**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**


**--------------------------**


**FORM
      10-QSB**





**[x]**
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934
              For
                the quarterly period ended June 30, 2006[
                ]
            TRANSITION
                REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934
              For
                the transition period from _____________ to _____________
              Commission
                file number _________





**Commission
      file No. 333-111715**





**AT&S
                HOLDINGS, INC.**(Name
                of Small Business Issuer in Its
                Charter)





**NEVADA**
            **20-0472144**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)




3505
                Manchester TrafficwayKansas
                City, Missouri 64129(Address
                of Principal orExecutive
                Offices)





(816)
                765-7771(Issuer’s
                Telephone Number)





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





Indicate
      by check mark whether the Registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12-b-2 of the Exchange Act. (Check
      one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer
      [X]





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





State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date:





Date       Class           Shares
      Outstanding


08/16/2006      Common
      stock - $ .001 par value    1,084,167





Transitional
      Small Business Disclosure Format (Check one): Yes [_] No [ X ]





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          of Contents
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**AT&S
      HOLDINGS, INC.**





**TABLE
      OF CONTENTS**








**Item
                Number**
            
            **Page****ITEM
                1 - CONDENSED CONSOLIDATED FINANCIAL
                STATEMENTS:**Condensed
                Consolidated Balance Sheets as of December 31, 2005
                (audited) and June 30, 2006 (unaudited)
            
            3Unaudited
                Condensed Consolidated Statements of
                Operations for the three and six months ended June 30, 2006 and 2005
            
            5Unaudited
                Condensed Consolidated Statements of Stockholders’
                Equity as of June 30, 2006
            
            6Unaudited
                Condensed Consolidated Statements of Cash Flows for
                the six months ended June 30, 2006 and 2005
            
            7Notes
                to Condensed Consolidated Financial
                Statements
            
            8**ITEM
                2 - MANAGEMENT'S DISCUSSION AND ANALYSIS Of FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS**
            
            9**ITEM
                3 - CONTROLS AND
                PROCEDURES**
            
            21**PART
                II - OTHER INFORMATION****ITEM
                1 - LEGAL PROCEEDINGS**
            
            22**ITEM
                2 - UNREGISTERED SALES OF SECURITIES AND USE OF
                PROCEEDS**
            
            22**ITEM
                3 - DEFAULTS UPON SENIOR
                SECURITIES**
            
            22**ITEM
                4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**
            
            22**ITEM
                5 - OTHER INFORMATION**
            
            22**ITEM
                6 - EXHIBITS AND REPORTS ON FORM
                8-K**
            
            22**SIGNATURES**
            
            24













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**PART
      I - FINANCIAL INFORMATION**





**ITEM
      1 - FINANCIAL STATEMENTS:**




**AT&S
      HOLDINGS, INC.**





**CONDENSED
      CONSOLIDATED BALANCE SHEETS**




**ASSETS:**


December
                31, 2005
            
            June
                30, 2006(Audited)
            
            (Unaudited)CURRENT
                ASSETSCash
            
            $
            244,908
            
            $
            57,172Accounts
                and notes receivableCustomers
            
            
            634,742
            
            
            338,425Other
            
            
            10,182
            
            
            4,671644,924
            
            
            343,096Allowance
                for doubtful accounts
            
            
            86,300
            
            
            80,000558,624
            
            
            263,096Inventory
            
            
            18,392
            
            
            54,252Prepaid
                Advertising
            
            
            32,422
            
            
            23,572Other
                Prepaid Expenses
            
            
            199,329
            
            
            301,208Total
                Current Assets
            
            
            1,053,675
            
            
            699,300PROPERTY
                AND EQUIPMENT - AT COSTRevenue
                equipment
            
            
            4,502,442
            
            
            4,980,795Delivery
                equipment
            
            
            278,377
            
            
            278,377Vehicles
            
            
            109,621
            
            
            109,621Information
                systems and equipment
            
            
            207,854
            
            
            207,854Office
                equipment
            
            
            20,222
            
            
            27,175Leasehold
                improvements
            
            
            66,011
            
            
            66,0115,184,527
            
            
            5,669,833Accumulated
                depreciation
            
            
            1,633,110
            
            
            1,773,7653,551,417
            
            
            3,896,068OTHER
                ASSETSDeposits
            
            
            10,110
            
            
            10,110Deferred
                loan fees
            
            
            50,000
            
            
            50,000Accumulated
                amortization
            
            
            35,996
            
            
            41,81614,004
            
            
            8,18424,114
            
            
            18,294Total
                Assets
            
            $
            4,629,206
            
            $
            4,613,662







The
      accompanying notes are an integral part of these statements.


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**AT&S
        HOLDINGS, INC****.**
 **UNAUDITED
        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**
 
 **THREE
                  MONTHS ENDED**
              **SIX
                  MONTHS ENDED****June
                  30, 2005**
              
              
              **June
                  30, 2006**
              
              
              **June
                  30, 2005**
              
              
              **June
                  30, 2006**REVENUE:Equipment
                  sales
              
              $
              177,098
              
              $
              126,183
              
              $
              337,398
              
              $
              282,194Equipment
                  rental
              
              
              486,940
              
              
              560,659
              
              
              913,387
              
              
              1,426,063Drayage
              
              
              80,173
              
              
              82,658
              
              
              190,396
              
              
              178,237Maintenance
              
              
              9,044
              
              
              10,405
              
              
              14,841
              
              
              63,389Other
              
              
              8,128
              
              
              11,990
              
              
              17,122
              
              
              23,149Total
                  revenue
              
              
              761,383
              
              
              791,895
              
              
              1,473,144
              
              
              1,973,032COST
                  OF SALES:Equipment
              
              
              120,472
              
              
              71,491
              
              
              200,621
              
              
              162,370Equipment
                  rental
              
              
              111,930
              
              
              154,639
              
              
              186,673
              
              
              465,503Depreciation
              
              
              81,556
              
              
              93,969
              
              
              157,930
              
              
              180,232Drayage
              
              
              64,314
              
              
              73,085
              
              
              148,148
              
              
              158,151Maintenance
              
              
              6,207
              
              
              14,210
              
              
              11,165
              
              
              22,363Total
                  cost of sales
              
              
              384,479
              
              
              407,394
              
              
              704,537
              
              
              988,619Gross
                  profit
              
              
              376,904
              
              
              384,501
              
              
              768,607
              
              
              984,413COSTS
                  AND EXPENSES:Selling,
                  general and administrative expenses
              
              
              350,806
              
              
              464,372
              
              
              697,688
              
              
              895,679Depreciation
                  expense
              
              
              21,726
              
              
              13,578
              
              
              43,712
              
              
              27,194372,532
              
              
              477,950
              
              
              741,400
              
              
              922,873Operating
                  profit (loss)
              
              
              4,372
              
              
              (93,449)
              
              
              27,207
              
              
              61,540OTHER
                  INCOME (EXPENSE):Interest
                  Income
              
              
              0
              
              
              0
              
              
              125
              
              
              0Interest
                  expense - related party
              
              
              (14,655
              )
              
              (11,278
              )
              
              (30,503
              )
              
              (23,199
              )Interest
                  expense - other
              
              
              (57,098
              )
              
              (53,976
              )
              
              (100,457
              )
              
              (103,144
              )Gain
                  (Loss) on sale of non-revenue equipment
              
              
              451
              
              
              0
              
              
              451
              
              
              0Other
                  income (expense)
              
              
              2,254
              
              
              (2,514)
              
              
              3,222
              
              
              (1,029)(69,423
              )
              
              (67,795
              )
              
              (127,162
              )
              
              (127,372
              )Net
                  Earnings (Loss)
              
              $
              (65,051)
              
              $
              (161,244)
              
              
              ($99,955
              )
              
              ($65,832
              )BASIC
                  net earnings (loss) per share
              
              $
              (0.07)
              
              $
              (0.15)
              
              
              ($0.10
              )
              
              ($0.06
              )Weighted
                  average shares outstanding
              
              
              984,167
              
              
              1,084,167
              
              
              984,167
              
              
              1,084,167DILUTED
                  net earnings (loss) per share
              
              $
              (0.07)
              
              $
              (0.15)
              
              $
              (0.10
              )
              $
              (0.06
              )Weighted
                  average shares outstanding
              
              
              984,167
              
              
              1,084,167
              
              
              984,167
              
              
              984,167
  The
        accompanying notes are an integral part of these statements.
 
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 5






**LIABILITIES
      AND STOCKHOLDERS' EQUITY:**


December
                31, 2005
            
            June
                30, 2006CURRENT
                LIABILITIES
            
            (Audited)
            
            (Unaudited)Current
                maturities of long-term debt - related party
            
            $Current
                maturities of long-term debt - other
            
            
            325,166
            
            $
            388,709Line
                of credit
            
            
            516,704
            
            
            123,800Accounts
                payableTrade
            
            
            398,430
            
            
            264,158Sales
                tax payable
            
            
            7,783
            
            
            9,130406,213
            
            
            273,288Accrued
                liabilitiesSalaries
            
            
            49,978
            
            
            10,689Payroll
                taxes and other
            
            
            1,314
            
            
            818Interest
                payable
            
            
            2,476
            
            
            2,124Security
                deposits
            
            
            500
            
            
            500Property
                taxes
            
            
            -
            
            
            9,00054,268
            
            
            23,131Total
                Current Liabilities
            
            
            1,302,351
            
            
            808,928LONG-TERM
                DEBT, less current maturitiesRelated
                party
            
            
            309,264
            
            
            247,259Subordinated
                debentures - related party
            
            
            45,000
            
            
            45,000Other
            
            
            1,855,461
            
            
            2,324,177Subordinated
                debentures - other
            
            
            -
            
            
            137,0002,209,725
            
            
            2,753,436COMMITMENTSSTOCKHOLDERS'
                EQUITYCommon
                stock - authorized 30,000,000 shares of$.001
                par value; issued and outstanding1,084,167
                shares
            
            
            1,084
            
            
            1,084Additional
                paid-in capital
            
            
            1,081,690
            
            
            1,081,690Retained
                earnings
            
            
            34,356
            
            
            (31,476)1,117,130
            
            
            1,051,298Total
                Liabilities and Stockholders’ Equity
            
            $
            4,629,206
            
            $
            4,613,662

















The
      accompanying notes are an integral part of these statements.


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**AT&S
      HOLDINGS, INC.**





**UNAUDITED
      CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY**


**JUNE
      30, 2006**











Common
            
            StockShares
            
            Amount
            
            AdditionalPaid
              In
                Capital
            
            Retained
              Earnings
            
            TotalBalance
                at January 1, 2006
            
            
            1,084,167
            
            $
            1,084
            
            $
            1,081,690
            
            $
            34,356
            
            $
            1,117,130Net
                earnings for the period (unaudited)
            
            
            -
            
            
            -
            
            
            -
            
            $
            (65,832)
            
            $
            (65,832)Balance
                at June 30, 2006 (unaudited)
            
            
            1,084,167
            
            $
            1,084
            
            $
            1,081,690
            
            $
            (31,476)
            
            $
            1,051,298










The
      accompanying notes are an integral part of these statements.


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**AT&S
      HOLDINGS, INC.**


**UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**


**SIX
      MONTHS ENDED JUNE 30, 2005 AND 2006**


**SIX
                MONTHS ENDED****June
                30, 2005**
            
            **June
                30, 2006**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                earnings (loss)
            
            
            ($99,955
            )
            
            ($65,832)Adjustments
                to reconcile net earnings (loss) to cash provided (used) by operating
                activities:Gain
                on sale of equipment
            
            
            (97,723
            )
            
            (86,405)Depreciation
            
            
            201,642
            
            
            207,426Provision
                for losses on accounts receivable
            
            
            4,164
            
            
            25,841Change
                in operating assets and liabilities:(Increase)
                decrease in accounts and notes receivable
            
            
            76,096
            
            
            269,687(Increase)
                decrease in prepaid expenses
            
            
            35,767
            
            
            (128,889)(Increase)
                decrease in deferred loan fees (net)
            
            
            6,545
            
            
            5,820Increase
                (decrease) in accounts payable and
              accrued
                liabilities
            
            
            (119,184
            )
            
            (164,062)Net
                cash and cash equivalents provided by operating activities
            
            
            7,352
            
            
            63,586CASH
                FLOWS FROM INVESTING ACTIVITIES:Proceeds
                from sale of equipment
            
            
            277,228
            
            
            209,950Purchase
                of property and equipment
            
            
            (501,020)
            
            
            (675,622)Net
                cash and cash equivalents provided (used) by investing
                activities
            
            
            (223,792)
            
            
            (465,672)CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from new financing
            
            
            436,250
            
            
            306,567Principal
                payments on long and short-term debt
            
            
            (215,042
            )
            
            (92,217)Net
                cash and cash equivalents provided (used) by financing
                activities
            
            
            221,208
            
            
            214,350(DECREASE)
                IN CASH
            
            
            4,768
            
            
            (187,736)Cash
                - beginning of period
            
            
            55,690
            
            
            244,908Cash
                - end of period
            
            $
            60,458
            
            $
            57,172Interest
                paid during the period:Related
                party
            
            $
            30,846
            
            $
            24,067Other
            
            
            100,496
            
            $
            96,807Total
                interest
            
            $
            131,342
            
            $
            120,874











The
      accompanying notes are an integral part of these statements.




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 7




**AT&S
      HOLDINGS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**




**FINANCIAL
      STATEMENT PRESENTATION**





We
      are
      providing herein the unaudited historical financial statements of AT&S
      HOLDINGS, INC. as of June 30, 2006, and for the three and six months ended
      June
      30, 2006 and 2005. The interim financial statements presented herein have been
      prepared pursuant to the rules and regulations of the Securities and Exchange
      Commission ("SEC"). Certain information and footnote disclosures normally
      included in financial statements prepared in accordance with accounting
      principles generally accepted in the United States of America have been
      condensed or omitted pursuant to such rules and regulations. The interim
      financial statements should be read in conjunction with our annual financial
      statements, notes and accounting policies included in the Company's most recent
      annual report on Form 10-KSB as filed with the Securities and Exchange
      Commission.





The
      information furnished in this report reflects all adjustments (consisting of
      only normal recurring accruals), which are, in the opinion of management,
      necessary for a fair presentation of the results for the interim periods. The
      results of operations for the three and six month period ended June 30, 2006,
      are not necessarily indicative of results that may be expected for the fiscal
      year ending December 31, 2006.





The
      effects of inter-company transactions on current assets, current liabilities,
      revenue, and cost of sales for periods presented and on retained earnings at
      the
      beginning of the periods presented have been eliminated.





CALLABLE
      SUBORDINATED NOTES


The
      Company has filed a Registration Statement on Form SB-2 with the Securities
      and
      Exchange Commission (SEC), whereby the Company registered callable subordinated
      notes at $1,000 par for up to $5,000,000 for sale to the public. The net
      proceeds of these notes (approximately $4,700,000 assuming all notes are sold
      and after offering expenses) are intended to fund the purchases of revenue
      equipment. The Commission declared the registration statement effective on
      May
      13, 2005. The company filed a post-effective amendment to the registration
      June
      2, 2006. As of August 14, 2006, the SEC has not declared this post-effective
      amendment effective. The offering of notes is not underwritten and is being
      sold
      on a best-efforts basis. From May 13, 2005 to June 30, 2006, we sold seven
      notes
      in the aggregate principal amount of $182,000. For the quarter ended June 30,
      2006 we sold one note in the aggregate principal amount of $96,000. Costs
      incurred with the preparation of the initial registration statement were
      approximately $100,000. Our expenses incurred in connection with the issuance
      and distribution of the notes from the date our registration statement became
      effective, May 13, 2005 through June 30, 2006 were approximately
      $187,000.











**FORWARD-LOOKING
      STATEMENTS**





**THIS
      FORM 10-QSB CONTAINS FORWARD-LOOKING STATEMENTS INVOLVING RISKS AND
      UNCERTAINTIES. OUR ACTUAL RESULTS IN THE FUTURE COULD DIFFER SIGNIFICANTLY
      FROM
      THE RESULTS DISCUSSED OR IMPLIED IN SUCH FORWARD-LOOKING STATEMENTS. FACTORS
      THAT COULD CAUSE OR CONTRIBUTE TO SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED
      TO, THOSE DISCUSSED, IN THE SECTION CAPTIONED "MANAGEMENT'S DISCUSSION AND
      ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” AS WELL AS THOSE
      DISCUSSED ELSEWHERE IN THIS FILING.**





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 8





**I****TEM
                2****-
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                OF
                OPERATIONS**





*In
      this item to the report, references to “AT&S,” the “Company,”“we,”“us,” and
“our” refer to AT&S Holdings, Inc., a Nevada corporation, and our subsidiary
      American Trailer & Storage, Inc., a Missouri corporation (“American
      Trailer”). The following discussion of our financial condition and results of
      operations should be read together with the financial statements and the
      accompanying notes included elsewhere in this quarterly report on Form 10-QSB.*





**Overview**





American
      Trailer was formed on May 15, 1994 under the laws of the State of Missouri
      under the name Financial Credit Corporation. Financial Credit Corporation
      conducted business under the fictitious names of Commercial Trailer and American
      Trailer & Storage. On December 9, 2003, the name was officially changed
      to American Trailer & Storage, Inc. American Trailer has been engaged solely
      in the business of renting and leasing storage containers and semi-trailers
      since inception and does not have any subsidiaries.





On
      December 31, 2003, we re-organized to a holding company structure. At that
      time AT&S became the parent of American Trailer. The Management’s Discussion
      and Analysis of Financial Condition and Results of Operations contained herein
      discusses the historical operations of American Trailer prior to December 31,
      2003 and includes the consolidated financial information for American Trailer
      and AT&S thereafter.





We
      are a
      provider of portable storage and transportation solutions through our rental
      fleet of over 1,800 portable storage and transportation units through our
      subsidiary American Trailer. We currently have two branches and operate in
      Missouri, Kansas, Illinois, Nebraska and Iowa. We primarily concentrate on
      the
      Kansas City and St. Louis metropolitan regions. We phased out of actively
      competing in other markets to focus on these core regions because we felt our
      resources could be more profitable focusing our efforts in the larger markets
      of
      Kansas City and St. Louis. We feel there are opportunities for growth in other
      Midwestern markets when our capital and human resources are adequate to handle
      external branch expansion.





Our
      rental equipment provides secure, accessible temporary storage and
      transportation for a diversified client base of over 600 customers in 76
      different industries. Our customers use our products for a wide variety of
      storage and transportation applications, including the storage of retail and
      manufacturing inventory, protection of construction materials and equipment,
      handling peaks in shipping cycles and transporting material to and from
      customers’ or their construction job sites. Our largest customer, Satellite
      Specialized Transportation (“SST”), constituted 29% of our revenues in 2005 and
      6% of our revenues in 2004. SST rents our equipment on a unit-by-unit,
      short-term basis. SST uses our equipment to haul cargo and freight long
      distances. In particular, SST has rented our equipment for transportation and
      storage of disaster relief supplies to victims of hurricanes and other
      disasters. In general, SST rents equipment for $500 per unit per month. We
      anticipate that SST will be our second largest customer after Wal-Mart for
      2006
      due to the continued large number of units rented to support the recent
      hurricane relief efforts. Because
      the disaster relief business is mainly short term, we do not purchase equipment
      specifically for this purpose and should not, therefore, have material amounts
      of idle equipment should natural disasters not occur in any given year. We
      mainly rent equipment owned by other entities under agreement with the other
      entities to supply SST with trailers. The trailers are turned back over to
      the
      other entities when SST is finished using them for disaster relief duties.





Our
      second largest customer, Wal-Mart, accounted for 10% of our revenue in 2005,
      22%
      in 2004 and 27% in 2003. Wal-Mart rents our storage equipment on a
      store-by-store, unit-by-unit, short-term basis. Rental and trucking (delivery
      and pick-up of storage equipment) rates vary by store location. No single store
      accounts for more than 5% of our revenues. In general, a Wal-Mart store rents
      equipment on a four-week minimum term for $90-$135 per four weeks, depending
      on
      the type of unit and the quantity of containers rented by the particular store.
      The store also pays delivery and pick-up charges between $75-$400 each way,
      depending on the distance of the store from our location. We believe that
      year-to-year reduction in revenues from Wal-Mart may be indicative of a trend
      resulting from improvements by Wal-Mart in its inventory
      management.





Aside
      from Wal-Mart, our other largest customers tend to vary significantly from
      year
      to year. Our third largest customer in 2005, Mobile Storage Group (“MSG”)
      accounted for 5% of our revenues that year and 9% of our revenues in 2004.
      MSG
      rents equipment from American Trailer and then re-rents the equipment to other
      companies, primarily in the retail industry. MSG rents our equipment on a
      unit-by-unit; short-term basis; rental and trucking rates vary by location
      of
      rental. No single MSG rental location constitutes more than 1% of our revenue.
      In general, MSG rents equipment on a four-week minimum term, to service their
      customers, for $90-$135 per four weeks, depending on the type of unit and the
      quantity of units rented at each location. MSG also pays delivery and pick-up
      charges between $75 and $400 each way, depending on the distance of the customer
      from one of our locations. Rental and trucking rates are quoted and confirmed
      at
      issuance of purchase order by MSG. Because MSG competes with our business,
      we do
      not necessarily expect them to remain a major customer every year. Our business
      with MSG is dependent on MSG being unable to meet its customers’ demand for
      storage units from within its own inventory and, thus, leasing from us to fill
      the shortfall.





We
      do not
      expect our largest customers to continue to represent such a significant share
      of our revenues. Indeed, SST rental demand is driven by its disaster relief
      activities and revenue from Wal-Mart has decreased on a year-to-year basis
      over
      the last three years as a result of its improved inventory management. Our
      third
      largest customer, Mobile Storage Group, is in all likelihood transitioning
      from
      a customer to a competitor. If we are unable to replace business from our
      significant customers from year to year, our business would be negatively
      affected. The loss of or diminution of these businesses as customers or the
      inability to continually replace business from them and our other significant
      customers would require immediate and substantial overhead cost reductions
      together with the disposal of excess equipment to mitigate the effects and
      prevent failure of our business. There can be no assurance that we would be
      able
      to effectively respond to any such customer loss. Management views this risk
      as
      very significant and should management not immediately implement overhead cost
      reductions and equipment dispersals, we would not be able to meet our
      obligations.









We
      primarily obtain our portable storage units by purchasing new and used
      ocean-going containers and purchasing new and used trailers from the trucking
      industry. We offer a wide range of products in varying lengths and widths with
      an assortment of differentiated features such as security systems, multiple
      doors, electrical wiring and shelving. In addition to our rental operations,
      we
      sell new and used portable storage units and provide ancillary services.
      Although our primary business is rental of storage units and trailers, we sell
      units from time to time when the customer demand for purchase exists and we
      are
      able to sell at prices that exceed our cost of replacing the unit, or when
      we
      have excess inventory.





Our
      primary revenue source is the rental and sale of portable storage and
      transportation units with our focus being on the rental rather than sale of
      such
      equipment.





As
      noted
      above, our discussion and analysis in this report, and other reports that we
      file with the Securities and Exchange Commission, in our press releases and
      in
      public statements of our officers and corporate spokespersons contain
      forward-looking statements. In this report, we have used words such as
“anticipate,” “believe,” “estimate,” “may,” “intend,” “expect” and other similar
      expressions, which identify forward-looking statements. Forward-looking
      statements may turn out to be wrong. They can be affected by inaccurate
      assumptions or by known or unknown risks and uncertainties. We undertake no
      obligation to update any forward-looking statement. We provide the following
      discussion of risks and uncertainties relevant to our business. These risk
      factors and uncertainties include:


·
            Our
                significant dependence on several key
                customers;




·
            The
                highly competitive nature of our
                business;




·
            The
                supply and price of used ocean-going containers and storage
                trailers;




·
            Significant
                changes in interest rates;




·
            Seasonal
                fluctuation in our business;




·
            Our
                continued ability to access bank debt;
                and




·
            Our
                dependence on third parties to lease us containers and trailers on
                favorable terms.




Many
      of
      these factors are beyond our control.





**Three
      months ended June 30, 2006 versus June 30, 2005**





Our
      revenues totaled $791,895 for the three months ended June 30, 2006. The increase
      of $30,512 versus the same period in 2005 represents a 4.0% increase.
      Approximately 84.1%, of total revenues were derived from equipment rental and
      related service revenues (delivery, pick-up, maintenance revenues, etc.).





Approximately
      15.9%, or $126,183, of total revenues was derived from the sale of equipment,
      compared to $177,098, or 23.3% of total revenues during the same period in
      2005. Revenues from equipment sales decreased during the period due to a
      general decrease in demand for equipment purchases from companies in
      varied industries. Because we routinely sell rental equipment as a course of
      our
      business, equipment sales includes both units sold from the rental fleet
      (revenue producing equipment / fixed assets) and units purchased for re-sale
      (sale inventory). The cost of the equipment (included in the cost of goods
      sold)
      was the net book value, after depreciation, of the equipment at the time of
      sale. (The line item “Gain on Sale of Equipment” on the Statement of Cash Flows
      is the net gain on the sale of rental equipment and is deducted from our net
      income when calculating “Net Cash Provided by Operating Activities.” The
      proceeds from the sale of the rental equipment is then included in the “Proceeds
      from the Sale of Equipment,” together with the proceeds from the sale of
      non-revenue producing equipment, when used to calculate “Net Cash Used by
      Investing Activities” on the Statement of Cash Flows.





We
      generated rental revenues of $560,659 during the three month period ending
      June
      30, 2006 versus $486,940 during the same period in 2005. The increase in rental
      revenue of $73,719, or 15.1%, was a result of an increase in demand for our
      equipment, particularly from the trucking, construction, and retail industries.
      Drayage (trucking) revenue increased $2,485, or 3.1%, to $82,658 during the
      three-month period versus the previous year. This increase is due to an increase
      in pricing of drayage services and an increase in the number of units picked
      up
      partially offset by a decrease in the number of delivered and moved at customer
      sites. We anticipate that drayage rates will continue to increase as we pass
      through increased fuel costs though this increase may not marginally cover
      all
      increased drayage expenses. Maintenance revenues, charges to customers for
      customer related equipment damages the cost of which are included in maintenance
      expenses, increased $1,361, or 15.05%, to $10,405 during the period due to
      a
      large number of damaged units returned after use during hurricane disaster
      relief efforts in the Gulf Coast.





Other
      revenues, which consist primarily of late fees, damage-waiver fees and property
      tax fees increased $3,862, or 47.5% due primarily to a general increase in
      rental activity, which increases ancillary revenues such as damage waiver and
      property tax fees.





Cost
      of
      sales for the three months ended June 30, 2006 totaled $407,394, an increase
      of
      6.0%, as compared to the same period in 2005. Cost of sales represented 51.5%
      of
      total revenues for the period versus 50.5% during the same period 2005. The
      cost
      of equipment sold decreased $48,981 or 40.7% due to the decrease in the number
      of units sold. Gross margins on equipment sales increased from 32.0% to 43.3%
      as
      we were able to increase our prices higher than our costs. We expect that
      availability of used trailers and containers will remain limited as the shipping
      industries continue to experience high demand. Equipment rental expense, which
      includes rent paid to third parties for equipment re-rented to our customers,
      routine maintenance of the rental fleet, licensing and titling fees, increased
      by $42,709, or 38.2%, for the period. The increase was primarily due to an
      increase in maintenance costs of our semi-trailers from normal wear and tear,
      as
      we had a high amount of turn over in equipment. Maintenance expenses related
      to
      customer damages increased $8,003 or 128.9% during the period to $14,210. This
      increase is primarily the result of an increase in the number of units rented
      and returned damaged. These costs are recouped from customers as shown in the
      maintenance revenue line item. We anticipate that maintenance revenues will
      be
      greater than the costs in the remaining months of 2006.





Depreciation
      expense increased $12,413, or 15.2%, to $93,969 due to an increase of owned
      units in the rental fleet. Depreciation expense will further increase as a
      result of purchasing more equipment as the fleet continues to grow. Drayage
      expenses increased $8,771, or 13.6% during the period due to an increase in
      fuel
      cost, but offset by a reduction in drayage expenses paid to third parties
      because of our increase in the number of owned delivery semi-tractors compared
      to 2005. Drayage expenses will likely increase during the upcoming 12 months
      due
      to rising fuel expenses. Our three semi-tractors do not typically require
      significant repair expenses.





Gross
      profits increased by $7,597, or 2.0%, during the three months ended June 30,
      2006 versus 2005, representing 48.6% of total revenues and totaling $384,501.
      The increase in gross profits is mainly due to the increase in equipment rental
      revenue. As the availability of new and used shipping containers decreases,
      we
      should be able to continue to command higher prices for our equipment; however,
      this will also cause us to pay higher prices for our equipment sold and
      additions to our rental fleet. We anticipate that our gross profit margin will
      be approximately 50% for the 12 months of 2006, as the third and fourth quarters
      typically have higher utilization and profitability.





Operating
      expenses increased $105,418, or 28.3%, during the three month period ended
      June
      30, 2006 versus the same period in 2005. Operating expenses represented 60.4%
      of
      total revenues versus 48.9% for the same period in 2005. The increase is
      primarily due to increases in personnel and the related expenses. We added
      approximately 45% more staff from June 2005 to June 2006. We anticipate an
      increase in future revenues due to the new personnel as they become trained
      and
      engaged in the business. Depreciation expense (on non-revenue equipment)
      decreased by $8,148, or 37.5% due to a decrease in company automobiles. We
      expect operating expenses to be under 40% of total revenues for 2006, as the
      third and fourth quarters have historically seen increases in demand for rental
      equipment, without marginally increasing operating expenses.





Overall,
      interest expense decreased $6,499 or 9.1%, during the three months ended June
      30, 2006 versus the same period in 2005 to $65,254. Interest expense constituted
      8.2% of total revenues versus 9.1% during the same period in 2005. This decrease
      is primarily due to a decrease in the amount of interest paid to our principal
      shareholder and a reduction in the interest rate on our bank debt for purchases
      of new equipment. “Interest Expense - Other” (primarily interest accrued to our
      bank) decreased $3,122, or 5.5%, due primarily to a decreased balance on our
      reducing revolver note and transferring $584,771 from our equipment purchase
      line-of-credit to a fixed interest rate term loan with a lower interest rate.
      We
      expect interest expenses to increase as we expand our fleet through increases
      in
      borrowing and as interest rates continue to increase over the previous year.





We
      had a
      net loss of $161,244 for the three-month period ended June 30, 2006 versus
      a net
      loss of $65,051 for the same period in 2005. This net loss represents 20.4%
      of
      total revenues for the period versus a net loss of 8.5% of total revenues during
      the same period in 2005. The increase in net loss is primarily attributable
      to
      the increase in personnel related operating expenses. We anticipate a positive
      net income for 2006 as gross profits historically increase each quarter and
      operating expenses should not marginally increase above 2 nd quarter
      levels..





**Six
      months ended June 30, 2006 versus June 30, 2005**





Our
      revenues totaled $1,973,032 for the six months ended June 30, 2006. The increase
      of $499,888 versus the same period in 2005 represents a 33.9% increase.
      Approximately 85.7%, of total revenues were derived from equipment rental and
      related service revenues (delivery, pick-up, maintenance revenues, etc.).





Approximately
      14.3%, or $282,194, of total revenues was derived from the sale of equipment,
      compared to $337,398, or 22.9% of total revenues during the same period in
      2005. Revenues from equipment sales decreased during the period due to a
      general decrease in demand for equipment purchases from companies in
      varied industries. Because we routinely sell rental equipment as a course of
      our
      business, equipment sales includes both units sold from the rental fleet
      (revenue producing equipment / fixed assets) and units purchased for re-sale
      (sale inventory). The cost of the equipment (included in the cost of goods
      sold)
      was the net book value, after depreciation, of the equipment at the time of
      sale. (The line item “Gain on Sale of Equipment” on the Statement of Cash Flows
      is the net gain on the sale of rental equipment and is deducted from our net
      income when calculating “Net Cash Provided by Operating Activities.” The
      proceeds from the sale of the rental equipment is then included in the “Proceeds
      from the Sale of Equipment,” together with the proceeds from the sale of
      non-revenue producing equipment, when used to calculate “Net Cash Used by
      Investing Activities” on the Statement of Cash Flows.





We
      generated rental revenues of $1,426,063 during the six month period ending
      June
      30, 2006 versus $913,387 during the same period in 2005. The increase in rental
      revenue of $512,676, or 56.1%, was a result of an increase in demand for our
      equipment, particularly from the trucking and construction industries,
      offsetting decreases in demand from the wholesale distribution industry. Drayage
      (trucking) revenue decreased $12,159, or 6.4%, to $178,237 during the six-month
      period versus the previous year. This decrease is due to a decrease in the
      number of dispatches compared to the previous period. We anticipate that drayage
      rates will increase as we pass through increased fuel costs though this increase
      may not marginally cover all increased drayage expenses. Maintenance revenues,
      charges to customers for customer related equipment damages the cost of which
      are included in maintenance expenses, increased $48,548, or 327.1%, 63,389
      during the period due
      to a
      large number of damaged units returned after use during hurricane disaster
      relief efforts in the Gulf Coast .





Other
      revenues, which consist primarily late fees, damage-waiver fees and property
      tax
      fees increased $6,027, or 35.2% due primarily to a general increase in rental
      activity, which increases ancillary revenues such as damage waiver and property
      tax fees.





Cost
      of
      sales for the six months ended June 30, 2006 totaled $988,619, an increase
      of
      40.3%, as compared to the same period in 2005. Cost of sales represented 50.1%
      of total revenues for the period versus 47.8% during the same period 2005.
      The
      cost of equipment sold decreased $38,251 or 19.1% due to the decrease in the
      number of units sold. Gross margins on equipment sales increased from 40.5%
      to
      42.5% as we were able to increase our prices higher than our costs. We expect
      that availability of used trailers and containers will remain limited as the
      shipping industries continue to experience high demand. Equipment rental
      expense, which includes rent paid to third parties for equipment re-rented
      to
      our customers, routine maintenance of the rental fleet, licensing and titling
      fees, increased by $278,830, or 149.4%, for the period. The increase was
      primarily due to the increase in number of over-the-road semi-trailers and
      over-the-road refrigerated semi-trailers rented from third parties and then
      rented to customers in the trucking industry versus the same period in 2005.
      We
      significantly increased the amount of trailers rented to one customer in
      particular, who is engaged in hauling cargo and disaster relief supplies to
      areas affected by the recent hurricanes. We expect the equipment rental expense
      to decline over the next six months as the need for trailers used in relief
      efforts of the 2005 hurricane season units diminishes. We will, however,
      continue to re-rent over-the-road equipment for customers when profitable
      opportunities present themselves. Maintenance expenses, related to customer
      damages, increased $11,198 or 100.3% during the period to $22,363. This increase
      is primarily the result of a large number of damaged units returned after use
      during hurricane disaster relief efforts in the Gulf Coast during the first
      quarter. These costs are recouped from customers as shown in the maintenance
      revenue line item.





Depreciation
      expense increased $22,302, or 14.1%, due to an increase of owned units in the
      rental fleet. Depreciation expense will further increase as a result of
      purchasing more equipment as the fleet continues to grow. Drayage expenses
      increased $10,003, or 6.8% during the period due to an increase in fuel cost,
      but offset by a reduction in drayage expenses paid to third parties because
      of
      our increase in the number of owned delivery semi-tractors compared to 2005.
      Drayage expenses will likely increase during the upcoming 12 months due to
      rising fuel expenses. Our three semi-tractors do not typically require
      significant repair expenses.





Gross
      profits increased by $215,806, or 28.1%, during the six months ended June 30,
      2006 versus 2005, representing 49.9% of total revenues and totaling $984,413.
      The increase in gross profits is mainly due to the increase in equipment rental
      revenue. As the availability of new and used shipping containers decreases,
      we
      should to be able to continue to command higher prices for our equipment;
      however, this will also cause us to pay higher prices for our equipment
      sold and additions to our rental fleet. We anticipate that our gross profit
      margin will be approximately 50% for the 12 months of 2006, as the third and
      fourth quarters typically have higher utilization and
      profitability.





Operating
      expenses increased $181,473, or 24.5%, during the six month period ended June
      30, 2006 versus the same period in 2005. Operating expenses represented 46.8%
      of
      total revenues versus 50.3% for the same period in 2005. The increase is
      primarily due to increases in personnel and their related expenses, including
      salaries, employee benefits including health insurance, and advertising. We
      added approximately 45% more staff in the 1 st half of
      2006 versus 2005. We anticipate future increases in revenues due to the new
      personnel as they become trained and productive. Depreciation expense (on
      non-revenue equipment) decreased by $16,518, or 37.8% due to a decrease in
      company automobiles. We expect operating expenses to be under 40% of total
      revenues for 2006, as the third and fourth quarters have historically seen
      increases in demand for rental equipment, without marginally increasing
      operating expenses.





Overall,
      interest expense decreased $4,617 or 3.5%, during the six months ended June
      30,
      2006 versus the same period in 2005 to $126,343. Interest expense constituted
      6.4% of total revenues versus 8.9% during the same period in 2005. This decrease
      is primarily due to a decrease in the amount of interest paid to our principal
      shareholder and the restructuring of our bank debt for purchases of new
      equipment. “Interest Expense - Other” (primarily interest accrued to our bank)
      increased $2,687, or 2.7% due primarily to increased balances owed to our bank
      and increased interest rates on floating lines of credit offset by the transfer
      of $584,771 from our equipment purchase line-of-credit to a fixed interest
      rate
      term loan with a lower interest rate. We expect interest expenses to increase
      as
      we expand our fleet through increases in borrowing and as interest rates
      continue to increase over the previous year.





We
      had a
      net loss of $65,832 for the six-month period ended June 30, 2006 versus a net
      loss of $99,955 for the same period in 2005. This net loss represents 3.3%
      of
      total revenues for the period versus a net loss of 6.8% of total revenues during
      the same period in 2005. The decrease in net loss is primarily attributable
      to
      the increase in rental revenues without marginal increases in expenses as
      described above. We anticipate a positive net income for 2006 as gross profits
      historically increase each quarter and operating expenses should not marginally
      increase.





**Liquidity
      and Capital Resources**




Growing
      our rental fleet is very capital intensive. The amount of capital needed is
      dependent on the number of units we plan to purchase in a given period to
      continue growth and on building the infrastructure to support such growth.
      Over
      the year, our fleet size has been steadily increasing in size as we focused
      on
      purchasing newer equipment and selling, older, non-utilized units. Purchases
      of
      new equipment have primarily been funded through equipment financing on a
      collateralized basis. Additional growth has primarily been funded through the
      issuance of subordinated debt to our principal owner.





A
      note
      payable to the majority shareholder had a balance of $309,264 at December 31,
      2005 and $419,827 at December 31, 2004, and is subordinate to our bank loans.
      On
      June 30, 2006, this note had a balance of $247,259. This note was originally
      due
      January 1, 2004 and then extended to January 1, 2005. On July 15, 2004, other
      loans to shareholder (which originally had due dates of August 15, 2004 and
      September 20, 2004) were combined with this loan, and the due date of the new
      loan, which required monthly payments of principal and interest, was February
      15, 2008. This loan agreement was amended on March 15, 2005. The amended
      agreement required monthly payments of interest only and the principal amount
      was due April 15, 2006. That agreement was further amended on September 30,
      2005
      by changing the maturity date to April 15, 2007. Our majority shareholder also
      purchased 2005 series subordinated notes in 2005 totaling $45,000. Due to bank
      financing covenants, the principal owner cannot be repaid the balance of the
      subordinated notes if the total debt to net worth ratio exceeds the bank’s
      maximum limit after any such repayment.





**Six
      months ended June 30, 2006 versus June 30, 2005**





*Operating
      Activities:* Cash
      provided by operating activities for the twelve-month period ended December
      31,
      2005 was approximately $489,000 compared to $376,000 during 2004. This increase
      was mainly due to an increase in revenues in 2005 over 2004. Cash provided
      by
      operating activities for the six month period ended June 30, 2006 was
      approximately $63,586 compared to $7,352 during the same period in 2005. The
      increase is primarily due to an increase in net earnings and a decrease in
      accounts and notes receivable. We had a gain on sale of revenue equipment of
      $86,405 during the period versus $97,723 in 2005. This was the net gain, after
      depreciation, on the sale of equipment from our rental fleet.





*Investing
      Activities:* Net
      cash
      used by investing activities during 2005 was approximately $388,000. This was
      the net result of the purchase of $924,000 of equipment and proceeds from the
      sale of equipment of $535,000. Proceeds from the sale of equipment includes
      proceeds from both the rental fleet (revenue equipment) and non-revenue
      equipment. This compares to approximately $962,000 net cash used by investing
      activities during 2004 as a result of net purchase of equipment versus proceeds
      received from the sale of equipment, $1,271,000 versus $309,000 respectively.
      Net cash used by investing activities during the six month period ended June
      30,
      2006 was approximately $465,672. This was the net result of proceeds received
      from the sale of equipment versus the purchase, $209,950 versus $675,622
      respectively. This compares to approximately $223,792 net cash used by investing
      during the same period in 2005 as a net result of proceeds received from the
      sale of equipment versus the purchase, $277,228 versus $501,020 respectively.
      We
      plan to continue selling non-utilized or under-utilized equipment and purchase
      more equipment to meet the demands of our customers. We anticipate that the
      purchase of new equipment will continue to outpace sales by approximately
      $200,000 during the remainder of 2006. We plan to continue selling non-utilized
      or under-utilized equipment and purchase more equipment to meet the demands
      of
      our customers and we anticipate that purchases will outpace sales of equipment
      in 2006.





*Financing
      Activities:* Net
      cash
      provided by financing activities was $89,000 during 2005 versus $400,000 in
      2004. Approximately $822,000 provided from proceeds of new financing and $50,000
      provided from the sale of common stock supplemented cash generated from
      operations to provide funds for the purchase of equipment. Approximately
      $783,000 was used to pay down principal of long-term senior and subordinated
      debt. Net cash provided by financing activities was $214,350 during the six
      month period ended June 30, 2006 versus $221,208 provided during the same period
      in 2005. $306,567 was provided from proceeds of new financing used to supplement
      the purchase of equipment from cash generated from operations during the
      six-month period ended June 30, 2006. $92,217 and $215,042 in the first six
      months of 2006 and 2005, respectively, was used to pay down principal of
      long-term senior and subordinated debt.





**Banking
      Arrangements:**




We
      have
      entered into a financing agreement with Bank of the West, Lee’s Summit,
      Missouri. The financing agreement provides us with a reducing revolving
      line-of-credit, an equipment purchase line-of-credit, a working capital
      line-of-credit, an automobile line-of-credit, and a fixed interest rate term
      loan.





·
            Reducing
                Revolving Line-of-Credit -- The current maturity date of our reducing
                revolving line-of-credit is March 30, 2008. The monthly reduction
                in
                availability is $26,690 with an interest rate of 6.70%. As of June
                30,
                2006, the outstanding balance on this line of credit was $2,143,975
                with
                $43,850 available funds.


·
            Equipment
                Purchase Line-of-Credit - The equipment purchase line-of-credit provides
                us with capital to purchase revenue producing equipment. The interest
                rate
                on this line of credit is prime (8.25% as of June 30, 2006). As of
                June 30, 2006, the outstanding balance on this line-of-credit was
                $123,800
                with $626,200 available. This line of credit expires March 28,
                2007.


·
            Working
                Capital Line-of-Credit - The working capital line-of-credit provides
                capital to cover short-term cash flow needs. The interest rate on
                this
                line of credit is prime (8.25% as of June 30, 2006). As of March
                30, 2006,
                the outstanding balance on this line-of-credit was $0 with $250,000
                available.


·
            Automobile
                Line-of-Credit - The automobile line-of-credit is to be used for
                purchasing corporate automobiles. The interest rate is the bank’s auto
                rate at the closing date. As of March 30, 2006, the outstanding balance
                on
                this line-of-credit was $0 with $150,000 available to be drawn
                down.


·
            Fixed
                Interest Rate Term Loan - On March 28, 2006, $584,771 was transferred
                from
                the equipment purchase line of credit to a fixed interest rate term
                loan
                with a maturity date of March 30, 2009. This loan requires 35 consecutive
                monthly payments of interest and principal of $8,904.71 each beginning
                April 30, 2006 and one principal and interest payment of $378,849.70
                to be
                made on March 30, 2009. The interest rate on the unpaid balance is
                7.15%.
                As of June 30, 2006, this loan had a balance of $568,909 and we were
                current on all payments.





The
      following table summarizes our banking lines-of-credit and term
      loans:





Credit
                Facility
            Interest
                Rate
            Amount
                Available as of June 30, 2006
            Balance
                outstanding as of June 30, 2006Reducing
                Revolving Line-of-Credit
            6.70%
            $43,850
            $2,143,975Equipment
                Purchase Line-of-Credit
            prime*
            $626,200
            $123,800Working
                Capital Line-of-Credit
            prime*
            $250,000
            $0Automobile
                Offering Line-of-Credit
            Variable
            $150,000
            $0Fixed
                Interest Rate Term Loan
            7.15%
            $0
            $568,909





*8.25%
      as
      of June 30, 2006.





The
      reducing revolving line of credit, the two lines of credit and the offering
      line
      of credit are subject to the provisions of a Security Agreement dated September
      18, 2003. Covenants of this agreement provide for the personal guarantees of
      our
      majority shareholder and his wife as well as subordination of our debt
      obligations to the majority shareholder.





The
      agreement also requires us to meet certain financial covenants.





**FINANCIAL
      COVENANTS**





Compliance
      with our financial covenants under our financing agreement is determined as
      of
      December 31 of each year. We were in compliance with all restrictive covenants
      as of December 31, 2005 and we anticipate remaining in compliance as of
      December 31, 2006. Per the terms of our business loan agreements, we must
      comply with the following three financial covenants and ratios:




1.
            Debt
                Service Coverage Ratio. Maintain a ratio of Debt Service Coverage
                in
                excess of 1.250 to 1.000. The term “Debt Service Coverage Ratio” means our
                Net Operating Income (Net Income + Depreciation + Amortization +
                Interest
                Expense) divided by our required principal payments (or Prior year
                CMLTD)
                + Interest Expense. This coverage ratio will be evaluated as of
                year-end.




The
      formula is EBITDA/CMLTD + interest expense. EBITDA (Earnings before interest,
      taxes, depreciation, and amortization) will be calculated as operating income
      (before interest and taxes) plus any depreciation or amortization expenses.
      CMLTD (current maturities of long term debt plus interest expense) will be
      computed as: the current maturities (principle payments due within the following
      12 months) of all term debt plus all interest expenses from the previous 12
      months associated with all debt (term, lines of credit, subordinated, etc.)
      plus
      any lease payments due within the following 12 months.




The
      current principle balances of any other lines of credit or subordinated debt
      will not be included in CMLTD. This is tested annually from audited financial
      statements.




2.
            Debt
                / Worth ratio. Maintain a ratio of Debt / Worth not in excess of
                4.0 to
                1.0. The ratio “Debt / Worth” means our Total Liabilities (less any
                subordinated debt) divided by our Tangible Net Worth (plus any
                subordinated debt). This leverage ratio will be evaluated as of
                year-end.




3.
            Maintain
                a positive current ratio. Current ratio to be calculated based on
                current
                assets divided by current liabilities less current maturities of
                subordinated debt less any outstanding balance on the equipment purchase
                Line of Credit.




If
      we
      fail to meet the required covenants or ratios, we would be in default under
      our
      business loan agreement and at the lender’s option, all indebtedness under the
      agreement would immediately become due and payable.





Our
      trailing twelve month debt service coverage ratio for the period ended June
      30,
      2006 is 1.60 : 1. We project this ratio to be greater than 1.33 for
      year-end.





As
      of
      June 30, 2006, our working capital ratio was 1.02.





As
      of
      June 30, 2006, our debt-to-equity ratio was 2.74.





We
      are in
      compliance with all restrictive covenants as of the most recent date required
      to
      be tested; the audited financial statements as of and for the year ended
      December 31, 2005.





All
      three
      financial covenants are tested annually using our audited year-end financial
      statements.





The
      reducing line-of-credit is collateralized by a blanket lien on our assets as
      well as the personal guarantee by the principal owner, Richard G. Honan, and
      his
      wife, Kathleen M. Honan.





We
      believe our credit facilities provide us with both short and long-term
      liquidity, the flexibility to acquire revenue equipment on an as needed basis,
      and lower our overall capital costs.





We
      expect
      to acquire at least $500,000 of additional revenue equipment during the upcoming
      12 months. As of August 1, 2006 we have agreements to purchase $97,500 of
      equipment in the third and fourth quarter of 2006.





We
      believe that our working capital, together with our cash flows from operations,
      borrowings under our working capital and equipment purchase lines-of-credit
      and
      other available funding sources will be sufficient to fund our operations and
      planned growth for at least 12 months.





**Seasonality**





Demand
      for our equipment is somewhat seasonal. This is due mainly to the seasonal
      demands of the retail industry. Retailers demand more equipment in the third
      and
      fourth quarters of each year to handle peak inventory demands of the holiday
      shopping season. Most of the equipment rented by the retailers is returned
      early
      in January of each year, resulting in decreased cash flow from operations for
      the company during the first half of every year. We expect this trend to
      continue.





**Off-Balance
      Sheet Arrangements**





The
      company does not engage, nor plans to engage, in any off-balance sheet financing
      arrangements.





**S
      Corporation Status**





We
      have
      elected to be taxed under the provisions of Subchapter S of the Internal Revenue
      Code. As such, we have not provided any income tax provision in the financial
      statements because, as an S corporation, net earnings and losses are
      passed-through to the shareholders. Provided below is a pro forma condensed
      consolidated income statement of earnings for the most recent fiscal year and
      subsequent interim period that depicts our financial results of operations
      to
      the extent that we would no longer meet the requirements of an S corporation.





**Pro
                Forma Condensed Consolidated Statements Of
                Earnings**Year
                Ended
            
            Six
                Months EndedDecember
                31,2005
            
            June
                30, 2006Revenues
            
            $4,086,560
            
            $1,973,032Cost
                of Sales
            
            1,954,803
            
            988,619Gross
                profit
            
            2,131,757
            
            984,413Selling
                , general and administrative expenses
            
            1,585,137
            
            922,873Operating
                Profit
            
            546,620
            
            61,540Other
                (Expense)
            
            (232,245)
            
            (127,372)Earnings
                (loss) before income taxes
            
            314,375
            
            (65,832)Income
                taxesCurrently
                payable
            
            0
            
            0Deferred
            
            122,195
            
            0122,195
            
            0Net
                Earnings (loss)
            
            $192,180
            
            $(65,832)BASIC
                Earnings per share
            
            $0.19
            
            $(0.06)Weighted
                average number of shares
            
            998,688
            
            1,084,167DILUTED
                Earnings per share
            
            $0.19
            
            $(0.06)Weighted
                average number of shares
            
            998,688
            
            1,084,167





We
      currently have three shareholders. We chose S Corporation status because the
      significant tax losses generated due to the equipment depreciation on a tax
      basis are passed through to the shareholders. This has allowed our shareholders
      to defer some personal taxes and invest those saving into the business. Current
      corporation rules limit the number of shareholders allowed in an S corporation
      to 100 and only allow one class of stock. In the future, these limitations
      may
      limit our ability to raise equity funds and expand our operations. We do not
      feel these limitations are a significant risk to internally growing our current
      operations, however, we may miss out on a significant and/or sizable future
      acquisition opportunity if we could not raise enough equity capital within
      the
      constraints of S corporation rules.





Should
      we
      decide to change our tax status to that of a C-Corporation, it would not have
      an
      immediate impact on our financial condition, results of operations, or cash
      flows. If we curtailed our equipment purchases, we would incur tax liabilities
      at the then-current corporate tax rate.





**Critical
      Accounting Policies and Estimates**





Our
      significant accounting policies are disclosed in Note B to our audited financial
      statements included in the Company’s last annual report on Form 10-KSB as filed
      with the SEC. The following discussion addresses our most critical accounting
      policies, some of which require significant judgment.





The
      preparation of the financial statements in conformity with generally accepted
      accounting principles requires our management to make estimates and assumptions
      that affect the amounts reported in the financial statements and the notes
      to
      those statements. These estimates and assumptions are based upon our evaluation
      of historical results and anticipated future events. Actual results could differ
      from those estimates. For purposes of this section, critical accounting policies
      are those that are, in our management’s view, most important to our financial
      condition and results of operations and that require significant judgments
      and
      estimates. Our management believes our most critical accounting policies relate
      to the following:





We
      recognize revenue from the sale of equipment upon delivery. Lease and lease
      ancillary revenues and related expenses generated under portable storage units
      and trailers are recognized monthly which approximates a straight-line basis.
      The company recognizes revenue from delivery, pick-up and other rental-related
      activities when the service is provided.





We
      depreciate our rental equipment on a 10 or 15-year term with 20% residual
      values. Trailers are depreciated over a 10-year period and containers are
      depreciated over a 15-year period using the straight-line method. Our management
      periodically evaluates our depreciation policy against several factors including
      appraisals from independent parties, profit margins from the sale of depreciated
      assets, and larger competitor’s depreciation policies.





**ITEM
      3.** **CONTROLS AND PROCEDURES**





**EVALUATION
      OF DISCLOSURE CONTROLS AND PROCEDURES**





As
      of the
      end of the period covered by this report, the Company carried out an evaluation
      of the effectiveness of the design and operation of its disclosure controls
      and
      procedures pursuant to Exchange Act Rule 13a-14. This evaluation was done under
      the supervision and with the participation of the Company's Principal Executive
      Officer and Principal Financial Officer. Based upon that evaluation, the
      Principal Executive Officer and Principal Financial Officer concluded that
      the
      Company's accounting controls and procedures are effective in gathering,
      analyzing and disclosing information needed to satisfy the Company's disclosure
      obligations under the Exchange Act.





**CHANGES
      IN INTERNAL CONTROLS**





There
      were no significant changes in the Company's internal controls or in other
      factors that could significantly affect those controls since the most recent
      evaluation of such controls.


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**PART
      II- OTHER INFORMATION**





**ITEM
      1 - LEGAL PROCEEDINGS**





None





**ITEM
      2-**  **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**





The
      company did not sell any unregistered equity securities during the period
      covered by the report.





The
      Company has filed a Registration Statement on Form SB-2 with the Securities
      and
      Exchange Commission (SEC), whereby the Company registered callable subordinated
      notes at $1,000 par for up to $5,000,000 for sale to the public. The net
      proceeds of these notes (approximately $4,700,000 assuming all notes are sold
      and after offering expenses) are intended to fund the purchases of revenue
      equipment. The Commission declared the registration statement effective on
      May
      13, 2005. The company filed a post-effective amendment to the registration
      June
      2, 2006. As of August 14, 2006, the SEC has not declared this post-effective
      amendment effective. The offering of notes is not underwritten and is being
      sold
      on a best-efforts basis. From May 13, 2005 to June 30, 2006, we sold seven
      notes
      in the aggregate principal amount of $182,000. For the quarter ended June 30,
      2006 we sold one note in the aggregate principal amount of $96,000. Costs
      incurred with the preparation of the initial registration statement were
      approximately $100,000. Our expenses incurred in connection with the issuance
      and distribution of the notes from the date our registration statement became
      effective, May 13, 2005 through June 30, 2006 were approximately
      $187,000.





**ITEM
      3** **- DEFAULTS UPON SENIOR SECURITIES**


None





**ITEM
      4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS**


None





**ITEM
      5- OTHER INFORMATION**


None





**ITEM
      6 - EXHIBITS AND REPORTS ON FORM 8-K**





**(a)**
            **Index
                to Exhibits**





EXHIBIT
                NUMBER
            DESCRIPTION31.1
            Certification
                of Chief Executive Officer pursuant to rule 15a-14(a)31.2
            Certification
                of Principal Financial and Accounting Officer pursuant to
                Rule 15d-14(a).32.1
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section
                1350.32.2
            Certification
                of Principal Financial and Accounting Officer pursuant to 18 U.S.C.
                Section 1350.


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





**(b)
      Reports on Form 8-K**





None





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**SIGNATURES**





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


AT&S
                HOLDINGS, INC.August
                16, 2006
            
            //s//
                Richard G. HonanRichard
                G. Honan, Chief Executive Officer and Chairman of the Board of
                Directors
              (PRINCIPAL
                EXECUTIVE OFFICER)August
                16, 2006
            
            //s//
                Richard G. Honan, IIRichard
                G. Honan II, Chief Financial Officer, Director and President
              (PRINCIPAL
                ACCOUNTING OFFICER)