                                  CERTIFICATION

I, Peter Chin, certify that:

1.   I have reviewed this Form 10-KSB of PTS, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the small  business  issuer as of, and for,  the periods  presented in this
     report;

4.   I am responsible for establishing and maintaining  disclosure  controls and
     procedures (as defined in Exchange Act Rules  13a-15(e) and 15d-15-(e)) for
     the small business issuer and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure
     controls and  procedures to be designed  under our  supervision,  to ensure
     that material information relating to the small business issuer,  including
     its consolidated  subsidiaries,  is made known to me by others within those
     entities,  particularly  during the  period in which  this  report is being
     prepared;

     b)   Evaluated the effectiveness of the small business issuer's  disclosure
          controls and  procedures  and presented in this report my  conclusions
          about the effectiveness of the disclosure controls and procedures,  as
          of the  end of the  period  covered  by  this  report  based  on  such
          evaluation; and

     c)   Disclosed  in this  report any change in the small  business  issuer's
          internal  control over financial  reporting  that occurred  during the
          small business issuer's most recent fiscal quarter (the small business
          issuer's  fourth fiscal  quarter in the case of an annual report) that
          has materially affected, or is reasonably likely to materially affect,
          the small business issuer's internal control over financial reporting;
          and

5.   I have disclosed,  based on our most recent  evaluation of internal control
     over financial  reporting,  to the small business issuer's auditors and the
     audit  committee of the small  business  issuer's  board of  directors  (or
     persons performing the equivalent functions):

     a)   All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the small  business  issuer's
          ability   to  record,   process,   summarize   and  report   financial
          information; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a significant  role in the small business  issuer's
          internal control over financial reporting.

Dated:  April 26, 2004                             /s/Peter Chin
                                                  -------------------------
                                                  Peter Chin
                                                  Chief Executive Officer and
                                                  Principal Accounting Officer

                                       15
<PAGE>



                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                                   PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The  undersigned  hereby  certifies,  pursuant to, and as required by, 18 U.S.C.
Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley  Act of
2002, that the Annual Report of PTS, Inc. (the "Company") on Form 10-KSB for the
period ended December 31, 2003 fully complies with the  requirements  of Section
13(a) or 15(d) of the  Securities  Exchange  Act of 1934,  as amended,  and that
information  contained in such Annual Report on Form 10-KSB fairly presents,  in
all material respects,  the financial condition and results of operations of the
Company.

Dated:  April 26, 2004                             /s/Peter Chin
                                                  -------------------------
                                                  Peter Chin
                                                  Chief Executive Officer and
                                                  Principal Accounting Officer





                                       16
<PAGE>