| Delaware(State of incorporation or organization)                                                         |   | 87-0273300(I.R.S. Employer Identification No.) |
|----------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|
|                                                                                                     |
| 11 Diamond RoadSpringfield, New Jersey 07081(Address of principal executive offices, including zip code) |

----

| PART I – FINANCIAL INFORMATION                                            |                                       |
|---------------------------------------------------------------------------------|--------------------------------------------|
|                                                                            |                                       |   |
| Item 1 - Financial Statements                                                   |                                       |
|                                                                            |                                       |   |
|                                                                            | Consolidated Balance Sheets                | 1 |
|                                                                            |                                       |   |
|                                                                            | Consolidated Statements of Operations      | 2 |
|                                                                            |                                       |   |
|                                                                            | Consolidated Statements of Cash Flows      | 3 |
|                                                                            |                                       |   |
|                                                                            | Notes to Consolidated Financial Statements | 4 |
|                                                                            |                                       |   |
|                                                                            |                                       |   |
| Item 2  - Management’s Discussion and Analysis of Financial     |                                       |
|                                                                            | Condition and Results of Operations        | 22 |
|                                                                            |                                       |   |
| Item 3  - Quantitative and Qualitative Disclosures About Market Risk  | 46                                         |
|                                                                            |                                       |   |
| Item 4  - Controls and Procedures                                     | 47                                         |
|                                                                            |                                       |   |
|  PART II – OTHER INFORMATION                                         |                                       |
|                                                                            |                                       |
| Item 1 – Legal Proceedings                                                | 48                                         |
|                                                                            |                                       |   |
| Item 1A  - Risk Factors                                               | 49                                         |
|                                                                            |                                       |   |
| Item 2  - Unregistered Sales of Equity Securities and Use of Proceeds | 50                                         |
|                                                                            |                                       |   |
| Item 3  - Defaults upon Senior Securities                             | 51                                         |
|                                                                            |                                       |   |
| Item 4 – [Removed and Reserved]                                           | 52                                         |
|                                                                            |                                       |   |
| Item 5  - Other Information                                           | 53                                         |
|                                                                            |                                       |   |
| Item 6 – Exhibits                                                         | 54                                         |
|                                                                            |                                       |   |
| SIGNATURES                                                                      | 55                                         |

----

| EMTEC, INC. AND SUBSIDIARIES                    |
|-------------------------------------------------|
|  CONSOLIDATED BALANCE SHEETS               |
| (In Thousands, Except per Share and Share Data) |

|                                                                                                                                                                                                       |   | February 28, 2011 |   |   |            |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|-----------------|--------|
|                                                                                                                                                                                                       |   | (Unaudited)       |   |   | August 31, 2010 |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |
| Assets                                                                                                                                                                                                     |   |              |   |   |            |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |
| Current Assets                                                                                                                                                                                             |   |              |   |   |            |   |
| Cash                                                                                                                                                                                                       |   | $                 | 2,827  |   |            | $      | 2,372 |   |
| Receivables:                                                                                                                                                                                               |   |              |   |   |            |   |   |   |
|    Trade, less allowance for doubtful accounts                                                                                                                                              |   |              | 29,956 |   |            |   | 36,262 |   |
|    Other                                                                                                                                                                                    |   |              | 1,679  |   |            |   | 2,019 |   |
| Inventories, net                                                                                                                                                                                           |   |              | 2,883  |   |            |   | 1,515 |   |
| Prepaid expenses and other                                                                                                                                                                                 |   |              | 2,898  |   |            |   | 2,977 |   |
| Deferred tax asset - current                                                                                                                                                                               |   |              | 998    |   |            |   | 898 |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Total current assets                                                                                                                                                                                       |   |              | 41,241 |   |            |   | 46,043 |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Property and equipment, net                                                                                                                                                                                |   |              | 2,942  |   |            |   | 2,211 |   |
| Intangible assets, net                                                                                                                                                                                     |   |              | 12,111 |   |            |   | 11,522 |   |
| Goodwill                                                                                                                                                                                                   |   |              | 14,254 |   |            |   | 13,979 |   |
| Deferred tax asset- long term                                                                                                                                                                              |   |              | 413    |   |            |   | 411 |   |
| Other assets                                                                                                                                                                                               |   |              | 187    |   |            |   | 106 |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Total assets                                                                                                                                                                                               |   | $                 | 71,148 |   |            | $      | 74,272 |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Liabilities, Put Options and Stockholders' Equity                                                                                                                                                          |   |              |   |   |            |   |   |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Current Liabilities                                                                                                                                                                                        |   |              |   |   |            |   |   |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Line of credit                                                                                                                                                                                             |   | $                 | 16,689 |   |            | $      | 16,023 |   |
| Current portion of capital lease obligation                                                                                                                                                                |   |              | 100    |   |            |   | - |   |
| Accounts payable                                                                                                                                                                                           |   |              | 21,199 |   |            |   | 24,666 |   |
| Warrant liability                                                                                                                                                                                          |   |              | 481    |   |            |   | 910 |   |
| Income taxes payable                                                                                                                                                                                       |   |              | 236    |   |            |   | 341 |   |
| Accrued liabilities                                                                                                                                                                                        |   |              | 7,351  |   |            |   | 8,027 |   |
| Due to former stockholders                                                                                                                                                                                 |   |              | 6      |   |            |   | 6 |   |
| Customer deposits                                                                                                                                                                                          |   |              | 123    |   |            |   | 202 |   |
| Deferred revenue                                                                                                                                                                                           |   |              | 1,335  |   |            |   | 2,150 |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Total current liabilities                                                                                                                                                                                  |   |              | 47,520 |   |            |   | 52,325 |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Deferred tax liability                                                                                                                                                                                     |   |              | 2,983  |   |            |   | 3,063 |   |
| Earn-out liabilities                                                                                                                                                                                       |   |              | 1,340  |   |            |   | 676 |   |
| Capital lease obligation, net of current portion                                                                                                                                                           |   |              | 343    |   |            |   | - |   |
| Accrued liabilities                                                                                                                                                                                        |   |              | 181    |   |            |   | 183 |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Total liabilities                                                                                                                                                                                          |   |              | 52,367 |   |            |   | 56,247 |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Commitments and contingencies (Note 12)                                                                                                                                                                    |   |              |   |   |            |   |   |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Put options in connection with SDI acquisition                                                                                                                                                             |   |              | 738    |   |            |   | 738 |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Stockholders' Equity                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Common stock $0.01 par value; 25,000,000 shares authorized; 19,284,402 and 18,984,520 shares issued and 16,419,813 and 16,119,931, outstanding at February 28, 2011 and August 31, 2010, respectively |   |              | 193    |   |            |   | 190 |   |
| Additional paid-in capital                                                                                                                                                                                 |   |              | 21,625 |   |            |   | 21,346 |   |
| Retained earnings                                                                                                                                                                                          |   |              | 1,460  |   |            |   | 1,158 |   |
| Accumulated other comprehensive income                                                                                                                                                                     |   |              | 361    |   |            |   | 189 |   |
|                                                                                                                                                                                                       |   |              | 23,639 |   |            |   | 22,883 |   |
| Less: treasury stock, at cost, 2,864,589 shares                                                                                                                                                            |   |              | (5,596 | )      |            |   | (5,596 | ) |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Total stockholders' equity                                                                                                                                                                                 |   |              | 18,043 |   |            |   | 17,287 |   |
|                                                                                                                                                                                                       |   |              |   |   |            |   |   |   |
| Total liabilities, put options and stockholders' equity                                                                                                                                                    |   | $                 | 71,148 |   |            | $      | 74,272 |   |

| The Accompanying Notes are Integral Parts of these Consolidated Financial Statements. |   |
|---------------------------------------------------------------------------------------|--------|

----

| EMTEC, INC. AND SUBSIDIARIES                    |
|-------------------------------------------------|
| CONSOLIDATED STATEMENTS OF OPERATIONS           |
| (Unaudited)                                     |
| (In Thousands, Except per Share and Share Data) |

|                                              |   | For the Three Months Ended February 28, |       |   | For the Six Months Ended February 28, |   |
|---------------------------------------------------|--------|-----------------------------------------|------------|--------|---------------------------------------|--------|
|                                              |   | 2011                                    |       |   | 2010                                  |   |   | 2011 |   |   | 2010 |   |
| Revenues                                          |   |                                    |       |   |                                  |   |   |   |   |   |   |   |
| Procurement services                              |   | $                                       | 28,557     |   |                                  | $      | 23,275 |   |   | $ | 88,737 |   |   | $ | 82,657 |   |
| Service and consulting                            |   |                                    | 17,573     |   |                                  |   | 12,828 |   |   |   | 34,262 |   |   |   | 27,023 |   |
| Total Revenues                                    |   |                                    | 46,130     |   |                                  |   | 36,103 |   |   |   | 122,999 |   |   |   | 109,680 |   |
| Cost of Sales                                     |   |                                    |       |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Cost of procurement services                      |   |                                    | 25,583     |   |                                  |   | 21,036 |   |   |   | 79,762 |   |   |   | 74,209 |   |
| Cost of service and consulting                    |   |                                    | 12,797     |   |                                  |   | 9,165 |   |   |   | 24,941 |   |   |   | 19,025 |   |
| Total Cost of Sales                               |   |                                    | 38,380     |   |                                  |   | 30,201 |   |   |   | 104,703 |   |   |   | 93,234 |   |
| Gross Profit                                      |   |                                    |       |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Procurement services                              |   |                                    | 2,974      |   |                                  |   | 2,239 |   |   |   | 8,975 |   |   |   | 8,448 |   |
| Service and consulting                            |   |                                    | 4,776      |   |                                  |   | 3,663 |   |   |   | 9,321 |   |   |   | 7,998 |   |
| Total Gross Profit                                |   |                                    | 7,750      |   |                                  |   | 5,902 |   |   |   | 18,296 |   |   |   | 16,446 |   |
| Operating expenses:                               |   |                                    |       |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general, and administrative expenses     |   |                                    | 7,970      |   |                                  |   | 6,409 |   |   |   | 16,169 |   |   |   | 13,756 |   |
| Stock-based compensation                          |   |                                    | 148        |   |                                  |   | 189 |   |   |   | 293 |   |   |   | 274 |   |
| Warrant liability adjustment                      |   |                                    | (455       | )      |                                  |   | - |   |   |   | (429 | ) |   |   |   |   |
| Depreciation and amortization                     |   |                                    | 736        |   |                                  |   | 571 |   |   |   | 1,440 |   |   |   | 1,167 |   |
| Total operating expenses                          |   |                                    | 8,399      |   |                                  |   | 7,169 |   |   |   | 17,473 |   |   |   | 15,197 |   |
| Operating income                                  |   |                                    | (649       | )      |                                  |   | (1,267 | ) |   |   | 823 |   |   |   | 1,249 |   |
| Other expense (income):                           |   |                                    |       |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Interest income – other                     |   |                                    | (5         | )      |                                  |   | (5 | ) |   |   | (8 | ) |   |   | (16 | ) |
| Interest expense                                  |   |                                    | 219        |   |                                  |   | 159 |   |   |   | 337 |   |   |   | 303 |   |
| Other                                             |   |                                    | -          |   |                                  |   | (2 | ) |   |   | 15 |   |   |   | (9 | ) |
| Income (loss) before income tax expense (benefit) |   |                                    | (863       | )      |                                  |   | (1,419 | ) |   |   | 479 |   |   |   | 971 |   |
| Income tax expense (benefit)                      |   |                                    | (436       | )      |                                  |   | (569 | ) |   |   | 177 |   |   |   | 413 |   |
| Net income (loss)                                 |   | $                                       | (427       | )      |                                  | $      | (850 | ) |   | $ | 302 |   |   | $ | 558 |   |
|                                              |   |                                    |       |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per common share                |   |                                    |       |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
|     Basic and Diluted         |   | $                                       | (0.03      | )      |                                  | $      | (0.06 | ) |   | $ | 0.02 |   |   | $ | 0.04 |   |
|                                              |   |                                    |       |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Shares Outstanding               |   |                                    |       |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
|     Basic                     |   |                                    | 15,569,935 |   |                                  |   | 15,027,140 |   |   |   | 15,569,935 |   |   |   | 15,027,140 |   |
|                                              |   |                                    |       |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
|     Diluted                   |   |                                    | 15,569,935 |   |                                  |   | 15,027,140 |   |   |   | 16,325,329 |   |   |   | 15,252,454 |   |

| The Accompanying Notes are Integral Parts of these Consolidated Financial Statements. |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|

----

| EMTEC, INC. AND SUBSIDIARIES                |
|---------------------------------------------|
|  CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Unaudited)                                 |
| (In Thousands)                              |

|                                                                                                                        |   | For the Six Months Ended February 28, |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                                                                        |   | 2011                                  |   |   | 2010 |   |
| Cash Flows From Operating Activities                                                                                        |   |                                  |   |   |   |   |
| Net income                                                                                                                  |   | $                                     | 302    |   |   | $ | 558 |   |
|                                                                                                                        |   |                                  |   |   |   |   |   |   |
| Adjustments to Reconcile Net Income to Net                                                                                  |   |                                  |   |   |   |   |   |   |
| Cash Provided By Operating Activities                                                                                       |   |                                  |   |   |   |   |   |   |
| Depreciation and amortization                                                                                               |   |                                  | 1,440  |   |   |   | 1,167 |   |
| Deferred income tax benefit                                                                                                 |   |                                  | (181   | ) |   |   | (271 | ) |
| Stock-based compensation                                                                                                    |   |                                  | 293    |   |   |   | 274 |   |
| Warranty liability adjustment                                                                                               |   |                                  | (429   | ) |   |   | - |   |
|                                                                                                                        |   |                                  |   |   |   |   |   |   |
| Changes In Operating Assets and Liabilities                                                                                 |   |                                  |   |   |   |   |   |   |
| Receivables                                                                                                                 |   |                                  | 7,307  |   |   |   | 8,414 |   |
| Inventories                                                                                                                 |   |                                  | (1,368 | ) |   |   | 1,291 |   |
| Prepaid expenses and other assets                                                                                           |   |                                  | 58     |   |   |   | (653 | ) |
| Accounts payable                                                                                                            |   |                                  | (3,547 | ) |   |   | (8,317 | ) |
| Customer deposits                                                                                                           |   |                                  | (79    | ) |   |   | - |   |
| Income taxes payable                                                                                                        |   |                                  | (119   | ) |   |   | (558 | ) |
| Accrued liabilities                                                                                                         |   |                                  | (1,313 | ) |   |   | (1,131 | ) |
| Deferred revenue                                                                                                            |   |                                  | (876   | ) |   |   | (14 | ) |
| Net Cash Provided By Operating Activities                                                                                   |   |                                  | 1,488  |   |   |   | 760 |   |
|                                                                                                                        |   |                                  |   |   |   |   |   |   |
| Cash Flows From Investing Activities                                                                                        |   |                                  |   |   |   |   |   |   |
| Purchases of property and equipment                                                                                         |   |                                  | (700   | ) |   |   | (251 | ) |
| Acquisition of business, net of cash acquired                                                                               |   |                                  | (1,094 | ) |   |   | - |   |
| Net Cash Used In Investing Activities                                                                                       |   |                                  | (1,794 | ) |   |   | (251 | ) |
|                                                                                                                        |   |                                  |   |   |   |   |   |   |
| Cash Flows From Financing Activities                                                                                        |   |                                  |   |   |   |   |   |   |
| Net increase  in line of credit                                                                                   |   |                                  | 666    |   |   |   | 1,581 |   |
| Repayment of debt                                                                                                           |   |                                  | -      |   |   |   | (1,059 | ) |
| Repayments under capital lease                                                                                              |   |                                  | (25    | ) |   |   |   |   |
| Net Cash Provided By Financing Activities                                                                                   |   |                                  | 641    |   |   |   | 522 |   |
|                                                                                                                        |   |                                  |   |   |   |   |   |   |
| Effect of exchange rates on cash                                                                                            |   |                                  | 120    |   |   |   | 64 |   |
|                                                                                                                        |   |                                  |   |   |   |   |   |   |
| Net Increase in Cash                                                                                                        |   |                                  | 455    |   |   |   | 1,095 |   |
| Beginning Cash                                                                                                              |   |                                  | 2,372  |   |   |   | 1,713 |   |
| Ending Cash                                                                                                                 |   | $                                     | 2,827  |   |   | $ | 2,808 |   |
| Supplemental Disclosure of Cash Flow Information                                                                            |   |                                  |   |   |   |   |   |   |
| Cash paid during the period for:                                                                                            |   |                                  |   |   |   |   |   |   |
| Income taxes                                                                                                                |   | $                                     | 446    |   |   | $ | 1,141 |   |
| Interest                                                                                                                    |   | $                                     | 700    |   |   | $ | 206 |   |
| Supplemental Disclosure of Non Cash Investing and Financing Activity                                                        |   |                                  |   |   |   |   |   |   |
| In January 2011, the Company entered into a capital lease for computer equipment and related hardware with a value of $468. |   |
| See Note 10 for additional information.                                                                                     |   |                                  |   |   |   |   |   |   |

| The Accompanying Notes are Integral Parts of these Consolidated Financial Statements. |
|---------------------------------------------------------------------------------------|

----

----

|                                                                |   | EIS    |   |   | EGS    |   |   | Total  |   |
|---------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Balance at August 31, 2010                                          |   | $      | 11,685 |   |   | $      | 2,294  |   |   | $ | 13,979 |   |
| Foreign currency translation effect of Canadian and Indian goodwill |   |   | 73     |   |   |   | 11     |   |   |   | 84 |   |
| Increase in goodwill due to Dinero acquisition                      |   |   | 191    |   |   |   |   |   |   |   | 191 |   |
| Balance at February 28, 2011                                        |   | $      | 11,949 |   |   | $      | 2,305  |   |   | $ | 14,254 |   |

----

|                                    |   | February 28, 2011 |   |   | August 31, 2010 |   |
|-----------------------------------------|--------|-------------------|--------|--------|-----------------|--------|
| Customer relationships                  |   | $                 | 16,568 |   |            | $      | 15,768 |   |
| Noncompete agreements                   |   |              | 879    |   |            |   | 449 |   |
| Software technology                     |   |              | 14     |   |            |   | 14 |   |
| Trademarks                              |   |              | 169    |   |            |   | 169 |   |
| Trade names                             |   |              | 453    |   |            |   | 203 |   |
| Foreign currency translation adjustment |   |              | 169    |   |            |   | 52 |   |
|                                    |   |              | 18,251 |   |            |   | 16,655 |   |
| Accumulated amortization                |   |              | (6,124 | )      |            |   | (5,128 | ) |
| Foreign currency translation adjustment |   |              | (16    | )      |            |   | (5 | ) |
| Balance, ending                         |   | $                 | 12,111 |   |            | $      | 11,522 |   |

----

|  Years ending August 31, |   |   |   |   |
|-------------------------------|--------|--------|--------|--------|
| 2011                          |   | $      | 2,053  |   |
| 2012                          |   | $      | 2,180  |   |
| 2013                          |   | $      | 2,132  |   |
| 2014                          |   | $      | 1,483  |   |
| 2015                          |   | $      | 1,352  |   |

----

|                                 |   | For the Three Months Ended February 28, |   |   | For the Six Months Ended February 28, |   |
|--------------------------------------|--------|-----------------------------------------|--------|--------|---------------------------------------|--------|
|                                 |   | 2011                                    |   |   | 2010                                  |   |   | 2011 |   |   | 2010 |   |
| Net Income (loss)                    |   | $                                       | (427   | )      |                                  | $      | (850 | ) |   | $ | 302 |   |   | $ | 558 |   |
| Translation adjustment, net of taxes |   |                                    | 105    |   |                                  |   | 9 |   |   |   | 172 |   |   |   | 54 |   |
| Total comprehensive income (loss)    |   | $                                       | (322   | )      |                                  | $      | (841 | ) |   | $ | 474 |   |   | $ | 612 |   |

----

|                                                                         |   | 2011   |   |   | 2010   |   |
|------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                         |   |   |   |   |   |   |
| Balance at September 1, 2010 and 2009                                        |   | $      | 212    |   |   | $      | 202 |   |
|                                                                         |   |   |   |   |   |   |   |   |
| Unrecognized tax positions of prior periods:                                 |   |   |   |   |   |   |   |   |
|      Increase                                       |   |   | -      |   |   |   | - |   |
|      Decrease                                       |   |   | -      |   |   |   | - |   |
|                                                                         |   |   |   |   |   |   |   |   |
| Unrecognized tax positions for the six months:                               |   |   |   |   |   |   |   |   |
|      Increase                                       |   |   | 2      |   |   |   | 2 |   |
|      Decrease                                       |   |   | -      |   |   |   | - |   |
|                                                                         |   |   |   |   |   |   |   |   |
| Decrease in Unrecognized tax benefits due to settlements                     |   |   | -      |   |   |   |   |   |
|                                                                         |   |   |   |   |   |   |   |   |
| Decrease in Unrecognized tax benefits due to lapse of statute of limitations |   |   | -      |   |   |   | - |   |
|                                                                         |   |   |   |   |   |   |   |   |
| Balance at February 28, 2011 and 2010                                        |   | $      | 214    |   |   | $      | 204 |   |
|                                                                         |   |   |   |   |   |   |   |   |

|                                                                                               |   | For the Six Months Ended February 28, |   |
|----------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                                               |   | 2011                                  |   |   | 2010 |   |
| Total amount of unrecognized tax benefits that, if recobnized, would affect the effective tax rate |   | $                                     | 98     |   |   | $ | 91 |   |
| Accrued interest and penalties for unrecognized tax benefits                                       |   | $                                     | 111    |   |   | $ | 89 |   |
| Interest and penalties classified as income tax expense (benefit)                                  |   | $                                     | 11     |   |   | $ | 11 |   |

----

----

----

| For the Six Months Ended February 28, 2011                 |   | Shares |          |   | Weighted Average Exercise Price |   | Weighted Average Remaining Term |   | Aggregate Intrinsic Value (a) |   |
|------------------------------------------------------------|--------|--------|---------------|--------|---------------------------------|--------|---------------------------------|--------|-------------------------------|--------|
| Options Outstanding -September 1, 2010                     |   |   | 413,333       |   |                            | $      | 1.13                            |   |                          |   |   |   |
| Options Granted                                            |   |   | 20,000        |   |                            | $      | 1.04                            |   |                          |   |   |   |
| Options Exercised                                          |   |   | -             |   |                            |   | -                               |   |                          |   |   |   |
| Options Forfeited or Expired                               |   |   | (1,000        | )      |                            | $      | 1.31                            |   |                          |   |   |   |
|                                                       |   |   |          |   |                            |   |                            |   |                          |   |
|     Options Outstanding - February 28, 2011 |   |   | 432,333       |   |                            | $      | 1.13                            |   | 5.57 years                    |   |  $ | 28,733  |   |
|                                                       |   |   |          |   |                            |   |                            |   |                          |   |   |   |    |
|     Options Exercisable - February 28, 2011 |   |   | 378,958  |   |                            | $      | 1.13                            |   |  5.42 years              |   |   | 28,733  |   |

| (a)   | Represents the total pre-tax intrinsic value based on the Company’s average closing stock prices for the three or six months ended February 28, 2011. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                        |   | 2011    |   |
|-----------------------------|--------|---------|--------|
| Weighted-Average Fair Value |   | $       | 0.70   |   |
| Assumptions                 |   |    |   |   |
| Expected Volatility         |   |    | 90.26  | % |
| Expected Term               |   | 5 years |   |
| Expected Forfeiture Rate    |   |    | 0      | % |
| Dividend Yield              |   |    | 0      | % |
| Risk-Free Interest Rate     |   |    | 1.53   | % |

| For the Six Months Ended February 28, 2011 |   | Shares |     |   | Weighted Average Grant Date Fair Value |   |   |   Fair Value |   |   |
|--------------------------------------------|--------|--------|----------|--------|----------------------------------------|--------|--------|-------------------|--------|--------|
| Nonvested - September 1, 2010              |   |   | 870,916  |   |                                   | $      | 1.06   |              |   |   |   |   |
| Granted                                    |   |   | 199,882  |   |                                   | $      | 0.99   |              |   |   |   |   |
| Vested                                     |   |   | (320,916 | )      |                                   | $      | 1.06   |              |   | $      | 349,670 |   | (a) |
| Forfeited                                  |   |   | -        |   |                                   |   | -      |              |   |   |   |   |   |
| Nonvested - February 28, 2011              |   |   | 749,882  |   |                                   | $      | 1.04   |              |   | $      | 487,423 |   | (b) |

| (a)   | The fair value of vested restricted stock shares represents the total pre-tax fair value, based on the closing stock price on the day of vesting,  which would have been received by holders of restricted stock shares had all such holders sold their underlying shares on that date. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (b)   | The aggregate fair value of the non-vested restricted stock shares expected to vest represents the total pre-tax fair value, based on the Company’s closing stock price as of February 28, 2011, which would have been received by holders of restricted stock shares had all such holders sold their underlying shares on that date. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | The First Amendment changed the base rate of interest to the three month (90 day) LIBOR rate from the previous base rate of the “Prime Rate.” |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The First Amendment changed the interest rate for revolving credit loans to the base rate plus 3.25% from the previous interest rate for revolving credit loans which was the base rate minus 0.5%, and changed the interest rate for floorplan loans, if applicable, to 6.25% in excess of the base rate from the previous interest rate for floorplan loans of 2.5% in excess of the base rate. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The First Amendment amended the Schedule to Loan and Security Agreement to provide that the Borrower must pay the Lender a floorplan annual volume commitment fee if the aggregate amount of all floorplan loans does not equal or exceed $60.0 million in a 12-month period from December 1st through November 30th.  The floorplan commitment fee is equal to the amount that the floorplan usage during such 12-month period is less than $60.0 million multiplied by 1%.  If the Borrower terminates the Credit Facility during a 12-month period, the Borrower shall be required to pay the Lender a prorated portion of the annual volume commitment fee. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | The Second Amendment changed the total facility amount by temporarily increasing it to $40.6 million.  This amendment was effective until January 31, 2011, at which time the total facility amount returned to its previous level of $32.0 million. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Second Amendment added and clarified certain covenants in the Credit Facility including the following: |
|--------------------|------------------------------------------------------------------------------------------------------------|

| o   | Changing the Positive Net Income covenant to add back to Net Income certain non-cash charges; |
|---------------|-----------------------------------------------------------------------------------------------|

----

| o   | Providing that Borrower shall maintain a ratio of EBITDA to Interest Paid (as such terms are defined in the Credit Facility) of 3.50 to 1.00 as of the end of each fiscal quarter measured on a trailing twelve month basis; and |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Changing the Capital Expense covenant to increase the limitation on capital expenditures to $2,750,000 in any rolling four fiscal quarter period and to provide that business acquisition costs are not considered capital expenditures for this purpose. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                               |   | For the Three Months Ended |    |
|------------------------------------|--------|----------------------------|---------|
|                               |   | February 28, 2011          |    |   | February 28, 2010 |   |
| Departments of the U.S. Government |   | $                          | 13,848  |   |   |   | 30.0 | % |   | $ | 15,514 |   |   |   | 43.0 | % |
| Canadian Government Agencies       |   |                       | 392     |   |   |   | 0.8 | % |   |   | 372 |   |   |   | 1.0 | % |
| State and Local Governments        |   |                       | 1,542   |   |   |   | 3.3 | % |   |   | 1,079 |   |   |   | 3.0 | % |
| Commercial Companies               |   |                       | 12,831  |   |   |   | 27.8 | % |   |   | 11,886 |   |   |   | 32.9 | % |
| Education and other                |   |                       | 17,518  |   |   |   | 38.0 | % |   |   | 7,252 |   |   |   | 20.1 | % |
| Total Revenues                     |   | $                          | 46,130  |   |   |   | 100.0 | % |   | $ | 36,103 |   |   |   | 100.0 | % |
|                               |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   | For the Six Months Ended   |    |
|                               |   | February 28, 2011          |    |   | February 28, 2010 |   |
| Departments of the U.S. Government |   | $                          | 60,088  |   |   |   | 48.9 | % |   | $ | 56,914 |   |   |   | 51.9 | % |
| Canadian Government Agencies       |   |                       | 1,310   |   |   |   | 1.1 | % |   |   | 721 |   |   |   | 0.7 | % |
| State and Local Governments        |   |                       | 2,255   |   |   |   | 1.8 | % |   |   | 2,136 |   |   |   | 1.9 | % |
| Commercial Companies               |   |                       | 26,248  |   |   |   | 21.3 | % |   |   | 25,485 |   |   |   | 23.2 | % |
| Education and other                |   |                       | 33,098  |   |   |   | 26.9 | % |   |   | 24,424 |   |   |   | 22.3 | % |
| Total Revenues                     |   | $                          | 122,999 |   |   |   | 100.0 | % |   | $ | 109,680 |   |   |   | 100.0 | % |

|                            |   | February 28, |   |   | August 31, |   |
|---------------------------------|--------|--------------|--------|--------|------------|--------|
|                            |   | 2011         |   |   | 2010       |   |
| Trade receivables               |   | $            | 30,432 |   |       | $      | 36,628 |   |
| Allowance for doubtful accounts |   |         | (476   | )      |       |   | (366 | ) |
| Trade receivables, net          |   | $            | 29,956 |   |       | $      | 36,262 |   |

----

|                                      |   | February 28, |   |   | August 31, |   |
|-------------------------------------------|--------|--------------|--------|--------|------------|--------|
|                                      |   | 2011         |   |   | 2010       |   |
| Hardware, software, accessories and parts |   | $            | 3,118  |   |       | $      | 1,759 |   |
| Inventory reserve                         |   |         | (235   | )      |       |   | (244 | ) |
| Net inventories                           |   | $            | 2,883  |   |       | $      | 1,515 |   |
|                                      |   |         |   |   |       |   |   |   |

|                             |   | February 28, 2011 |   |   | August 31, 2010 |   |
|----------------------------------|--------|-------------------|--------|--------|-----------------|--------|
| Accrued payroll                  |   | $                 | 2,822  |   |            | $      | 4,156 |   |
| Accrued commissions              |   |              | 288    |   |            |   | 389 |   |
| Accrued state sales taxes        |   |              | 59     |   |            |   | 84 |   |
| Accrued third-party service fees |   |              | 12     |   |            |   | 181 |   |
| Other accrued expenses           |   |              | 4,170  |   |            |   | 3,217 |   |
|                             |   | $                 | 7,351  |   |            | $      | 8,027 |   |

|                                     |   | Asset Balances at |   |
|------------------------------------------|--------|-------------------|--------|
|                                     |   | February 28, 2011 |   |   | August 31, 2010 |   |
| Computer equipment                       |   | $                 | 47     |   |   | $ | - |   |
| Software                                 |   |              | 422    |   |   |   | - |   |
|                                     |   |              | 468    |   |   |   | - |   |
| Less: accumulated amortization (a)       |   |              | -      |   |   |   | - |   |
| Leased property under capital lease, net |   | $                 | 468    |   |   | $ | - |   |

| (a)   |  As of February 28, 2011, the lease property under capital lease had not yet been placed in service. |
|-----------------|-----------------------------------------------------------------------------------------------------------|

----

| Years ending August 31,                                           |   |   |   |
|-------------------------------------------------------------------|--------|--------|--------|
| 2011                                                              |   | $      | 82     |   |
| 2012                                                              |   |   | 164    |   |
| 2013                                                              |   |   | 164    |   |
| 2014                                                              |   |   | 55     |   |
| 2015                                                              |   |   | -      |   |
| Future minimum lease payments                                     |   |   | 465    |   |
| Less:  amounts representing interest at 3.35% per annum |   |   | (22    | ) |
| Present value of future minimum lease payments                    |   |   | 443    |   |
| Less:  current portion of capital lease obligation      |   |   | (100   | ) |
| Capital lease obligation, net of current portion                  |   | $      | 343    |   |

----

|                 |   | (Unaudited)  |   |   |       |   |
|----------------------|--------|--------------|--------|--------|------------|--------|
|                 |   | February 28, |   |   | August 31, |   |
|                 |   | 2011         |   |   | 2010       |   |
| Identifiable Assets: |   |         |   |   |       |   |
| EIS                  |   | $            | 59,614 |   |       | $      | 61,501 |   |
| EGS                  |   |         | 11,534 |   |       |   | 12,771 |   |
| Total Assets         |   | $            | 71,148 |   |       | $      | 74,272 |   |

----

|                          |   | For the Three Months Ended |   |   | For the Six Months Ended |   |
|-------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                          |   | February 28,               |   |   | February 28,             |   |
|                          |   | (Unaudited)                |   |   | (Unaudited)              |   |
|                          |   |                       |   |   |                     |   |   |   |   |
|                          |   | 2011                       |   |   | 2010                     |   |   | 2011 |   |   | 2010 |   |
| Revenues                      |   |                       |   |   |                     |   |   |   |   |   |   |   |
|   EIS               |   | $                          | 39,165 |   |                     | $      | 29,179 |   |   | $ | 108,510 |   |   | $ | 95,009 |   |
|   EGS               |   |                       | 6,965  |   |                     |   | 6,924 |   |   |   | 14,489 |   |   |   | 14,671 |   |
| Total Revenue                 |   | $                          | 46,130 |   |                     | $      | 36,103 |   |   | $ | 122,999 |   |   | $ | 109,680 |   |
|                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                  |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   EIS               |   | $                          | 6,448  |   |                     | $      | 4,708 |   |   | $ | 15,659 |   |   | $ | 13,882 |   |
|   EGS               |   |                       | 1,302  |   |                     |   | 1,194 |   |   |   | 2,637 |   |   |   | 2,564 |   |
| Gross profit                  |   | $                          | 7,750  |   |                     | $      | 5,902 |   |   | $ | 18,296 |   |   | $ | 16,446 |   |
|                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   EIS               |   | $                          | 508    |   |                     | $      | 342 |   |   | $ | 983 |   |   | $ | 711 |   |
|   EGS               |   |                       | 228    |   |                     |   | 229 |   |   |   | 457 |   |   |   | 456 |   |
| Depreciation and amortization |   | $                          | 736    |   |                     | $      | 571 |   |   | $ | 1,440 |   |   | $ | 1,167 |   |
|                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss)       |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   EIS               |   | $                          | (737   | )      |                     | $      | (1,173 | ) |   | $ | 650 |   |   | $ | 1,237 |   |
|   EGS               |   |                       | 88     |   |                     |   | (94 | ) |   |   | 173 |   |   |   | 12 |   |
| Operating income (loss)       |   | $                          | (649   | )      |                     | $      | (1,267 | ) |   | $ | 823 |   |   | $ | 1,249 |   |
|                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Interest and other expense    |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   EIS               |   | $                          | 162    |   |                     | $      | 99 |   |   | $ | 238 |   |   | $ | 170 |   |
|   EGS               |   |                       | 52     |   |                     |   | 53 |   |   |   | 106 |   |   |   | 108 |   |
| Interest and other expense    |   | $                          | 214    |   |                     | $      | 152 |   |   | $ | 344 |   |   | $ | 278 |   |
|                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Income tax expense (benefit)  |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   EIS               |   | $                          | (473   | )      |                     | $      | (523 | ) |   | $ | 83 |   |   | $ | 435 |   |
|   EGS               |   |                       | 37     |   |                     |   | (46 | ) |   |   | 94 |   |   |   | (22 | ) |
| Income tax expense (benefit)  |   | $                          | (436   | )      |                     | $      | (569 | ) |   | $ | 177 |   |   | $ | 413 |   |
|                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)             |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   EIS               |   | $                          | (426   | )      |                     | $      | (749 | ) |   | $ | 329 |   |   | $ | 632 |   |
|   EGS               |   |                       | (1     | )      |                     |   | (101 | ) |   |   | (27 | ) |   |   | (74 | ) |
| Net income (loss)             |   | $                          | (427   | )      |                     | $      | (850 | ) |   | $ | 302 |   |   | $ | 558 |   |
|                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Capital expenditures          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   EIS               |   | $                          | 384    |   |                     | $      | 117 |   |   | $ | 693 |   |   | $ | 206 |   |
|   EGS               |   |                       | 4      |   |                     |   | 5 |   |   |   | 7 |   |   |   | 45 |   |
| Capital expenditures          |   | $                          | 388    |   |                     | $      | 122 |   |   | $ | 700 |   |   | $ | 251 |   |

----

----

| EMTEC, INC.                           |
|---------------------------------------|
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| (In thousands)                        |

|                                          |   | Three Months Ended February 28, |   |   |   |   |   |   |   |
|-----------------------------------------------|--------|---------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                          |   | 2011                            |   |   | 2010   |   |   | Change |   |   | % |   |
| Revenues                                      |   |                            |   |   |   |   |   |   |   |   |   |   |
| Procurement services                          |   | $                               | 28,557 |   |   | $      | 23,275 |   |   | $ | 5,282 |   |   |   | 22.7 | % |
| Service and consulting                        |   |                            | 17,573 |   |   |   | 12,828 |   |   |   | 4,745 |   |   |   | 37.0 | % |
| Total Revenues                                |   |                            | 46,130 |   |   |   | 36,103 |   |   |   | 10,027 |   |   |   | 27.8 | % |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Sales                                 |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of procurement services                  |   |                            | 25,583 |   |   |   | 21,036 |   |   |   | 4,547 |   |   |   | 21.6 | % |
| Cost of service and consulting                |   |                            | 12,797 |   |   |   | 9,165  |   |   |   | 3,632 |   |   |   | 39.6 | % |
| Total Cost of Sales                           |   |                            | 38,380 |   |   |   | 30,201 |   |   |   | 8,179 |   |   |   | 27.1 | % |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                  |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Procurement services                          |   |                            | 2,974  |   |   |   | 2,239  |   |   |   | 735 |   |   |   | 32.8 | % |
| Procurement services %                        |   |                            | 10.4   | %      |   |   | 9.6    | %      |   |   |   |   |   |   |   |   |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service and consulting                        |   |                            | 4,776  |   |   |   | 3,663  |   |   |   | 1,113 |   |   |   | 30.4 | % |
| Service and consulting %                      |   |                            | 27.2   | %      |   |   | 28.6   | %      |   |   |   |   |   |   |   |   |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Gross Profit                            |   |                            | 7,750  |   |   |   | 5,902  |   |   |   | 1,848 |   |   |   | 31.3 | % |
| Total Gross Profit %                          |   |                            | 16.8   | %      |   |   | 16.3   | %      |   |   |   |   |   |   |   |   |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                           |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general, and administrative expenses |   |                            | 7,970  |   |   |   | 6,409  |   |   |   | 1,561 |   |   |   | 24.3 | % |
| Stock-based compensation                      |   |                            | 148    |   |   |   | 189    |   |   |   | (41 | ) |   |   | (21.5 | )% |
| Warrant liability adjustment                  |   |                            | (455   | )      |   |   | -      |   |   |   | (455 | ) |   |   | N/A |   |
| Depreciation and amortization                 |   |                            | 736    |   |   |   | 571    |   |   |   | 165 |   |   |   | 28.9 | % |
| Total operating expenses                      |   |                            | 8,399  |   |   |   | 7,169  |   |   |   | 1,230 |   |   |   | 17.2 | % |
| Percent of revenues                           |   |                            | 18.2   | %      |   |   | 19.9   | %      |   |   |   |   |   |   |   |   |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating loss                                |   |                            | (649   | )      |   |   | (1,267 | )      |   |   | 618 |   |   |   | (48.8 | )% |
| Percent of revenues                           |   |                            | -1.4   | %      |   |   | -3.5   | %      |   |   |   |   |   |   |   |   |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other expense (income):                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income – other                 |   |                            | (5     | )      |   |   | (5     | )      |   |   | - |   |   |   | 0.0 | % |
| Interest expense                              |   |                            | 219    |   |   |   | 159    |   |   |   | 60 |   |   |   | 37.7 | % |
| Other                                         |   |                            | -      |   |   |   | (2     | )      |   |   | 2 |   |   | NM |   |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss before income tax benefit                |   |                            | (863   | )      |   |   | (1,419 | )      |   |   | 556 |   |   |   | (39.2 | )% |
| Income tax benefit                            |   |                            | (436   | )      |   |   | (569   | )      |   |   | 133 |   |   |   | (23.4 | )% |
| Net loss                                      |   | $                               | (427   | )      |   | $      | (850   | )      |   | $ | 423 |   |   |   | (49.8 | )% |
| Percent of revenues                           |   |                            | -0.9   | %      |   |   | -2.4   | %      |   |   |   |   |   |   |

----

----

----

| EIS                      |
|--------------------------|
| STATEMENTS OF OPERATIONS |
| (In thousands)           |

|                                          |   | Three Months Ended February 28, |   |   |   |   |   |   |   |
|-----------------------------------------------|--------|---------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                          |   | 2011                            |   |   | 2010   |   |   | Change |   |   | % |   |
| Revenues                                      |   |                            |   |   |   |   |   |   |   |   |   |   |
| Procurement services                          |   | $                               | 28,557 |   |   | $      | 23,275 |   |   | $ | 5,282 |   |   |   | 22.7 | % |
| Service and consulting                        |   |                            | 10,608 |   |   | $      | 5,904  |   |   |   | 4,704 |   |   |   | 79.7 | % |
| Total Revenues                                |   |                            | 39,165 |   |   |   | 29,179 |   |   |   | 9,986 |   |   |   | 34.2 | % |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Sales                                 |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of procurement services                  |   |                            | 25,583 |   |   |   | 21,036 |   |   |   | 4,547 |   |   |   | 21.6 | % |
| Cost of service and consulting                |   |                            | 7,134  |   |   |   | 3,435  |   |   |   | 3,699 |   |   |   | 107.7 | % |
| Total Cost of Sales                           |   |                            | 32,717 |   |   |   | 24,471 |   |   |   | 8,246 |   |   |   | 33.7 | % |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                  |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Procurement services                          |   |                            | 2,974  |   |   |   | 2,239  |   |   |   | 735 |   |   |   | 32.8 | % |
| Procurement services %                        |   |                            | 10.4   | %      |   |   | 9.6    | %      |   |   |   |   |   |   |   |   |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service and consulting                        |   |                            | 3,474  |   |   |   | 2,469  |   |   |   | 1,005 |   |   |   | 40.7 | % |
| Service and consulting %                      |   |                            | 32.7   | %      |   |   | 41.8   | %      |   |   |   |   |   |   |   |   |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Gross Profit                            |   |                            | 6,448  |   |   |   | 4,708  |   |   |   | 1,740 |   |   |   | 37.0 | % |
| Total Gross Profit %                          |   |                            | 16.5   | %      |   |   | 16.1   | %      |   |   |   |   |   |   |   |   |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                           |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general, and administrative expenses |   |                            | 6,984  |   |   |   | 5,350  |   |   |   | 1,634 |   |   |   | 30.5 | % |
| Stock-based compensation                      |   |                            | 148    |   |   |   | 189    |   |   |   | (41 | ) |   |   | (21.5 | )% |
| Warrant liability adjustment                  |   |                            | (455   | )      |   |   | -      |   |   |   | (455 | ) |   |   | 0.0 | % |
| Depreciation and amortization                 |   |                            | 508    |   |   |   | 342    |   |   |   | 166 |   |   |   | 48.5 | % |
| Total operating expenses                      |   |                            | 7,185  |   |   |   | 5,881  |   |   |   | 1,304 |   |   |   | 22.2 | % |
| Percent of revenues                           |   |                            | 18.3   | %      |   |   | 20.2   | %      |   |   |   |   |   |   |   |   |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating loss                                |   |                            | (737   | )      |   |   | (1,173 | )      |   |   | 436 |   |   |   | (37.1 | )% |
| Percent of revenues                           |   |                            | (1.9   | )%     |   |   | (4.0   | )%     |   |   |   |   |   |   |   |   |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other expense (income):                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income – other                 |   |                            | (4     | )      |   |   | (5     | )      |   |   | 1 |   |   |   | 20.0 | % |
| Interest expense                              |   |                            | 166    |   |   |   | 104    |   |   |   | 62 |   |   |   | 59.6 | % |
|                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss before income tax benefit                |   |                            | (899   | )      |   |   | (1,272 | )      |   |   | 373 |   |   |   | (29.3 | )% |
| Income tax benefit                            |   |                            | (473   | )      |   |   | (523   | )      |   |   | 50 |   |   |   | (9.6 | )% |
| Net loss                                      |   | $                               | (426   | )      |   | $      | (749   | )      |   | $ | 323 |   |   |   | (43.1 | )% |
| Percent of revenues                           |   |                            | (1.1   | )%     |   |   | (2.6   | )%     |   |   |   |   |   |   |   |   |

----

|                               |   | For the Three Months Ended |   |
|------------------------------------|--------|----------------------------|--------|
|                               |   | February 28, 2011          |   |   | February 28, 2010 |   |
| Departments of the U.S. Government |   | $                          | 13,848 |   |   |   | 35.4 | % |   | $ | 15,514 |   |   |   | 53.1 | % |
| Canadian Government Agencies       |   |                       | 392    |   |   |   | 1.0 | % |   |   | 372 |   |   |   | 1.3 | % |
| State and Local Governments        |   |                       | 1,541  |   |   |   | 3.9 | % |   |   | 1,079 |   |   |   | 3.7 | % |
| Commercial Companies               |   |                       | 5,866  |   |   |   | 15.0 | % |   |   | 4,962 |   |   |   | 17.0 | % |
| Education and other                |   |                       | 17,518 |   |   |   | 44.7 | % |   |   | 7,252 |   |   |   | 24.9 | % |
| Total Revenues                     |   | $                          | 39,165 |   |   |   | 100.0 | % |   | $ | 29,179 |   |   |   | 100.0 | % |

----

----

----

| EGS                      |
|--------------------------|
| STATEMENTS OF OPERATIONS |
| (In thousands)           |

|                                                         |   | Three Months Ended February 28, |   |   |   |   |   |   |   |
|--------------------------------------------------------------|--------|---------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                         |   | 2011                            |   |   | 2010   |   |   | Change |   |   | % |   |
| Revenues                                                     |   |                            |   |   |   |   |   |   |   |   |   |   |
| Service and consulting                                       |   | $                               | 6,965  |   |   | $      | 6,924  |   |   | $ | 41 |   |   |   | 0.6 | % |
| Total Revenues                                               |   |                            | 6,965  |   |   |   | 6,924  |   |   |   | 41 |   |   |   | 0.6 | % |
|                                                         |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Sales                                                |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of service and consulting                               |   |                            | 5,663  |   |   |   | 5,730  |   |   |   | (67 | ) |   |   | (1.2 | )% |
| Total Cost of Sales                                          |   |                            | 5,663  |   |   |   | 5,730  |   |   |   | (67 | ) |   |   | (1.2 | )% |
|                                                         |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                                 |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service and consulting                                       |   |                            | 1,302  |   |   |   | 1,194  |   |   |   | 108 |   |   |   | 9.0 | % |
| Service and consulting %                                     |   |                            | 18.7   | %      |   |   | 17.2   | %      |   |   |   |   |   |   |   |   |
|                                                         |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Gross Profit                                           |   |                            | 1,302  |   |   |   | 1,194  |   |   |   | 108 |   |   |   | 9.0 | % |
| Total Gross Profit %                                         |   |                            | 18.7   | %      |   |   | 17.2   | %      |   |   |   |   |   |   |   |   |
|                                                         |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general, and administrative expenses                |   |                            | 986    |   |   |   | 1,059  |   |   |   | (73 | ) |   |   | (6.9 | )% |
| Depreciation and amortization                                |   |                            | 228    |   |   |   | 229    |   |   |   | (1 | ) |   |   | (0.4 | )% |
| Total operating expenses                                     |   |                            | 1,214  |   |   |   | 1,288  |   |   |   | (74 | ) |   |   | (5.7 | )% |
| Percent of revenues                                          |   |                            | 17.4   | %      |   |   | 18.6   | %      |   |   |   |   |   |   |   |   |
|                                                         |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss)                                      |   |                            | 88     |   |   |   | (94    | )      |   |   | 182 |   |   |   | (193.6 | )% |
| Percent of revenues                                          |   |                            | 1.3    | %      |   |   | -1.4   | %      |   |   |   |   |   |   |   |   |
|                                                         |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other expense (income):                                      |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income – other                                |   |                            | (1     | )      |   |   | -      |   |   |   | (1 | ) |   |   | N/A |   |
| Interest expense                                             |   |                            | 53     |   |   |   | 55     |   |   |   | (2 | ) |   |   | (3.6 | )% |
| Other                                                        |   |                            | -      |   |   |   | (2     | )      |   |   | 2 |   |   |   | (100.0 | )% |
|                                                         |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss)  before income tax expense (benefit) |   |                            | 36     |   |   |   | (147   | )      |   |   | 183 |   |   |   | (124.5 | )% |
|  Income tax expense (benefit)                           |   |                            | 37     |   |   |   | (46    | )      |   |   | 83 |   |   |   | (180.4 | )% |
| Net loss                                                     |   | $                               | (1     | )      |   | $      | (101   | )      |   | $ | 100 |   |   |   | (99.0 | )% |
| Percent of revenues                                          |   |                            | (0.0   | )%     |   |   | (1.5   | )%     |   |   |   |   |   |   |   |   |

----

----

| EMTEC, INC.                           |
|---------------------------------------|
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| (In thousands)                        |

|                                          |   | Six Months Ended February 28, |    |   |   |   |    |   |   |
|-----------------------------------------------|--------|-------------------------------|---------|--------|--------|--------|---------|--------|--------|
|                                          |   | 2011                          |    |   | 2010   |   |    | Change |   |   | % |   |
| Revenues                                      |   |                          |    |   |   |   |    |   |   |   |   |   |
| Procurement services                          |   | $                             | 88,737  |   |   | $      | 82,657  |   |   | $ | 6,080 |   |   |   | 7.4 | % |
| Service and consulting                        |   |                          | 34,262  |   |   |   | 27,023  |   |   |   | 7,239 |   |   |   | 26.8 | % |
| Total Revenues                                |   |                          | 122,999 |   |   |   | 109,680 |   |   |   | 13,319 |   |   |   | 12.1 | % |
|                                          |   |                          |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Cost of Sales                                 |   |                          |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Cost of procurement services                  |   |                          | 79,762  |   |   |   | 74,209  |   |   |   | 5,553 |   |   |   | 7.5 | % |
| Service and consulting                        |   |                          | 24,941  |   |   |   | 19,025  |   |   |   | 5,916 |   |   |   | 31.1 | % |
| Total Cost of Sales                           |   |                          | 104,703 |   |   |   | 93,234  |   |   |   | 11,469 |   |   |   | 12.3 | % |
|                                          |   |                          |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Gross Profit                                  |   |                          |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Procurement services                          |   |                          | 8,975   |   |   |   | 8,448   |   |   |   | 527 |   |   |   | 6.2 | % |
| Procurement services %                        |   |                          | 10.1    | %      |   |   | 10.2    | %      |   |   |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Service and consulting                        |   |                          | 9,321   |   |   |   | 7,998   |   |   |   | 1,323 |   |   |   | 16.5 | % |
| Service and consulting %                      |   |                          | 27.2    | %      |   |   | 29.6    | %      |   |   |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Total Gross Profit                            |   |                          | 18,296  |   |   |   | 16,446  |   |   |   | 1,850 |   |   |   | 11.2 | % |
| Total Gross Profit %                          |   |                          | 14.9    | %      |   |   | 15.0    | %      |   |   |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Operating expenses:                           |   |                          |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Selling, general, and administrative expenses |   |                          | 16,169  |   |   |   | 13,756  |   |   |   | 2,413 |   |   |   | 17.5 | % |
| Stock-based compensation                      |   |                          | 293     |   |   |   | 274     |   |   |   | 19 |   |   |   | 6.8 | % |
| Warrant liability adjustment                  |   |                          | (429    | )      |   |   | -       |   |   |   | (429 | ) |   |   | 0.0 | % |
| Depreciation and amortization                 |   |                          | 1,440   |   |   |   | 1,167   |   |   |   | 273 |   |   |   | 23.4 | % |
| Total operating expenses                      |   |                          | 17,473  |   |   |   | 15,197  |   |   |   | 2,276 |   |   |   | 15.0 | % |
| Percent of revenues                           |   |                          | 14.2    | %      |   |   | 13.9    | %      |   |   |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Operating income                              |   |                          | 823     |   |   |   | 1,249   |   |   |   | (426 | ) |   |   | (34.1 | )% |
| Percent of revenues                           |   |                          | 0.7     | %      |   |   | 1.1     | %      |   |   |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Other expense (income):                       |   |                          |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Interest income – other                 |   |                          | (8      | )      |   |   | (16     | )      |   |   | 8 |   |   |   | (50.0 | )% |
| Interest expense                              |   |                          | 337     |   |   |   | 303     |   |   |   | 34 |   |   |   | 11.2 | % |
| Other                                         |   |                          | 15      |   |   |   | (9      | )      |   |   | 24 |   |   |   | (266.7 | )% |
|                                          |   |                          |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Income before income tax expense              |   |                          | 479     |   |   |   | 971     |   |   |   | (492 | ) |   |   | (50.7 | )% |
| Income tax expense                            |   |                          | 177     |   |   |   | 413     |   |   |   | (236 | ) |   |   | (57.1 | )% |
| Net income                                    |   | $                             | 302     |   |   | $      | 558     |   |   | $ | (256 | ) |   |   | (45.9 | )% |
| Percent of revenues                           |   |                          | 0.2     | %      |   |   | 0.5     | %      |   |   |   |   |   |   |   |   |

----

| EIS                      |
|--------------------------|
| STATEMENTS OF OPERATIONS |
| (In thousands)           |

|                                          |   | Six Months Ended February 28, |    |   |   |   |   |   |   |
|-----------------------------------------------|--------|-------------------------------|---------|--------|--------|--------|--------|--------|--------|
|                                          |   | 2011                          |    |   | 2010   |   |   | Change |   |   | % |   |
| Revenues                                      |   |                          |    |   |   |   |   |   |   |   |   |   |
| Procurement services                          |   | $                             | 88,737  |   |   | $      | 82,657 |   |   | $ | 6,080 |   |   |   | 7.4 | % |
| Service and consulting                        |   |                          | 19,773  |   |   |   | 12,352 |   |   |   | 7,421 |   |   |   | 60.1 | % |
| Total Revenues                                |   |                          | 108,510 |   |   |   | 95,009 |   |   |   | 13,501 |   |   |   | 14.2 | % |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Sales                                 |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of procurement services                  |   |                          | 79,762  |   |   |   | 74,209 |   |   |   | 5,553 |   |   |   | 7.5 | % |
| Service and consulting                        |   |                          | 13,089  |   |   |   | 6,918  |   |   |   | 6,171 |   |   |   | 89.2 | % |
| Total Cost of Sales                           |   |                          | 92,851  |   |   |   | 81,127 |   |   |   | 11,724 |   |   |   | 14.5 | % |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                  |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Procurement services                          |   |                          | 8,975   |   |   |   | 8,448  |   |   |   | 527 |   |   |   | 6.2 | % |
| Procurement services %                        |   |                          | 10.1    | %      |   |   | 10.2   | %      |   |   |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service and consulting                        |   |                          | 6,684   |   |   |   | 5,434  |   |   |   | 1,250 |   |   |   | 23.0 | % |
| Service and consulting %                      |   |                          | 33.8    | %      |   |   | 44.0   | %      |   |   |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Gross Profit                            |   |                          | 15,659  |   |   |   | 13,882 |   |   |   | 1,777 |   |   |   | 12.8 | % |
| Total Gross Profit %                          |   |                          | 14.4    | %      |   |   | 14.6   | %      |   |   |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                           |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general, and administrative expenses |   |                          | 14,162  |   |   |   | 11,660 |   |   |   | 2,502 |   |   |   | 21.5 | % |
| Stock-based compensation                      |   |                          | 293     |   |   |   | 274    |   |   |   | 19 |   |   |   | 6.8 | % |
| Warrant liability adjustment                  |   |                          | (429    | )      |   |   | -      |   |   |   | (429 | ) |   |   | N/A |   |
| Depreciation and amortization                 |   |                          | 983     |   |   |   | 711    |   |   |   | 272 |   |   |   | 38.3 | % |
| Total operating expenses                      |   |                          | 15,009  |   |   |   | 12,645 |   |   |   | 2,364 |   |   |   | 18.7 | % |
| Percent of revenues                           |   |                          | 13.8    | %      |   |   | 13.3   | %      |   |   |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income                              |   |                          | 650     |   |   |   | 1,237  |   |   |   | (587 | ) |   |   | (47.4 | )% |
| Percent of revenues                           |   |                          | 0.6     | %      |   |   | 1.3    | %      |   |   |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other expense (income):                       |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income – other                 |   |                          | (7      | )      |   |   | (16    | )      |   |   | 9 |   |   |   | (56.3 | )% |
| Interest expense                              |   |                          | 230     |   |   |   | 191    |   |   |   | 39 |   |   |   | 20.4 | % |
| Other                                         |   |                          | 15      |   |   |   | (5     | )      |   |   | 20 |   |   |   | (400.0 | )% |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income before income tax expense              |   |                          | 412     |   |   |   | 1,067  |   |   |   | (655 | ) |   |   | (61.4 | )% |
| Income tax expense                            |   |                          | 83      |   |   |   | 435    |   |   |   | (352 | ) |   |   | (80.9 | )% |
| Net income                                    |   | $                             | 329     |   |   | $      | 632    |   |   | $ | (303 | ) |   |   | (47.9 | )% |
| Percent of revenues                           |   |                          | 0.3     | %      |   |   | 0.7    | %      |   |   |   |   |   |   |

----

|                               |   | For the Six Months Ended |    |
|------------------------------------|--------|--------------------------|---------|
|                               |   | February 28, 2011        |    |   | February 28, 2010 |   |
| Departments of the U.S. Government |   | $                        | 60,088  |   |   |   | 55.4 | % |   | $ | 56,915 |   |   |   | 59.9 | % |
| Canadian Government Agencies       |   |                     | 1,309   |   |   |   | 1.2 | % |   |   | 721 |   |   |   | 0.8 | % |
| State and Local Governments        |   |                     | 2,255   |   |   |   | 2.1 | % |   |   | 2,136 |   |   |   | 2.2 | % |
| Commercial Companies               |   |                     | 11,759  |   |   |   | 10.8 | % |   |   | 10,813 |   |   |   | 11.4 | % |
| Education and other                |   |                     | 33,098  |   |   |   | 30.5 | % |   |   | 24,424 |   |   |   | 25.7 | % |
| Total Revenues                     |   | $                        | 108,510 |   |   |   | 100.0 | % |   | $ | 95,009 |   |   |   | 100.0 | % |

----

----

----

| EGS                      |
|--------------------------|
| STATEMENTS OF OPERATIONS |
| (In thousands)           |

|                                                         |   | Six Months Ended February 28, |   |   |   |   |   |   |   |
|--------------------------------------------------------------|--------|-------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                         |   | 2011                          |   |   | 2010   |   |   | Change |   |   | % |   |
| Revenues                                                     |   |                          |   |   |   |   |   |   |   |   |   |   |
| Service and consulting                                       |   | $                             | 14,489 |   |   | $      | 14,671 |   |   | $ | (182 | ) |   |   | (1.2 | )% |
| Total Revenues                                               |   |                          | 14,489 |   |   |   | 14,671 |   |   |   | (182 | ) |   |   | (1.2 | )% |
|                                                         |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Sales                                                |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of service and consulting                               |   |                          | 11,852 |   |   |   | 12,107 |   |   |   | (255 | ) |   |   | (2.1 | )% |
| Total Cost of Sales                                          |   |                          | 11,852 |   |   |   | 12,107 |   |   |   | (255 | ) |   |   | (2.1 | )% |
|                                                         |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                                 |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service and consulting                                       |   |                          | 2,637  |   |   |   | 2,564  |   |   |   | 73 |   |   |   | 2.8 | % |
| Service and consulting %                                     |   |                          | 18.2   | %      |   |   | 17.5   | %      |   |   |   |   |   |   |   |   |
|                                                         |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Gross Profit                                           |   |                          | 2,637  |   |   |   | 2,564  |   |   |   | 73 |   |   |   | 2.8 | % |
| Total Gross Profit %                                         |   |                          | 18.2   | %      |   |   | 17.5   | %      |   |   |   |   |   |   |   |   |
|                                                         |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                          |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general, and administrative expenses                |   |                          | 2,007  |   |   |   | 2,096  |   |   |   | (89 | ) |   |   | (4.2 | )% |
| Depreciation and amortization                                |   |                          | 457    |   |   |   | 456    |   |   |   | 1 |   |   |   | 0.2 | % |
| Total operating expenses                                     |   |                          | 2,464  |   |   |   | 2,552  |   |   |   | (88 | ) |   |   | (3.4 | )% |
| Percent of revenues                                          |   |                          | 17.0   | %      |   |   | 17.4   | %      |   |   |   |   |   |   |   |   |
|                                                         |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income                                             |   |                          | 173    |   |   |   | 12     |   |   |   | 161 |   |   |   | 1341.7 | % |
| Percent of revenues                                          |   |                          | 1.2    | %      |   |   | 0.1    | %      |   |   |   |   |   |   |   |   |
|                                                         |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other expense (income):                                      |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income – other                                |   |                          | (1     | )      |   |   | -      |   |   |   | (1 | ) |   |   | N/A |   |
| Interest expense                                             |   |                          | 107    |   |   |   | 112    |   |   |   | (5 | ) |   |   | (4.5 | )% |
| Other                                                        |   |                          | -      |   |   |   | (4     | )      |   |   | 4 |   |   |   | (100.0 | )% |
|                                                         |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss)  before income tax expense (benefit) |   |                          | 67     |   |   |   | (96    | )      |   |   | 163 |   |   |   | (169.8 | )% |
|  Income tax expense (benefit)                           |   |                          | 94     |   |   |   | (22    | )      |   |   | 116 |   |   |   | (527.3 | )% |
| Net loss                                                     |   | $                             | (27    | )      |   | $      | (74    | )      |   | $ | 47 |   |   |   | (63.5 | )% |
| Percent of revenues                                          |   |                          | (0.2   | )%     |   |   | (0.5   | )%     |   |   |   |   |   |   |   |   |

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| ·   | The First Amendment changed the base rate of interest to the three month (90 day) LIBOR rate from the previous base rate of the “Prime Rate.” |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The First Amendment changed the interest rate for revolving credit loans to the base rate plus 3.25% from the previous interest rate for revolving credit loans which was the base rate minus 0.5%, and changed the interest rate for floorplan loans, if applicable, to 6.25% in excess of the base rate from the previous interest rate for floorplan loans of 2.5% in excess of the base rate. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The First Amendment amended the Schedule to Loan and Security Agreement to provide that the Borrower must pay the Lender a floorplan annual volume commitment fee if the aggregate amount of all floorplan loans does not equal or exceed $60.0 million in a 12-month period from December 1st through November 30th.  The floorplan commitment fee is equal to the amount that the floorplan usage during such 12-month period is less than $60.0 million multiplied by 1%.  If the Borrower terminates the Credit Facility during a 12-month period, the Borrower shall be required to pay the Lender a prorated portion of the annual volume commitment fee.  |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·  | The Second Amendment changed the total facility amount by temporarily increasing it to $40.6 million.  This amendment was effective until January 31, 2011, at which time the total facility amount returned to its previous level of $32.0 million. |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | The Second Amendment added and clarified certain covenants in the Credit Facility including the following: |
|--------------|------------------------------------------------------------------------------------------------------------|

| o   | Changing the Positive Net Income covenant to add back to Net Income certain non-cash charges; |
|---------------|-----------------------------------------------------------------------------------------------|

| o   | Providing that Borrower shall maintain a ratio of EBITDA to Interest Paid (as such terms are defined in the Credit Facility) of 3.50 to 1.00 as of the end of each fiscal quarter measured on a trailing twelve month basis; and |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Changing the Capital Expense covenant to increase the limitation on capital expenditures to $2,750,000 in any rolling four fiscal quarter period and to provide that business acquisition costs are not considered capital expenditures for this purpose. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·  | In some instances, the “set-up” service is performed after date of delivery.  We recognize revenue for the “hardware” component at date of delivery when the amount of revenue allocable to this component is not contingent upon the completion of “set-up” services and, therefore, our client has agreed that the transaction is complete as to the “hardware” component.  In instances where our client does not accept delivery until “set-up” services are completed, we defer all revenue in the transaction until client acceptance occurs. |
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| ·  | There are occasions when a client requests a transaction on a “bill and hold” basis.  We follow the ASC criteria and recognize revenue from these sales prior to date of physical delivery only when all the criteria of ASC are met. We do not modify our normal billing and credit terms for these clients. The client is invoiced at the date of revenue recognition when all of the criteria have been met. For the periods ended February 28, 2011 and 2010, we did not have any bill and hold transactions. |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                       |      |                                 |   |   |
|----------------------------|-----------|--------------------------------------|--------|--------|
|   EMTEC, INC.    |      |                                 |
|                       |      |                                 |   |   |
|                       |  By: | /s/  DINESH R. DESAI       |   |
|                       |      | Dinesh R. Desai                      |   |
|                       |      | Chairman and Chief Executive Officer |   |
|                       |      | (Principal Executive Officer)        |   |
|                       |      |                                 |   |   |
|                       |  By: | /s/  GREGORY P. CHANDLER   |   |
|                       |      | Gregory P. Chandler                  |   |
|                       |      | Chief Financial Officer              |   |
|                       |      | (Principal Financial Officer)        |   |
|                       |      |                                 |   |   |
|  Date: April 14, 2011 |      |                                 |   |   |