**U.S. SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

** **

**FORM 10-KSB**

 
| **x**      | ** ** | **ANNUAL REPORT UNDER SECTION 13 OR  15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                                                    |
|------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                       |
| ** ** | ** ** | **FOR THE  FISCAL YEAR ENDED JUNE 30, 2007**                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                       |
| **o**      | ** ** | **TRANSITION REPORT UNDER  SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                                           |
| ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                       |
| ** ** | ** ** | **For the transition period from                                  to                              ** |
| ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                       |
| ** ** | ** ** | **Commission File Number 001-10320**                                                                                                                                                                                                                                                                                                                                                                             |

 

**Tempco, Inc. (Formerly NETtime Solutions, Inc.)**

(Name of small business issuer in its charter)

 

| **Nevada**                                   | ** ** | **13-3465289**      |
|----------------------------------------------|------------|---------------------|
| (State or other jurisdiction of              |       | (I.R.S. Employer    |
| incorporation of organization)               |       | Identification No.) |
|                                         |       |                |
| **7625 East Via Del Reposa  Scottsdale, AZ** | ** ** | **85258**           |
| (Address of principal executive offices)     |       | Zip Code            |

 

**(480) 272-8745**

(Issuer’s telephone number)

 

Securities registered under Section 12(b) of the ExchangeAct: ** None**

 

Securities registered under Section 12(g) of the ExchangeAct:

**Common Stock, $.005 par value**

 

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

 

Check if there is no disclosure of delinquent filers in response toItem 405 of Regulation S-B contained in this form, and no disclosure will becontained, to the best of registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-KSBor any amendment to this Form 10-KSB. o

 

Indicate by check mark whether the registrant is a shell company (asdefined in Rule 12b-2 of the Exchange Act) Yes x No o

 

The issuer is in the development stage and had no revenues for thefiscal year ended June 30, 2008.

 

The aggregate market value of the voting stock and non-voting commonequity (based on the closing price on that date) held by non-affiliates of theregistrant as of September 22, 2008 was approximately $1,596,520.

 

At September 22, 2008, the issuer had outstanding 11,403,711shares of Common Stock, par value $.005 per share.

 

Transitional Small Business Disclosure Format:  Yes  o No  x

 

 

 

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**PART I**

 

# **Forward-LookingInformation**

# ** **

The statements containedin this Annual Report on Form 10-KSB that are not historical fact areforward-looking statements (as such term is defined in the Private SecuritiesLitigation Reform Act of 1995), within the meaning of Section 27A of theSecurities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended.  Theforward-looking statements contained herein are based on current expectationsthat involve a number of risks and uncertainties.  These statements can be identified by the useof forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,”or “anticipates,” or the negative thereof or other variations thereon orcomparable terminology, or by discussions of strategy that involve risks anduncertainties.  The Company wishes tocaution the reader that its forward-looking statements that are not historicalfacts are only predictions.  Noassurances can be given that the future results indicated, whether expressed orimplied, will be achieved.  Whilesometimes presented with numerical specificity, these projections and otherforward-looking statements are based upon a variety of assumptions relating tothe business of the Company, which, although considered reasonable by theCompany, may not be realized.  Because ofthe number and range of assumptions underlying the Company’s projections andforward-looking statements, many of which are subject to significantuncertainties and contingencies that are beyond the reasonable control of theCompany, some of the assumptions inevitably will not materialize, andunanticipated events and circumstances may occur subsequent to the date of thisreport.  These forward-looking statementsare based on current expectations and the Company assumes no obligation toupdate this information.  Therefore, theactual experience of the Company and the results achieved during the periodcovered by any particular projections or forward-looking statements may differsubstantially from those projected. Consequently, the inclusion of projections and other forward-lookingstatements should not be regarded as a representation by the Company or anyother person that these estimates and projections will be realized.  The Company’s actual results may varymaterially.  There can be no assurancethat any of these expectations will be realized or that any of theforward-looking statements contained herein will prove to be accurate.

 

**Item1.  Description of Business.**

 

# **General**

# ** **

Tempco, Inc.is a Nevada corporation. We were originally incorporated in 1988 as RichardBarrie Fragrances, Inc., a Nevada Corporation. From March 1996through February 2000, we operated under the name FBR Capital Corp. In February 2000we changed our name to Vitrix, Inc. and continued under that name untilNovember, 2003, when we changed our name to Time America, Inc. In May 2007,we again changed our name to NETtime Solutions, Inc. In February, 2008 wechanged the name of the Company from NetTime Solutions, Inc. to Tempco, Inc.As a result of the sale of substantially all of our operating assets in February 2008,we are, currently a shell company. We have no business plan except to seek toacquire or merge with an operating company. Our sole assets are $212,278 incash, prepaid expenses of $9,559 and a $200,000 promissory note receivableissued by NETtime Solutions, LLC, as part of the purchase price for sale of ourassets, and related accrued interest of $7,250.

 

**PriorOperations**

 

Prior to the disposition of all of our operating assets on February 4,2008, we developedand marketed a line of time and labor management software and hardwareproducts.  Our products were designed to improve productivity byautomating time and attendance, workforce scheduling and management of laborresources. We targeted our product solutions at small to mid-sized companiesfrom 25 to 2,000 or more employees.

 

In March 2001 as Vitrix, Incorporated, we acquired Time America, Inc.,a private Arizona-based time and attendance software development company.Following the acquisition, in April, 2001, we changed the name of ourwholly-owned subsidiary from Vitrix Incorporated to Time America, Inc. In December 2003,we also changed the name of our parent company to Time America, Inc.

 

 In October 2005 we formed asubsidiary, Net Edge Devices, LLC, an Arizona limited liability company, tomanufacture and distribute a line of advanced data collection devices thattrack and display labor information (our TA7000 product series) that trackedand displayed critical labor information across a variety of industries. As of January 2007, we ceasedmanufacturing or offering our TA7000 family of products through our subsidiary,NetEdge Devices, or otherwise.  TheTA7000 product series was sold pursuant to the Asset Purchase Agreementdiscussed below.

 

2

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**Prior Asset Sales**

** **

Effective March 31, 2006 the Company closed on the sale of certain ofthe Company’s direct sales assets pursuant to the terms of an Asset PurchaseAgreement (the “Purchase Agreement”). Under the terms of the PurchaseAgreement, certain assets associated with the Company’s previous direct salesbusiness were sold, including a copy of the source code and other intellectualproperty relating to the Company’s NETtime, HourTrack and GENESIS time andattendance software products, related ASP and maintenance contracts, andcertain specified direct channel sales opportunities.

 

In January 2007, we entered into an Asset Purchase Agreement with SynelIndustries, Inc., an Israeli registered corporation (“Synel”). Under the agreement,Synel purchased the Company’s reseller sales channel, source code and relatedintellectual property for the Company’s GENESIS, HourTrack, and TA7000 productseries, certain use rights associated with the Company’s NETtime source code,and all of the Company’s rights associated with the “Time America” name. Thesale closed on January 22, 2007. Subsequently, the Company filed a Second Amendment to the Articles onIncorporation with the Arizona Corporation Commission to change the corporatename of its wholly-owned subsidiary, Time America, Inc., a Arizona corporation,to NETtime Solutions, Inc.  The effectivedate of the subsidiary corporate name change was January 22, 2007.  On April 20, 2007, the Company filed aCertificate of Amendment to the Articles of Incorporation with the NevadaSecretary of State to change the corporate name of Time America, Inc., a Nevadacorporation, to NETtime Solutions, Inc. The effective date of the corporate name change was May 10, 2007

 

The Company has had a history of losses from operations and due to theCompany’s financial condition and inability to continue ongoing operations withcurrent cash flow, along with debt obligations, the Company’s Board ofDirectors and management determined that the sale of substantially all of ouroperating assets and liabilities (the “Asset Sale”) would be in the bestinterest of the Company’s stockholders.

 

On August 31, 2007, the Board of Directors approved the Asset Salepursuant to the terms of the Memorandum of Understanding, dated September 24,2007 (the “Memorandum of Understanding”). Under the terms of the Memorandum ofUnderstanding, certain insiders of the Company, including all of the members ofthe Company’s Board of Directors, the President and Chief Executive Officer, togetherwith certain other shareholders of the Company, collectively referred to as the“Contributors,” formed NETtime Solutions, LLC (the “Buyer”) for the purpose ofconsummating the Asset Sale and acquiring substantially all of the net assetsof the Company. The Contributors contributed certain issued and outstandingshares of the Company that they collectively held to NETtime Solutions, LLCpursuant to the terms of the limited liability company operating agreementgoverning NETtime Solutions, LLC. Accordingly, on February 4, 2008, wecompleted the sale of substantially all of our net liabilities and the netliabilities of our two operating subsidiaries, NETtime Solutions, Inc., anArizona corporation and NetEdge Devices, LLC, an Arizona limited liability company,to the Buyer for consideration valued at approximately $1,042,000, whichconsisted of the following:

 

(i)    6,478,693 shares which were to be delivered to theSeller at Closing.

(ii)   An unsecured promissory note in the aggregateprincipal amount of $200,000. The promissory note bears interest at the rate of9%, with principal and interest due on February 4, 2011.

 

No gain or loss was recorded in relation to the transaction because theAsset Sale was with companies under common control.  Accordingly, the excess of the fair value ofthe consideration received plus the net liabilities disposed of has beentreated as a capital contribution.  Thefollowing table summarizes the consideration received and the net assetsdisposed of:

 

3

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| Consideration Received                                                      |   |      |      |
|-----------------------------------------------------------------------------|--------|-----------|-----------|
| Fair value of  6,478,693 shares received                                    |   | $         | 842,351   |   |
| Promissory note  receivable                                                 |   | 200,000   |      |
| Total fair value  of consideration received                                 |   | $         | 1,042,351 |   |
|                                                                        |   |      |      |
| Net Liabilities Divested                                                    |   |      |      |
| Cash                                                                        |   | $         | 397,472   |   |
| Accounts  receivable                                                        |   | 736,595   |      |
| Inventory                                                                   |   | 70,579    |      |
| Property and  Equipment, net                                                |   | 175,591   |      |
| Other assets                                                                |   | 62,253    |      |
| Total assets  divested                                                      |   | 1,442,490 |      |
|                                                                        |   |      |      |
| Accounts payable                                                            |   | 295,146   |      |
| Accrued  liabilities                                                        |   | 326,792   |      |
| Deferred revenue                                                            |   | 307,055   |      |
| Notes  payable-related parties                                              |   | 1,494,050 |      |
|                                                                        |   |      |      |
| Total current  liabilities divested                                         |   | 2,423,043 |      |
|                                                                        |   |      |      |
| Net liabilities  divested                                                   |   | $         | (980,553  | ) |
|                                                                        |   |      |      |
| Fair value of  the consideration received plus the net liabilities divested |   | $         | 2,022,904 |   |

 

**Current Business Strategy**

 

Because of the sale ofall of our operating assets in February 2008, the Company has no ongoingoperations.   The Board has determined tomaintain the Company as a public “shell” corporation, which will seek suitablebusiness combination opportunities.  TheBoard believes that a business combination with an operating company has thepotential to create greater value for the Company’s stockholders than aliquidation or similar distribution.

 

**Effect of Status as a “Shell”Company**

 

Because we are a shellcompany as defined under the Rules of the Securities and Exchange Commission,we are disqualified from using a short form of registration statement (S-8) forthe issuance of employee stock options. Furthermore, holders of restrictedsecurities issued while we were or are a shell company may not re-sell thempursuant to SEC Rule 144 for a period of one year after we cease to be a shelland have filed the necessary report with the SEC to that effect.

 

**Employees**

 

The Company presently hasno employees apart from our Officers and Directors. We expect no significantchanges in the number of our employees other than such changes, if any,incident to a business combination.

 

4

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**Item2. Description of Property.**

 

We do not own anyreal property.  The Company’s corporate headquarters are located inthe offices of one of our Board Members, located in Scottsdale,Arizona.  The Company is not obligated under the terms of that lease,which has monthly rental payments of $1,000, on a month to month basis.

 

** Item 3. Legal Proceedings.**

 

We are from timeto time involved in legal proceedings arising from the normal course ofbusiness.  As of the date of this report,we were not currently involved in any legal proceedings.

 

**Item4. Submission Of Matters To A Vote Of Security Holders and Small BusinessIssuer Purchases of Equity Securities.**

 

No matter wassubmitted to vote of our security holders during the fourth fiscal quartercovered by this report.

 

5

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**PART II**

 

**Item 5.Market For Common Equity And Related Stockholder Matters**

 

**Marketfor Common Stock**

 

Our common stockis quoted on the Over-The-Counter Bulletin Board maintained by the NASD underthe symbol “NTMS.OB.”  The high and lowbid prices of our common stock as reported for the periods presented, by fiscalquarter (i.e. 1st Quarter = July 1 through September 30), were as follows.  The quotations reflect inter-dealer prices,without retail markup, mark-down or commission and may not represent actualtransactions.

 
| ** **                             | ** ** | **High** | ** ** | **Low** | ** ** |
|----------------------------------------|------------|----------|------------|---------|------------|
|                                   |       |     |       |    |       |
| Fiscal Year  Ended: June 30, 2006 |       |     |       |    |       |
| First Quarter                          |       | $        | 0.75       |    | $          | 0.51 |   |
| Second Quarter                         |       | 0.72     |       | 0.55    |       |
| Third Quarter                          |       | 0.63     |       | 0.45    |       |
| Fourth Quarter                         |       | 0.55     |       | 0.36    |       |
|                                   |       |     |       |    |       |
| Fiscal Year Ended:  June 30, 2007 |       |     |       |    |       |
| First Quarter                          |       | $        | 0.48       |    | $          | 0.29 |   |
| Second Quarter                         |       | 0.45     |       | 0.25    |       |
| Third Quarter                          |       | 0.48     |       | 0.3     |       |
| Fourth Quarter                         |       | 0.42     |       | 0.16    |       |
|                                   |       |     |       |    |       |
| Fiscal Year  Ended: June 30, 2008 |       |     |       |    |       |
| First Quarter                          |       | $        | 0.22       |    | $          | 0.12 |   |
| Second Quarter                         |       | 0.18     |       | 0.09    |       |
| Third Quarter                          |       | 0.40     |       | 0.09    |       |
| Fourth Quarter                         |       | 0.20     |       | 0.08    |       |

 

**Holders**

 

As of September 22, 2008, there were approximately 129 holders ofrecord of our common stock.  This doesnot include beneficial owners holding stock in street name.

 

6

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**Dividend Policy**

 

To date, we have not paid any cash dividends and our present policy isto retain earnings, if any for use in our business.

 

**EquityCompensation Plan Information**

 

The following table setsforth information regarding the number of shares of our common stock that maybe issued pursuant to our equity compensation plans or arrangements as of theend of fiscal 2008.

 
| **Plan Category**                                      | ** ** | **Number of Securities  To Be Issued Upon  Exercise of Outstanding  Options, Warrants  and Rights** | ** ** | **Weighted-Average  Exercise Price of  Outstanding Options,  Warrants and Rights** | ** ** | **Number of Securities  Remaining Available For  Future Issuance Under  Equity Compensation  Plans (Excluding  Securities Reflected  in First Column)** | ** ** |
|-------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Equity compensation  plans approved by security holders     |       | None                                                                                                                                             | (1)        | $                                                                                                           | —     |                                                                                                                                                                                                           | 3,000,000  | (2) |
| Equity  compensation plans not approved by security holders |       | 3,692,944                                                                                                                                        | (3)        | $                                                                                                           | 0.44       |                                                                                                                                                                                                           | —     |   |
| TOTAL                                                       |       | 3,692,944                                                                                                                                        |       | $                                                                                                           | .44        |                                                                                                                                                                                                           | 3,000,000  |   |

 

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(1)   Represents shares of common stock that may be issuedpursuant to outstanding options granted under our 1999 Equity CompensationPlan.

 

(2)   Represents shares of common stock that may be issuedpursuant to options available for future grant under our 1999 EquityCompensation Plan.

 

(3)   Represents (a) an aggregate of 2,704,287 sharesof common stock underlying non-statutory stock options approved by the Company’sboard of directors and granted to directors and employees of the Company (the “Options”).  The options have vesting schedules rangingfrom immediate vesting to four year vesting and have an exercise price equal tothe closing bid price of the common stock on the date of grant and a term ofeight to ten years; and (b) an aggregate of 988,657 shares of common stockpurchasable upon exercise of warrants issued to various parties in connectionwith debt and equity offerings and for services rendered by contractors.  See Note 6 to our Consolidated FinancialStatements for a detailed description of the terms of these warrants.

 

**Recent Sales of Unregistered Securities**

 

Set forth below isinformation regarding securities sold by us since March, 2004 which were notregistered under the Securities Act.

 

In March 2004,we consummated a private placement pursuant to which we issued a $2,000,000principal amount secured convertible term note due March 22, 2007,together with a common stock purchase warrant entitling the holder to purchase280,000 shares of common stock.  The noteand the warrant were sold to a single “accredited investor”, as such term isdefined in the rules promulgated under the Securities Act, Laurus MasterFund, Ltd., for a purchase price of $2,000,000. The principal and unpaid interest on the note are convertible intoshares of our common stock at an original fixed conversion price of $1.17 per share,which was based on the weighted average price of our common stock for thetwenty trading days immediately prior to the issuance of the note.  Such conversion price is subject toanti-dilution adjustments based on the occurrence of certain corporate events.  The note provides for monthly payments ofinterest at the prime rate, which is subject to reduction if the market priceof 

 

7

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our common stockexceeds certain designated thresholds. Under the terms of the note, if the average price of the stock for thefive trading days preceding a scheduled payment is 10% greater than the fixedconversion price, the scheduled payment is paid by the conversion of commonstock. If the scheduled payment is not made with common stock, the payment ismade with cash.  In June 2005, weamended the conversion price of the note. The conversion price on the first$300,000 of the note was reduced to $0.50 per share and the conversion price onthe remainder of the note was reduced to $0.65 per share.  The warrant entitles the holder thereof topurchase, at any time through March 22, 2011, 200,000 shares of our commonstock at a price of $1.29 per share; 40,000 shares of our common stock at aprice of $1.35 per share; and 40,000 shares of our common stock at a price of$1.40 per share.  We issued the note andthe warrant in a transaction exempt from registration under Section 4(2) ofthe Securities Act.

 

The privateplacement of the note and the warrant with Laurus in March 2004 wasfacilitated by The Oberon Group, LLC (Oberon) in consideration for which Oberonwas paid an advisory fee of $150,000, and granted a warrant to purchase, at anytime through March 22, 2007, 136,364 shares of our common stock at a pershare price of $1.10.  We issued thewarrant in a transaction exempt from registration under Section 4(2) ofthe Securities Act.

 

In April 2004,the Company entered into a subordinated note agreement with a shareholder andexisting debt holder.  Under the terms ofthe agreement, an existing term note was refinanced as a five year term notewith monthly principal and interest payments at 15%.  In consideration for agreeing to subordinaterepayment of the note to the Laurus note, we issued 25,000 shares of restrictedcommon stock to the holder of the subordinated note.  We issued these shares in a transactionexempt from registration under Section 4(2) of the Securities Act.

 

In June 2005,we entered into a security agreement with Laurus that provided that we mayborrow from time to time revolving loans up to $1,500,000 subject to aborrowing base calculation based on our eligible accounts receivable.  Borrowings under the revolving facility,evidenced by notes, accrue interest at the prime rate payable monthly. Pursuantto the terms of the Agreement, Laurus shall have the right at any time untilthe maturity date, or during an event of default, to convert all or any portionof the outstanding notes into fully paid restricted shares of our common stockat a fixed conversion price of $0.65. The principal amount of all outstanding loans together with any accruedand unpaid interest is due as of June 23, 2008.  We also issued Laurus a common stock purchasewarrant entitling the holder to purchase 210,000 shares of common stock, at anytime through June 23, 2012, as follows: 150,000 shares at a price of $0.72 per share; 30,000 shares at a priceof $0.75 per share; and 30,000 shares at a price of $0.78 per share.  We issued the notes and the warrant in atransaction exempt from registration under Section 4(2) of theSecurities Act.

 

In January 2006,we entered into a security and purchase agreement with Laurus to refinance ourobligations to Laurus under our prior arrangements, and to obtain an additional$1 million in new financing.  Under theterms of the agreement, we issued a $2 million convertible term note and a $1.5million non-convertible revolving note. The term note was fully drawn, with $1,058,310 of the proceeds of theterm note used to repay in full the March 22, 2004 Laurus note. Under therevolving facility, we may borrow from time to time revolving loans up to$1,500,000 subject to a borrowing base calculation based on our eligibleaccounts receivable and eligible inventory. Borrowings under the notes accrue interest at the prime rate plus 2%,with a 7.25% minimum interest rate, payable monthly.  Pursuant to the terms of the agreement,Laurus has the right to convert all or any portion of the outstanding term noteinto fully paid restricted shares of the Company’s common stock at a fixedconversion price of $0.65 if the average market price of such stock for thefive (5) days preceding the payment is 10% above the initial fixedconversion price of $0.65 per share.  Therevolving note matured on January 3, 2008 and the term note matures on January 3,2009.  We also issued to Laurus a commonstock purchase warrant entitling the holder to purchase 140,000 shares ofcommon stock, at any time through January 3, 2013, at a price of $0.65 pershare.  We issued the notes and the warrantin a transaction exempt from registration under Section 4(2) of theSecurities Act.

 

In December 2006,the Company entered into a subordinated note agreement with a relatedparty.  The note is a 90-day note with the principal and interest due in90 days and monthly interest payments at an annual percentage rate of10%.  In consideration for agreeing to subordinate repayment of the note,the Company issued 30,000 shares of restricted common stock to the holder ofthe subordinated note.

 

In January 2007,the Company issued 100,000 shares of restricted common stock to Laurus inconsideration for Laurus’s consent to extending the maturity date of theCompany’s existing revolving note with Laurus, the asset sale to Synel, and thecorporate name change.

 

8

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In February 2007,the Company issued 100,000 shares of its common stock to Thomas Bednarik forconsulting services following the January 2007 asset sale.

 

In February 2007,the Company amended the terms of all its note agreements with a related partyto defer the monthly principal payments through December 2007.  The amortization period of the note wasincreased by 12 months to compensate for the deferred principal payments.  The Company issued 100,000 shares of itscommon stock in consideration for consent to interest only payments through December 2007.

 

In March 2008,we commenced a private placement which closed in April, 2008 pursuant to whichwe received net proceeds of $225,000 upon issuance of 2,500,000 shares of ourcommon stock. The shares were sold to “accredited investors”, as such term isdefined in the rules promulgated under the Securities Act, for a purchaseprice of $.10 per share, with a minimum purchase of 50,000 shares. In relationto the private placement, we paid Source Capital $25,000, and issued a warrantentitling the holder to purchase 250,000 shares of common stock, at any timethrough April 14, 2013, at a price of $0.12 per share.

 

No underwriterswere involved in the foregoing sales of securities.  The securities described in the foregoingparagraphs were issued in reliance upon the exemption from the registrationrequirements of the Securities Act under Section 4(2) of theSecurities Act and Rule 506 of Regulation D promulgated thereunderrelating to sales by an issuer not involving any public offering.  The purchasers of our securities representedto us in connection with their purchase that they were accredited investors andwere acquiring the shares for investment and not distribution, that they couldbear the risks of the investment and could hold the securities for anindefinite period of time.  Thepurchasers received written disclosures that the securities had not beenregistered under the Securities Act and that any resale must be made pursuantto an effective registration statement or an available exemption from suchregistration requirement.  We did notengage in any general solicitation or advertising in connection with the sales.  Unless otherwise indicated, the proceeds fromthe private offering were used for general working capital needs.

 

9

 

**Item 6.  Management’s Discussion and Analysis and PlanOf Operation.**

 

The followingdiscussion and analysis provides information that management believes isrelevant to an assessment and understanding of our results of operations andfinancial condition for the periods presented.  The following selectedfinancial information is derived from our historical consolidated financialstatements and should be read in conjunction with such consolidated financialstatements and notes thereto set forth elsewhere herein and the “Forward-LookingStatements” explanation included herein.

 

**Plan of Operation**

 

The Company’s currentbusiness objective is to locate suitable business combination opportunities.The Company does not currently engage in any business activities that providecash flow. As of June 30, 2008, we have approximately $212,000 in cash and cashequivalents. We believe this will be sufficient to fund the costs ofinvestigating and analyzing a suitable business combination or to fund generaland administrative expenses for the next 12 months. If our efforts areunsuccessful within that period, we will have to seek additional funds.

 

During the next 12 months we anticipate incurring costs related to:

 
|   | (i)    | Filing of Exchange Act reports;                    |
|--------|--------|----------------------------------------------------|
|   |   |                                               |
|   | (ii)   | Officer and director’s salaries and rent; and |
|   |   |                                               |
|   | (iii)  | Consummating an acquisition.                       |

 

We believe we will be able to meet these costs through use of exisitingcash and cash equivalents or additional amounts, as necessary, to be loaned byor invested in us by our stockholders, management or other investors. However,no assurance can be given that we will be able to raise additional capital,when needed or at all, or that such capital, if available, will be onacceptable terms. In the absence of obtaining additional financing, the Companymay be unable to fund its operations. Accordingly, the Company’s financial condition could require that theCompany seek the protection of applicable reorganization laws in order to avoidor delay actions by third parties, which could materially adversely affect,interrupt or cause the cessation of the Company’s operations. As a result, theCompany’s independent registered public accounting firms have issued goingconcern opinions on the consolidated financial statements of the Company forthe fiscal years ended June 30, 2008 and 2007.

 

Prior to consummating a business combination transaction, we do notanticipate:

 
|   | (i)    | Any expenditures for research and development;                                                     |
|--------|--------|----------------------------------------------------------------------------------------------------|
|   |   |                                                                                               |
|   | (ii)   | Any expenditures or cash receipts for the  purchase or sale of any property plant or equipment; or |
|   |   |                                                                                               |
|   | (iii)  | Any significant change in the number of employees.                                                 |

 

**Revenue**

 

Due to the assetsale in February 2008, we have classified all of our operations asdiscontinued operations, and accordingly, there are no revenues reflected inour financial statements for the years ended June 30, 2008 or 2007.

 

**Generaland Administrative Expenses**

 

For the year endedJune 30, 2008 we have recorded general and administrative expenses of$77,618. There is no similar expense reflected for the year ended June 30,2007 as all of our prior general and administrative expenses were classified asa part of discontinued operations. Our general and administrative expenses inthe current year consist primarily of officer’s salaries, legal and accountingfees, and other costs associated with maintaining the company as a publiclytraded entity.

 

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**NetIncome**

 

For the yearsended June 30, 2008 and 2007, we have reflected net income of $574,131 and$140,436. In both years we had recognized gains from the sale of assets, whichare included as part of our discontinued operations. We do not anticipatesimilar gains or revenue or expenses from these discontinued operations infuture periods.

 

**Off-balancesheet arrangements**

 

We have nooff-balance sheet arrangements that have or are reasonably likely to have acurrent or future effect on our financial condition, changes in our financialcondition, revenues or expenses, results of operations, liquidity, capitalexpenditures or capital resources that is material to investors.

 

**Item 7.Financial Statements.**

 

The financial statementsand schedules are included herewith commencing on page F-1.

 
| Reports of Independent Registered Public Accounting  Firms                 |   | F-1    |
|----------------------------------------------------------------------------|--------|--------|
|                                                                       |   |   |
| Consolidated  Balance Sheet                                                |   | F-3    |
|                                                                       |   |   |
| Consolidated Statements of Operations                                      |   | F-4    |
|                                                                       |   |   |
| Consolidated Statements of Changes in Stockholders’  Equity (Deficit) |   | F-5    |
|                                                                       |   |   |
| Consolidated Statements of Cash Flows                                      |   | F-6    |
|                                                                       |   |   |
| Notes to  Consolidated Financial Statements                                |   | F-8    |

 

11

----

 

****TEMPCO, INC. AND SUBSIDIARIES****

****(A DEVELOPMENT STAGE COMPANY)****

****FINANCIAL STATEMENTS FOR THE****

****YEARS ENDED JUNE 30, 2008 AND 2007****

 

----

 

**MOORE &ASSOCIATES, CHARTERED**

*ACCOUNTANTS AND ADVISORS*

*PCAOB REGISTERED*

 

**REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM**

 

**To theBoard of Directors**

**Tempco, Inc.and Subsidiaries**

**(ADevelopment Stage Company)**

 

Wehave audited the accompanying consolidated balance sheet of Tempco, Inc.and Subsidiaries as of June 30, 2008, and the related consolidatedstatements of operations, stockholders’ equity and cash flows for the year thenended and cumulative since reentering development stage on February 5,2008 through June 30, 2008. These consolidated financial statements arethe responsibility of the Company’s management. Our responsibility is to express an opinion on these financialstatements based on our audits. The financial statements of Tempco, Inc.and Subsidiaries as of June 30, 2007 were audited by other auditors whosereport dated October 12, 2007, expressed an unqualified opinion on thosestatements.

 

Weconduct our audits in accordance with standards of the Public CompanyAccounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the financial statements are free ofmaterial misstatement.  An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements.  An audit alsoincludes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statementpresentation.  We believe that our auditsprovide a reasonable basis for our opinion.

 

Inour opinion, the consolidated financial statements referred to above presentfairly, in all material respects, the financial position of Tempco, Inc.and Subsidiaries as of June 30, 2008, and the related consolidatedstatements of operations, stockholders’ equity and cash flows for the year thenended and cumulative since reentering development stage on February 5,2008 through June 30, 2008, in conformity with accounting principlesgenerally accepted in the United States of America.

 

Theaccompanying consolidated financial statements have been prepared assuming thatthe Company will continue as a going concern. As discussed in Note 9 to the financial statements, the Companycurrently has no operations and no source of revenue, which raises substantialdoubt about its ability to continue as a going concern.  Management’s plans concerning these mattersare also described in Note 9.  Thefinancial statements do not include any adjustments that might result from theoutcome of this uncertainty.

 

 

***/s/ Moore & Associates, Chartered***

 

Moore &Associates Chartered

LasVegas, Nevada

September 18, 2008

 

*2675 S. Jones Blvd. Suite 109, Las Vegas, NV89146 (702) 253-7499 Fax (702) 253-7501*

 

F-1

----

 

**Report ofIndependent Registered Public Accounting Firm**

 

Board of Directors andStockholders of 

NETtime Solutions, Inc.and Subsidiaries

 

We have audited theaccompanying consolidated balance sheet of NETtime Solutions Inc. andSubsidiaries as of June 30, 2007 and the related consolidated statements ofoperations, stockholders’ equity (deficit), and cash flows for the year thenended. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financialstatements based on our audit.

 

We conducted our audit inaccordance with standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free ofmaterial misstatement.  The Company isnot required to have, nor were we engaged to perform, an audit of its internalcontrol over financial reporting.  Ouraudit includes consideration of internal control over financial reporting as abasis for designing audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control over financial reporting. Accordingly, we express nosuch opinion. An audit also includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements.  An audit also includes assessing theaccounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation. We believethat our audit provides a reasonable basis for our opinion.

 

In our opinion, theconsolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of NETtime Solutions Inc. andSubsidiaries at June 30, 2007, and the results of its consolidated operationsand its cash flows for the year then ended, in conformity with accountingprinciples generally accepted in the United States.

 

The accompanyingconsolidated financial statements have been prepared assuming that the Companywill continue as a going concern. As discussed in Note 9 to the consolidatedfinancial statements, the Company has suffered recurring losses from operationsand has a net capital deficiency that raises substantial doubt about itsability to continue as a going concern. Management’s plans in regard to these matters are also described in Note9.  The consolidated financial statementsdo not include any adjustments that might result from the outcome of thisuncertainty.

 

/s/ Semple, Marchal &Cooper, LLP

 

Certified PublicAccountants

 

Phoenix, Arizona

October 12, 2007

 

F-2

----

 

TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENTSTAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

 
| ** **                                                                                                                            | ** ** | **June 30,** | ** ** | **June 30,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-------------------|------------|
| ** **                                                                                                                            | ** ** | **2008**          | ** ** | **2007**          | ** ** |
| ** **                                                                                                                            | ** ** | ** **        | ** ** | ** **        | ** ** |
| **ASSETS**                                                                                                                            | ** ** | ** **        | ** ** | ** **        | ** ** |
| Current assets:                                                                                                                       |       |              |       |              |       |
| Cash and cash  equivalents                                                                                                            |       | $                 | 212,278    |              | $          | 40,000 |   |
| Prepaid expenses                                                                                                                      |       | 9,559             |       | —            |       |
| Current assets  of discontinued operations, net                                                                                       |       | —            |       | 1,233,881         |       |
| Total current  assets                                                                                                                 |       | 221,837           |       | 1,273,881         |       |
|                                                                                                                                  |       |              |       |              |       |
| Note receivable                                                                                                                       |       | 200,000           |       | —            |       |
| Accrued interest  receivable                                                                                                          |       | 7,250             |       | —            |       |
| Long term assets  of discontinued operations                                                                                          |       | —            |       | 328,827           |       |
| Total assets                                                                                                                          |       | $                 | 429,087    |              | $          | 1,602,708 |   |
| ** **                                                                                                                            | ** ** | ** **        | ** ** | ** **        | ** ** |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)**                                                                               | ** ** | ** **        | ** ** | ** **        | ** ** |
| Current  Liabilities:                                                                                                                 |       |              |       |              |       |
| Accounts payable                                                                                                                      |       | $                 | 9,224      |              | $          | — |   |
| Note payable                                                                                                                          |       | 5,435             |       | —            |       |
| Current  liabilities of discontinued operations                                                                                       |       | —            |       | 2,320,869         |       |
| Total current  liabilities                                                                                                            |       | 14,659            |       | 2,320,869         |       |
|                                                                                                                                  |       |              |       |              |       |
| Long term  liabilities of discontinued operations                                                                                     |       | —            |       | 909,442           |       |
| Total  liabilities                                                                                                                    |       | 14,659            |       | 3,230,311         |       |
|                                                                                                                                  |       |              |       |              |       |
| Common stock  subject to registration rights (351,923 shares)                                                                         |       | —            |       | 207,635           |       |
|                                                                                                                                  |       |              |       |              |       |
| Commitments and  Contingencies:                                                                                                       |       |              |       |              |       |
|                                                                                                                                  |       |              |       |              |       |
| Stockholders’  equity (deficit):                                                                                                 |       |              |       |              |       |
| Common stock,  $.005 par value 50,000,000 authorized; 11,403,711 and 15,030,481 shares  outstanding, net of 6,478,693 treasury shares |       | 89,413            |       | 75,153            |       |
| Contributed  capital                                                                                                                  |       | 12,392,814        |       | 9,889,188         |       |
| Accumulated  deficit prior to reentering the development stage                                                                        |       | (11,160,829       | )          | (11,799,579       | )          |
| Deficit  accumlated in the development stage                                                                                          |       | (64,619           | )          | —            |       |
| Treasury stock,  at cost (6,478,693 shares)                                                                                           |       | (842,351          | )          | —            |       |
| Total  stockholders’ equity (deficit)                                                                                            |       | 414,428           |       | (1,835,238        | )          |
| Total  liabilities and stockholders’ equity (deficit)                                                                            |       | $                 | 429,087    |              | $          | 1,602,708 |   |

 

#### **TheAccompanying Notes are an Integral Partof the Consolidated Financial Statements**

 

F-3

----

 

TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENTSTAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

 
| ** **                                             | ** ** | ** **          | ** ** | ** **                 | ** ** | **Cumulative**                         | ** ** |
|--------------------------------------------------------|------------|---------------------|------------|----------------------------|------------|----------------------------------------|------------|
| ** **                                             | ** ** | **Year Ended** | ** ** | **Since Reentering**  | ** ** |
| ** **                                             | ** ** | **June 30,**   | ** ** | **Development Stage** | ** ** |
| ** **                                             | ** ** | **2008**            | ** ** | **2007**                   | ** ** | **on February 5, 2008** | ** ** |
|                                                   |       |                |       |                       |       |                                   |       |
| Costs and  expenses                                    |       |                |       |                       |       |                                   |       |
| General and  administrative                            |       | $                   | 77,618     |                       | $          | —                                 |       | $ | 77,618 |   |
|                                                   |       |                |       |                       |       |                                   |       |
| Operating loss                                         |       | (77,618             | )          | —                     |       | (77,618                                | )          |
|                                                   |       |                |       |                       |       |                                   |       |
| Other income  (expense)                                |       |                |       |                       |       |                                   |       |
| Interest expense                                       |       | (205                | )          | —                     |       | (205                                   | )          |
| Interest income                                        |       | 13,204              |       | —                     |       | 13,204                                 |       |
| Total other  income                                    |       | 12,999              |       | —                     |       | 12,999                                 |       |
|                                                   |       |                |       |                       |       |                                   |       |
| Net loss from  continuing operations                   |       | (64,619             | )          | —                     |       | (64,619                                | )          |
|                                                   |       |                |       |                       |       |                                   |       |
| Discontinued  operations:                              |       |                |       |                       |       |                                   |       |
| Income from  discontinued operations                   |       | 638,750             |       | 140,436                    |       | —                                 |       |
|                                                   |       |                |       |                       |       |                                   |       |
| Provision for  income taxes                            |       | —              |       | —                     |       | —                                 |       |
|                                                   |       |                |       |                       |       |                                   |       |
| Net income  (loss)                                     |       | $                   | 574,131    |                       | $          | 140,436                                |       | $ | (64,619 | ) |
|                                                   |       |                |       |                       |       |                                   |       |
| Basic and  diluted net income (loss) per common share: |       |                |       |                       |       |                                   |       |
| Loss from  continuing operations                       |       | $                   | —     |                       | $          | —                                 |       | $ | — |   |
| Income from  discontinued operations                   |       | 0.05                |       | 0.01                       |       | —                                 |       |
|                                                   |       |                |       |                       |       |                                   |       |
| Basic and  diluted earnings per share                  |       | $                   | 0.05       |                       | $          | 0.01                                   |       | $ | — |   |
|                                                   |       |                |       |                       |       |                                   |       |
| Basic and  diluted weighted average                    |       |                |       |                       |       |                                   |       |
| common shares  outstanding                             |       | 12,515,139          |       | 14,809,963                 |       | 10,186,679                             |       |

 

TheAccompanying Notes are an Integral Partof the Consolidated Financial Statements

 

F-4

----

 

TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENTSTAGE COMPANY)

CONSOLIDATED STATEMENTS STOCKHOLDERS’ EQUITY (DEFICIT)

 
| ** **                                                                                | ** ** | ** **            | ** ** | ** **              | ** ** | ** **      | ** ** | ** **      | ** ** | ** **        | ** ** | ** **                       | ** ** | **Deficit**                    | ** ** | ** **  | ** **  |
|-------------------------------------------------------------------------------------------|------------|-----------------------|------------|-------------------------|------------|-----------------|------------|-----------------|------------|-------------------|------------|----------------------------------|------------|--------------------------------|------------|-------------|-------------|
| ****                                                                                      | ** ** | ****                  | ** ** | ****                    | ** ** | ** **      | ** ** | ** **      | ** ** | ** **        | ** ** | **Accumulated**                  | ** ** | **Accumulated**                | ** ** | ** **  | ** **  |
| ** **                                                                                | ** ** | ** **            | ** ** | ** **              | ** ** | ** **      | ** ** | ** **      | ** ** | ** **        | ** ** | **Deficit**                      | ** ** | **Since Reentering**      | ** ** | ** **  | ** **  |
| ** **                                                                                | ** ** | ** **            | ** ** | ** **              | ** ** | ** **      | ** ** | ** **      | ** ** | ** **        | ** ** | **Prior to rentering** | ** ** | **the Development**       | ** ** | ** **  | ** **  |
| ** **                                                                                | ** ** | **Common Stock** | ** ** | **Treasury Stock** | ** ** | **Contributed** | ** ** | **Development** | ** ** | **Stage on** | ** ** | ** **                       | ** ** |
| ** **                                                                                | ** ** | **Shares**            | ** ** | **Amount**              | ** ** | **Shares**      | ** ** | **Amount**      | ** ** | **Capital**       | ** ** | **Stage**                        | ** ** | **February 5, 2008** | ** ** | **Total**   | ** **  |
|                                                                                      |       |                  |       |                    |       |            |       |            |       |              |       |                             |       |                           |       |        |        |
| Balance at  June 30, 2006                                                            |       | 14,652,481            |       | $                       | 73,263     |            | $          | —          |       | $                 | —     |                             | $          | 9,591,098                      |       | $           | (11,940,015 | ) | $ | — |   | $ | (2,275,654 | ) |
|                                                                                      |       |                  |       |                    |       |            |       |            |       |              |       |                             |       |                           |       |        |        |
| Exercise of  stock options                                                                |       | 23,000                |       | 115                     |       | —          |       | —          |       | 5,135             |       | —                           |       | —                         |       | 5,250       |        |
| Exercise of  stock warrants                                                               |       | 25,000                |       | 125                     |       | —          |       | —          |       | 3,625             |       | —                           |       | —                         |       | 3,750       |        |
| Stock based  compensation                                                                 |       | —                |       | —                  |       | —          |       | —          |       | 142,980           |       | —                           |       | —                         |       | 142,980     |        |
| Issuance of  common stock for financing                                                   |       | 230,000               |       | 1,150                   |       | —          |       | —          |       | 102,850           |       | —                           |       | —                         |       | 104,000     |        |
| Issuance of  common stock for services                                                    |       | 100,000               |       | 500                     |       | —          |       | —          |       | 43,500            |       | —                           |       | —                         |       | 44,000      |        |
| Net income                                                                                |       | —                |       | —                  |       | —          |       | —          |       | —            |       | 140,436                          |       | —                         |       | 140,436     |        |
|                                                                                      |       |                  |       |                    |       |            |       |            |       |              |       |                             |       |                           |       |        |        |
| Balance at  June 30, 2007                                                            |       | 15,030,481            |       | 75,153                  |       | —          |       | —          |       | 9,889,188         |       | (11,799,579                      | )          | —                         |       | (1,835,238  | )           |
| Stock based  compensation                                                                 |       | —                |       | —                  |       | —          |       | —          |       | 62,347            |       | —                           |       | —                         |       | 62,347      |        |
| Reclassification  of restricted shares to equity                                          |       | 351,923               |       | 1,760                   |       | —          |       | —          |       | 205,875           |       | —                           |       | —                         |       | 207,635     |        |
| Shares  surrendered in relation to Asset Sale                                             |       | —                |       | —                  |       | (6,478,693      | )          | (842,351        | )          | —            |       | —                           |       | —                         |       | (842,351    | )           |
| Contributed  capital adjustment related to Asset Sale                                     |       | —                |       | —                  |       | —          |       | —          |       | 2,022,904         |       | —                           |       | —                         |       | 2,022,904   |        |
| Sale of common  stock in April 2008 Private Placement at $.10 per share, net of fees |       | 2,500,000             |       | 12,500                  |       | —          |       | —          |       | 212,500           |       | —                           |       | —                         |       | 225,000     |        |
| Net income (loss)                                                                         |       | —                |       | —                  |       | —          |       | —          |       | —            |       | 638,750                          |       | (64,619                        | )          | 574,131     |        |
|                                                                                      |       |                  |       |                    |       |            |       |            |       |              |       |                             |       |                           |       |        |        |
| Balance at  June 30, 2008                                                            |       | 17,882,404            |       | $                       | 89,413     |            | (6,478,693 | )               | $          | (842,351          | )          | $                                | 12,392,814 |                           | $          | (11,160,829 | )           | $ | (64,619 | ) | $ | 414,428 |   |
|                                                                                           |            |                       |            |                         |            |                 |            |                 |            |                   |            |                                  |            |                                |            |             |             |  |  |  |  |  |  |  |

 

#### **TheAccompanying Notes are an Integral Partof the Consolidated Financial Statements**

 

F-5

 

TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENT STAGECOMPANY)

CONSOLIDATEDSTATEMENTS OF CASH FLOWS

 
| ** **                                                                                | ** ** | ** **          | ** ** | **Cumulative Since**  | ** ** |
|-------------------------------------------------------------------------------------------|------------|---------------------|------------|----------------------------|------------|
| ** **                                                                                | ** ** | **Year Ended** | ** ** | **Reentering the**    | ** ** |
| ** **                                                                                | ** ** | **June 30,**   | ** ** | **Development Stage** | ** ** |
| ** **                                                                                | ** ** | **2008**            | ** ** | **2007**                   | ** ** | **on February 5, 2008** | ** ** |
| ** **                                                                                | ** ** | ** **          | ** ** | ** **                 | ** ** | ** ** | ** ** |
| **Operating  activities**                                                                 |       |                |       |                       |       |   |   |
| Net income                                                                                |       | $                   | 574,131    |                       | $          | 140,436 |   | (64,619 | ) |
| Adjustments to  reconcile net income to net cash provided (used) by operating activities: |       | —              |       | —                     |       |   |   |
| Gain on asset  sale                                                                       |       | (1,200,000          | )          | (2,012,035                 | )          | — |   |
| Loss on disposal  of fixed assets                                                         |       | 45,609              |       | —                     |       | — |   |
| Depreciation                                                                              |       | 75,916              |       | 141,996                    |       | — |   |
| Amortization of  deferred loan costs                                                      |       | 197,246             |       | 320,731                    |       | — |   |
| Stock based  compensation                                                                 |       | 62,348              |       | 142,980                    |       | 27,046 |   |
| Common stock,  stock options and warrants issued for services                             |       | —              |       | 44,000                     |       | — |   |
| Non-cash  interest payment                                                                |       | —              |       | 8,309                      |       | — |   |
| Allowance for  doubtful accounts                                                          |       | —              |       | 320,662                    |       | — |   |
| Inventory  allowance                                                                      |       | —              |       | 8,000                      |       | — |   |
| Inventory write  off                                                                      |       | —              |       | 54,284                     |       | — |   |
| Changes in  Assets and Liabilities:                                                       |       |                |       |                       |       |   |   |
| Accounts  receivable                                                                      |       | (35,517             | )          | 1,467,938                  |       | — |   |
| Prepaid expenses                                                                          |       | (9,559              | )          | —                     |       | (9,559 | ) |
| Inventory                                                                                 |       | (3,613              | )          | 238,835                    |       | — |   |
| Deferred loan  costs and other current assets                                             |       | 217,056             |       | (158,847                   | )          | — |   |
| Other assets                                                                              |       | (14,236             | )          | 5,810                      |       | — |   |
| Accrued interest  receivable                                                              |       | (7,250              | )          | —                     |       | (7,250 | ) |
| Accounts payable                                                                          |       | (246,732            | )          | (137,521                   | )          | 9,225 |   |
| Accrued  liabilities                                                                      |       | (262,649            | )          | (145,083                   | )          | 5,434 |   |
| Deferred revenue                                                                          |       | (257,121            | )          | (380,196                   | )          | — |   |
| Net cash  provided (used) by operating activities                                         |       | (864,371            | )          | 60,299                     |       | (39,723 | ) |
|                                                                                      |       |                |       |                       |       |   |   |
| **Investing  activities**                                                                 |       |                |       |                       |       |   |   |
| Purchase of property  and equipment                                                       |       | (3,472              | )          | (27,693                    | )          | — |   |
| Payments for  services for asset sale                                                     |       | —              |       | (126,162                   | )          | — |   |
| Non-operating  sale of inventory                                                          |       | —              |       | 140,000                    |       | — |   |
| Proceeds from  sale of assets                                                             |       | 1,000,000           |       | 768,024                    |       | — |   |
| Cash  relinquished in asset sale                                                          |       | (397,472            | )          | —                     |       | — |   |
| Net cash  provided by investing activities                                                |       | 599,056             |       | 754,169                    |       | — |   |
|                                                                                      |       |                |       |                       |       |   |   |
| **Financing  activities:**                                                                |       |                |       |                       |       |   |   |
| Repayment of  debt-related party                                                          |       | (26,108             | )          | (25,842                    | )          | — |   |
| Proceeds from  debt-related party                                                         |       | —              |       | 300,000                    |       | — |   |
| Repayment of  debt                                                                        |       | —              |       | (5,338,888                 | )          | — |   |
| Proceeds from  debt                                                                       |       | —              |       | 3,904,759                  |       | — |   |
| Proceeds from  sale of common stock                                                       |       | 225,000             |       | —                     |       | 225,000 |   |
| Proceeds from  exercise of options and warrants                                           |       | —              |       | 9,000                      |       | — |   |
| Net cash  provided used by financing activities                                           |       | 198,892             |       | (1,150,971                 | )          | 225,000 |   |
|                                                                                           |            |                     |            |                            |            |  |  |  |  |

 

The Accompanying Notesare an Integral Partof the Consolidated Financial Statements

 

F-6

----

 
| ** **                                       | ** ** | ** **          | ** ** | **Cumulative Since**  | ** ** |
|--------------------------------------------------|------------|---------------------|------------|----------------------------|------------|
| ** **                                       | ** ** | **Year Ended** | ** ** | **Reentering the**    | ** ** |
| ** **                                       | ** ** | **June 30,**   | ** ** | **Development Stage** | ** ** |
| ** **                                       | ** ** | **2008**            | ** ** | **2007**                   | ** ** | **on February 5, 2008** | ** ** |
|                                             |       |                |       |                       |       |   |   |
| Net change in  cash and cash equivalents         |       | (66,423             | )          | (336,503                   | )          | 185,277 |   |
|                                             |       |                |       |                       |       |   |   |
| Cash and cash  equivalents at beginning of year  |       | 278,701             |       | 615,204                    |       | 40,000 |   |
| Cash and cash  equivalents at end of year        |       | $                   | 212,278    |                       | $          | 278,701 |   | $ | 225,277 |   |
|                                             |       |                |       |                       |       |   |   |
| Supplemental  disclosures:                       |       |                |       |                       |       |   |   |
| Cash paid for  income taxes                      |       | $                   | —     |                       | $          | — |   | $ | — |   |
| Cash paid for  interest                          |       | $                   | 101,117    |                       | $          | 371,038 |   | $ | 205 |   |
|                                             |       |                |       |                       |       |   |   |
| Non-cash  investing and financing activities     |       |                |       |                       |       |   |   |
| Disposal of  fixed assets in asset sale          |       | $                   | 175,591    |                       | $          | 94,362 |   | $ | — |   |
| Stock issued for  deferred loan costs            |       | $                   | —     |                       | $          | 104,000 |   | $ | — |   |
| Repayment of  debt through asset sale            |       | $                   | 1,494,050  |                       | $          | 1,716,667 |   | $ | — |   |
| Net operating  liabilities assumed in asset sale |       | $                   | 59,566     |                       | $          | — |   | $ | — |   |
| Note receivable  -asset sale                     |       | $                   | 200,000    |                       | $          | — |   | $ | 200,000 |   |

 

The Accompanying Notesare an Integral Partof the Consolidated Financial Statements

 

F-7

----

 

TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENT STAGECOMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

****Note 1 – Organization,Basis of Presentation and Description of Business****

**** ****

Tempco, Inc. was incorporated in Nevada in June 1988 asRichard Barrie Fragrances, Inc. Over the years, the Company changed itsname several times, most recently from Vitrix, Inc. in October 1999,to Time America, Inc. in December 1993, then to NETtime Solutions, Inc.in January 2007. The name was changed again on February 4, 2008 toTempco, Inc. The consolidated financial statements include the accounts ofTempco, Inc. and its wholly-owned subsidiaries (collectively, the “Company”),NETtime Solutions, Inc. an Arizona corporation, and Net Edge Devices, LLC,an Arizona Limited Liability Company. All intercompany accounts and transactionshave been eliminated in consolidation.

 

As Time America, Inc.and NETtime Solutions, Inc. the Company operated as a time and attendancesoftware company. In February, 2008 the time attendance software business wassold (“the 2008 Asset Sale”)(see Note 3), and the Company is currentlyresearching other business opportunities. These audited financial statementsare presented to reflect the discontinuation of the Company’s time andattendance software business, and concurrently reset the development stageinception date of the Company to February 5, 2008. Due to the 2008 AssetSale, the Company has reentered the development stage and following this sale,the Company has limited operations and therefore, in accordance with Statementof Financial Accounting Standards No. 7, “Accounting and Reporting byDevelopment Stage Enterprises,” the Company is considered a development stagecompany.   The Company intends to locateand combine with an existing company that is profitable or which, in management’sview, has growth potential, irrespective of the industry in which it isengaged.   A combination may be structured as a merger,consolidation, exchange of the Company’s common stock for stock or assets orany other form.

 

Pending negotiation andconsummation of a combination the Company anticipates that it will have, asidefrom carrying on its search for a combination partner, no business activities,and, thus, will have no source of revenue.  The Company believes thatthe cash on hand at June 30, 2008 is sufficient to fund its operationsuntil the earlier of a combination or a period of one year. If necessary tocontinue as a going concern, pending consummation of a transaction, the Companyintends to either seek additional equity or debt financing.  Noassurances can be given that such equity or debt financing will be available,nor can there be any assurance that a combination transaction will beconsummated.  Should the Company be required to incur any significantliabilities prior to a combination transaction, including those associated withthe current minimal level of general and administrative expenses, it may not beable to satisfy those liabilities in the event it was unable to obtainadditional equity or debt financing.

 

**Note 2 – Summary of Significant AccountingPolicies**

 

**Principles of Consolidation:**

 

The consolidated financial statements include the accounts of Tempco, Inc.and its wholly-owned subsidiaries (collectively, the “Company”), NETtimeSolutions, Inc. an Arizona corporation, and Net Edge Devices, LLC, anArizona Limited Liability Company. All intercompany accounts and transactionshave been eliminated in consolidation.

 

**Use of Estimates**

 

The preparation of financial statements in conformity with generallyaccepted accounting principles in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amountsof assets and liabilities and disclosure of contingent assets and liabilitiesat the date of the financial statements and the reported amounts or revenuesand expenses during the period. Actual results could differ from thoseestimates. Significant estimates include deferred income taxes and fair valueof stock-based compensation. It is at least reasonably possible a materialchange in these estimates may occur in the near term.

 

F-8

----

 

TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENT STAGECOMPANY)

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

 

**Reclassifications**

 

Certain balances as of June 30,2007 have been reclassified in the accompanying consolidated financialstatements to conform to the current year presentation of discontinuedoperations. These reclassifications had no effect on previously reported netincome or stockholders’ equity (deficit).

 

**Estimated Fair Value of Financial Instruments**

 

The carrying value ofnotes receivable, prepaid expenses, accounts payable and other financialinstruments reflected in the financial statements approximate fair value due tothe short-term maturity of the instruments. It is management’s opinion that theCompany is not exposed to significant interest, currency or credit risksarising from these financial instruments.

 

**Cash and Cash Equivalents:**

 

Cash and cash equivalents are considered to be all highly liquid investmentspurchased with an initial maturity of three months or less.

 

**Concentration of Credit Risk**

 

The Company has nosignificant off-balance-sheet concentrations of credit risk such as foreignexchange contracts, options contracts or other foreign hedging arrangements.  TheCompany maintains the majority of its cash balances with one financialinstitution.  At times, such balances may be in excess of any insuredlimits.

 

**Advertising Costs**

 

Advertising costs are charged to operations when incurred. Advertisingcosts for the years ended June 30, 2008 and 2007 were approximately $1,000and $11,000, respectively. The advertising costs are included as part ofdiscontinued operations.

 

**Deferred Income Taxes**

 

The Company follows theprovisions of Statement of Financial Accounting Standards (“SFAS”) No. 109,“Accounting for Income Taxes”. Deferred income taxes are provided on an assetand liability method, whereby deferred tax assets are recognized for deductibletemporary differences and operating loss and tax credit carryforwards anddeferred tax liabilities are recognized for taxable temporary differences.Temporary differences are the differences between the reported amounts ofassets and liabilities and their tax basis. Deferred tax assets are reduced bya valuation allowance when, in the opinion of management, there is uncertaintyof the utilization of these assets in future periods. Deferred tax assets andliabilities are adjusted for the effects of changes in tax laws and rates onthe date of enactment.

 

**Income (Loss) Per Share:**

 

Diluted income (loss) per share is computed based on the weightedaverage number of shares of common stock and dilutive securities outstandingduring the period.  Potentially dilutive securities are options andwarrants that are exercisable into common stock.  Dilutive securities arenot included in the weighted average number of shares when inclusion wouldincrease the income per share or decrease the loss per share.  At June 30,2008 and 2007, there were options and warrants outstanding to purchase3,692,944 and 3,201,223, respectively, shares of the Company’s common stock. AtJune 30, 2008 and 2007, there were no potentially dilutive securitiesincluded in the calculation as their effect was anti-dilutive.

 

F-9

----

 

TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENT STAGECOMPANY)

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

 

**Stock-Based Compensation:**

 

Prior to July 1, 2005, the Company accounted for stock-basedcompensation arrangements in accordance with the provisions of AccountingPrinciples Board Opinion No. 25, “Accounting for Stock Issued toEmployees,” (“APB 25”). Accordingly, compensation expense, if any, was measuredas the excess of the underlying stock price over the exercise price on the dateof grant. The Company complied with the disclosure provisions of Statement ofFinancial Accounting Standards Board No. 123  “Accounting for Stock Based Compensation” (“SFAS123”) as amended by Statement of Financial Accounting Standards Board No. 148“Accounting for Stock-Based Compensation-Transition and Disclosure,” whichrequired pro-forma disclosure of compensation expense associated with stockoptions under the fair value method.

 

Effective July 1, 2005, the Company adopted the fair value recognitionprovisions of Statement of Financial Accounting Standards Board No. 123(R),“Share–Based Payment,” (“SFAS 123(R)”) using the modifiedprospective-transition method. Under this transition method, compensationexpense recognized for the years ended June 30, 2008 and 2007includes:  (a) compensation expense for all share-based paymentsgranted prior to, but not yet vested as of June 30, 2005 based on thegrant date fair value estimated under the original provisions of SFAS 123 and (b) compensationexpense for all share-based payments granted subsequent to June 30, 2005,based on the grant date fair value estimated in accordance with the provisionsof SFAS 123(R). Results for prior periods have not been restated. The fairvalue of option grants is estimated as of the date of grant utilizing theBlack-Scholes option-pricing model and amortized to expense over the options’requisite service period.

 

**Recent Accounting Pronouncements**

 

In September 2006, the FASB issued SFAS No. 157, “Fair ValueMeasurements”, which clarifies the principle that fair value should be based onthe assumptions that market participants would use when pricing an asset orliability. It also defines fair value and established a hierarchy thatprioritizes the information used to develop assumptions. In February 2008,the FASB issued Financial Staff Positions (“FSP”) SFAS 157-2, *Effective Date of FASB Statement No. 157*(“FSP157-2”), which delays the effective date of SFAS No. 157, for allnonfinancial assets and nonfinancial liabilities, except those that arerecognized or disclosed at fair value in the financial statements on arecurring basis (at least annually). FSP 157-2 partially defers the effectivedate of SFAS 157 to fiscal years beginning after November 15, 2008,and interim periods within those fiscal years for items within the scope ofthis FSP. FSP 157-2 is effective for us beginning July 1, 2009. We arecurrently evaluating the potential impact of the adoption of those provisionsof SFAS 157, for which effectiveness was delayed by FSP 157-2, on ourconsolidated financial position and results of operations, or cash flows.

 

In February 2007, the FASB issued SFAS 159, “The Fair Value Optionfor Financial Assets and Financial Liabilities”, which permits entities tochoose to measure many financial instruments and certain other items at fairvalue. The unrealized gains and losses on items for which the fair value optionhas been elected should be reported in earnings. The decision to elect the fairvalue option is determined on an instrument-by-instrument basis, should beapplied to an entire instrument and is irrevocable. Assets and liabilitiesmeasured at fair values pursuant to the fair value option should be reportedseparately in the balance sheet from those instruments measured using othermeasurement attributes. SFAS No. 159 is effective as of the beginning of July 1,2008. The adoption of SFAS No. 159 is not expected to have a materialeffect on its financial position, results of operations or cash flows.

 

In December 2007,the FASB issued SFAS No. 160, “Noncontrolling Interests in ConsolidatedFinancial Statements, an amendment of Accounting Research Bulletin No. 51”(SFAS 160). SFAS 160 establishes accounting and reporting standards forownership interests in subsidiaries held by parties other than the parent,changes in a parent’s ownership of a noncontrolling interest, calculation anddisclosure of the consolidated net income attributable to the parent and thenoncontrolling interest, changes in a parent’s ownership interest while theparent retains its controlling financial interest and fair value measurement ofany retained noncontrolling equity investment. SFAS 160 is effective forfinancial statements issued for fiscal years beginning after December 15,2008, and interim periods within those fiscal years. Early adoption isprohibited. The Company has not yet determined the effect of the adoption ofSFAS No. 160 will have on its financial position, results of operations orcash flows.

 

F-10

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TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENT STAGECOMPANY)

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

 

In December 2007, the FASB issued SFAS 141R, “BusinessCombinations” (“SFAS 141R”), which replaces FASB SFAS 141, “Business Combinations”.This Statement retains the fundamental requirements in SFAS 141 that theacquisition method of accounting be used for all business combinations and foran acquirer to be identified for each business combination. SFAS 141R definesthe acquirer as the entity that obtains control of one or more businesses inthe business combination and establishes the acquisition date as the date thatthe acquirer achieves control. SFAS 141R will require an entity to recordseparately from the business combination the direct costs, where previouslythese costs were included in the total allocated cost of the acquisition. SFAS141R will require an entity to recognize the assets acquired, liabilitiesassumed, and any non-controlling interest in the acquired at the acquisitiondate, at their fair values as of that date. This compares to the costallocation method previously required by SFAS No. 141. SFAS 141R willrequire an entity to recognize as an asset or liability at fair value forcertain contingencies, either contractual or non-contractual, if certaincriteria are met. Finally, SFAS 141R will require an entity to recognizecontingent consideration at the date of acquisition, based on the fair value atthat date. This Statement will be effective for business combinations completedon or after the first annual reporting period beginning on or after December 15,2008. Early adoption of this standard is not permitted and the standards are tobe applied prospectively only. Upon adoption of this standard, there would beno impact to the Company’s results of operations and financial condition foracquisitions previously completed. The adoption of SFAS No. 141R is notexpected to have a material effect on its financial position, results ofoperations or cash flows.

 

In March 2008, the FASB issued SFAS No. 161 “Disclosuresabout Derivative Instruments and Hedging Activities—An Amendment of FASBStatement No. 133.” (“SFAS 161”). SFAS 161 establishes the disclosurerequirements for derivative instruments and for hedging activities with theintent to provide financial statement users with an enhanced understanding ofthe entity’s use of derivative instruments, the accounting of derivativeinstruments and related hedged items under Statement 133 and its relatedinterpretations, and the effects of these instruments on the entity’s financialposition, financial performance, and cash flows. This statement is effectivefor financial statements issued for fiscal years beginning after November 15,2008. We do not expect its adoption will have a material impact on ourfinancial position, results of operations or cash flows.

 

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy ofGenerally Accepted Accounting Principles.” The current GAAP hierarchy, asset forth in the American Institute ofCertified Public Accountants (AICPA) Statement on Auditing Standard No. 69, The Meaning of Present Fairly in Conformity with Generally AcceptedAccounting Principles, has been criticized because (1) it is directed tothe auditor rather than the entity, (2) it is complex, and (3) itranks FASB Statements of Financial Accounting Concepts.  The FASB believes that the GAAP hierarchyshould be directed to entities because it is the entity (not its auditor) thatis responsible for selecting accounting principles for financial statementsthat are presented in conformity with GAAP. Accordingly, the FASB concluded that the GAAP hierarchy should reside inthe accounting literature established by the FASB and is issuing this Statementto achieve that result. This Statement is effective 60 days following the SEC’sapproval of the Public Company Accounting Oversight Board amendments to AU Section 411,The Meaning of Present Fairly in Conformity with Generally Accepted AccountingPrinciples.  The adoption of SFAS No. 162is not expected to have a material impact on the Company’s financial position,results of operations, or cash flows.

 

**Note 3 – Discontinued Operations**

 

As of the beginning of fiscal 2008, the Company had experienced ahistory of losses from operations. Due to the Company’s financial condition andinability to continue ongoing operations with current cash flows, along withdebt obligations, towards the beginning of fiscal 2008, the Company’s Board ofDirectors and management determined that it would be in the best interest ofthe Company’s stockholders to sell all of the operating assets and liabilities.

 

F-11

----

 

TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENT STAGECOMPANY)

NOTES TOTHE CONSOLIDATED FINANCIAL STATEMENTS

 

On August 31, 2007, pursuant to a Memorandum of Understandingdated September 24, 2007, the Board of Directors approved the sale of allthe assets to certain insiders of the Company, including all the members of theCompany’s Board of Directors, the President and Chief Executive Office,together with certain other shareholders of the Company, collectively referredto as the “Contributors”. The Contributors formed NETtime Solutions, LLC (the “Buyer”)for the purpose of consummating the 2008 Asset Sale and acquiring substantiallyall of the net assets of the Company. The Contributors contributed certainissued and outstanding shares of the Company that they held to NETtimeSolutions, LLC pursuant to the terms of the limited liability company operatingagreement governing NETtime Solutions, LLC. Accordingly, on February 4,2008, we completed the sale of substantially all of our net liabilites and thenet liabilites of our two operating subsidiaries, NETtime Solutions, Inc.,an Arizona corporation and NetEdge Devices, LLC, an Arizona limited liabilitycompany, to the Buyer for consideration valued at approximately $1,042,000,which consisted of the following:

 

(i)                                     6,478,693shares which were to be delivered to the Seller at Closing.

(ii)                                  Anunsecured promissory note in the aggregate principal amount of $200,000. Thepromissory note bears interest at the rate of 9%, with principal and interestdue on February 4, 2011.

 

The following tables summarize the consideration received and the netliabilities divested:

 
| Consideration Received                 |   |
|---------------------------------------------|--------|
|                                        |   |
| Fair value of  6,478,693 shares received    |   | $ | 842,351 |   |
| Promissory note  receivable                 |   | 200,000 |   |
| Total fair value  of consideration received |   | $ | 1,042,351 |   |

 
| Net Liabilities  Divested                                                   |   |
|-----------------------------------------------------------------------------|--------|
|                                                                        |   |
| Cash                                                                        |   | $ | 397,472 |   |
| Accounts  receivable                                                        |   | 736,595 |   |
| Inventory                                                                   |   | 70,579 |   |
| Property and  Equipment, net                                                |   | 175,591 |   |
| Other assets                                                                |   | 62,253 |   |
| Total assets  divested                                                      |   | 1,442,490 |   |
|                                                                        |   |   |   |
| Accounts payable                                                            |   | 295,146 |   |
| Accrued  liabilities                                                        |   | 326,792 |   |
| Deferred revenue                                                            |   | 307,055 |   |
| Notes  payable-related parties                                              |   | 1,494,050 |   |
|                                                                        |   |   |   |
| Total current  liabilities divested                                         |   | 2,423,043 |   |
|                                                                        |   |   |   |
| Net liabilities  divested                                                   |   | $ | (980,553 | ) |
|                                                                        |   |   |   |
| Fair value of  the consideration received plus the net liabilities divested |   | $ | 2,022,904 |   |

 

F-12

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** **

TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENT STAGECOMPANY)

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

 

Assets and liabilities of discontinued operations at June 30, 2007consist of the following:

 
| ** **                             | ** ** | **June 30,** | ** ** |
|----------------------------------------|------------|-------------------|------------|
| ** **                             | ** ** | **2007**          | ** ** |
| Cash                                   |       | $                 | 278,701    |   |
| Accounts receivable                    |       | 501,078           |       |
| Inventory                              |       | 66,966            |       |
| Property and  Equipment, net           |       | 293,644           |       |
| Other assets                           |       | 462,319           |       |
| Total assets  disposed of              |       | $                 | 1,602,708  |   |
|                                   |       |              |       |
| Accounts payable                       |       | $                 | 551,102    |   |
| Accrued  liabilities                   |       | 594,875           |       |
| Deferred revenue                       |       | 564,176           |       |
| Notes payable-related  parties         |       | 610,716           |       |
|                                   |       |              |       |
| Total current  liabilities disposed of |       | 2,320,869         |       |
|                                   |       |              |       |
| Long-term notes  payable               |       | 909,442           |       |
|                                   |       |              |       |
| Total  liabilities disposed of         |       | $                 | 3,230,311  |   |

 

Included in DiscontinuedOperations for the years ended June 30, 2008 and 2007 are revenues of$1,526,220 and $5,377,207. For the years ended June 30, 2008 and 2007, netincome included in discontinued operations is $639,542 and $140,436,respectively. Included in the net income for the year ended June 30, 2007was $2,012,035 which related primarily to the 2007 Asset Sale to Synel (SeeNote 7).

 

No gain or loss wasrecorded in relation to the 2008 Asset Sale as the transaction was betweenentities under common control.  Accordingly, the excess of the fair valueof the consideration received over the net assets disposed of has been treatedas a capital contribution.

 

**Note 5 – Income Taxes**

 

As of June 30, 2008 and 2007 deferred tax assets consist of thefollowing:

 
| ** **                        | ** ** | **2008**   | ** ** | **2007**   | ** ** |
|-----------------------------------|------------|------------|------------|------------|------------|
|                              |       |       |       |       |       |
| Federal loss  carryforwards       |       | $          | 2,292,000  |       | $          | 2,321,000 |   |
| State loss  carryforwards         |       | 306,000    |       | 313,000    |       |
| Other                             |       | 21,000     |       | 184,000    |       |
|                              |       | 2,619,000  |       | 2,818,000  |       |
| Less:   valuation allowances |       | (2,619,000 | )          | (2,818,000 | )          |
|                              |       |       |       |       |       |
|                              |       | $          | —     |       | $          | — |   |

 

The Company has established a valuation allowance equal to the fullamount of the deferred tax assets primarily because of uncertainty in theutilization of net operating loss carryforwards.

 

F-13

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TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENT STAGECOMPANY)

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

 

As a result of stock ownership changes, the Company’s ability toutilize net operating losses in the future could be limited, in whole or part,under Internal Revenue Code Section 382.  The Company was treated asan S-Corporation for income tax purposes through May 13, 1997.  As ofJune 30, 2008 the Company’s federal and state net operating losscarryforwards were approximately $7,163,000 and $3,819,000, respectively, andexpire through 2026 as follows:

 
| ** **        | ** ** | **Federal Net**    | ** ** | ** **        | ** ** | **State Net**      | ** ** |
|-------------------|------------|-------------------------|------------|-------------------|------------|-------------------------|------------|
| **Expiration**    | ** ** | **Operating Loss** | ** ** | **Expiration**    | ** ** | **Operating Loss** | ** ** |
| **June 30,** | ** ** | **Carryforwards**       | ** ** | **June 30,** | ** ** | **Carryforwards**       | ** ** |
| 2021              |       | $                       | 1,920,274  |              | 2009       |                    | $          | 594,197 |   |
| 2022              |       | 687,018                 |       | 2010              |       | 1,305,148               |       |
| 2023              |       | 179,972                 |       | 2011              |       | 1,919,918               |       |
| 2024              |       | 1,135,796               |       |              |       |                    |       |
| 2025              |       | 1,335,057               |       |              |       |                    |       |
| 2026              |       | 1,905,260               |       |              |       |                    |       |
|              |       | $                       | 7,163,377  |              |       |                    | $          | 3,819,263 |   |

 

The Company’s tax expense differed from the statutory rate primarilydue to the $199,000 change in the deferred tax asset valuation allowance since June 30,2007 and the utilization of a portion of the net operating loss carryforward atJune 30, 2008.

 

**Note 6- Stockholders’ Equity**

 

**Stock Options:**

 

On July 13, 1999, the Board of Directors authorized the 1999Equity Compensation Plan.  The plan allows for the award of incentivestock options, non-statutory stock options or restricted stock awards tocertain employees, directors, consultants and independent contractors. The Company has reserved an aggregate of 600,000 shares of common stock fordistribution under the plan.  Incentive stock options granted under theplan may be granted to employees only, and may not have an exercise price lessthan the fair market value of the common stock on the date of grant. Optionsmay be exercised on a one-for-one basis, with a maximum term of ten years fromthe date of grant.  Incentive stock options granted to employees generallyvest annually over a four year period.

 

The fair value of option grants is estimated as of the date of grantutilizing the Black-Scholes option-pricing model with the following weightedaverage assumptions:

 
| ** **                 | ** ** | **Year Ended June 30,** | ** ** |
|----------------------------|------------|----------------------------------------|------------|
| ** **                 | ** ** | **2008**                               | ** ** | **2007** | ** ** |
| Expected  volatility       |       | 106                                    | %          | 138 | % |
| Risk-free  interest rate   |       | 2                                      | %          | 4 | % |
| Expected  dividends        |       | 0                                      | %          | 0 | % |
| Expected lives  (in years) |       | 3                                      |       | 3 |   |

 

The weighted average fair value at date of grant for options grantedduring the years ended June 30, 2008 and 2007 approximated $.06 and $.33,respectively.

 

F-14

----

 

TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENT STAGECOMPANY)

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

 

A summary of the activity of options under the plan and non-statutoryoptions granted outside the plan follows:

 
| ** **                         | ** ** | **Number of** | ** ** | **Average**             | ** ** |
|------------------------------------|------------|--------------------|------------|-------------------------|------------|
| ** **                         | ** ** | **Options**        | ** ** | **Exercise Price** | ** ** |
|                               |       |               |       |                    |       |
| Outstanding at  June 30, 2007 |       | 2,289,489          |       | $                       | 1.07       |   |
|                               |       |               |       |                    |       |
| Granted                            |       | 1,652,767          |       | 0.09                    |       |
| Exercised                          |       | —             |       | —                  |       |
| Expired                            |       | (21,969            | )          | 1.10                    |       |
| Forfeited                          |       | (1,216,000         | )          | 1.03                    |       |
| Outstanding at  June 30, 2008 |       | 2,704,287          |       | $                       | 0.30       |   |

 

Additional information about outstanding options to purchase theCompany’s common stock as of June 30, 2008 is as follows:

 
| ** **   | ** ** | **Options Outstanding** | ** ** | **Options Exercisable** | ** ** |
|--------------|------------|------------------------------|------------|------------------------------|------------|
| ** **   | ** ** | ** **                   | ** ** | **Weighted**                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Weighted** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **   | ** ** | ** **                   | ** ** | **Average**                  | ** ** | **Weighted** | ** ** | ** ** | ** ** | ** ** | ** ** | **Average** | ** ** | **Weighted** | ** ** | ** ** | ** ** |
| ** **   | ** ** | **Number**                   | ** ** | **Remaining**                | ** ** | **Average** | ** ** | **Aggregate** | ** ** | ** ** | ** ** | **Remaining** | ** ** | **Average** | ** ** | **Aggregate** | ** ** |
| **Exercise** | ** ** | **of**                       | ** ** | **Contractual**              | ** ** | **Exercise** | ** ** | **Intrinsic** | ** ** | **Number of** | ** ** | **Contractual** | ** ** | **Exercise** | ** ** | **Intrinsic** | ** ** |
| **Price**    | ** ** | **Shares**                   | ** ** | **Life (Years)**        | ** ** | **Price** | ** ** | **Value** | ** ** | **Shares** | ** ** | **Life (Years)** | ** ** | **Price** | ** ** | **Value** | ** ** |
| $            | 2.20       |                         | 20,000     |                         | 1.51       |   | $ | 2.20 |   | $ | — |   | 20,000 |   | 1.51 |   | $ | 2.20 |   | $ | — |   |
| $            | 1.10       |                         | 12,000     |                         | 0.61       |   | $ | 1.00 |   | $ | — |   | 12,000 |   | 0.61 |   | $ | 1.00 |   | $ | — |   |
| $            | 0.91-$0.60 |                         | 514,520    |                         | 5.43       |   | $ | 0.76 |   | $ | — |   | 514,250 |   | 5.43 |   | $ | 0.76 |   | $ | — |   |
| $            | 0.51-$0.40 |                         | 385,000    |                         | 6.71       |   | $ | 0.46 |   | $ | — |   | 385,000 |   | 6.71 |   | $ | 0.46 |   | $ | — |   |
| $            | 0.32-$0.30 |                         | 120,000    |                         | 4.32       |   | $ | 0.31 |   | $ | — |   | 120,000 |   | 4.32 |   | $ | 0.31 |   | $ | — |   |
| $            | 0.16-$0.13 |                         | 152,767    |                         | 9.04       |   | $ | 0.15 |   | $ | 328 |   | 152,767 |   | 9.04 |   | $ | 0.15 |   | $ | 328 |   |
| $            | 0.09       |                         | 1,500,000  |                         | 7.66       |   | $ | 0.09 |   | $ | 23,077 |   | 461,538 |   | 7.66 |   | $ | 0.09 |   | $ | 7,101 |   |
|         |       | 2,704,287                    |       |                         |       |   |   |   |   | 1,665,555 |   |   |   |   |   |   |   |

 

During the years ended June 30, 2008 and 2007 the Companyrecognized compensation expense of $62,347 and $142,980, respectively.Compensation expense for the year ended June 30, 2008 includes a reversalof previously recognized share based compensation expense of $28,113, due tothe forfeiture of options as a result of the 2008 Asset Sale. As of June 30,2008, there was $80,410 of total unrecognized compensation cost related tononvested stock options under the Plan.  That cost is expected to berecognized over the weighted average period of 13 months.  The total fairvalue of the 461,538 options which vested during the year ended June 30,2008, and that were not subsequently forfeited in the 2008 Asset Sale, was$27,046.

 

During the year ended June 30, 2007, the Company extended the termof an employee’s option to purchase 839,000 shares for one year. In relation tothe extension, $34,125 was recognized as compensation expense during the yearended June 30, 2007. This compensation expense is included as part of theincome from discontinued operations.

 

F-15

----

 

TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENT STAGECOMPANY)

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

 

**Non-Employee Stock Options and Warrants:**

 

As of June 30, 2008 the Company has warrants outstanding that wereissued primarily in connections with prior financing arrangements. Activityrelative to these warrants for the year ended June 30, 2008 is as follows:

 
| ** **                                | ** ** | **Number of** | ** ** | **Average**             | ** ** |
|-------------------------------------------|------------|--------------------|------------|-------------------------|------------|
| ** **                                | ** ** | **Shares**         | ** ** | **Exercise Price** | ** ** |
| Warrants  outstanding - beginning of year |       | 911,734            |       | $                       | 0.87       |   |
| Granted                                   |       | 250,000            |       | 0.12                    |       |
| Expired                                   |       | (173,077           | )          | 0.65                    |       |
| Warrants  outstanding - end of year       |       | 988,657            |       | 0.72                    |       |
|                                           |            |                    |            |                         |            |  |

 

All the warrants outstanding as of June 30, 2008 are exercisable.

 

**Private Placement**

 

On April 15, 2008, the Company closed on gross proceeds of$250,000 in a private placement through the sale of 2,500,000 shares of commonstock.  The shares in the private placement were offered and sold solelyto accredited investors in reliance on the exemption from registration providedby Rule 506 of Regulation D under the Securities Act of 1933, asamended.  Source Capital Group, Inc. acted as the sole placementagent in the private placement.  In connection with the private placement,the Company paid Source Capital Group (i) a cash sales commission of$25,000 (representing 10% of the gross proceeds raised in the privateplacement) and (ii) warrants to purchase 250,000 shares of common stock(representing 10% of the aggregate number of shares of common stock sold in theprivate placement), with each warrant having an exercise price of $0.12 pershare, exercisable until April 15, 2013.

 

**Note 7-2007 Asset Sales**

 

Effective March 31, 2006 the Company closed on the sale of certainof the Company’s direct sales assets pursuant to the terms of an Asset PurchaseAgreement (the “Purchase Agreement”). Under the terms of the PurchaseAgreement, certain assets associated with the Company’s previous direct salesbusiness were sold, including a copy of the source code and other intellectualproperty relating to the Company’s NETtime, HourTrack and GENESIS time andattendance software products, related ASP and maintenance contracts, andcertain specified direct channel sales opportunities.

 

The sale generated cash to the Company at closing of approximately$530,000. The purchase price under the Purchase Agreement included cash payableto the Company at the closing in consideration for a copy of the source codeand related intellectual property. The consideration for the ASP andmaintenance contracts was determined based on multiples of the projectedannualized revenues under such contracts. At closing, the Company received incash 100% of the total consideration for the customer ASP contracts and 40% ofthe total consideration for the maintenance contracts.  The remainingconsideration for the maintenance contracts was payable quarterly through July 2007.The Company also transitioned over additional ASP customers through December 31,2006. The Company was paid for the additional transfers at the time of suchtransfers.  Additionally, through March 2007, the Company receivedmonthly royalty payments equal to 27.5% of the revenues in connection withdirect channel sales opportunities specified at closing. These are included aspart of the income from discontinued operations for the year ended June 30,2007.

 

On January 16, 2007, Tempco, Inc. (formerly NETtime Solutions, Inc.).,a Nevada corporation (the “Company”), along with its subsidiaries, NETtimeSolutions, Inc., an Arizona corporation (formerly Time America, Inc.),and NetEdge Devices, LLC, an Arizona limited liability company, entered into anAsset Purchase Agreement with Synel Industries, Inc., an Israeliregistered corporation (“Synel”). Under the agreement, Synel purchased theCompany’s reseller sales channel, source code and related intellectual propertyfor the Company’s GENESIS, HourTrack, and TA7000 product series, certain userights associated with the Company’s NETtime source code, and all of theCompany’s rights associated with the “Time America” name. The sale closed on January 22,2007.  In relation to the sale, on April 20, 2007, the Company fileda Certificate of Amendment to the Articles of Incorporation with the NevadaSecretary of State to change the corporate name of Time America, Inc., aNevada corporation, to NETtime Solutions, Inc.  The effective date ofthe corporate name change was May 10, 2007.

 

F-16

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TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENT STAGECOMPANY)

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

 

Under the agreement, the purchase price for the acquired assets was$2.5 million, $250,000 of which was held in escrow pending resolution ofcertain post-closing obligations. Other contingent consideration under theagreement for the acquired assets consisted of royalty payments, payable to theCompany quarterly over the four year period ending January 15, 2011, equalto 5% of the revenue derived from Synel’s U.S. sales of TA7000 units outside ofSynel’s established U.S. customer base. Any amounts receivable under theagreement were disposed of as part of the 2008 Asset Sale. Additionally, Synelpurchased certain of the Company’s TA7000 inventory for $140,000. A portion ofthe proceeds from the sale were used to repay its Secured Convertible Term Notewith Laurus, dated January 3, 2006.  In addition, the Company issued100,000 shares of its Common Stock to Laurus in consideration for Laurus’sconsent to extending the maturity date of the Company’s existing revolving notewith Laurus, the asset sale to Synel, and the corporate name change.

 

On June 25, 2007, the Company announced that Synel hadentered into a master agreement with PayChex, Inc., a Delaware corporation(“PayChex”), pursuant to which such parties agreed to conduct a pilot programrelating to the Company’s NETtime software.  During the pilot program, theCompany provided qualified employees to PayChex for consulting services.

 

The master agreement provided that, in the event PayChex elected toexercise its rights under a related license agreement, and in consideration forthe grant of a perpetual license under the license agreement, PayChex paid toSynel an aggregate of $1,500,000, of which amount $1,200,000 was payable to theCompany as follows:  an initial payment of $1,000,000 payable to theCompany upon the election by PayChex to acquire the license rights, and twosubsequent payments of $100,000 each, which were due three months and sixmonths, respectively, thereafter.  PayChex was obligated to exercise itsoption to acquire the perpetual license rights to the NETtime source code underthe license agreement by December 1, 2007 and did so on November 30,2007. This is included in discontinued operations for the year ended June 30,2008.

 

The Company did not distinguish operationally or financially itsactivities other than gross product sales between its sales channels and assuch the Company did not account for the sale as discontinued operations underSFAS No. 144 “Accounting for the Impairment or Disposal of Long-LivedAssets” at the time of the sale. In conjunction with the 2008 Asset Saleconsummated in February, 2008, all the operations of the company prior to thattime were reclassified as discontinued operations.

 

**Note 8 – Commitments**

 

The Company leases officespace from a related party in Scottsdale, Arizona on a month to month basis.Monthly rent expense on the lease is $1,000. For the year ended June 30,2008, rent expense was $5,000 in relation to the related party lease.

 

During fiscal year 2007and to the date of the Asset sale, the Company leased office space inScottsdale, Arizona. Rental expense for the year ended June 30, 2007 wasapproximately $335,000 and is included in the income from discontinuedoperations. Rent expense included in the income from discontinued operationswas approximately $190,000 for the year ended June 30, 2008. As a resultof the 2008 Asset Sale, the lease was assumed by NETtime Solutions, LLC.

 

**Note 9- Going Concern**

 

Through June 30,2007, the Company had sustained recurring losses from operations, and at September 30,2007, the Company estimated that its working capital and funds generated fromoperations would be sufficient to fund the Company’s operations for thefollowing three months.  Those conditions raised substantial doubt aboutthe ability of the Company to continue as a going concern.   Theconsolidated financial statements for the year ended June 30, 2007 did notinclude any adjustments that may have arisen from these uncertainties.

 

F-17

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TEMPCO, INC. ANDSUBSIDIARIES

(A DEVELOPMENT STAGECOMPANY)

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

 

At June 30, 2008 theCompany does not currently engage in any business activities that provide cashflow. As of June 30, 2008, we have approximately $212,000 in cash and cashequivalents. We believe this will be sufficient to fund the costs ofinvestigating and analyzing a suitable business combination or to fund generaland administrative expenses for the next 12 months. If our efforts areunsuccessful within that period, we will have to seek additional funds. Noassurance can be given that we will be able to raise additional capital, whenneeded or at all, or that such capital, if available, will be on acceptableterms. The financial statements do not contain any adjustments that mightresult from these uncertainties.

 

F-18

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** **

**Item8.  Changes In And Disagreements WithAccountants On Accounting And Financial Disclosure.**

 

On July 14, 2008,the Company’s Board of Director’s dismissed Semple, Marchal & Cooper,LLP, of Phoenix, Arizona, as the Company’s independent registered publicaccounting firm.

 

On July 16, 2008the Company’s Board of Director’s engaged Moore & Associates,Chartered, of Las Vegas, Nevada, to serve as the independent registered publicaccounting firm for the Company’s fiscal year ending June 30, 2008.

 

The report of Semple, Marchal & Cooper, LLP for the yearsending June 30, 2007 and 2006 did not contain an adverse opinion ordisclaimer of opinion and were not qualified or modified as to uncertainty,audit scope or accounting principles other than going concern.

 

During the Company’s two most recent fiscal years and the subsequentinterim periods and through the date of dismissal, there were no disagreementswith Semple, Marchal & Cooper, LLP on any matter of accountingprinciples or practices, financial statement disclosure, or auditing scope orprocedure which, if not resolved to the satisfaction of Semple, Marchal &Cooper, LLP, would have caused it to make reference to the matter in connectionwith its reports. There were no “reportable events” as that term is describedin Item 304(a)(1)(v) of Regulation S-B.

 

The Company did not consult Moore & Associates Chartered, LLPregarding either: (i) the application of accounting principles to aspecified transaction, completed or proposed, or the type of audit opinion thatmight be rendered on the Company’s financial statements, or (ii) anymatter that was either the subject of a disagreement as defined in Item304(a)(1)(iv) of Regulation S-B or a reportable event as described in Item304(a)(1)(v) of Regulation S-B.

 

12

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**Item 8A. Controls and Procedures.**

** **

**Disclosure Controls and Procedures**

 

In accordance with Rule 13a-15(b) of the SecuritiesExchange Act of 1934 as amended (the “Exchange Act”), as of the end of the periodcovered by this *Annual Report on Form 10-KSB,* theCompany’s management evaluated, with the participation of the Company’sprincipal executive and financial officer, the effectiveness of the design andoperation of the Company’s disclosure controls and procedures (as defined inRule 13a-15(e) or Rule 15d-15(e) under the Exchange Act). Disclosure controlsand procedures are defined as those controls and other procedures of an issuerthat are designed to ensure that the information required to be disclosed bythe issuer in the reports it files or submits under the Act is recorded,processed, summarized and reported, within the time periods specified in theCommission’s rules and forms. Disclosure controls and procedures include,without limitation, controls and procedures designed to ensure that informationrequired to be disclosed by an issuer in the reports that it files or submitsunder the Act is accumulated and communicated to the issuer’s management,including its principal executive officer and principal financial officer, orpersons performing similar functions, as appropriate to allow timely decisionsregarding required disclosure. Based on their evaluation of these disclosurecontrols and procedures, the Company’s chairman of the board and chief executiveand financial officer has concluded that the disclosure controls and procedureswere effective as of the date of such evaluation to ensure that materialinformation relating to the Company, including its consolidated subsidiaries,was made known to them by others within those entities, particularly during theperiod in which this *Annual Report on Form10-KSB* was being prepared.

 

**Item 8A(T) Controls and Procedures**

 

**Internal Control Over Financial Reporting**

 

Management of the Company is responsible for establishing andmaintaining adequate internal control over financial reporting. The Company’sinternal control over financial reporting has been designed to providereasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance withgenerally accepted accounting principles generally accepted in the UnitedStates of America.

 

The Company’s internal control over financial reporting includespolicies and procedures that pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect transactions and dispositionsof assets of the Company; provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements inaccordance with accounting principles generally accepted in the United Statesof America, and that receipts and expenditures are being made only inaccordance with authorization of management and directors of the Company; andprovide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use or disposition of the Company’s assets that couldhave a material effect on the Company’s financial statements.

 

Because of its inherent limitations, internal control over financialreporting may not prevent or detect misstatements. Therefore, even thosesystems determined to be effective can provide only reasonable assurance withrespect to financial statement preparation and presentation. Projections of anyevaluation of effectiveness to future periods are subject to the risk thatcontrols may become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may deteriorate.

 

Management assessed the effectiveness of the Company’s internal controlover financial reporting at June 30, 2008. In making this assessment,management used the criteria set forth by the Committee of SponsoringOrganizations of the Treadway Commission (“COSO”) in **Internal Control—Integrated Framework**.Based on that assessment under those criteria, management has determined that,at June 30, 2008, the Company’s internal control over financial reportingwas effective.

 

This annual report does not include an attestation report of theCompany’s registered public accounting firm regarding internal control overfinancial reporting. Management’s report was not subject to attestation by the Company’sregistered public accounting firm pursuant to temporary rules of the SECthat permit the Company to provide only management’s report in this annualreport.

 

13

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**Item 8B. Other Information.**

 

None.

 

**PART III**

 

**Item 9.    Directors,Executive Officers, Promoters and Control Persons; Compliance With Section16(a) of the Exchange Act.**

 

Informationregarding our directors and executive officer is provided below:

 

STANLEY L. SCHLOZ, age 65, has been a Director, President and Treasurersince February 4, 2008. Mr. Schloz retired from Motorola in 1998 after a32-year career in positions advancing from engineering through senior businessmanagement. As Director, Tactical Systems Operations of the Space and SystemsTechnology Group he was responsible for the strategic direction and performanceof the electronic fuse business with over $150,000,000 in annual sales, servingUS and foreign governments, along with prime contractors. His organizationconsisted of over 400 program management, engineering, marketing, andmanufacturing associates. Mr. Schloz has been engaged in business managementconsulting since July 2000. He holds the degree of Bachelor of Science inElectrical Engineering from Iowa State University and has done advancedbusiness studies at Arizona State University.

 

FRED BURSTEIN, age 72, has been a Director and Vice President of thecompany since February 4, 2008. Since 1960, Mr. Burstein has been a lawyerpracticing law in Minneapolis, Minnesota.

 

ANTHONY SILVERMAN, age 65, has been a director since February 4, 2008.He is the General Partner of Katsinam Partners, LP, a private investment fundlocated in Scottsdale, Arizona that invests in micro and small-cap publiccompanies. Katsinam holds 510,000 shares of our common stock. Mr. Silvermanalso manages his personal investments. Mr. Silverman was Founder, Chairman andCEO of Paradise Valley Securities from 1987 to 1999. For most of his 30-yearcareer in the securities business, Mr. Silverman concentrated in transactionsfor the financing of micro-cap and small-cap companies. Mr. Silverman has ledfinancings aggregating over $500 million for close to 100 companies, includingdiverse industries such as airlines, food products, telecommunications, retail,media and life sciences.

 

**Compliance with Section 16(a) of the SecuritiesExchange Act of 1934**

 

Section 16(a) of the Securities Exchange Act of 1934, as amended,requires our directors and executive officers, as well as persons beneficiallyowning more than 10% of our outstanding common stock, to file reports ofownership and changes in ownership with the Securities and Exchange Commission(the “SEC”) within specified time periods. Such officers, directors and shareholders are also required to furnishus with copies of all Section 16(a) forms they file.

 

Based solely on its review of such forms received by us, or writtenrepresentations from certain reporting persons, we believe that all Section16(a) filing requirements applicable to our officers, directors and 10%shareholders were complied with during the fiscal year ended June 30, 2008.

 

14

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**Item 10.  Executive Compensation.**

 

The following table summarizes allcompensation paid to our Chief Executive Officer for each of the fiscal yearsended June 30, 2008 and 2007.  Wedid not have any other executive officers whose total annual salary and bonusexceeded $100,000 for the periods presented.

 

**SUMMARY COMPENSATION TABLE**

 
| ** **                                                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** **         | ** ** | **Stock**  | ** ** |
|----------------------------------------------------------------------|------------|------------|------------|------------|------------|--------------------|------------|------------|------------|
| **Name and**                                                    | ** ** | ** ** | ** ** | **Salary** | ** ** | ** **         | ** ** | **Awards** | ** ** |
| **Principal Position**                                          | ** ** | **Year**   | ** ** | **($)**    | ** ** | **Bonus ($)** | ** ** | **($)(1)** | ** ** |
| ** **                                                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** **         | ** ** | ** ** | ** ** |
| Stanley L.  Schloz, Chief Executive and Financial Officer            | ** ** | 2008       | ** ** | $          | 7,500      | ** **         | $          | —     | ** ** | $ | — | ** ** |
| ** **                                                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** **         | ** ** | ** ** | ** ** |
| Bahan Sadegh (3)                                                     |       | 2008       |       | 105,000    |       | —             |       | —     |       |
| Former Chief  Executive Officer                                      |       | 2007       |       | 119,300    |       | —             |       | —     |       |
|                                                                 |       |       |       |       |       |               |       |       |       |
| Thomas S.  Bednarik (4) Former  Chief Executive Officer              |       | 2007       |       | 105,400    |       | —             |       | 112,250    |       |
|                                                                 |       |       |       |       |       |               |       |       |       |
| Jon Weiss  (5) Former Interim Chief Executive Officer and VP of |       | 2008       |       | 97,888     |       |               |       |       |       |
| Business  Development                                                |       | 2007       |       | 95,400     |       | 51,811             |       | —     |       |
|                                                                      |            |            |            |            |            |                    |            |            |            |  |  |  |

 

15

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| ** **                                                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** **              | ** ** | **Non-qualified** | ** ** | ** **         | ** ** | ** ** | ** ** |
|----------------------------------------------------------------------|------------|------------|------------|------------|------------|-------------------------|------------|-------------------|------------|--------------------|------------|------------|------------|
| ** **                                                           | ** ** | ** ** | ** ** | ** ** | ** ** | **Nonequity**           | ** ** | **deferrred**     | ** ** | ** **         | ** ** | ** ** | ** ** |
| ** **                                                           | ** ** | ** ** | ** ** | **Option** | ** ** | **incentive plan** | ** ** | **compensation**  | ** ** | **All other** | ** ** | ** ** | ** ** |
| **Name and**                                                    | ** ** | ** ** | ** ** | **Awards** | ** ** | **compensation**        | ** ** | **earnings**      | ** ** | **Compensation**   | ** ** | **Total**  | ** ** |
| **Principal Position**                                          | ** ** | **Year**   | ** ** | **($)(2)** | ** ** | **($)**                 | ** ** | **($)**           | ** ** | **($)**            | ** ** | **($)**    | ** ** |
| ** **                                                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** **              | ** ** | ** **        | ** ** | ** **         | ** ** | ** ** | ** ** |
| Stanley L.  Schloz, Chief Executive and Financial Officer            | ** ** | 2008       | ** ** | $          | 10,818     |                    | $          | —            |       | $                  | —     |       | $          | — |   | $ | 18,318 |   |
| ** **                                                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** **              | ** ** | ** **        | ** ** | ** **         | ** ** | ** ** |
| Bahan Sadegh (3)                                                     |       | 2008       |       | —     |       | —                  |       | —            |       | —             |       | 105,000    |       |
| Former Chief  Executive Officer                                      |       | 2007       |       | 6,375      |       | —                  |       | —            |       | —             |       | 125,675    |       |
|                                                                 |       |       |       |       |       |                    |       |              |       |               |       |       |       |
| Thomas S. Bednarik  (4)                                              |       | 2008       |       |       |       |                    |       |              |       |               |       |       |       |
| Former Chief  Executive Officer                                      |       | 2007       |       | —     |       | —                  |       | —            |       | —             |       | 217,650    |       |
|                                                                 |       |       |       |       |       |                    |       |              |       |               |       |       |       |
| Jon Weiss  (5) Former Interim Chief Executive Officer and VP of |       | 2008       |       | —     |       | —                  |       | —            |       | —             |       | 97,888     |       |
| Business  Development                                                |       | 2007       |       | 2,700      |       | —                  |       | —            |       | —             |       | 149,911    |       |
|                                                                      |            |            |            |            |            |                         |            |                   |            |                    |            |            |            |  |  |  |  |  |

 

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|   | (1)    | Reflects the dollar amount recognized for financial  statement reporting purposes in accordance with SFAS 123(R). Amounts are  calculated using the closing stock price of each award on the date of grant.                                                                                                                                                                                                                                                                                                                        |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | (2)    | Reflects dollar amount expensed by us during  applicable fiscal years for financial statement reporting purposes pursuant  to SFAS 123(R). SFAS 123(R) requires us to determine the overall value of the  options as of the date of grant based upon the Black-Scholes method of  valuation, and to then expense that value over the service period over which  the options become exercisable (vest). See the assumptions made in the  valuation of the stock options in the footnotes of our consolidated financial  statements. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | (3)    | Mr. Sadegh was appointed to serve as the Company’s  President and Chief Executive Officer effective April 16, 2007. He resigned  on February 8, 2008.                                                                                                                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | (4)    | Mr. Bednarik resigned  effective January 22, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | (5)    | Mr. Weiss assumed the  position of Interim CEO effective January 22, 2007.  The amounts in  the Bonus column in fiscal year 2007 consist of sales commissions paid.                                                                                                                                                                                                                                                                                                                                                 |

 

**Item 11. Security Ownership Of Certain Beneficial Owners And Management andRelated Stockholder Matters.**

 

The following table sets forth certaininformation, as of September 22, 2008, concerning the beneficial ownershipof shares of Common Stock of the Company by (i) each person known by theCompany to beneficially own more than 5% of the Company’s Common Stock; (ii) eachDirector; (iii) the Company’s Chief Executive Officer; and (iv) alldirectors and executive officers of the Company as a group.  To the knowledge of the Company, all personslisted in the table have sole voting and investment power with respect to theirshares, except to the extent that authority is shared with their respectivespouse under applicable law.

 

16

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| ** **                                                        | ** ** | **Shares Beneficially Owned (1)** | ** ** |
|-------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| **Name and Address of Beneficial Owner** | ** ** | **Number**                                       | ** ** | **Percent of Class** | ** ** |
|                                                              |       |                                             |       |   |   |
| Laurus Capital  Management (2)(4)                                 |       | 1,081,923                                        |       | 9.5 | % |
| Anthony  Silverman (3)                                            |       | 2,333,000                                        |       | 20.5 | % |

 

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| (1)    |   | A person is deemed to be  the beneficial owner of securities that can be acquired within 60 days from  the date set forth above through the exercise of any option, warrant or  right. Shares of common stock subject to options, warrants or rights that are  currently exercisable or exercisable within 60 days are deemed outstanding  for computing the percentage of the person holding such options, warrants or  rights, but are not deemed outstanding for computing the percentage of any  other person. The amounts and percentages are based upon 11,403,711 shares of  common stock outstanding as of September 22, 2008. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (2)    |   | The address of Laurus  Capital Management, LLC is 825 Third Avenue, 14th Floor, New York,  NY 10022.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (3)    |   | The address of Anthony  Silverman is 2747 Paradise Road #1405, Las Vegas, Nevada 89109                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (4)    |   | Includes 630,000 shares of  common stock underlying warrants that were exercisable on September 22,  2008 or within 60 days thereafter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

 

**Item 12.  Certain Relationships And RelatedTransactions, and Director Independence.**

 

Except as set forth below, the Company did not have any transactionsduring fiscal years 2008 and 2007 with any director, director nominee,executive officer, security holder known to the Company to own of record orbeneficially more than 5% of the Company’s common stock, or any member of theimmediate family of any of the foregoing persons, in which the amount involvedexceeded $120,000.

 

On March 31, 2001, the Company borrowed $400,000 from Joseph L.Simek, a significant stockholder of the Company.  The loan accrues interest at an annual rateof prime plus one percent (1%) and is secured by a subordinated lien on all ofthe Company’s assets.  Principal andinterest payments of approximately $8,500 are due monthly, with the outstandingprincipal balance due on October 1, 2004. On November 2, 2001, Mr. Simek agreed to provide the Companywith a $200,000 line of credit, which is also secured by all of the Company’sassets.  On September 24, 2002, Mr. Simekagreed to provide the Company with an additional $200,000 revolving line ofcredit, which is also secured by all of the Company’s assets.  Borrowings under the lines of credit accrueinterest at an annual rate of 10%.  In January 2004,Mr. Simek and the Company agreed to extend the maturity date of the lineof credit facility to December 31, 2005. In September 2004, theCompany and Mr. Simek agreed to extend the balloon payment on the promissorynote from October 1, 2004 to October 1, 2005. In November 2005,the Company and Mr. Simek agreed to extend the term of its $400,000 lineof credit facility to December 31, 2007.  At June 30, 2007, the $400,000loan had been paid in full and $150,000 was outstanding under the line ofcredit. As a result of the 2008 Asset Sale, the balance on the line of creditof $150,000 at February 4, 2008 was assumed by NETtime Solutions, LLC.

 

On September 4,2001, the Company borrowed $500,000 from Francis Simek, the spouse of Mr. Simek,under a five year term note.  On March 22, 2004, the Company and Mrs. Simekentered into a subordinated note agreement pursuant to which the obligationsoutstanding under this note were subordinated to the obligations under our creditfacilities with Laurus Master Fund. Under the terms of the agreement, the existing term note was refinancedas a five year term note with monthly principal and interest payments at 15%.The Company issued 25,000 shares of restricted common stock to Mrs. Simekin consideration for her agreement to subordinate the note.  In November 2004, the Company and Mrs. Simekamended the terms of the note to change the interest rate to 10%. Theloan is

 

17

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secured by ajunior lien on all of the Company’s assets. Principal and interest payments of $8,918 are due and payable monthlyover a 60-month period.  At June 30,2007, $249,613 was outstanding under this loan. In February 2007, the Company amended the terms of this noteagreement with a related party to defer the monthly principal payments through December 2007.As a result of the 2008 Asset Sale, the balance of the loan of $242,774 wasassumed by NETtime Solutions, LLC.

 

In October 2003,the Company entered into a four year consulting services agreement with Mr. Belferpursuant to which Mr. Belfer agreed to introduce the Company to investmentbanking and investor relations firms and persons/entities interested in doingbusiness with the Company.  In exchange forMr. Belfer’s agreement to provide such consulting services, Mr. Belferwas granted a non-statutory option to purchase 200,000 shares of the Company’scommon stock at $0.75 per share.  Theoptions vested over four years and have a term of ten years. At June 30,2008, the options are still outstanding.

 

On April 16,2004, the Company borrowed $500,000 from Mrs. Simek.  The note is a five year term note withmonthly principal and interest payments at 15%. In consideration for agreeing to subordinate the note, the Companyissued 25,000 shares of restricted common stock to Mrs. Simek.  The loan is secured by a subordinated lien onall of the Company’s assets.  In November 2004, the Company paid$456,100 to retire the remaining balance on the note.  The Company and Mrs. Simek then enteredinto a $500,000 revolving credit note agreement.  Borrowings under the note accrue interest atthe rate of 10% per annum with interest due monthly.  Unused borrowings are subject to a 2% perannum commitment fee payable quarterly. In May 2005, the Company borrowed $500,000 under thisagreement.  Subsequently, the Company andMrs. Simek amended the agreement to provide for a 60-month repaymentperiod.  Principal and interestpayments of $10,562 are due and payable monthly. At June 30, 2007,$402,187 was outstanding under this loan. In February 2007, the Company amended the terms of this noteagreement with a related party to defer the monthly principal payments through December 2007.As a result of the 2008 Asset Sale, the balance of the loan on February 4,2008 of $394,976 was assumed by NETtime Solutions, LLC.

 

On December 8,2005, the Company borrowed $500,000 from Francis Simek under a three year termnote at an annual interest rate of 15%. The loan is secured by a subordinated lien on all of the Company’sassets.  Principal and interest paymentsof $17,288 are due and payable monthly over a 36-month period.  At June 30, 2007, $418,358 wasoutstanding under this loan.  In February 2007,the Company amended the terms of this note agreement to defer the monthlyprincipal payments through December 2007. As a result of the 2008 AssetSale, the balance of the loan on February 4, 2008 of $406,300 was assumedby NETtime Solutions, LLC.

 

In July 2006,the Company amended the terms of its aforementioned note agreements withrelated parties to defer the monthly principal payments for the period of July 2006through December 2006.  Theamortization period of the note was increased by six months to compensate forthe deferred principal payments.

 

In December 2006,the Company entered into a $300,000 subordinated note agreement with a relatedparty.  The note was a 90-day note with the principal due in 90 days andmonthly interest payments at an annual percentage rate of 10%.  Inconsideration for agreeing to subordinate repayment of the note, the Companyissued 30,000 shares of restricted common stock to the holder of thesubordinated note.  The fair value of the stock was recorded as a deferredloan issue charge. In February 2007, the Company amended the terms of thisnote agreement with a related party to defer the monthly principal paymentsthrough December 2007.  At February 4,2008, the $300,000 note was assumed by NETtime Solutions, LLC as a result ofthe 2008 Asset Sale.

 

As discussedabove, in February 2007, the Company amended the terms of all its noteagreements with a related party to defer the monthly principal payments throughDecember 2007.  The amortizationperiod of the note was increased by 12 months to compensate for the deferredprincipal payments.  The Company issued100,000 shares of its Common Stock in consideration for consent to interestonly payments through December 2007. These shares were included in theshares given up as consideration for the 2008 Asset Sale.

 

Two of ourdirectors receive monthly compensation in the amount of $1,500 per month forthe services they provide to the Company. A third director receives monthlycompensation in the amount of $1,000 as consideration for rent.

 

18

----

 

**Director Independence**

 

Our directors areStanley L. Schloz, Fred Burstein, and Anthony Silverman.  Mr. Schloz is also our President andChief Executive and Financial Officer and is therefore not consideredindependent.  While the OTC BulletinBoard does not prescribe independence requirements for board members, theCompany believes the remainder of its Board members are “independent” withinthe meaning of the listing standards of the NADAQ Stock Market.

 

“Independent director” means a person other than anexecutive officer or employee of the company or any other individual having arelationship which, in the opinion of the issuer’s board of directors, wouldinterfere with the exercise of independent judgment in carrying out theresponsibilities of a director. The following persons shall not be consideredindependent:

 

(A)                              a director who is, or at any time during the pastthree years was, employed by the company;

 

(B)                                a director who accepted or who has a Family Memberwho accepted any compensation from the company in excess of $100,000 during anyperiod of twelve consecutive months within the three years preceding thedetermination of independence, other than the following:

 

(i)                                     compensation for board orboard committee service;

 

(ii)                                  compensation paid to aFamily Member who is an employee (other than an executive officer) of thecompany; or

 

(iii)                               benefits under a tax-qualified retirement plan, ornon-discretionary compensation.

 

Provided, however, that in addition to therequirements contained in this paragraph (B), audit committee members are alsosubject to additional, more stringent requirements under Rule 4350(d).

 

(C)                                a director who is a Family Member of an individualwho is, or at any time during the past three years was, employed by the companyas an executive officer;

 

(D)                               a director who is, or has a Family Member who is, apartner in, or a controlling shareholder or an executive officer of, anyorganization to which the company made, or from which the company received,payments for property or services in the current or any of the past threefiscal years that exceed 5% of the recipient’s consolidated gross revenues forthat year, or $200,000, whichever is more, other than the following:

 

(i)            payments arising solely frominvestments in the company’s securities; or

 

(ii)           payments under non-discretionarycharitable contribution matching programs.

 

(E)                                 a director of the issuerwho is, or has a Family Member who is, employed as an executive officer ofanother entity where at any time during the past three years any of theexecutive officers of the issuer serve on the compensation committee of suchother entity; or

 

(F)                                 a director who is, or hasa Family Member who is, a current partner of the company’s outside auditor, orwas a partner or employee of the company’s outside auditor who worked on thecompany’s audit at any time during any of the past three years.

 

(G)                                in the case of an investment company, in lieu ofparagraphs (A)–(F), a director who is an “interested person” of the company as definedin Section 2(a)(19) of the Investment Company Act of 1940, other than inhis or her capacity as a member of the board of directors or any boardcommittee.

 

19

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**Item 13. Exhibits.**

 

The exhibits as indexed immediately following the signature page ofthis Report are included as part of this Form 10-KSB.

 

**Item 14. Principal Accountant Fees and Services.**

 

The followingtable sets forth fees billed to us by our auditors during the fiscal yearsended June 30, 2008 and 2007 for: (i) services rendered for the auditof our annual financial statements and the review of our quarterly financialstatements, (ii) services by our auditors that are reasonably related tothe performance of the audit or review of our financial statements and that arenot reported as Audit Fees, (iii) services rendered in connection with taxcompliance, tax advice and tax planning, and (iv) all other fees forservices rendered.  All other feesconsist primarily of fees incurred to review our registration statementfilings, proxy statements, and 8-K’s related to the asset sales.

 
|   |   |               |   | **June 30, 2008** | ** ** | **June 30, 2007** |   |
|--------|--------|--------------------|--------|-----------------------------|------------|-----------------------------|--------|
| (i)    |   | Audit Fees         |   | $                           | 81,113     |                        | $      | 63,900 |   |
| (ii)   |   | Audit Related Fees |   | —                      |       | —                      |   |
| (iii)  |   | Tax Fees           |   | $                           | 6,150      |                        | $      | 5,500 |   |
| (iv)   |   | All Other Fees     |   | $                           | 17,355     |                        | $      | 16,705 |   |

 

**Audit Committee Pre-Approval Policies and Procedures**

 

The entire board of directors acts as the Company’s Audit Committee. TheAudit Committee does not have a financial expert serving on its committee atthis time due to the size and nature of the Company. The Company intends toseek such an expert at such time as it ceases to be a “shell.”

 

All audit and non-audit services are pre-approved by the Audit Committee,which consists of the members of the board of directors which considers, amongother things, the possible effect of the performance of such services on theauditors’ independence.  The AuditCommittee pre-approves the annual engagement of the principal independentregistered public accounting firm, including the performance of the annualaudit and quarterly reviews for the subsequent fiscal year, and pre-approvesspecific engagements for tax services performed by such firm.  The Audit Committee has also establishedpre-approval policies and procedures for certain enumerated audit and auditrelated services performed pursuant to the annual engagement agreement,including such firm’s attendance at and participation at Board and committeemeetings; services associated with SEC registration statements approved by the Board of Directors; review of periodicreports and other documents filed with the SEC or other documents issuedin connection with securities offerings, such as comfort letters and consents;assistance in responding to any SEC comments letters; and consultations withsuch firm as to the accounting or disclosure treatment of transactions orevents and the actual or potential impact of final or proposed rules, standardsor interpretations by the SEC, Public Company Accounting Oversight Board(PCAOB), Financial Accounting Standards Board (FASB), or other regulatory orstandard-setting bodies.  The AuditCommittee is informed of each service performed pursuant to its pre-approvalpolicies and procedures.  The AuditCommittee has considered the role of Moore & Associates, Chartered inproviding services to us for the fiscal year ended June 30, 2008 and hasconcluded that such services are compatible with such firm’s independence.

 

20

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**SIGNATURES**

 

In accordance with Section 13 or 15(d) ofthe Securities Exchange Act of 1934, the Registrant caused this Report to besigned on its behalf by the undersigned, thereunto duly authorized.

 

 
|                           | TEMPCO, INC.                                                                                          |
|--------------------------------|-------------------------------------------------------------------------------------------------------|
|                           |                                                                                                  |
|                           | /s/ Stanley L. Schloz,                                                                                |
|                           | Stanley L. Schloz, President and Chief Executive and  Financial Officer (Principal Executive Officer) |
|                           |                                                                                                  |
| Dated: September 29, 2008 |                                                                                                  |

 

In accordance with the Securities Exchange Act of1934, this Report has been signed below by the following persons on behalf ofthe Registrant and in the capacities and on the dates indicated.

 
| **Signatures**        | ** ** | **Title**                                   | ** ** | **Date**                |
|-----------------------|------------|---------------------------------------------|------------|-------------------------|
|                  |       |                                        |       |                    |
| /s/ Stanley L. Schloz |       | President, CEO, CFO and Director            |       | September 29, 2008 |
| Stanley L. Schloz     |       | (Principal Executive and Financial Officer) |       |                    |
|                  |       |                                        |       |                    |
| /s/ Fred Burstein     |       | Director                                    |       | September 29, 2008 |
| Fred Burstein         |       |                                        |       |                    |
|                  |       |                                        |       |                    |
| /s/ Anthony Silverman |       | Director                                    |       | September 29, 2008 |
| Anthony Silverman     |       |                                        |       |                    |

 

21

 

**EXHIBIT INDEX**

 
| **Exhibit   Number** | ** ** | **Description**                                                                                                                                   | ** ** | **By Reference   from Document** | ** ** | **No. in   Document** |
|---------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|----------------------------|
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 3.1                       |       | Registrant’s  Articles of Incorporation                                                                                                      |       | (A)                              |       | 3.1                        |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 3.1.1                     |       | Registrant’s  Amendment to its Articles of Incorporation, dated November 7, 1988                                                        |       | (A)                              |       | 3.1.1                      |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 3.1.2                     |       | Registrant’s  Amendment to its Articles of Incorporation, dated June 25, 1991                                                           |       | (B)                              |       | 3.1.2                      |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 3.1.3                     |       | Registrant’s  Certificate of Reverse Stock Split, dated February 15, 1994                                                               |       | (C)                              |       | 3.1.3                      |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 3.1.4                     |       | Registrant’s  Certificate of Designation of Series A Preferred Stock, dated  June 27, 1996                                         |       | (D)                              |       | 3.1.4                      |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 3.1.5                     |       | Registrant’s  Amendment to Articles of Incorporation, dated June 25, 1996                                                               |       | (D)                              |       | 3.15                       |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 3.1.6                     |       | Registrant’s  Certificate of Designation of Series B Preferred Stock, dated  March 31, 1999                                        |       | (E)                              |       | 3.1.6                      |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 3.1.7                     |       | Registrant’s  Amendment to Articles of Incorporation, dated October 7, 1999.                                                            |       | (F)                              |       | 3.1                        |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 3.1.8                     |       | Certificate of  Correction to Certificate of Amendment to Articles of Incorporation of  Vitrix, Inc., dated June 16, 2005               |       | (O)                              |       | 3.1.8                      |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 3.1.9                     |       | Registrant’s  Amendment to Articles of Incorporation, dated April 20, 2007                                                              |       | (S)                              |       | 3.1                        |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 3.1.10                    |       | Registrant’s  Amendment to Articles of Incorporation, dated February 4, 2008                                                            |       | (U)                              |       | 99.1                       |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 3.2                       |       | Amended Bylaws  of the Registrant                                                                                                                 |       | (C)                              |       | 3.2                        |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 4.1                       |       | Registrant’s  Form of Common Stock Certificate                                                                                          |       | (A)                              |       | 4.1                        |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 10.6                      |       | 1999 Equity  Compensation Plan                                                                                                                    |       | (E)                              |       | 10.7                       |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 10.7.1                    |       | Lease Agreement,  dated September 3, 1999, between LAFP Phoenix, Inc., as lessor, and  the Registrant, as lessee.                       |       | (F)                              |       | 10.1                       |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 10.7.2                    |       | First Amendment  to Office Lease Agreement, dated March 28, 2000, between LAFP  Phoenix, Inc., as lessor and the Registrant, as lessee. |       | (G)                              |       | 10.1                       |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 10.8                      |       | Securities  Purchase Agreement, dated September 21, 1999, between Circle F Ventures,  LLC and the Registrant.                                |       | (F)                              |       | 10.2                       |
|                      |       |                                                                                                                                              |       |                             |       |                       |
| 10.10                     |       | Merger  Agreement, dated March 28, 2001 by and among Vitrix, Inc., Vitrix  Incorporated, and Time America, Inc.                    |       | (H)                              |       | 2.1                        |

 

22

----

 
| **Exhibit   Number** | ** ** | **Description**                                                                                                                                                                                                                                              | ** ** | **By Reference   from Document** | ** ** | **No. in   Document** |
|---------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|----------------------------|
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.12                     |       | Letter from BDO  Seidman, LLP, dated June 4, 2001, regarding its concurrence or  disagreement with the statements made by the registrant in the current report  concerning the resignation or dismissal as the registrants’ principal  accountant. |       | (I)                              |       | 16                         |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.13                     |       | Promissory Note  Agreement, dated September 4, 2001 between Vitrix, Inc. and Frances  L. Simek                                                                                                                                                     |       | (J)                              |       | 10.13                      |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.14                     |       | Security Agreement  dated September 4, 2001 between Vitrix, Inc. and Frances L. Simek                                                                                                                                                              |       | (J)                              |       | 10.14                      |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.15                     |       | Warrant to purchase common stock agreement dated September 4,  2001 between Vitrix, Inc. and Frances L. Simek                                                                                                                                      |       | (J)                              |       | 10.15                      |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.16                     |       | Promissory Note Agreement, dated March 31, 2001 between Time  America, Inc and Joseph L. Simek                                                                                                                                                          |       | (K)                              |       | 10.16                      |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.17                     |       | Revolving Credit Agreement, dated November 2, 2001 between  Vitrix, Inc and Joseph L. Simek                                                                                                                                                             |       | (K)                              |       | 10.17                      |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.18                     |       | Securities Purchase Agreement, dated  March 22, 2004, among Time America, Inc. and Laurus Master Fund,  Ltd.                                                                                                                                       |       | (L)                              |       | 10.1                       |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.19                     |       | Secured Convertible Term Note, dated March 22, 2004, among Time  America, Inc. and Laurus Master Fund, Ltd.                                                                                                                                        |       | (L)                              |       | 10.2                       |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.20                     |       | Common Stock Purchase Warrant, dated  March 22, 2004, issued to Laurus Master Fund, Ltd.                                                                                                                                                                |       | (L)                              |       | 10.3                       |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.21                     |       | Security Agreement, dated March 22, 2004,  among Time America, Inc. and Laurus Master Fund, Ltd.                                                                                                                                                   |       | (L)                              |       | 10.4                       |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.22                     |       | Subordination Agreement, dated March 22,  2004, among Time America, Inc., Laurus Master Fund, Ltd and Joseph and  Frances Simek                                                                                                                    |       | (L)                              |       | 10.5                       |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.23                     |       | Registration Rights Agreement, dated  March 22, 2004, among Time America, Inc. and Laurus Master Fund,  Ltd.                                                                                                                                       |       | (L)                              |       | 10.6                       |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.24                     |       | Guarantee, dated March 22, 2004, issued by  Time America, Inc. in favor of Laurus Master Fund, Ltd.                                                                                                                                                |       | (L)                              |       | 10.7                       |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.25                     |       | Stock Pledge Agreement, dated March 22,  2004, among Time America, Inc. and Laurus Master Fund, Ltd.                                                                                                                                               |       | (L)                              |       | 10.8                       |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.26                     |       | Note Purchase  Agreement, dated April 16, 2004 between Time America, Inc. and  Frances L. Simek                                                                                                                                                    |       | (M)                              |       | 10.26                      |
|                      |       |                                                                                                                                                                                                                                                         |       |                             |       |                       |
| 10.27                     |       | Promissory Note  Agreement, dated April 16, 2004 between                                                                                                                                                                                                |       | (M)                              |       | 10.27                      |

 

23

----

 
| **Exhibit   Number** | ** ** | **Description**                                                                                                                                                                                                                                                                      | ** ** | **By Reference   from Document** | ** ** | **No. in   Document** |
|---------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|----------------------------|
|                      |       |                                                                                                                                                                                                                                                                                 |       |                             |       |                       |
|                      |       | Time  America, Inc. and Frances L. Simek                                                                                                                                                                                                                                        |       |                             |       |                       |
|                      |       |                                                                                                                                                                                                                                                                                 |       |                             |       |                       |
| 10.28                     |       | Security  Agreement, dated April 16, 2004 between Time America, Inc. and  Frances L. Simek                                                                                                                                                                                 |       | (M)                              |       | 10.28                      |
|                      |       |                                                                                                                                                                                                                                                                                 |       |                             |       |                       |
| 10.29                     |       | Consulting Services  Agreement, dated October 15, 2003, between Vitrix, Inc. and Todd P.  Belfer                                                                                                                                                                           |       | (O)                              |       | 10.29                      |
|                      |       |                                                                                                                                                                                                                                                                                 |       |                             |       |                       |
| 10.30                     |       | Bonus Plan  Document with Tom Bednarik, effective as of January 1, 2005                                                                                                                                                                                                         |       | (O)                              |       | 10.30                      |
|                      |       |                                                                                                                                                                                                                                                                                 |       |                             |       |                       |
| 10.31                     |       | Equipment  Purchase, License and Services Agreement, dated as of August 29, 2005,  between FedEx Corporate Services, Inc. and Time America, Inc.  (certain portions deleted pursuant to confidential treatment)                                                       |       | (O)-(N)                          |       | 10.31                      |
|                      |       |                                                                                                                                                                                                                                                                                 |       |                             |       |                       |
| 10.32                     |       | Amendment, dated  as of August 29, 2005, between Federal Express Corporation and Time  America, Inc. (certain portions deleted pursuant to confidential  treatment)                                                                                                        |       | (O)-(N)                          |       | 10.32                      |
|                      |       |                                                                                                                                                                                                                                                                                 |       |                             |       |                       |
| 10.33                     |       | Professional  Services Agreement, dated as of August 29, 2005, between FedEx Corporate  Services, Inc. and Time America, Inc. (certain portions deleted  pursuant to confidential treatment)                                                                          |       | (O)-(N)                          |       | 10.33                      |
|                      |       |                                                                                                                                                                                                                                                                                 |       |                             |       |                       |
| 10.34                     |       | Amendment, dated  as of August 29, 2005, between Federal Express Corporation and Time  America, Inc. (certain portions deleted pursuant to confidential  treatment)                                                                                                        |       | (O)-(N)                          |       | 10.34                      |
|                      |       |                                                                                                                                                                                                                                                                                 |       |                             |       |                       |
| 10.35                     |       | Letter  Agreement, dated February 17, 2000, between Vitrix Incorporated and  Thomas S. Bednarik                                                                                                                                                                                 |       | (O)                              |       | 10.35                      |
|                      |       |                                                                                                                                                                                                                                                                                 |       |                             |       |                       |
| 10.36                     |       | Security and  Purchase Agreement, dated January 3, 2006, by and among Laurus Master  Fund, Ltd., Time America, Inc., a Nevada corporation, Time America, Inc,  an Arizona corporation, and NetEdge Devices, LLC, an Arizona limited  liability company.                    |       | (P)                              |       | 10.1                       |
|                      |       |                                                                                                                                                                                                                                                                                 |       |                             |       |                       |
| 10.37                     |       | Secured  Convertible Term Note, dated January 3, 2006, made by Time  America, Inc., a Nevada corporation, Time America, Inc., an Arizona  corporation and NetEdge Devices, LLC, an Arizona limited liability company,  in favor of Laurus Master Fund, Ltd.           |       | (P)                              |       | 10.2                       |
|                      |       |                                                                                                                                                                                                                                                                                 |       |                             |       |                       |
| 10.38                     |       | Secured  Non-Convertible Revolving Note, dated January 3, 2006, made by Time  America, Inc., a Nevada corporation, Time America, Inc., an Arizona  corporation, and NetEdge Devices, LLC, an Arizona limited liability company,  in favor of Laurus Master Fund, Ltd. |       | (P)                              |       | 10.3                       |
|                      |       |                                                                                                                                                                                                                                                                                 |       |                             |       |                       |
| 10.39                     |       | Common Stock  Purchase Warrant, dated January 3, 2006, issued to Laurus Master Fund,  Ltd.                                                                                                                                                                                      |       | (P)                              |       | 10.4                       |

 

24

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| **Exhibit   Number** | ** ** | **Description**                                                                                                                                                                                                                                                                                            | ** ** | **By Reference   from Document** | ** ** | **No. in   Document** |
|---------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|----------------------------|
|                      |       |                                                                                                                                                                                                                                                                                                       |       |                             |       |                       |
| 10.40                     |       | Registration  Rights Agreement, dated January 3, 2006, between Time  America, Inc., a Nevada corporation, and Laurus Master Fund, Ltd.                                                                                                                                                           |       | (P)                              |       | 10.5                       |
|                      |       |                                                                                                                                                                                                                                                                                                       |       |                             |       |                       |
| 10.41                     |       | Amended and  Restated Subordination Agreement, dated January 3, 2006, among Time  America, Inc., a Nevada corporation, Time America, Inc., an Arizona  corporation, and NetEdge Devices, LLC, an Arizona limited liability company,  Laurus Master Fund, Ltd. and Joseph and Frances Simek. |       | (P)                              |       | 10.6                       |
|                      |       |                                                                                                                                                                                                                                                                                                       |       |                             |       |                       |
| 10.42                     |       | Reaffirmation  and Ratification Agreement, dated January 3, 2006, among Laurus Master  Fund, Ltd., Time America, Inc., a Nevada corporation, Time  America, Inc., an Arizona corporation, and NetEdge Devices, LLC, an  Arizona limited liability company.                                  |       | (P)                              |       | 10.7                       |
|                      |       |                                                                                                                                                                                                                                                                                                       |       |                             |       |                       |
| 10.43                     |       | Letter Agreement  with Oberon Securities, LLC, dated January 13, 2006.                                                                                                                                                                                                                                |       | (P)                              |       | 10.8                       |
|                      |       |                                                                                                                                                                                                                                                                                                       |       |                             |       |                       |
| 10.44                     |       | Asset Purchase  Agreement, dated April 12, 2006 between Time America, Inc. and  Unitime Systems, Inc.                                                                                                                                                                                       |       | (Q)                              |       | 10.1                       |
|                      |       |                                                                                                                                                                                                                                                                                                       |       |                             |       |                       |
| 10.45                     |       | Asset Purchase  Agreement, dated January 16, 2007, among Time America, Inc.  (Nevada), Time America, Inc. (Arizona), NetEdge Devices, LLC, and Synel  Industries, Inc.                                                                                                                 |       | (R)                              |       | 10.1                       |
|                      |       |                                                                                                                                                                                                                                                                                                       |       |                             |       |                       |
| 10.46                     |       | Master  Agreement, dated June 19, 2007, between NETtime Solutions, Inc. and  Synel Industries, Inc.                                                                                                                                                                                         |       | (V)                              |       | 10.46                      |
|                      |       |                                                                                                                                                                                                                                                                                                       |       |                             |       |                       |
| 10.47                     |       | Asset Purchase  Agreement, dated February 4, 2008, between NETtime Solutions, Inc.  (Nevada) and NETtime Solutions, LLC(Arizona)                                                                                                                                                                 |       | (T)                              |       | 99                         |
|                      |       |                                                                                                                                                                                                                                                                                                       |       |                             |       |                       |
| 31                        |       | Certification  pursuant to Rules 13a-14(a) and 15d-14(a)(5) of the Securities  Exchange Act of 1934                                                                                                                                                                                         |       | *                                |       | —                     |
|                      |       |                                                                                                                                                                                                                                                                                                       |       |                             |       |                       |
| 32                        |       | Certification  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                         |       | *                                |       | —                     |

 

----

| *   |   | Filed herewith.                                                                                            |
|-----|--------|------------------------------------------------------------------------------------------------------------|
| (A) |   | Form S-18 Registration Statement No. 33-25704-NY.                                                |
| (B) |   | Form 10-K Annual Report of the Registrant for the fiscal year  ended June 30, 1991.              |
| (C) |   | Form 10-KSB Annual Report of the Registrant for the fiscal year  ended June 30, 1994.            |
| (D) |   | Form 8-K Current Report reporting event on June 28, 1996.                                        |
| (E) |   | Form 10-KSB Annual Report of the Registrant for the fiscal year  ended June 30, 1999.            |
| (F) |   | Form 10-QSB Quarterly Report of the Registrant for the fiscal  quarter ended September 30, 1999. |
| (G) |   | Form 10-QSB Quarterly Report of the Registrant for the fiscal  quarter ended March 31, 2000.     |
| (H) |   | Form 8-K Current Report reporting event on April 13, 2001.                                       |
| (I) |   | Form 8-K Current Report reporting event on June 6, 2001.                                         |

 

25

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| (J) |   | Form 10-KSB Annual Report of the Registrant for the fiscal year  ended June 30, 2001.                                                            |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (K) |   | Form 10-KSB Annual Report of the Registrant for the fiscal year  ended June 30, 2002.                                                            |
| (L) |   | Form 8-K Current Report reporting event on March 22, 2004.                                                                                       |
| (M) |   | Form 10-KSB Annual Report of the Registrant for the fiscal year  ended June 30, 2004.                                                            |
| (N) |   | Portions of the referenced exhibit have been omitted pursuant to a  request for confidential treatment filed with the Securities and Exchange  Commission. |
| (O) |   | Form 10-KSB Annual Report of the Registrant for the fiscal year  ended June 30, 2005.                                                            |
| (P) |   | Form 10-QSB Quarterly Report of the Registrant for the quarter  ended December 31, 2005.                                                         |
| (Q) |   | Form 10-QSB Quarterly Report of the Registrant for the quarter  ended March 31, 2006.                                                            |
| (R) |   | Form 10-QSB Quarterly Report of the Registrant for the quarter  ended December 31, 2006.                                                         |
| (S) |   | Form 8-K Current Report reporting event on May 10, 2007.                                                                                         |
| (T) |   | Form 8-K Current Report reporting event on February 8, 2008                                                                                      |
| (U) |   | Form 8-K/A Current Report reporting event on February 15,  2008                                                                                  |
| (V) |   | Form 10KSB Annual Report for the Registrant for the fiscal year ended  June 30, 2007.                                                                      |

 

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