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

# FORM 10-QSB

# (Mark
One)

| | |X| | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
| | --- | ---------------------------------------------------------------------------------

# For the quarterly
period ended September 30, 2005

| | |_| | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
| | --- | -----------------------------------------------------------------------

# For the transition
period
from          to

# Commission file number
000-50712

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

|Delaware                                                        | 58-2131736                          
|--------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of 
incorporation or organization) | (I.R.S. Employer Identification No.)
|                                                                |                                     

|1490 Westfork Drive, Suite G, Lithia Springs, Georgia | 30122-1509
|----------------------------------------------------- | ----------
|(Address of principal executive offices)              | (Zip Code)

(770) 819-1600
(Issuers telephone number)

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

# APPLICABLE ONLY TO
ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed
all documents and reports required to be filed by Section 12, 13 or 15(d) of the
Exchange Act after the distribution of securities under a plan confirmed by a court.
Yes |X| No |_|

Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes |_|
No |X|

Transitional Small Business
Disclosure Format.  Yes |X|  No |_|

As of September 30, 2005, there were
outstanding 4,987,624 shares of the Issuers common stock $.0001 par value.

---

# ETS
PAYPHONES, INC.
INDEX TO FORM 10-QSB
SEPTEMBER 30, 2005

|           |                                                                                                                    | Page Numbers
|---------- | ------------------------------------------------------------------------------------------------------------------ | ------------
|
|           | Part I. Financial Information                                                                                      | 3           
|Item 1.    | Financial Statements                                                                                               | 3           
|           | Balance Sheet September 30, 2005 (Unaudited)                                                                       | 3           
|           | Statements of Operations For the three and nine months ended September 30, 2005 and September 30, 2004 (Unaudited) | 4           
|           | Statements of Cash Flows For the three and nine months ended September 30, 2005 and September 30,
2004 (Unaudited) | 5           
|           | Notes to Financial Statements (Unaudited)                                                                          | 6           
|Item 2.    | Plan of Operation                                                                                                  | 8           
|Item 3.    | Controls and Procedures                                                                                            | 10          
|           | Part II. Other Information                                                                                         | 10          
|Item 5.    | Other Information                                                                                                  | 10          
|Item 6.    | Exhibits                                                                                                           | 11          
|           |                                                                                                                    |             
|Signatures |                                                                                                                    | 12          

# PART I. FINANCIAL
INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ETS PAYPHONES, INC.
BALANCE SHEET
SEPTEMBER 30, 2005
(Unaudited)

|ASSETS                                                                 | 
|---------------------------------------------------------------------- | 
|
|CURRENT ASSETS                                                         | 
|Cash                                                                   | 
|Cash, restricted                                                       | 
|Accounts receivable                                                    | 
|Inventories                                                            | 
|Prepaid expenses                                                       | 
|                                                                       | 
|                                                                       | 
|TOTAL CURRENT ASSETS                                                   | 
|                                                                       | 
|FIXED ASSETS                                                           | 
|Payphones                                                              | 
|Other property and equipment                                           | 
|                                                                       | 
|                                                                       | 
|Accumulated depreciation                                               | 
|                                                                       | 
|                                                                       | 
|                                                                       | 
|OTHER ASSETS                                                           | 
|Deposits                                                               | 
|                                                                       | 
|                                                                       | 
|TOTAL ASSETS                                                           | 
|                                                                       | 
|                                                                       | 
|LIABILITIES AND SHAREHOLDERS' EQUITY                                   | 
|CURRENT LIABILITIES                                                    | 
|Accounts payable                                                       | 
|Accrued expenses                                                       | 
|Accrued property, excise and sales taxes                               | 
|401k payable                                                           | 
|                                                                       | 
|TOTAL CURRENT LIABILITIES                                              | 
|                                                                       | 
|NON-CURRENT LIABILITIES                                                | 
|Accrued property, excise and sales taxes                               | 
|                                                                       | 
|SHAREHOLDERS' EQUITY                                                   | 
|Common Stock, par value $.0001 per share; authorized 6,000,000 shares; | 
|4,987,624 shares issued and outstanding                                | 
|Additional Paid in Capital                                             | 
|Accumulated deficit                                                    | 
|                                                                       | 
|TOTAL SHAREHOLDERS' EQUITY                                             | 
|                                                                       | 
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                             | 
|                                                                       | 

The accompanying notes
are an integral part of these financial statements.

# ETS
PAYPHONES, INC.

# STATEMENTS OF
OPERATIONS

# (Unaudited)

|                                                     | For the Three Months Ended
September 30, | For the Nine Months Ended
September 30,
|---------------------------------------------------- | ---------------------------------------- | ---------------------------------------
|
|REVENUE                                              |                                          |                                        
|Coin Calls                                           |                                          |                                        
|Non - coin calls                                     |                                          |                                        
|Other payphone revenue                               |                                          |                                        
|                                                     |                                          |                                        
|Total Revenue                                        |                                          |                                        
|                                                     |                                          |                                        
|OPERATING EXPENSES                                   |                                          |                                        
|Telephone Charges                                    |                                          |                                        
|Commissions                                          |                                          |                                        
|Service, maintenance and network costs               |                                          |                                        
|Depreciation & amortization                          |                                          |                                        
|Selling, general and administrative                  |                                          |                                        
|                                                     |                                          |                                        
|Total operating expenses                             |                                          |                                        
|                                                     |                                          |                                        
|Loss from Operations                                 |                                          |                                        
|                                                     |                                          |                                        
|OTHER INCOME (EXPENSE)                               |                                          |                                        
|Interest income (expense)                            |                                          |                                        
|Reorganization expense                               |                                          |                                        
|Gain(loss) on asset disposition                      |                                          |                                        
|Other income(expense)                                |                                          |                                        
|                                                     |                                          |                                        
|Total other income(expense)                          |                                          |                                        
|                                                     |                                          |                                        
|NET INCOME(LOSS)                                     |                                          |                                        
|                                                     |                                          |                                        
|Basic and diluted net income(loss) per common share  |                                          |                                        
|                                                     |                                          |                                        
|Weighted average number of common shares outstanding |                                          |                                        
|                                                     |                                          |                                        

The accompanying notes
are an integral part of these financial statements.

---

# ETS
PAYPHONES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                                           | Nine Months Ended
|-------------------------------------------------------------------------- | -----------------
|
|Operating Activities                                                       |                  
|Net Loss                                                                   |                  
|                                                                           |                  
|Adjustments to reconcile net loss to net cash used by operating activities |                  
|Depreciation and amortization expense                                      |                  
|Site licenses written down for sites taken out of service                  |                  
|Decrease in restricted cash balance                                        |                  
|Gain from sale of payphones                                                |                  
|Changes in operating assets and liabilities:                               |                  
|Decrease in accounts receivable                                            |                  
|Decrease in inventories                                                    |                  
|(Increase)Decrease in prepaid expenses                                     |                  
|(Decrease) in accounts payable                                             |                  
|Increase in accrued expenses and other liabilities                         |                  
|(Increase)Decrease in other non-current assets                             |                  
|                                                                           |                  
|Total Adjustments                                                          |                  
|                                                                           |                  
|Net cash used by operating activities                                      |                  
|Investing Activity                                                         |                  
|Purchase of fixed assets                                                   |                  
|Financing Activity                                                         |                  
|Cash used for stock issuance costs                                         |                  
|                                                                           |                  
|Net decrease in cash                                                       |                  
|Cash - Beginning of Period                                                 |                  
|                                                                           |                  
|Cash - End of Period                                                       |                  
|                                                                           |                  
|Supplemental Disclosure of Cash Flow Information                           |                  
|Cash (paid)received for interest                                           |                  
|                                                                           |                  

The accompanying notes
are an integral part of these financial statements.

---

# ETS PAYPHONES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2005

# NOTE A BASIS OF
PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary Information

The
accompanying unaudited condensed financial statements have been prepared in accordance
with generally accepted accounting principles in the United States of America
(GAAP) for interim financial information and the general instructions to Form
10-QSB. Accordingly, they do not include all information and footnotes required by GAAP
for complete financial statements. These interim financial statements should be read in
conjunction with our audited financial statements and notes thereto included in our Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2004. Interim results are not
necessarily indicative of results to be expected for the entire year. The preparation of
financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues and
expenses. Actual results could differ from those estimates.

In
the opinion of management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included.

The Company

ETS
Payphones, Inc. (ETS or the Company) is a Delaware
corporation that operates, services, and maintains a system of payphones. ETS is one of
the largest independent payphone operators in the United States, and managed approximately
15,500 payphones from eight branch offices handling 29 states, Washington D.C., and Puerto
Rico before the sale of the majority of its payphones in New York, New Jersey,
Connecticut, and Massachusetts, which occurred on June 30, 2005. The Company currently
owns and operates approximately 13,000 payphones from seven branch offices handling 31
states, Washington D.C., and Puerto Rico.

The
Company enters into binding agreements with location owners to operate payphones at
locations such as shopping centers, hospitals, hotels, convenience stores, service
stations, grocery stores, restaurants, airports, truck stops and bus terminals. In
addition to agreements with private property owners, ETS is party to various agreements
with municipalities under which the Company has been granted the right to provide payphone
services on municipal property. In most instances, the site agreements on location leases
entitle the private property owner or municipality to a percentage of revenues as
rent. In other instances, these agreements take the form of franchises
pursuant to which ETS is required to pay either a fixed per phone fee or a percentage of
revenues.

Revenue Recognition

The
Company derives its revenues from two principal sources: coin calls and non-coin calls.
Coin calls represent calls paid for by callers with coins deposited into the payphone.
Coin call revenues are recorded in the amount of coins deposited in the payphones and in
the period deposited. We also receive revenues from non-coin calls made from our
payphones. These non-coin calls include credit card, calling card, prepaid calling card,
collect and third-party billed calls where the caller dials 0 plus the number
or simply dials 0 for an operator. Non-coin calls often require a number of
services, including automated or live operators to answer the call, verifying billing
information, validating calling cards and credit cards, routing and transmitting the call
to its destination, monitoring the calls duration and determining the charge for the
call, and billing and collecting the applicable charge. We have contracted with a limited
number of operator service providers to handle these calls and perform all associated
functions, while paying us a commission on the revenues generated thereby.

---

Net Income(Loss) Per
Common Share

Basic
income(loss) per share is computed based on net income(loss) divided by the weighted
average number of common shares outstanding. There were no potential common share
equivalents outstanding during 2004 or 2005, therefore the diluted loss per common share
is the same as the basic loss per common share.

# NOTE BOTHER
INCOME(EXPENSE)

Other
income as shown under the heading Other Income and Expense in the Statement of
Operations consists of the following:

|2005                                                     | Q3 | Q2 | Q1 | YTD    
|-------------------------------------------------------- | -- | -- | -- | -------
|Dial around true-up receipts for prior years' operations |    |    | $  | 4,904  
|MCI bankruptcy settlement                                |    |    |    |        
|EUCL and other legal settlements                         |    |    |    | 342,625
|Commission true-up for prior years' operations           |    |    |    | 81,592 
|Other miscellaneous income(expense) items                |    |    |    | (8,607 
|                                                         |    |    |    |        
|Total                                                    |    |    | $  | 420,514
|                                                         |    |    |    |        

|2004                                                     | Q3 | Q2 | Q1 | YTD   
|-------------------------------------------------------- | -- | -- | -- | ------
|Estimated tax liability adjustment                       |    |    |    |       
|Dial around true-up receipts for prior years' operations |    |    | $  | 28,768
|Dial around take-back, prior years                       |    |    |    |       
|N.C. BellSouth new services test settlement              |    |    |    | 39,239
|Other miscellaneous income items                         |    |    |    | 1,499 
|                                                         |    |    |    |       
|Total                                                    |    |    | $  | 69,506
|                                                         |    |    |    |       

# NOTE CSALE OF
PAYPHONE ASSETS

On June 30, 2005 the
Company sold to an independent third party substantially all of its payphones
located in the states of New York, New Jersey, Massachusetts, and Connecticut.
This sale was made to Empire Payphones, Inc. The sale terms were such that the
Company received $200,000 in cash upon contract signing by both parties and will
receive future payments of $62,500 per month for twelve months or $750,000 in
total. The gain from this sale is calculated as follows:

| | Total sale price, $200,000 cash and $750,000 receivable | $   950,000
| | ------------------------------------------------------- | -----------

| | Less: | $952,116 book value less accumulated depreciation of $399,809
     Parts inventory transferred to buyer
     Coin in phones collections not paid to ETS | (552,307)
      (12,798)
        (4,184)
       ---------
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------

| | Gain on Sale |  | $   380,711  
            ========
| | ------------ |  | ----------------------------------

| |  | 
| |  | 

# NOTE DGOING CONCERN

The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate the continuation of
the Company as a going concern. The Company reported a net loss during the
quarter ended September 30, 2005; it reported net losses for the nine months
ended September 30, 2005 and in 2004, and had a working capital deficiency of
$536,537 at September 30, 2005.  In view of the matters described, there is
substantial doubt about the Companys ability to continue as a going
concern. The liquidity of the recorded assets and satisfaction of the
liabilities reflected in the accompanying balance sheet is dependent upon
continued operation of the Company, which is in turn dependent upon the
Companys ability to meet its cash flow requirements on a continuing basis
and to succeed in its future operations. The Company has continued expense
reduction efforts in the areas of phone line costs, overhead, and the removal of
unprofitable payphones. Despite these efforts to reduce costs as well as efforts
to increase revenues, there can be no assurance that management will be
successful in implementing its plans. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

# NOTE E  SUBSEQUENT
EVENTS

As
we reported in the Form 8-K filed November 7, 2005 (the November 7 Form
8-K), subsequent to the balance sheet date, the Company entered into an
Asset Sale Agreement dated November 1, 2005, and related agreements including
a security agreement and a promissory note to sell substantially all of its
operating assets to Empire Payphones, Inc. (Empire). In addition as
reported on the November 7 Form 8-K, the Company also entered into a Management
Services Agreement effective November 1, 2005, with Empire in which Empire will
provide management services and fund the operational losses of ETS pending
consummation of the sale transaction. A summary description of the transactions
is below. The description below is qualified in its entirety by the more detailed
description in the November 7 Form 8-K and to the exhibits therein, which are
incorporated herein by reference.

Asset Sale
Agreement

Pursuant
to the Asset Sale Agreement dated November 1, 2005, the Company has agreed to
sell substantially all of its assets used in its payphone business to Empire.
Under the Asset Sale Agreement, the purchase price aggregates $4.5 million and
will be paid in installments, some prior to the consummation of the transaction,
as follows: (i) $250,000 in cash on November 1, 2005, (ii) payment of certain
commissions under assigned contracts not to exceed $2.4 million in the aggregate
and (iii) $1.85 million in cash, payable in monthly installments of $132,143
commencing December 1, 2005, with any remaining balance being paid at the
closing of the transaction. At November 1, 2005, the carrying value of ETS
operating assets, consisting primarily of fixed assets and inventories, was
approximately $3.5 million.

The
closing of the Asset Sale Agreement is subject to a number of conditions,
including approval by the stockholders of ETS of the Asset Sale Agreement, as
well as compliance with regulatory requirements. The Asset Sale Agreement also
includes termination provisions which may require ETS to repay certain amounts
paid by Empire under this agreement and the Management Services Agreement
discussed below. We intend to file proxy materials relating to the 2005 Annual
Meeting of Stockholders seeking approval of the Asset Sale Agreement with the
Securities and Exchange Commission on or about December 1, 2005.

Management Services
Agreement

In
order to provide for the funding of operational losses of ETS payphone
business pending stockholder approval of the Asset Sale Agreement, ETS and
Empire entered into a Management Services Agreement dated as of November 1,
2005. Under the Management Services Agreement, Empire will provide to ETS
management services and fund operational losses of the payphone business of ETS,
subject to the oversight of the Board of Directors of ETS. In consideration for
its management services and the use by ETS of Empires affiliates
resources, Empire shall be entitled to receive a management fee calculated at
the end of the initial term of the Management Services Agreement and at the end
of any renewal term in the amount of the first $400,000 of excess revenue, after
repayment of, among other amounts, all expenses of operation and any advances
made by Empire to fund operational losses plus 50% of any excess revenue above
$400,000. ETS shall receive the remaining 50% of excess revenue above $400,000.
For use of Empires affiliates resources during the term of the
Management Agreement, the affiliates shall receive a monthly resource fee of
$92,000.

The
Management Services Agreement has an initial term of two years and will be
automatically extended for successive periods of one year unless Empire provides
notice prior to the end of any term that the agreement will terminate at the end
of such term. The Management Services Agreement is also subject to other
termination provisions, which includes the consummation of the Asset Sale
Agreement detailed above. If the Management Services Agreement is terminated
other than upon the consummation of the Asset Sale Agreement, ETS will be
required to repay certain amounts paid by Empire under the Management Services
Agreement.

Wind Down
of Operations

Following
the consummation of the Asset Sale Agreement, it is the intention of the Board of
Directors to dissolve ETS in accordance with applicable laws and to distribute any
proceeds remaining after such dissolution to its stockholders.

---

# Item 2. Plan of Operation

ETS
Payphones, Inc. owns and operates approximately 13,000 public pay
telephones in 31 states concentrated primarily in the Eastern and Southern
United States, as well as the District of Columbia and Puerto Rico. We are an
independent owner of payphone equipment placed at locations with client site
owners that include retail establishments, convenience stores, hotels, hospitals
and other publicly and privately owned businesses. These locations are owned or
managed by over 4,000 clients that include Fortune 100 companies as well as
single store accounts and municipalities. We also provide other
telecommunications products to certain clients.

Our
primary business is to install and operate payphones pursuant to contracts with
location owners. We install public payphones in properties owned or controlled
by others where significant demand exists for public payphone services, such as
shopping centers, hospitals, hotels, convenience stores, service stations,
grocery stores, restaurants, airports, truck stops and bus terminals. We service
and maintain the payphones and collect the revenue generated.

As
we reported on the November 7 Form 8-K and in Item 1 hereto, ETS and Empire Payphones, Inc.
(Empire) entered into an Asset Sale Agreement, dated as of November
1, 2005, and related agreements including a security agreement and
a promissory note pursuant to which ETS has agreed, subject to the conditions of the
Asset Sale Agreement, to sell substantially all of its assets to Empire. In
addition, as discussed in the November 7 Form 8-K and in Item 1 hereto, in order to provide for the
funding of operational losses of our payphone business pending stockholder
consideration of the Asset Sale Agreement, we entered into a Management Services
Agreement with Empire on November 1, 2005. The consummation of the Asset Sale Agreement is
subject to a number of conditions including approval by the stockholders of ETS
and/or such other approvals required by Delaware law, and obtaining certain
regulatory approvals. We intend to file proxy materials relating to the 2005
Annual Meeting of stockholders and seeking approval of the Asset Sale Agreement
with the Securities and Exchange Commission on or about December 1, 2005. As
discussed in the November 7 Form 8-K and in Item 1 hereto, following the consummation of the
transactions contemplated by the Asset Sale Agreement, it is the intention of
the Board of Directors to dissolve ETS in accordance with applicable laws and to
distribute any proceeds remaining after such dissolution to the stockholders.
The foregoing description is qualified in its entirety by the description in the
November 7 Form 8-K and to the exhibits therein which are incorporated herein by
reference.

# Risk Factors

The
following risk factors should be considered carefully in addition to the other information
contained in this report.

# 1.    Regulatory Issues

The
enactment of the Telecommunications Act significantly altered the regulatory landscape in
which payphone companies operate. Although we believe that the Telecommunications Act, as
implemented by the FCC, addressed certain historical inequities in the payphone
marketplace, uncertainties relating to the impact and timing of the implementation of the
new regulatory framework still exist. The uncertainty with the greatest potential
financial impact relates to revenue from access code calls and toll-free dialed calls,
also referred to as dial-around compensation. Dial-around compensation accounts for a
material percentage of our revenues. Additionally, the March 2004 United States Court
of Appeals, D.C. Circuit decision to vacate the FCC Unbundled Network Element rules will
have an unknown effect on local line access pricing, but is expected to increase prices to
payphone service providers.

# 2.      Limited Financial
Resources

Our
future performance and liquidity will depend on a number of factors, including industry
performance, general business and economic conditions, the absence of contingencies, and
other matters, many of which are beyond our control. We will have limited financial
resources, and it may be the case that we will not have the funds to make capital
improvements arising other than in the ordinary course of business.

# 3.     Dependence Upon
Third-Party Providers

We
assemble payphones from components provided by outside suppliers. In addition,
we rely on outside suppliers for local line access, billing and collection
services, and long-distance and operator services. We believe that multiple
suppliers are available to meet all of our product and service needs at
competitive prices and rates and expect the availability of such products and
services to continue in the future. However, we cannot assure the continuing
availability of alternative sources.

---

# 4.     Competition

We
compete with other telecommunications providers, including providers of wireless services,
other payphone providers and long-distance carriers. Many of these competitors have
substantially greater financial, marketing, and other resources than the Company.

# 5.     Technological Change
and New Services

Continuous
technological change, frequent service and product innovations, and evolving
industry standards characterize the telecommunications industry. We believe that
our future success will depend in part on our ability to anticipate
technological changes and respond in a timely and effective manner to meet new
industry standards. Any failure to keep pace with technological change
(including the technical support component required to operate payphones) and
new customer service demands could have a material adverse effect on our
business.

# 6.   
  Impact of Seasonality

Our
revenue from payphone operations is affected by seasonal variations. Because
many of our payphones are located outdoors, weather patterns have differing
effects on our revenue depending on the region of the country where the
payphones are located and the enclosure housing of the phone. For example, our
payphones throughout the Midwestern and Eastern United States produce their
highest call volumes during the second and third quarters, when the climate
tends to be more favorable. Seasonal variations in revenues could have a
material adverse effect on our business. Changes in the geographic distribution
of our payphones may in the future result in different seasonal variations in
our results.

# 7.   
  No established market for the Common Stock.

Our
Common Stock is not listed on any stock exchange. Our Common Stock was issued to
approximately 12,500 individuals and entities. Ownership interests are tracked
by the transfer agent, American Stock Transfer and Trust Company
(AST&T), and transfers of ownership may be documented through
AST&T. The Common Stock is not traded on any recognized stock exchange,
stock market or bulletin board system and there are no market makers for the
Common Stock. There can be no assurance that an active or liquid trading market
for our shares of Common Stock will develop or be maintained.

# 8.  
   Possible discontinuance of operations

If we
are unable to achieve profitability, or if operating losses increase in the
future, we may not be able to remain a viable company and may have to
discontinue operations. Our expenses have historically exceeded our revenues and
we have sustained losses since our bankruptcy reorganization in
December 2002. Based on a continued erosion of revenue and despite
managements reduction of operating expenses, there is substantial doubt
about the Companys ability to continue as a going concern.

---

# Item 3. 
Controls and Procedures

Our
Chief Executive Officer and Chief Financial Officer (collectively, the Certifying
Officers) are responsible for establishing and maintaining disclosure controls and
procedures for the Company. Based upon such officers evaluation of these controls
and procedures as of a date within 45 days of the filing of this Quarterly Report,
and subject to the limitations noted hereinafter, the Certifying Officers have concluded
that our disclosure controls and procedures are effective to ensure that information
required to be disclosed by us in this Quarterly Report is accumulated and communicated to
management, including our principal officers as appropriate, to allow timely decisions
regarding required disclosure.

The
Certifying Officers have also indicated that there were no significant changes in our
internal controls or other factors that could significantly affect such controls
subsequent to the date of their evaluation, and there were no corrective actions with
regard to significant deficiencies and material weaknesses.

Our
management, including each of the Certifying Officers, does not expect that our disclosure
controls or our internal controls will prevent all error and fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. In addition, the design of a
control system must reflect the fact that there are resource constraints, and the benefits
of controls must be considered relative to their costs. Because of the inherent
limitations on all control systems, no evaluation of controls can provide absolute
assurance that all controls issues and instances of fraud, if any, within a company have
been detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple error or
mistake. Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people or by management override of the control. The
design of any system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions. Over time, control may
become inadequate because of changes in conditions, or the degree of compliance with the
policies or procedures may deteriorate. Because of these inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and not be
detected.

# PART II. OTHER
INFORMATION

# Item 5. Other Information

On
November 10, 2005, the Company extended by amendment (the Amendment) the
Employment Agreement (the Employment Agreement) of Guy A. Longobardo
(Mr. Longobardo), the Companys President and Chief Executive Officer.
The Amendment extends the term of his Employment Agreement through December 31, 2006.

---

# ITEM 6. EXHIBITS

|EXHIBIT
NUMBER | DESCRIPTION                                                                                                 
|-------------- | ------------------------------------------------------------------------------------------------------------
|10.1           | Amendment to Employment Agreement
between ETS Payphones, Inc. and Guy A. Longobardo                         
|31.1           | Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                              
|31.2           | Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                              
|32.1           | Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                              
|32.2           | Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                              
|99.1           | Form 8-K of ETS Payphones, filed on November 7, 2005 (File No. 000-50712) (incorporated herein by reference)
|               |                                                                                                             

---

# SIGNATURES

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.

| | ETS PAYPHONES, INC.
| | -------------------

|Date: November 14, 2005 |  | By: | /s/ GUY A. LONGOBARDO
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Guy A. LongobardoPresident and Chief Executive Officer
|----------------------- |  | --- | --------------------------------------------------------------------------------------------------------------------

| |  | By: | /s/ MICHAEL H. MCCLELLAN
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Michael H. McClellanExecutive Vice President,
Chief Financial Officer and Treasurer
| |  | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------

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