**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, 2007[
                  ]
              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
 08/14/2007 Common
        stock - $ .001 par value    1,084,167
 
 Transitional
        Small Business Disclosure Format (Check one): Yes [_] No [ X ]
 
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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, 2006
                  (audited) and June 30, 2007 (unaudited)
              
              3Unaudited
                  Condensed Consolidated Statements of Operations for
                  the three and six months ended June 30, 2007 and 2006
              
              5Unaudited
                  Condensed Consolidated Statements of Stockholders’
                  Equity as of June 30, 2007
              
              6Unaudited
                  Condensed Consolidated Statements of Cash Flows for
                  the six months ended June 30, 2007 and 2006
              
              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, 2006
              
              June
                  30, 2007(Audited)
              
              (Unaudited)CURRENT
                  ASSETSCash
              
              $
              158,876
              
              $
              48,739Accounts
                  and notes receivableCustomers
              
              
              480,258
              
              
              309,615Other
              
              
              4,338
              
              
              4,116484,596
              
              
              313,751Allowance
                  for doubtful accounts
              
              
              80,000
              
              
              20,000404,596
              
              
              293,731Inventory
              
              
              17,334
              
              
              32,123Prepaid
                  Advertising
              
              
              22,286
              
              
              10,716Other
                  Prepaid Expenses
              
              
              351,399
              
              
              354,830Total
                  Current Assets
              
              
              954,491
              
              
              740,139PROPERTY
                  AND EQUIPMENT - AT COSTRevenue
                  equipment
              
              
              6,354,304
              
              
              6,324,888Delivery
                  equipment
              
              
              278,377
              
              
              441,377Vehicles
              
              
              121,980
              
              
              121,980Information
                  systems and equipment
              
              
              210,492
              
              
              242,456Office
                  equipment
              
              
              47,566
              
              
              51,835Leasehold
                  improvements
              
              
              67,000
              
              
              67,0007,079,719
              
              
              7,249,536Accumulated
                  depreciation
              
              
              1,966,568
              
              
              2,141,8785,113,151
              
              
              5,107,658OTHER
                  ASSETSDeposits
              
              
              10,110
              
              
              10,110Deferred
                  loan fees
              
              
              50,000
              
              
              50,000Accumulated
                  amortization
              
              
              47,227
              
              
              50,0002,773
              
              
              012,883
              
              
              10,110Total
                  Assets
              
              $
              6,080,525
              
              $
              5,857,906
 
  The
        accompanying notes are an integral part of these statements.
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 3
  
 **LIABILITIES
        AND STOCKHOLDERS' EQUITY:**
 December
                  31, 2006
              
              June
                  30, 2007CURRENT
                  LIABILITIES
              
              (Audited)
              
              (Unaudited)Current
                  maturities of long-term debt - related party
              
              $
              -
              
              $
              -Current
                  maturities of long-term debt - other
              
              
              535,889
              
              
              590,878Line
                  of credit
              
              
              429,988
              
              
              310,368Outstanding
                  checks in excess of cash balance
              
              
              0
              
              
              29,777Accounts
                  payableTrade
              
              
              225,306
              
              
              230,216Sales
                  tax payable
              
              
              12,995
              
              
              9,389238,301
              
              
              239,605Accrued
                  liabilitiesSalaries
              
              
              15,604
              
              
              10,707Payroll
                  taxes and other
              
              
              1,194
              
              
              819Interest
                  payable
              
              
              27,628
              
              
              25,730Security
                  deposits
              
              
              500
              
              
              500Property
                  taxes
              
              
              -
              
              
              9,00044,926
              
              
              46,756Total
                  Current Liabilities
              
              
              1,249,104
              
              
              1,217,384LONG-TERM
                  DEBT, less current maturitiesRelated
                  party
              
              
              180,292
              
              
              107,964Subordinated
                  debentures - related party
              
              
              45,000
              
              
              45,000Other
              
              
              3,107,601
              
              
              3,011,309Subordinated
                  debentures - other
              
              
              264,000
              
              
              318,0004,845,997
              
              
              4,699,657COMMITMENTSSTOCKHOLDERS'
                  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
              
              
              151,754
              
              
              75,4761,234,528
              
              
              1,158,250Total
                  Liabilities and Stockholders’ Equity
              
              $
              6,080,525
              
              $
              5,857,907
 
 
 
 
 
 The
        accompanying notes are an integral part of these statements.
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 4
  **AT&SHOLDINGS,
        INC** **.**
 **UNAUDITED
        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**
 
 **THREE
                  MONTHS ENDED**
              **SIX
                  MONTHS ENDED****June
                  30, 2006**
              
              
              **June
                  30, 2007**
              
              
              **June
                  30, 2006**
              
              
              **June
                  30, 2007**REVENUE:Equipment
                  sales
              
              $
              126,183
              
              $
              431,841
              
              $
              282,194
              
              $
              529,141Equipment
                  rental
              
              
              560,659
              
              
              576,185
              
              
              1,426,063
              
              
              1,422,506Drayage
              
              
              82,658
              
              
              121,826
              
              
              178,237
              
              
              199,175Maintenance
              
              
              10,405
              
              
              17,885
              
              
              63,389
              
              
              56,161Other
              
              
              11,990
              
              
              15,238
              
              
              23,149
              
              
              29,908Total
                  revenue
              
              
              791,895
              
              
              1,162,975
              
              
              1,973,032
              
              
              2,236,891COST
                  OF SALES:Equipment
              
              
              71,491
              
              
              325,159
              
              
              162,370
              
              
              384,293Equipment
                  rental
              
              
              154,639
              
              
              111,575
              
              
              465,503
              
              
              318,307Depreciation
              
              
              93,969
              
              
              125,772
              
              
              180,232
              
              
              249,125Drayage
              
              
              73,085
              
              
              81,273
              
              
              158,151
              
              
              164,932Maintenance
              
              
              14,210
              
              
              28,832
              
              
              22,363
              
              
              54,843Total
                  cost of sales
              
              
              407,394
              
              
              672,611
              
              
              988,619
              
              
              1,171,500Gross
                  profit
              
              
              384,501
              
              
              490,364
              
              
              984,413
              
              
              1,065,391COSTS
                  AND EXPENSES:Selling,
                  general and administrative expenses
              
              
              464,372
              
              
              467,952
              
              
              895,679
              
              
              947,869Depreciation
                  expense
              
              
              13,578
              
              
              17,115
              
              
              27,194
              
              
              33,249477,950
              
              
              485,067
              
              
              922,873
              
              
              981,118Operating
                  profit (loss)
              
              
              (93,449)
              
              
              5,297
              
              
              61,540
              
              
              84,273OTHER
                  INCOME (EXPENSE):Interest
                  Income
              
              
              0
              
              
              0
              
              
              0
              
              
              0Interest
                  expense - related party
              
              
              (11,278
              )
              
              (5,983
              )
              
              (23,199
              )
              
              (13,356
              )Interest
                  expense - other
              
              
              (53,976
              )
              
              (78,282
              )
              
              (103,144
              )
              
              (155,060
              )Gain
                  (Loss) on sale of non-revenue equipment
              
              
              0
              
              
              0
              
              
              0
              
              
              0Other
                  income (expense)
              
              
              (2,541
              )
              
              3,752
              
              
              (1,029)
              
              
              7,865(67,795
              )
              
              (80,513
              )
              
              (127,372
              )
              
              (160,551
              )Net
                  Earnings (Loss)
              
              $
              (161,244
              )
              $
              (75,216)
              
              
              ($65,832
              )
              
              (76,278
              )BASIC
                  net earnings (loss) per share
              
              $
              (0.15
              )
              $
              (0.07)
              
              
              ($0.06
              )
              
              ($0.07
              )Weighted
                  average shares outstanding
              
              
              1,084,167
              
              
              1,084,167
              
              
              1,084,167
              
              
              1,084,167DILUTED
                  net earnings (loss) per share
              
              $
              (0.15
              )
              $
              (0.07)
              
              $
              (0.06
              )
              $
              ($0.07
              )Weighted
                  average shares outstanding
              
              
              1,084,167
              
              
              1,084,167
              
              
              984,167
              
              
              1,084,167
  The
        accompanying notes are an integral part of these statements.
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 5
 **AT&SHOLDINGS,
        INC.**
 
 **UNAUDITED
        CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY**
 **June
        30, 2007**
  
 Common
              
              StockShares
              
              Amount
              
              AdditionalPaid
                In
                  Capital
              
              Retained
                Earnings
              
              TotalBalance
                  at January 1, 2007
              
              
              1,084,167
              
              $
              1,084
              
              $
              1,081,690
              
              $
              151,754
              
              $
              1,234,528Net
                  earnings for the period (unaudited)
              
              
              -
              
              
              -
              
              
              -
              
              $
              (75,216)
              
              $
              (75,216)Balance
                  at June 30, 2007 (unaudited)
              
              
              1,084,167
              
              $
              1,084
              
              $
              1,081,690
              
              $
              75,476
              
              $
              1,158,250
 
 
 
 
  The
        accompanying notes are an integral part of these statements.
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 6
  **AT&S
        HOLDINGS, INC.**
 **UNAUDITED
        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **SIX
        MONTHS ENDED JUNE 30, 2006 AND 2007**
 **SIX
                  MONTHS ENDED****June
                  30, 2006**
              
              **June
                  30, 2007**CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  earnings (loss)
              
              
              $(65,832)
              
              
              $(76,278)Adjustments
                  to reconcile net earnings (loss) to cash provided (used) by operating
                  activities:Gain
                  on sale of equipment
              
              
              (86,405)
              
              
              (111,873)Depreciation
              
              
              207,426
              
              
              282,374Provision
                  for losses on accounts receivable
              
              
              25,841
              
              
              (3,025)Change
                  in operating assets and liabilities:Decrease
                  in accounts and notes receivable
              
              
              269,687
              
              
              113,890(Increase)
                  decrease in prepaid expenses
              
              
              (128,889)
              
              
              (6,651)Decrease
                  in deferred loan fees (net)
              
              
              5,820
              
              
              2,773Increase
                  (decrease) in accounts payable and
                accrued
                  liabilities
              
              
              (164,062)
              
              
              32,910Net
                  cash and cash equivalents provided by operating activities
              
              
              63,586
              
              
              234,120CASH
                  FLOWS FROM INVESTING ACTIVITIES:Proceeds
                  from sale of equipment
              
              
              209,950
              
              
              440,674Purchase
                  of property and equipment
              
              
              (675,622)
              
              
              (605,681)Net
                  cash and cash equivalents provided (used) by investing
                  activities
              
              
              (465,672)
              
              
              (165,007)CASH
                  FLOWS FROM FINANCING ACTIVITIES:Proceeds
                  from new financing
              
              
              306,567
              
              
              1,599,846Principal
                  payments on long and short-term debt
              
              
              (92,217)
              
              
              (1,779,097)Net
                  cash and cash equivalents provided (used) by financing
                  activities
              
              
              214,350
              
              
              (179,251)(DECREASE)
                  IN CASH
              
              
              (187,736)
              
              
              (110,138)Cash
                  - beginning of period
              
              
              244,908
              
              
              158,876Cash
                  - end of period
              
              $
              57,172
              
              $
              48,739Interest
                  paid during the period:Related
                  party
              
              $
              24,067
              
              $
              13,823Other
              
              
              96,807
              
              $
              156,192Total
                  interest
              
              $
              120,874
              
              $
              170,015
 
 
 
 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, 2007, and for the three and six months ended
        June
        30, 2007 and 2006. 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 periods ended June 30,
        2007,
        are not necessarily indicative of results that may be expected for the fiscal
        year ending December 31, 2007.
 
 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.
 
 BANKING
        ARRANGEMENTS
 
 On
        April
        4, 2007, we changed the terms of our lines of credit and signed an additional
        term loan with our current bank. Our operating and equipment purchase lines
        of
        credit were extended to March 30, 2008. The balance of the equipment purchase
        line of credit, $440,053, was transferred to a new term loan. The new term
        loan
        is a fixed
        interest rate loan in the amount of $440,053 dated April 4, 2007 with a maturity
        date of April 4, 2010. This loan requires 35 consecutive monthly payments
        of
        interest and principal of $6,642.66 each, beginning May 4, 2007 with interest
        on
        the unpaid balances at an interest rate of 6.9%, and one principal and interest
        payment of $284,013.40 on April 4, 2010, with interest on the unpaid balances
        at
        an interest rate of 6.9%.
 
 SUBORDINATED
        NOTES
 
 We
        filed
        a Registration Statement on Form SB-2 with the Securities and Exchange
        Commission, whereby we registered 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
        offering of notes is not underwritten and is being sold on a best-efforts
        basis.
        From May 13, 2005 to June 30, 2007, we sold 15 notes in the aggregate principal
        amount of $363,000. For the quarter ended June 30, 2007 we sold four notes
        in
        the principal amount of $80,000. We also partially redeemed one note due
        to
        financial need on the part of the investor. This redemption totaled $36,000
        including early redemption penalties. 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,
        2007 were approximately $288,000.
 
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 8
  
 **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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 **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 in 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 approximately 2,300 portable storage and transportation units through
        our subsidiary American Trailer. We currently have two branches and operate
        in
        Missouri, Kansas, and Illinois. We primarily concentrate on the Kansas City
        and
        St. Louis metropolitan regions. 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 700 customers in 77
        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 26% of our revenue in 2006, 29%
        of our revenue in 2005 and 6% of our revenue 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 2007 due to the continued large number of units rented to support disaster
        preparedness and the potential for damaging hurricanes in 2007. 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 13.5% of our revenue in
        2006,
        10% 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. 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 Wal-Mart is continually working to reduce
        inventory levels. 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 do
        not
        expect a significant impact to our financial condition in the next 12 months
        resulting from a decrease in business from our largest customers. We expect
        SST
        to continue to rent equipment on a seasonal, on-going basis for disaster
        preparedness; and disaster relief efforts, should conditions warrant such.
        We do
        not expect Wal-Mart’s demand for equipment to decrease in a significantly short
        period of time. We also anticipate the demand for equipment in other industries
        to cyclically increase from year to year, as has occurred in the past, and
        we
        anticipate that these increases will be substantial enough to replace revenues
        from industries that demand has declined in a given year.
 
  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 where
        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 spokes-persons 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, 2007 versus June 30, 2006**
 
 Our
        revenues totaled $1,162,975 for the three months ended June 30, 2007. The
        increase of $371,080 versus the same period in 2006 represents a 46.9% increase.
        Approximately 62.9%, of total revenues were derived from equipment rental
        and
        related service revenues (delivery, pick-up, maintenance revenues, etc.).
 
 Approximately
        37.1%, or $431,841, of total revenues was derived from the sale of equipment,
        compared to $126,183, or 15.9% of total revenues during the same period in
        2006. Revenues from equipment sales increased during the period primarily
        due to a large sale of used trailers to a single customer and
        general increase 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 $576,185 during the three month period ending
        June
        30, 2007 versus $560,669 during the same period in 2006. The increase in
        rental
        revenue of $15,526, or 2.77%, was a result of a increases in demand from
        the
        retail, wholesale distribution and sub-contractor industries partially offset
        by
        a decrease in demand from the trucking industry. Drayage (trucking) revenue
        increased $39,168, or 47.4%, to $121,826 during the three-month period versus
        the previous year. This increase is due to a increase in the numbers of pick-ups
        and deliveries due to increased rental turnover. We anticipate that drayage
        rates will hold steady. Maintenance revenues, charges to customers for customer
        related equipment damages the cost of which are included in maintenance
        expenses, increased $7,480 or 71.9% during the period due to the general
        increase in rental activity.
 
 Cost
        of
        goods sold for the three months ended June 30, 2007 totaled $672,611, an
        increase of 65.1%, as compared to the same period in 2006. Cost of goods
        sold
        represented 57.8% of total revenues for the period versus 51.5% during the
        same
        period 2006. The cost of equipment sold increased $253,668 or 354.8% due
        to the
        increase in the number of units sold and an increase in the cost of the units
        sold. Gross margins on equipment sales, as a result, decreased from 43.3%
        to
        24.8% as we were not able to marginally increase our prices commensurate
        with
        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 costs to maintain the rental fleet
        not
        related to customer damages, rent paid to third parties for equipment re-rented
        to our customers, and licensing and titling fees, decreased by $43,064, or
        27.9%, for the period. The decrease was primarily due to the decrease 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 2006. We expect the equipment rental expense to
        hold
        steady or decline over the next six months as we have increased the number
        of
        trailers available in our owned rental fleet. We will, however, continue
        to
        re-rent over-the-road equipment for customers when profitable opportunities
        present themselves. Maintenance expenses increased $14,622 or 102.9% during
        the
        period to $28,832. This increase is primarily the result of an increase in
        the
        number of units returned by customers with damages requiring additional
        maintenance to ensure rental worthiness for the new customers. These costs
        are
        recouped from customers as shown in the maintenance revenue line
        item.
 
 Depreciation
        expense increased $31,803, or 33.8%, 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 $8,188, or 11.2% during the period due to an increase in fuel cost.
        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 $105,863, or 27.5%, during the three months ended June
        30,
        2007 versus 2006, representing 42.2% of total revenues and totaling $490,364.
        The increase in gross profits is mainly due to the increase in revenue partially
        offset by a larger increase in cost of goods sold. 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 above 50% for the 12 months
        of
        2007, as the third and fourth quarters typically have higher utilization
        and
        profitability.
 
 Operating
        expenses increased $7,117, or 1.5%, during the three month period ended June
        30,
        2007 versus the same period in 2006. Operating expenses represented 41.7%
        of
        total revenues versus 60.4% for the same period in 2006. The increase is
        primarily due to increases in salaries, employee benefits including health
        insurance, and professional fees. We had 14% more employees in 2007 compared
        to
        the same period in 2006. Marketing expenses decreased $19,213, or 43.5% due
        to a
        decrease in direct mail advertising. Bad debt expense decreased $26,321,
        or
        121.9% due to our improved accounts receivable collections and a decrease
        in our
        allowance for doubtful accounts to $20,000 from $80,000. We expect operating
        expenses to be under 45% of total revenues for 2007, as the third and fourth
        quarters have historically seen increases in demand for rental equipment,
        without marginally increasing operating expenses.
 
 Overall,
        interest expense increased $19,011 or 29.1%, during the three months ended
        June
        30, 2007 versus the same period in 2006 to $84,265. Interest expense constituted
        7.24% of total revenues versus 8.24% during the same period in 2006. This
        increase is primarily due to an increase in the amount of our bank debt for
        purchases of new equipment and to an increase in subordinated debt. “Interest
        Expense - Other” (primarily interest accrued to our bank) increased $24,306, or
        45.0% due primarily to increased balances owed to our bank and increased
        interest rates on our floating lines of credit, and due, to a much lesser
        extent, issuance of subordinated debt. 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 $75,216 for the three-month period ended June 30, 2007 versus
        a net
        loss of $161,244 for the same period in 2006. This net loss represents 6.5%
        of
        total revenues for the period versus a net loss representing 20.4% of total
        revenues during the same period in 2006. The decrease in net loss is primarily
        attributable to the increase in equipment sales revenues offset by an increase
        in operating and other expenses as described above. We anticipate a positive
        net
        income for 2007 as gross profits historically increase each quarter and
        operating expenses should not marginally increase.
 
 **Six
        months ended June 30, 2007 versus June 30, 2006**
 
 Our
        revenues totaled $2,236,891 for the six months ended June 30, 2007. The increase
        of $263,859 versus the same period in 2006 represents a 13.4% increase.
        Approximately 76.3%, of total revenues were derived from equipment rental
        and
        related service revenues (delivery, pick-up, maintenance revenues, etc.).
 
 Approximately
        23.7%, or $529,141, of total revenues was derived from the sale of equipment,
        compared to $282,194, or 14.3% of total revenues during the same period in
        2006. Revenues from equipment sales increased during the period primarily
        due to a large sale of used trailers to a single customer and
        general increase 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 $1,422,506 during the six month period ending
        June
        30, 2007 versus $1,426,063 during the same period in 2006. The decrease in
        rental revenue of $3,557, or 0.3%, was a result of a decrease in demand for
        our
        equipment from the trucking industry, offsetting increases in demand from
        the
        retail, wholesale distribution and sub-contractor industries. Drayage (trucking)
        revenue increased $20,938, or 11.8%, to $199,175 during the six-month period
        versus the previous year. This increase is due to an increase in the number
        out-of-town deliveries offset by a slight decrease in the total number of
        drayage dispatches. We anticipate that drayage rates will hold steady.
        Maintenance revenues, charges to customers for customer related equipment
        damages the cost of which are included in maintenance expenses, decreased
        $7,228
        or 11.4% during the period due to the general decrease in rentals in the
        first
        quarter.
 
 Cost
        of
        goods sold for the six months ended June 30, 2007 totaled $1,171,500, an
        increase of 18.5%, as compared to the same period in 2006. Cost of goods
        sold
        represented 52.4% of total revenues for the period versus 50.1% during the
        same
        period 2006. The cost of equipment sold increased $221,923 or 136.7% due
        to the
        increase in the number of units sold and an increase in the cost of the units
        sold. Gross margins on equipment sales, as a result, decreased from 42.5%
        to
        27.4% as we were not able to marginally increase our prices commensurate
        with
        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 costs to maintain the rental fleet
        not
        related to customer damages, rent paid to third parties for equipment re-rented
        to our customers, and licensing and titling fees, decreased by $147,196,
        or
        31.6%, for the period. The decrease was primarily due to the decrease 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 2006. We expect the equipment rental expense to
        hold
        steady or decline over the next six months as we have increased the number
        of
        trailers available in our owned rental fleet. We will, however, continue
        to
        re-rent over-the-road equipment for customers when profitable opportunities
        present themselves. Maintenance expenses increased $32,480 or 145.2% during
        the
        period to $54,843. This increase is primarily the result of an increase in
        the
        number of units returned by customers with damages requiring additional
        maintenance to ensure rental worthiness for the new customers. These costs
        are
        recouped from customers as shown in the maintenance revenue line
        item.
 
 Depreciation
        expense increased $68,893, or 38.2%, 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 $6,781, or 4.3% during the period due to an increase in fuel cost.
        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 $80,978, or 8.2%, during the six months ended June 30,
        2007
        versus 2006, representing 47.6% of total revenues and totaling $1,065,391.
        The
        increase in gross profits is mainly due to the increase in revenue from a
        variety of customers partially offset by a larger increase in cost of goods
        sold. 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 above 50% for the 12 months of 2007, as the third and fourth
        quarters typically have higher utilization and profitability.
 
 Operating
        expenses increased $58,245, or 6.3%, during the six month period ended June
        30,
        2007 versus the same period in 2006. Operating expenses represented 43.9%
        of
        total revenues versus 46.8% for the same period in 2006. The increase is
        primarily due to increases in salaries, employee benefits including health
        insurance, and professional fees. We had 14% more employees in 2007 compared
        to
        the same period in 2006. Marketing expenses decreased $32,809, or 37.4% due
        to a
        decrease in direct mail advertising. Bad debt expense decreased $28,866,
        or
        111.7% due to our improved accounts receivable collections and a decrease
        in our
        allowance for doubtful accounts to $20,000 from $80,000.We expect operating
        expenses to be under 45% of total revenues for 2007, as the third and fourth
        quarters have historically seen increases in demand for rental equipment,
        without marginally increasing operating expenses.
 
 Overall,
        interest expense increased $42,073 or 33.3%, during the six months ended
        June
        30, 2007 versus the same period in 2006 to $168,416. Interest expense
        constituted 7.5% of total revenues versus 6.4% during the same period in
        2006.
        This increase is primarily due to an increase in the amount of our bank debt
        for
        purchases of new equipment and to an increase in subordinated debt. “Interest
        Expense - Other” (primarily interest accrued to our bank) increased $51,916, or
        50.3% due primarily to increased balances owed to our bank and increased
        interest rates on our floating lines of credit, and due, to a much lesser
        extent, issuance of subordinated debt. 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 $76,278 for the six-month period ended June 30, 2007 versus a
        net
        loss of $65,832 for the same period in 2006. This net loss represents 3.4%
        of
        total revenues for the period versus a net loss representing 3.3% of total
        revenues during the same period in 2006. The increase in net loss is primarily
        attributable to the increase in equipment sales revenues offset by an increase
        in operating and other expenses as described above. We anticipate a positive
        net
        income for 2007 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 and additional staff have primarily been funded through the
        issuance of subordinated debt to our principal owner and equipment financing
        on
        a collateralized basis.
 
 A
        note
        payable to the majority shareholder had a balance of $180,292 at December
        31,
        2006 and $107,964 at June 30, 2007, and is subordinate to our bank loans.
        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, 2006 by changing the maturity date to April 15, 2008. 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.
 
 *Operating
        Activities:* Cash
        provided by operating activities for the six-month period ended June 30,
        2007
        was $234,120 compared to $63,586 during 2006. This increase was mainly due
        to an
        increase in depreciation and a decrease in accounts receivable partially
        offset
        by an increase in net loss.
 
 *Investing
        Activities:* Net
        cash
        used by investing activities during the six-month period ended June 30, 2007
        was
        $165,007. This was the result of net purchase of equipment versus proceeds
        received from the sale of equipment, $605,681 versus $440,674 respectively.
        This
        compares to approximately $465,672 net cash used by investing activities
        during
        2006 as a result of net purchase of equipment versus proceeds received from
        the
        sale of equipment, $675,622 versus $209,950 respectively. Proceeds from the
        sale
        of equipment includes proceeds from both the rental fleet (revenue equipment)
        and non-revenue equipment. 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
        2007.
 
 *Financing
        Activities:* Net
        cash
        used by financing activities was $179,251 during the six-month period ended
        June
        30, 2007 versus $214,350 net cash provided in 2006. Approximately $1,599,846
        provided from proceeds of new financing supplemented cash generated from
        operations to provide funds for the purchase of equipment during the six-months
        ended June 30, 2007. Approximately $1,779,097 and $92,217 in the six-months
        ended June 30, 2007 and 2006, 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, four fixed interest
        rate
        term notes, and a working capital line-of-credit.
 
 ·
            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,
                2007, the outstanding balance on this line of credit was $1,544,316
                with
                $323,230 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, 2007). As of
                June
                30, 2007, the outstanding balance on this line-of-credit was $310,368
                with
                $439,632 available. This line of credit expires March 28,
                2008. ·
            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, 2007). As of June 30,
                2007,
                the outstanding balance on this line-of-credit was $0 with $250,000
                available. ·
            Fixed
                Interest Rate Term Note - The fixed interest rate term note was used
                to
                finance the acquisition of Ace Trailer and Storage on October 26,
                2006.
                The interest rate on this note is 7.3%. This note requires monthly
                payments of principal and interest of $16,377.60 and the outstanding
                principal is due October 31, 2013. As of June 30, 2007, the outstanding
                balance on this note was $1,000,990. ·
            Fixed
                Interest Rate Term Note - The fixed interest rate term note was used
                to
                finance equipment purchases from April 2005 through March 2006. The
                interest rate on this note is 7.15%. The note requires monthly payments
                of
                principal and interest of $8,904.71 and the outstanding principal
                is due
                March 30, 2009. As of June 30, 2007, this note had a balance of $506,849. ·
            Fixed
                Interest Rate Term Note - The fixed interest rate term note was used
                to
                finance equipment purchases in January 2007. The interest rate on
                this
                note is 7.3%. The note requires monthly payments of principal and
                interest
                of $1,647.48 and the outstanding principal is due February 15, 2014.
                As of
                June 30, 2007, this note had a balance of
                $105,231. ·
            Fixed
                Interest Rate Term Note - On April 4, 2007 the balance of $440,053
                on the
                equipment purchase line of credit was transferred to a term loan
                bearing
                an interest rate of 6.9% with a maturity date of April 4, 2010. This
                loan
                requires monthly payments of interest and principal of $6,642.66.
                As of
                June 30, 2007, this note had a balance of
                $431,913. 
 The
        following table summarizes our banking lines-of-credit and term
        loans:
 
 Credit
                  Facility
              Interest
                  Rate
              Amount
                  Available as of June 30, 2007
              Balance
                  outstanding as of June 30, 2007Reducing
                  Revolving Line-of-Credit
              6.70%
              $323,230
              $1,544,316Equipment
                  Purchase Line-of-Credit
              prime*
              $310,368
              $439,632Working
                  Capital Line-of-Credit
              prime*
              $250,000
              $0Fixed
                  Interest Rate Term Note
              7.30%
              $0
              $1,000,990Fixed
                  Interest Rate Term Note
              7.15%
              $0
              $506,849Fixed
                  Interest Rate Term Note
              7.3%
              $0
              $105,231Fixed
                  Interest Rate Term Note
              6.9%
              $0
              $431,913
 
 *8.25%
        as
        of June 30, 2007.
 
 All
        of
        the notes and lines 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 two of three restrictive
        covenants as of December 31, 2006. We anticipate being in compliance as of
        all
        three covenants as of December 31, 2007. 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.
  Our
        trailing twelve month debt service coverage ratio for the period ended June
        30,
        2007 is 1.35 : 1.
 
 As
        of
        June 30, 2007, our working capital ratio was .82.
 
 As
        of
        June 30, 2007, our debt-to-equity ratio was 2.60.
 
 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, 2006.
 
 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 $400,000 of additional revenue equipment during 2007.
        As of
        August 6, 2007 we have agreements to purchase $325,000 of delivery and rental
        equipment in the third and fourth quarters of 2007.
 
 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**YearEnded
              
              Six
                  Months EndedDecember
                  31,2006
              
              June
                  30, 2007Revenues
              
              $4,249,195
              
              $2,236,891Cost
                  of Sales
              
              2,003,551
              
              1,171,500Gross
                  profit
              
              2,245,644
              
              1,065,391Selling
                  , general and administrative expenses
              
              1,866,925
              
              981,118Operating
                  Profit
              
              378,719
              
              84,273Other
                  (Expense)
              
              (261,322)
              
              (160,551)Earnings
                  before income taxes
              
              117,397
              
              (76,278)Income
                  taxesCurrently
                  payable
              
              0
              
              0Deferred
              
              45,786
              
              045,786
              
              0Net
                  Earnings
              
              $76,409
              
              $(76,278)BASIC
                  Earnings per share
              
              $0.07
              
              $(0.07)Weighted
                  average number of shares
              
              1,084,167
              
              1,084,167DILUTED
                  Earnings per share
              
              $0.07
              
              $(0.07)Weighted
                  average number of shares
              
              1,084,167
              
              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
        S 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**
 
 January
        4, 2007, American Trailer received service of process with respect to a civil
        action brought against it by Jeffery N. Orr, a former officer, director and
        employee of American Trailer. Orr currently owns more than 5% of our outstanding
        common stock.
 
 In
        his
        civil proceeding, which was brought in the Circuit Court of Jackson County,
        Missouri, Orr contends American Trailer breached its written employment contract
        with him as a result of nonpayment of compensation and benefits. Mr. Orr
        seeks
        damages in the amount of $200,000 for such alleged breach.
 
 In
        the
        same action, Orr has also brought civil claims against our current officers
        and
        directors, Richard G. Honan and Richard G. Honan, II. More specifically,
        Orr
        contends that Richard G. Honan and Richard G. Honan, II, as directors and
        shareholders of American Trailer, breached fiduciary duties they owed to
        him.
        According to Orr’s complaint, these individuals failed to discharge their
        fiduciary obligations by causing American Trailer to grant warrants and issue
        promissory notes to Richard G. Honan without adequate consideration and by
        diluting Mr. Orr’s ownership in the Company. Orr also asserts that these
        individuals breached their fiduciary obligations by dissipating corporate
        assets
        and by removing Mr. Orr from the American Trailer board of directors. Orr
        seeks
        damages in excess of $75,000 for such alleged breaches. Mr. Orr further contends
        that Richard G. Honan and Richard G. Honan, II made various fraudulent and/or
        negligent statements to Mr. Orr about future compensation and benefits that
        Orr
        would be entitled to receive from American Trailer and the amount of loans
        that
        Richard G. Honan had made to American Trailer. Orr contends these statements
        were made for the purpose of inducing him to consent to certain corporate
        actions and enticing him to make capital investments and to forego salary
        and
        other benefits. With respect to these claims, Mr. Orr seeks compensatory
        and
        punitive damages from these individuals.
 
 In
        addition to these monetary claims, Orr seeks an order from the court requiring
        Richard G. Honan, Richard G. Honan, II and American Trailer to provide a
        corporate accounting as required by Missouri law. Moreover, Mr. Orr seeks
        a
        court order that American Trailer be judicially dissolved and liquidated
        and
        that a receiver be appointed to take possession of American Trailer’s
        assets.
 
 February
        15, 2007, American Trailer filed a motion to dismiss three of the four counts
        in
        which American Trailer is a defendant in the case of Jeffrey N. Orr vs. American
        Trailer & Storage, Inc. in the Circuit Court of Jackson County, Missouri, on
        the grounds that each of the causes of action fail to state a claim for relief
        against them that may be granted as a matter of law.
 
 In
        the
        same motion, our current officers and directors, Richard G. Honan, and Richard
        G. Honan, II also requested dismissal of all of the counts brought against
        them
        in the same lawsuit also on the grounds that each of the causes of action
        fail
        to state a claim for relief against them that may be granted as a matter
        of
        law.
 
 We
        believe that all of Orr’s claims are completely without merit both factually and
        legally. We will continue to vigorously defend against the claims. Richard
        G.
        Honan and Richard G. Honan, II have both advised us that they believe Mr.
        Orr’s
        claims against them are without basis and that they will continue to vigorously
        defend against these claims.
 
 On
        February 15, 2007, we filed a civil action against Orr. In this civil
        proceeding, which was brought in the District Court of Clark County, Nevada,
        we
        sought declaratory relief and damages.
 
 In
        the
        Nevada proceeding, we sought a declaration that (i) we own 100% of the
        outstanding shares in American Trailer and that no shares are owned by Orr;
        that
        (ii) there are no other shares of stock, stock rights, options, warrants
        or
        other similar claims of ownership of American Trailer; that (iii) under the
        laws
        of the State of Nevada, as the owner of all outstanding shares of American
        Trailer, we are the only party entitled to bring claims arising from the
        ownership of shares of our wholly owned subsidiary; that (iv) we have no
        contractual or other legal obligation to purchase any of the outstanding
        shares
        owned by Orr; that (v) removal in 2005 of Orr as a director was accomplished
        in
        accordance with the By-Laws of our corporation and the Law of the State of
        Nevada; that (vi) removal of Defendant Orr in 2005 as an officer of our
        corporation was accomplished in accordance with our By-Laws and the laws
        of the
        State of Nevada; that (vii) the decisions of our Board of Directors and officers
        in borrowing money and the distribution of profits either in us or our
        wholly-owned subsidiary are controlled by the business judgment rule and
        the
        laws of the State of Nevada; and that (viii) we are not presently indebted
        to
        Orr.
 
 We
        also
        sought to recover our costs and fees associated with the prosecution of this
        action and damages. On July 19, 2007, the Nevada proceeding was dismissed
        by the
        court for jurisdictional reasons.
 
 **ITEM
        2** **-
        UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
        PROCEEDS**
 
 The
        Company did not sell any unregistered securities during the period covered
        by
        this report.
 
 We
        filed
        a Registration Statement on Form SB-2 with the Securities and Exchange
        Commission, whereby we registered 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
        offering of notes is not underwritten and is being sold on a best-efforts
        basis.
        From May 13, 2005 to June 30, 2007, we sold 15 notes in the aggregate principal
        amount of $363,000. For the quarter ended June 30, 2007 we sold two notes
        in the
        principal amount of $65,000. We also partially redeemed one note due to
        financial need on the part of the investor. This redemption totaled $36,000
        including early redemption penalties. 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,
        2007 were approximately $288,000.
 
 **ITEM
        3** **-
        DEFAULTS UPON SENIOR SECURITIES**
 None
 
 **ITEM
        4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
        HOLDERS**
 None
 
 **ITEM
        5- OTHER INFORMATION**
 None
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 **ITEM
        6 - EXHIBITS**
 
 **(a)**
              **Index
                  to Exhibits**
 
 EXHIBIT
                  NUMBER
              DESCRIPTION--------------
              -----------------------------------------------------------3.01
              Articles
                  of Incorporation of AT&S (Incorporated by reference to Exhibit 3.01 to
                  the Registrant’s Registration Statement on Form SB-2 filed with the
                  Securities and Exchange Commission on January 6, 2004.)3.02
              Bylaws
                  of AT&S (Incorporated by reference to Exhibit 3.02 to the Registrant’s
                  Registration Statement on Form SB-2 filed with the Securities and
                  Exchange
                  Commission on January 6, 2004.)31.1*
              Certificate
                  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 200231.2*
              Certificate
                  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 200232.1*
              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.
 ---------------------------
 *
        Filed
        herewith
 
 **(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
                  20, 2007
              
              //s//
                  Richard G. HonanRichard
                  G. Honan, Chief Executive Officer and Chairman of the Board of
                  Directors
                (PRINCIPAL
                  EXECUTIVE OFFICER)August
                  20, 2007
              
              //s//
                  Richard G. Honan IIRichard
                  G. Honan II, Chief Financial Officer, Director and President
                (PRINCIPAL
                  ACCOUNTING OFFICER)