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

**Washington,D.C. 20549**

** **

**FORM 10-QSB**

** **

**x****             ****QUARTERLY REPORT UNDER SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

** **

**For thequarterly period ended March 31, 2008**

** **

**o****                ****TRANSITION REPORT UNDER SECTION 13 OR 15(d) OFTHE EXCHANGE ACT**

** **

**For thetransition period from                       to                       **

** **

**CommissionFile number 001-10320**

** **

**Tempco, Inc.**

(Exact name of smallbusiness issuer as specified in its charter)

 

| **Nevada**                      | ** ** | **13-3465289**      |
|---------------------------------|------------|---------------------|
| (State or other jurisdiction of |       | (I.R.S. Employer    |
| incorporation of organization)  |       | Identification No.) |

 

**7625 EastVia Del Reposa, Scottsdale, AZ 85258**

(Address ofprincipal executive offices)

 

**(480) 272-8745**

(Issuer’s telephonenumber)

 

**NETTime Solutions, Inc.**

(Former name, formeraddress and former fiscal year, if changed since last report)

 

Check whether the issuer (1) filedall reports required to be filed by Section 13 or 15(d) of theExchange Act during the past 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.    Yes  x      No  o

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).    Yes  x      No  o

 

State the number ofshares outstanding of each of the issuer’s classes of common equity, as of thelatest practicable date: At May 16, 2008, the issuer had outstanding11,403,711 shares of Common Stock, par value $.005 per share.

 

Transitional SmallBusiness Disclosure Format:    Yes  o      No  x

 

 

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**TABLEOF CONTENTS**

 
| ** **                               | ** **                                                                                                                        | **PAGE**   |
|------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                               | ** **                                                                                                                        | ** ** |
| **PART I -  FINANCIAL INFORMATION** |
| Item 1.                                  | Financial Statements                                                                                                              | 2          |
|                                     | Condensed  Consolidated Balance Sheets as of March 31, 2008 (unaudited) and  June 30, 2007                              | 2          |
|                                     | Unaudited Condensed Consolidated Statements of  Operations for the Three and Nine Months Ended March 31, 2008 and 2007       | 3          |
|                                     | Unaudited  Condensed Consolidated Statement of Shareholders’ Equity (Deficit) for the  Nine Months Ended March 31, 2008 | 4          |
|                                     | Unaudited Condensed Consolidated Statements of Cash  Flows for the Nine Months Ended March 31, 2008 and 2007                 | 5          |
|                                     | Notes to Unaudited Condensed Consolidated Financial  Statements                                                                   | 6          |
| Item 2.                                  | Management’s Discussion  and Analysis or Plan of Operation                                                                   | 11         |
| Item 3.                                  | Controls and Procedures                                                                                                           | 12         |
|                                     |                                                                                                                              |       |
| **PART II  - OTHER INFORMATION**    |
| Item 1.                                  | Legal Proceedings                                                                                                                 | 13         |
| Item 2.                                  | Unregistered  Sales of Equity Securities and Use of Proceeds                                                                      | 13         |
| Item 3.                                  | Defaults Upon  Senior Securities                                                                                                  | 13         |
| Item 4.                                  | Submission of  Matters to a Vote of Security Holders                                                                              | 13         |
| Item 5.                                  | Other information                                                                                                                 | 13         |
| Item 6.                                  | Exhibits                                                                                                                          | 14         |
| Signatures                               |                                                                                                                              | 15         |
|                                          |                                                                                                                                   |            |  |

 

1

----

 

#### **PART I FINANCIAL INFORMATION**

#### ** **

**Item 1-Financial Statements**

 

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

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

## ** **

| ** **                                                                                 | ** ** | **March 31,** | ** ** | **June 30,** | ** ** |
|--------------------------------------------------------------------------------------------|------------|--------------------|------------|-------------------|------------|
| ** **                                                                                 | ** ** | **2008**           | ** ** | **2007**          | ** ** |
|                                                                                       |       |               |       |              |       |
| **ASSETS**                                                                                 | ** ** |
| Current assets:                                                                            |       |               |       |              |       |
| Cash and cash  equivalents                                                                 |       | $                  | 24,665     |              | $          | 40,000 |   |
| Current assets  of discontinued operations, net                                            |       | —             |       | 1,233,881         |       |
|                                                                                       |       |               |       |              |       |
| Total current  assets                                                                      |       | 24,665             |       | 1,273,881         |       |
|                                                                                       |       |               |       |              |       |
| Long term assets of discontinued operations                                                |       | —             |       | 328,827           |       |
| Note receivable                                                                            |       | 200,000            |       | —            |       |
| Accrued interest receivable                                                                |       | 2,750              |       | —            |       |
|                                                                                       |       |               |       |              |       |
| Total assets                                                                               |       | $                  | 227,415    |              | $          | 1,602,708 |   |
| ** **                                                                                 | ** ** | ** **         | ** ** | ** **        | ** ** |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY (DEFICIT)**                                   | ** ** |
| Current Liabilities:                                                                       |       |               |       |              |       |
| Accounts payable                                                                           |       | $                  | 6,246      |              | $          | — |   |
| Current  liabilities of discontinued operations                                            |       | —             |       | 2,320,869         |       |
|                                                                                       |       |               |       |              |       |
| Total current liabilities                                                                  |       | 6,246              |       | 2,320,869         |       |
|                                                                                       |       |               |       |              |       |
| Long term liabilities of discontinued operations                                           |       | —             |       | 909,442           |       |
|                                                                                       |       |               |       |              |       |
| Total  liabilities                                                                         |       | 6,246              |       | 3,230,311         |       |
|                                                                                       |       |               |       |              |       |
| Common stock subject to registration rights  (351,923) shares                              |       | —             |       | 207,635           |       |
|                                                                                       |       |               |       |              |       |
| Commitments:                                                                               |       | —             |       | —            |       |
|                                                                                       |       |               |       |              |       |
| Stockholders’ equity (deficit):                                                       |       |               |       |              |       |
| Common stock,  $.005 par value 50,000,000 authorized; 8,903,711 and 15,030,481 outstanding |       | 76,913             |       | 75,153            |       |
| Contributed  capital                                                                       |       | 12,160,029         |       | 9,889,188         |       |
| Accumulated  deficit                                                                       |       | (11,173,422        | )          | (11,799,579       | )          |
| Treasury stock,  at cost (6,478,693 shares)                                                |       | (842,351           | )          | —            |       |
|                                                                                       |       |               |       |              |       |
| Total  stockholders’ equity (deficit)                                                 |       | 221,169            |       | (1,835,238        | )          |
|                                                                                       |       |               |       |              |       |
| Total  liabilities and stockholders’ equity (deficit)                                 |       | $                  | 227,415    |              | $          | 1,602,708 |   |

 

The AccompanyingNotes are an Integral Part of the Financial Statements

 

2

----

 

TEMPCO, INC. ANDSUBSIDIARIES

CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 
| ** **                                                   | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|--------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                   | ** ** | **March 31,**     | ** ** | **March 31,**    | ** ** |
| ** **                                                   | ** ** | **2008**               | ** ** | **2007**              | ** ** | **2008** | ** ** | **2007** | ** ** |
| Costs and Expenses                                           |       |                   |       |                  |       |   |   |   |   |
| General and  administrative                                  |       | $                      | 21,581     |                  | $          | — |   | $ | 21,581 |   | $ | — |   |
|                                                         |       |                   |       |                  |       |   |   |   |   |
| Operating loss                                               |       | (21,581                | )          | —                |       | (21,581 | ) | — |   |
|                                                         |       |                   |       |                  |       |   |   |   |   |
| Interest income                                              |       | 4,850                  |       | 17                    |       | 8,196 |   | 3,321 |   |
|                                                         |       |                   |       |                  |       |   |   |   |   |
| Net income (loss) from continuing operations                 |       | (16,731                | )          | 17                    |       | (13,385 | ) | 3,321 |   |
|                                                         |       |                   |       |                  |       |   |   |   |   |
| Discontinued operations:                                     |       |                   |       |                  |       |   |   |   |   |
| Income (loss)  from discontinued operations                  |       | (35,889                | )          | 1,624,767             |       | 639,542 |   | 932,830 |   |
|                                                         |       |                   |       |                  |       |   |   |   |   |
| Net income (loss)                                            |       | $                      | (52,620    | )                     | $          | 1,624,784 |   | $ | 626,157 |   | $ | 936,151 |   |
|                                                         |       |                   |       |                  |       |   |   |   |   |
| Basic and diluted net income (loss) per common  share:       |       |                   |       |                  |       |   |   |   |   |
| Loss from  continuing operations                             |       | $                      | —     |                  | $          | — |   | $ | — |   | $ | — |   |
| Income from  discontinued operations                         |       | —                 |       | 0.11                  |       | 0.04 |   | 0.06 |   |
|                                                         |       |                   |       |                  |       |   |   |   |   |
| Basic and diluted earnings per share                         |       | $                      | —     |                  | $          | 0.11 |   | $ | 0.04 |   | $ | 0.06 |   |
|                                                         |       |                   |       |                  |       |   |   |   |   |
| Basic and diluted weighted average common shares outstanding |       | 11,395,316             |       | 14,884,459            |       | 14,063,107 |   | 14,737,090 |   |

 

The AccompanyingNotes are an Integral Part of the Financial Statements

 

3

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TEMPCO, INC. ANDSUBSIDIARIES

CONDENSED CONSOLIDATEDSTATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE NINE MONTH PERIOD ENDED MARCH 31,2008

(UNAUDITED)

 
| ** **                                            | ** ** | **Common  Stock** | ** ** | **Treasury  Stock** | ** ** | **Contributed** | ** ** | **Accumulated** | ** ** | ** **  | ** ** |
|-------------------------------------------------------|------------|-------------------|------------|---------------------|------------|-----------------|------------|-----------------|------------|-------------|------------|
| ** **                                            | ** ** | **Shares**        | ** ** | **Amount**          | ** ** | **Shares**      | ** ** | **Amount**      | ** ** | **Capital** | ** ** | **Deficit** | ** ** | **Total** | ** ** |
|                                                  |       |              |       |                |       |            |       |            |       |        |       |   |   |   |   |
| Balance at June 30, 2007                         |       | 15,030,481        |       | $                   | 75,153     |            | —     |            | $          | —      |       | $ | 9,889,188 |   | $ | (11,799,579 | ) | $ | (1,835,238 | ) |
| Share-based awards compensation                       |       | —            |       | —              |       | —          |       | —          |       | 42,062      |       | — |   | 42,062 |   |
| 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 |   |
| Net loss                                              |       | —            |       | —              |       | —          |       | —          |       | —      |       | 626,157 |   | 626,157 |   |
|                                                  |       |              |       |                |       |            |       |            |       |        |       |   |   |   |   |
| Balance at March 31, 2008                        |       | 15,382,404        |       | $                   | 76,913     |            | (6,478,693 | )               | $          | (842,351    | )          | $ | 12,160,029 |   | $ | (11,173,422 | ) | $ | 221,169 |   |

 

The AccompanyingNotes are an Integral Part of the Financial Statements

 

4

----

** **

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 
| ** **                                                    | ** ** | **Nine Months Ended** | ** ** |
|---------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                    | ** ** | **March 31,**    | ** ** |
| ** **                                                    | ** ** | **2008**              | ** ** | **2007** | ** ** |
|                                                          |       |                  |       |   |   |
| **Cash flows from operating activities**                      | ** ** | ** **            | ** ** | ** ** | ** ** |
| Net income                                                    |       | $                     | 626,157    |   | $ | 936,151 |   |
| 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                                                  |       | 67,539                |       | 111,694 |   |
| Stock based  compensation                                     |       | 42,062                |       | 95,372 |   |
| Common stock,  stock options and warrants issued for services |       | —                |       | 148,000 |   |
| Inventory  relinquished as part of asset sale                 |       | —                |       | (283,603 | ) |
| Changes in  Assets and Liabilities:                           |       |                  |       |   |   |
| Accounts  receivable                                          |       | 501,078               |       | 775,550 |   |
| Inventory                                                     |       | (66,966               | )          | 511,901 |   |
| Deferred loan  costs and other current assets                 |       | (50,758               | )          | 70,073 |   |
| Other assets                                                  |       | (14,236               | )          | 157,440 |   |
| Accrued interest  receivable                                  |       | (2,750                | )          | — |   |
| Accounts payable                                              |       | (218,064              | )          | (117,414 | ) |
| Accrued  liabilities                                          |       | (299,729              | )          | (72,664 | ) |
| Deferred revenue                                              |       | (257,121              | )          | (296,879 | ) |
| Net Cash Provided  (Used) by Operating Activities             |       | (827,179              | )          | 23,586 |   |
|                                                          |       |                  |       |   |   |
| **Cash flows from investing activities**                      | ** ** | ** **            | ** ** | ** ** | ** ** |
| Purchase of  property and equipment                           |       | (3,472                | )          | (23,826 | ) |
| Proceeds from  sale of assets                                 |       | 1,000,000             |       | 665,024 |   |
| Cash  relinquished in asset sale                              |       | (397,277              | )          | — |   |
| Restricted cash  held in escrow                               |       | —                |       | (250,000 | ) |
| Net Cash  Provided by Investing Activities                    |       | 599,251               |       | 391,198 |   |
|                                                          |       |                  |       |   |   |
| **Cash flows from financing activities:**                     | ** ** | ** **            | ** ** | ** ** | ** ** |
| Reypayment of  debt                                           |       | (26,108               | )          | (733,021 | ) |
| Proceeds from  debt                                           |       | —                |       | 318,341 |   |
| Proceeds from  exercise of options and warrants               |       | —                |       | 4,200 |   |
| Net Cash  Provided Used by Financing Activities               |       | (26,108               | )          | (410,480 | ) |
|                                                          |       |                  |       |   |   |
| Net change in cash and cash equivalents                       |       | (254,036              | )          | 4,304 |   |
|                                                          |       |                  |       |   |   |
| Cash and cash equivalents at beginning of year                |       | 278,701               |       | 615,204 |   |
| Cash and cash equivalents at end of period                    |       | $                     | 24,665     |   | $ | 619,508 |   |
|                                                          |       |                  |       |   |   |
| Supplemental Disclosures:                                     |       |                  |       |   |   |
| Cash paid for income taxes                                    |       | $                     | —     |   | $ | — |   |
| Cash paid for interest                                        |       | $                     | 101,117    |   | $ | 326,951 |   |

## ** **

The AccompanyingNotes are an Integral Part of the Financial Statements

 

5

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

## **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

## ** **

## **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

## ** **

Note A - Basis ofPresentation and Interim Consolidated Financial Statements

 

Tempco, Inc., a Nevada corporation, is a holding corporation, as aresult of the sale of substantially all of our net operating assets in February 2008,which is described in further detail in Note B below. We do not have anyongoing business operations and are functioning as a “shell” corporationfollowing such sale. The historical results of the divested business related tothe Asset Sale have accordingly been classified as discontinued operations inthese condensed consolidated financial statements.

 

In February 2008, the Company filed a Certificate of Amendment to itsArticles of Incorporation with the Nevada Secretary of State to change thecorporate name of NETtime Solutions, Inc., a Nevada corporation, to Tempco,Inc. The effective date of the parent corporate name change was February 4,2008. The Company filed a Second Amendment to the Articles of Incorporationwith the Arizona Corporation Commission to change the corporate name of itswholly-owned subsidiary, NETtime Solutions, Inc., an Arizona corporation, toTempco, Inc. The effective date of the subsidiary corporate name change wasalso February 4, 2008.

 

Unless the context indicates otherwise, references to the Company inthis report shall include Tempco, Inc. (the parent company organized in Nevada),Tempco, Inc. (our wholly-owned subsidiary organized in Arizona) andNetEdge Devices, LLC, an Arizona limited liability company (our wholly-ownedsubsidiary).

 

The accompanying unaudited condensed consolidated financialstatements of Tempco, Inc. and subsidiaries have been prepared inaccordance with generally accepted accounting principles (“GAAP”), pursuant tothe rules and regulations of the Securities and Exchange Commission, andare unaudited. Accordingly, they do not include all the information andfootnotes required by GAAP for complete financial statements. In the opinion ofmanagement, all adjustments (which include only normal recurring adjustments)necessary for a fair presentation of the results for the interim periodspresented have been made. The results for the nine month period ended March 31,2008, may not be indicative of the results for the entire year. These financialstatements should be read in conjunction with the Company’s Annual Report on Form 10-KSBfor the fiscal year ended June 30, 2007.

 

The preparation of financial statements in conformity withGAAP requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingent assetsand liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period. Actual resultscould differ materially from these estimates.

 

Note B – Asset Sale:

 

The Company hashad a history of losses from operations and due to the Company’s financialcondition and inability to continue ongoing operations with current cash flow,along with debt obligations, the Company’s Board of Directors and managementdetermined that the sale ofsubstantially all of our operating assets and liabilities (the “Asset Sale”)would be in the best interest 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,together with certain other shareholders of the Company, collectively referredto as the “Contributors,” formed NETtime Solutions, LLC (the “Buyer”) for thepurpose of consummating the Asset Sale and acquiring substantially

 

6

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TEMPCO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

all of the net assets of the Company. The Contributors contributedcertain issued and outstanding shares of the Company that they collectivelyheld to NETtime Solutions, LLC pursuant to the terms of the limited liabilitycompany operating agreement governing NETtime Solutions, LLC. Accordingly, onFebruary 4, 2008, we completed the sale of substantially all of our net assetsand the net assets 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)    6,478,693 shares which were to be deliveredto the Seller 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.

 

Includedin the liabilities assumed by the Buyer were approximately $500,000 oftrade payables and $1,500,000 of short and long-term notes. No gain or loss was recorded in relation to thetransaction because the Asset Sale was with a related party. Accordingly, theexcess of the fair value of the consideration received over the net assetsdisposed of has been treated as a capital contribution. The following tablesummarizes the consideration received and the net assets disposed of:

 

| Fair value of  6,478,693 shares received                                             |   | $         | 842,351   |   |
|--------------------------------------------------------------------------------------|--------|-----------|-----------|--------|
| Promissory note  receivable                                                          |   | 200,000   |      |
| Total fair value  of consideration received                                          |   | $         | 1,042,351 |   |
|                                                                                 |   |      |      |
| Cash                                                                                 |   | 397,472   |      |
| Accounts  receivable.                                                                |   | 736,595   |      |
| Inventory                                                                            |   | 70,579    |      |
| Property and  Equipment, net                                                         |   | 175,591   |      |
| Other assets.                                                                        |   | 62,253    |      |
| Total assets  disposed of.                                                           |   | 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 disposed of                                               |   | 2,423,043 |      |
|                                                                                 |   |      |      |
| Net liabilities  disposed of.                                                        |   | $         | (980,553  | )      |
|                                                                                 |   |      |      |
| Excess of the  fair value of the consideration received over the net assets disposed |   | $         | 2,022,904 |   |

 

Note C- Discontinued Operations

 

As a result of the Asset Sale, all prior periodbalances have been reclassified to reflect the assets and liabilities and theresults of operations as discontinued operations.

 

7

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TEMPCO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

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

 

| 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 Discontinued Operations for the threemonths ended March 31, 2008 and 2007 are revenues of $239,109 and$1,371,372, respectively. Revenues included in discontinued operations for thenine months ended March 31, 2008 and 2007 are $1,526,220 and $4,904,304.Net income (loss) reflected in discontinued operations for the three monthsended March 31, 2008 and 2007 is $(35,889) and $1,624,767, respectively.For the nine months ended March 31, 2008 and 2007, net income included indiscontinued operations is $1,011,050 and $932,830, respectively.

 

Note D - Income (Loss) PerShare:

 

Basicincome (loss) per share of common stock wascomputed by dividing the net income (loss) by the weighted average number ofshares of common stock outstanding during the period.

 

Dilutedincome (loss) per share is computed based on the weighted average number ofshares of common stock and dilutive securities outstanding during the period. Dilutivesecurities are options and warrants that are freely exercisable into commonstock at less than the prevailing market price. Dilutive securities are notincluded in the weighted average number of shares when inclusion would increasethe earnings per share or decrease the loss per share. For the three and ninemonths ended March 31, 2008, no securities were included in weightedaverage shares outstanding as the effect would be anti-dilutive.

 

Note E - Stock Based Compensation:

 

Effective July 1,2005, the Company adopted the fair value recognition provisions of Statement ofFinancial Accounting Standards Board No. 123(R), “Share–Based Payment,”using the modified prospective-transition method. Under this transition method,compensation expense recognized for the three months ended and nine monthsended March 31, 2008 and 2007 includes: (a) compensation expense forall share-based payments granted prior to, but not yet vested as of June 30,2005 based on the grant date fair value estimated in accordance with theoriginal provisions of SFAS 123 and (b) compensation expense for allshare-based payments granted subsequent to June 30, 2005, based on thegrant date fair value estimated in accordance with the provisions of SFAS 123(R). The fair value ofoption grants is estimated as of the date of grant utilizing the Black-Scholesoption-pricing model and amortized to expense over the options’ vesting periodnet of estimated forfeitures.

 

8

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TEMPCO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

In July 2007, the Company issued 152,767 options to the members ofthe board. Those options have an exercise price of $.16 and were fully vestedon the date of grant. In February, 2008, the Company issued 1,500,000 optionsto the new members of the board. These options vest over a period of 13 months,and have an exercise price of $.09. The options were valued using the followingassumptions:

 
| Risk  Free Rate:   |   | 2.1%-4%   |   |
|--------------------|--------|-----------|--------|
| Volatility:        |   | 138%-160% |   |
| Expected  life     |   | 3 Years   |   |
| Expected  dividend |   | 0%        |   |

 

A summary of options activity for the period ended March 31, 2008is as follows:

 

| Outstanding at  June 30, 2007  |   | 2,289,489  |   |
|-------------------------------------|--------|------------|--------|
|                                |   |       |   |
| Granted                             |   | 1,652,767  |   |
| Exercised                           |   | —     |   |
| Forfeited                           |   | (1,216,000 | )      |
|                                |   |       |   |
| Outstanding at  March 31, 2008 |   | 2,726,256  |   |

 

Due to the Asset Sale, 1,216,000 unvested options which had previouslybeen issued to employees were forfeited. As such, in the current period, theCompany has reversed compensation expense in the amount of $34,875.

 

Note F - New Accounting Pronouncements:

 

In December 2007, the Financial AccountingStandards Board issued Statement of Financial Accounting Standards No. 160,“Non-controlling Interests in Consolidated Financial Statements—an amendment ofAccounting Research Bulletin No. 51” (“SFAS 160”). SFAS 160 establishesnew accounting and reporting standards for the noncontrolling interest in asubsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 iseffective for fiscal years beginning on or after December 15, 2008. TheCompany does not believe that SFAS 160 will have a material impact on itsconsolidated financial statements.

 

In December 2007, the Financial AccountingStandards Board issued Statement of Financial Accounting Standards No. 141(revised 2007), “Business Combinations” (“SFAS 141(R)”). SFAS 141(R) willchange the accounting for business combinations. Under SFAS No. 141(R), anacquiring entity will be required to recognize all the assets acquired andliabilities assumed in a transaction at the acquisition-date fair value withlimited exceptions. SFAS No. 141(R) will change the accountingtreatment and disclosure for certain specific items in a business combination.SFAS No. 141(R) applies prospectively to business combinations forwhich the acquisition date is on or after the beginning of the first annualreporting period beginning on or after December 15, 2008. SFAS 141(R) willimpact the Company in the event of any future acquisition.

 

In February 2007, the Financial AccountingStandards Board issued Statement of Financial Accounting Standards No. 159,“The Fair Value Option for Financial Assets and Financial Liabilities—Includingan amendment of Statement of Financial Accounting Standards Statement No. 115”(“SFAS 159”), which permits entities to choose to measure many financialinstruments and certain other items at fair value at specified election dates.A business entity is required to report unrealized gains and losses on itemsfor which the fair value option has been elected in earnings at each subsequentreporting date. This statement is expected to expand the use of fair valuemeasurement. SFAS 159 is effective for financial statements issued for fiscalyears beginning after November 15, 2007, and interim periods within thosefiscal years. The Company has not determined the impact of SFAS 159 on itsfinancial position or results of operations.

 

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TEMPCO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

In September 2006,the Financial Accounting Standard Board issued a Statement of FinancialAccounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”).The Statement defines fair value, establishes a framework for measuring fairvalue in accordance with GAAP, and expands disclosures about fair valuemeasurements.  This Statement iseffective for financial statements issued for fiscal years beginning after November 15,2007, and interim periods within those fiscal years. The adoption of SFAS 157is not expected to have a material affect on our financial position or resultsof operations.

 

In March 2008, the FASB issued SFAS No. 161,“Disclosures about Derivative Instruments and Hedging Activities, an amendmentof FASB Statement No. 13*3*” (“SFAS 161”),which establishes, among other things, the disclosure requirements forderivative instruments and hedging activities. SFAS 161 requiresqualitative disclosures about objectives and strategies for using derivatives,quantitative disclosures about fair value amounts of and gains and losses onderivative instruments, and disclosures about credit-risk-related contingentfeatures in derivative agreements. SFAS 161 is effective for fiscalperiods and interim periods beginning after November 15, 2008.  We are currently evaluating theimpact SFAS 161 will have on our financial statement disclosures.

 

Note G – Subsequent Events:

 

On April 15, 2008, the Company closed on gross proceeds of $250,000 ina private placement through the sale of 2,500,000 shares of common stock.  The shares in the private placement wereoffered and sold solely to accredited investors in reliance on the exemptionfrom registration provided by Rule 506 of Regulation D under the Securities Actof 1933, as amended.  Source CapitalGroup, Inc. acted as the sole placement agent in the private placement.  In connection with the private placement, theCompany paid Source Capital Group (i) a cash sales commission of $25,000 (representing10% of the gross proceeds raised in the private placement) and (ii) warrants topurchase 250,000 shares of common stock (representing 10% of the aggregatenumber of shares of common stock sold in the private placement), with eachwarrant having an exercise price of $0.12 per share, exercisable until April15, 2013.

 

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**Item 2. Management’s Discussion and Analysis or Plan of Operation.**

 

**Overview**

 

This quarterly report on Form 10-QSB covers the quarterly periodended March 31, 2008.  On February 4,2008, our shareholders approved the proposed sale of substantially all of ournet assets, and the net assets of our two operating subsidiaries, to a newlyformed private company called NETtime Solutions, LLC (the “Buyer”) forconsideration valued at $1,042,351, which consisted of the following:

 
| (i)  |   | 6,478,693 shares  which were to be delivered to the Sellers at Closing.                                                                                                                   |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii) |   | An unsecured  promissory note in the aggregate principal amount of $200,000. The promissory  note bears interest at the rate of 9%, with principal and interest due on  February 4, 2011. |

 

Included in the liabilities assumed by the Buyer were approximately$620,000 of trade payables and accrued liabilities and $1,494,050 of notespayable-related parties. No gain or loss was recorded in relation to thetransaction because the Asset Sale was with a related party. Accordingly, theexcess of the fair value of the consideration received over the net assetsdisposed of, which totaled $2,022,904, has been treated as a capitalcontribution.

 

As a result ofthis sale transaction, the Company now has no operating business and is, ineffect, a “shell” company with no significant liabilities and minimalcash.  Our new management team and boardof directors intends to commence looking for a private company that it canmerge with or acquire and that has an operating business that will helpincrease shareholder value.  No suchcompany has yet been identified and there is no assurance of any success in thisregard.  Your review of this quarterlyreport should be read with the above facts in mind.

 

### **Critical Accounting Policies**

### ** **

Our significant accounting policies are described inthe audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-KSBfor the year ended June 30, 2007. We believe our most critical accounting policies is the valuation ofstock-based compensation and classification.

 

  Determining the appropriate fair value model andcalculating the fair value of share-based payment awards requires the input ofhighly subjective assumptions, including the expected life of the share-basedpayment awards and stock price volatility. The assumptions used in calculatingthe fair value of share-based payment awards represent management’s bestestimates, but these estimates involve inherent uncertainties and theapplication of management judgment. As a result, if factors change and we usedifferent assumptions, our stock-based compensation expense could be materiallydifferent in the future. In addition, we are required to estimate the expectedforfeiture rate and only recognize expense for those shares expected to vest.If our actual forfeiture rate is materially different from our estimate, thestock-based compensation expense could be significantly different from what wehave recorded in the current and prior periods.

 

We now plan to seek to find and acquire or merge with a private companywith an operating business that we believe will result in an increase in ourshareholder value. No such company has yet been identified and there is noassurance of any success in this regard. Therefore, we have reported ourhistorical operations as discontinued operations within the accompanyingcondensed consolidated financial statements for all periods presented.

 

### **Dueto the private placement that was completed in April 2008, we believe thatthe Company has sufficient capital to fund our operations for the next twelvemonths or until such earlier time that we identify a business with which tomerge or acquire.**

 

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### **Results of Operationsfor the Three and Nine Months Ended March 31, 2008 and 2007**

### ** **

As discussed above, on February 4, 2008, we completed the sale ofall of substantially all of our net assets. In completing this transaction, theCompany has become a “shell” company; having no operating business or source ofrevenues and only nominal assets and the historical results of the divestedbusiness related to the Asset Sale have accordingly been classified asdiscontinued operations in these condensed financial statements. Accordingly,the loss from continuing operations consists of general and administrativeexpenses for all periods presented.

 

**Item 3. Controls and Procedures.**

 

An evaluation as of the end of the period covered by this report wascarried out under the supervision and with the participation of our management,including our Chief Executive Officer and Principal Accounting Officer, of theeffectiveness of the design and operation of our disclosure controls andprocedures (as defined in Rule 13a-15(e) and 15d-15(e) under theSecurities Exchange Act of 1934). Based upon that evaluation, the ChiefExecutive Officer and Principal Accounting Officer concluded that those disclosurecontrols and procedures were effective in providing reasonable assurance thatinformation required to be disclosed by us in the reports that we file orsubmit under the Securities Exchange Act of 1934, as amended, is recorded,processed, summarized and reported within the time periods specified in theCommission’s rules and forms. In addition, there has been no change in ourinternal control over financial reporting (as defined in Rule 13a-15(f) and15d-15(f) under the Securities Exchange Act of 1934) that occurred duringthe period covered by this report that has materially affected, or isreasonably likely to materially affect, our internal control over financialreporting.

 

It should be noted that any system of controls, however well designedand operated, can provide only reasonable, not absolute, assurance that theobjectives of the system are met.  Inaddition, the design of any control system is based in part upon certainassumptions about the likelihood of future events.  Because of these and other inherentlimitations of control systems, there can be no assurance that any design willsucceed in achieving its stated goals under all potential future conditions,regardless of how remote.

 

# **FORWARD-LOOKING INFORMATION**

# ** **

The statements contained in this Quarterly Report on Form 10-QSBthat are not historical fact are forward-looking statements (as such term isdefined in the Private Securities Litigation Reform Act of 1995), within themeaning of Section 27A of the Securities Act of 1933, as amended, and Section 21Eof the Securities Exchange Act of 1934, as amended.  The forward-looking statements containedherein are based on current expectations that involve a number of risks anduncertainties.  These statements can beidentified by the use of forward-looking terminology such as “believes,” “expects,”“may,” “will,” “should,” or “anticipates,” or the negative thereof or othervariations thereon or comparable terminology, or by discussions of strategythat involve risks and uncertainties. The Company wishes to caution the reader that these forward-lookingstatements that are not historical facts are only predictions.  No assurances can be given that the futureresults indicated, whether expressed or implied, will be achieved.  While sometimes presented with numericalspecificity, these projections and other forward-looking statements are basedupon a variety of assumptions relating to the business of the Company, which,although considered reasonable by the Company, may not be realized.  Because of the number and range ofassumptions underlying the Company’s projections and forward-lookingstatements, many of which are subject to significant uncertainties andcontingencies that are beyond the reasonable control of the Company, some ofthe assumptions inevitably will not materialize, and unanticipated events andcircumstances may occur subsequent to the date of this report.  These forward-looking statements are based oncurrent expectations and the Company assumes no obligation to update thisinformation.  Therefore, the actualexperience of the Company and the results achieved during the period covered byany 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 

 

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Company or anyother person that these estimates and projections will be realized, and actualresults may vary materially.  There canbe no assurance that any of these expectations will be realized or that any ofthe forward-looking statements contained herein will prove to be accurate.

 

##### **PART II– OTHER INFORMATION**

##### ** **

**Item 1. Legal Proceedings.**

 

The Company isfrom time to time involved in legal proceedings arising from the normal courseof business.   As of the date of thisreport, the Company is not currently involved in any legal proceedings.

 

**Item2. Unregistered Sales of Equity Securities and Use of Proceeds.**

 

On April 15, 2008, the Company obtained gross proceedsof $250,000 in a private placement through the sale of 2,500,000 shares ofcommon stock.  The shares in the privateplacement were offered and sold solely to accredited investors in reliance onthe exemption from registration provided by Rule 506 of Regulation D under theSecurities Act of 1933, as amended. Source Capital Group, Inc. acted as the sole placement agent in theprivate placement.  In connection withthe private placement, the Company paid Source Capital Group (i) a cash salescommission of $25,000 (representing 10% of the gross proceeds raised in theprivate placement) 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.

 

**Item3. Defaults Upon Senior Securities**

 

There have been nodefaults with respect to any indebtedness of the Company.

 

**Item4. Submission of Matters to a Vote of Security Holders**

 

1.            To sell substantially all of the assets of theCompany, including the assets of its wholly-owned subsidiaries, NETtimeSolutions, Inc., an Arizona corporation, and NetEdge Devices, LLC, an Arizonalimited liability company, to NETtime Solutions, LLC, an Arizona limitedliability company;

 

2.            To amend the Company’s Articles of Incorporationto change the Company’s name to “Tempco, Inc.”.

 

Theshareholders approved both matters.  The votefor the asset sale was 9,977,185 votes for, 35,000 votes against, with 14,550votes abstaining.  The vote for the namechange was 9,990,651 votes for, 35,000 votes against, with 1,084 votesabstaining.

 

Asa covenant of the Asset Sale, all of the officers and directors of the Companyresigned with positions with the Company and Stanley L. Schloz, Fred Bursteinand Anthony Silverman were appointed as the directors of the Company.  Mr. Schloz was named as President andTreasurer while Mr. Burstein was elected as Vice President.  Mr. Stephen T. Meadow was electedSecretary.  Mr. Schloz and Mr. Bursteinwere each granted stock options to acquire 600,000 shares of the Company’scommon stock, and Mr. Meadow was granted stock options to acquire 300,000shares of the Company’s common stock, all at an exercise price of $0.09 pershare, the market value of the Company’s common stock on the date the stockoptions were granted.

 

**Item5. Other information**

 

N/A

 

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**Item 6. Exhibits**

 

(a)       Thefollowing exhibits are filed herewith pursuant to Regulation S-B.

 
| 31     | Section 302  Certification of Chief Executive and Financial Officer |
|--------|--------------------------------------------------------------------------|
|   |                                                                     |
| 32     | Section 906  Certification                                          |

 

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SIGNATURES

 

 

In accordance with therequirements of the Securities Exchange Act of 1934, the registrant caused thisreport to be signed on its behalf by the undersigned, thereunto dulyauthorized.

 
|                     | TEMPCO, INC.                  |
|--------------------------|-------------------------------|
|                     |                          |
|                     |                          |
| Dated: May 20, 2008 |                          |
|                     |                          |
|                     | By                            | /s/ Stanley L. Schloz |
|                     | Stanley L. Schloz             |
|                     | President and Chief Executive |
|                     | Officer                       |

 

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