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

**Washington,D.C. 20549**

**FORM10-QSB**

| **x**      | ** ** | **QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                       |
|------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |       |                                                                                                                                                                                                                                                                                                                                                                         |
| ** ** | ** ** | **For the quarterly period ended March 31, 2007**                                                                                                                                                                                                                                                                                                                            |
|       |       |                                                                                                                                                                                                                                                                                                                                                                         |
| **o**      | ** ** | **TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF  THE EXCHANGE ACT**                                                                                                                                                                                                                                                                                                         |
|       |       |                                                                                                                                                                                                                                                                                                                                                                         |
| ** ** | ** ** | **For the transition period from                              to                            ** |
|       |       |                                                                                                                                                                                                                                                                                                                                                                         |
| ** ** | ** ** | **Commission File number 001-10320**                                                                                                                                                                                                                                                                                                                                         |

 

**NETtime Solutions, 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.) |
|                                                                                |   |                 |
| **8840  East Chaparral Road, Suite 100, Scottsdale, AZ 85250**                      |
| (Address of  principal executive offices)                                           |
|                                                                                |
| **(480)  296-0400**                                                                 |
| (Issuer’s  telephone number)                                                   |
|                                                                                |
| **Time  America, Inc.**                                                             |
| (Former name,  former address and former fiscal year, if changed since last report) |

 

Check whether the issuer(1) filed all 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 to suchfiling 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 o   No x

State the number ofshares outstanding of each of the issuer’s classes of common equity, as of thelatest practicable date: At May 11, 2007, the issuer had outstanding 15,382,404shares of Common Stock, par value $.005 per share.

Transitional SmallBusiness Disclosure Format:  Yes o   No x

 

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**PART I — FINANCIALINFORMATION**

**Item 1 — FinancialStatements.**

**NETTIME SOLUTIONS, INC. AND SUBSIDIARIES**

CONSOLIDATEDBALANCE SHEETS
| ** **                                                                                                                    | ** ** | **March 31,** | ** ** | **June 30,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-------------------|------------|
| ** **                                                                                                                    | ** ** | **2007**           | ** ** | **2006**          | ** ** |
| ** **                                                                                                                    | ** ** | **(Unaudited)**    | ** ** | ** **        | ** ** |
| **ASSETS**                                                                                                                    | ** ** | ** **         | ** ** | ** **        | ** ** |
| **Current Assets:**                                                                                                           | ** ** | ** **         | ** ** | ** **        | ** ** |
| Cash and cash  equivalents                                                                                                    |       | $                  | 619,508    |              | $          | 615,204 |   |
| Restricted cash  and cash equivalents                                                                                         |       | 250,000            |       | —            |       |
| Accounts  receivable — trade, net                                                                                        |       | 1,514,128          |       | 2,289,678         |       |
| Inventory                                                                                                                     |       | 141,258            |       | 653,159           |       |
| Deferred loan  costs and other current assets                                                                                 |       | 245,153            |       | 315,226           |       |
|                                                                                                                          |       |               |       |              |       |
| **Total  Current Assets**                                                                                                     |       | 2,770,047          |       | 3,873,267         |       |
|                                                                                                                          |       |               |       |              |       |
| **Property and equipment, net**                                                                                               |       | 320,080            |       | 502,309           |       |
| **Other Assets**                                                                                                              |       | 45,512             |       | 202,952           |       |
|                                                                                                                          |       |               |       |              |       |
| **Total  Assets**                                                                                                             |       | $                  | 3,135,639  |              | $          | 4,578,528 |   |
|                                                                                                                          |       |               |       |              |       |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY (DEFICIT)**                                                                      | ** ** | ** **         | ** ** | ** **        | ** ** |
|                                                                                                                          |       |               |       |              |       |
| **Current Liabilities:**                                                                                                      | ** ** | ** **         | ** ** | ** **        | ** ** |
| Current portion  of long-term debt                                                                                            |       | $                  | 1,151,485  |              | $          | 2,081,122 |   |
| Accounts payable                                                                                                              |       | 571,209            |       | 688,623           |       |
| Accrued  liabilities                                                                                                          |       | 667,294            |       | 739,958           |       |
| Deferred revenue                                                                                                              |       | 647,493            |       | 944,372           |       |
|                                                                                                                          |       |               |       |              |       |
| **Total  Current Liabilities**                                                                                                |       | 3,037,481          |       | 4,454,075         |       |
|                                                                                                                          |       |               |       |              |       |
| **Long-term debt, less current  portion**                                                                                     |       | 982,454            |       | 2,192,472         |       |
|                                                                                                                          |       |               |       |              |       |
| **Total  Liabilities**                                                                                                        |       | 4,019,935          |       | 6,646,547         |       |
|                                                                                                                          |       |               |       |              |       |
| **Common stock subject to  registration rights (351,923 shares)**                                                             |       | 207,635            |       | 207,635           |       |
|                                                                                                                          |       |               |       |              |       |
| **Commitments:**                                                                                                              |       | —             |       | —            |       |
|                                                                                                                          |       |               |       |              |       |
| **Stockholders’ Equity (Deficit):**                                                                                      | ** ** | ** **         | ** ** | ** **        | ** ** |
| Common stock, $.005  par value, 50,000,000 shares authorized;    15,010,481 and 14,652,481 shares issued and outstanding |       | 75,053             |       | 73,263            |       |
| Contributed  capital                                                                                                          |       | 9,836,880          |       | 9,591,098         |       |
| Accumulated  deficit                                                                                                          |       | (11,003,864        | )          | (11,940,015       | )          |
|                                                                                                                          |       |               |       |              |       |
| **Total  Stockholders’ Equity (Deficit)**                                                                                |       | (1,091,931         | )          | (2,275,654        | )          |
|                                                                                                                          |       |               |       |              |       |
| **Total  Liabilities and Stockholders’ Equity (Deficit)**                                                                |       | $                  | 3,135,639  |              | $          | 4,578,528 |   |

 

See Notes toConsolidated Financial Statements

2

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#### **NETTIME SOLUTIONS, INC. AND SUBSIDIARIES**

CONSOLIDATEDSTATEMENTS OF OPERATIONS

(UNAUDITED)
| ** **                                       | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|--------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                       | ** ** | **March 31,**               | ** ** | **March 31,**              | ** ** |
| ** **                                       | ** ** | **2007**                         | ** ** | **2006**                        | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                                       | ** ** | **(unaudited)**                  | ** ** | **(unaudited)**                 | ** ** | **(unaudited)** | ** ** | **(unaudited)** | ** ** |
| **Revenues:**                                    | ** ** | ** **                       | ** ** | ** **                      | ** ** | ** ** | ** ** | ** ** | ** ** |
| Product sales                                    |       | $                                | 917,262    |                            | $          | 1,256,006 |   | $ | 3,486,975 |   | $ | 3,322,927 |   |
| Services revenue                                 |       | 454,110                          |       | 467,154                         |       | 1,417,329 |   | 1,410,401 |   |
|                                             |       |                             |       |                            |       |   |   |   |   |
| **Total Revenues**                               |       | 1,371,372                        |       | 1,723,160                       |       | 4,904,304 |   | 4,733,328 |   |
|                                             |       |                             |       |                            |       |   |   |   |   |
| **Cost of  Revenues:**                           | ** ** | ** **                       | ** ** | ** **                      | ** ** | ** ** | ** ** | ** ** | ** ** |
| Product                                          |       | 536,439                          |       | 684,943                         |       | 1,764,536 |   | 1,701,287 |   |
| Services                                         |       | 156,336                          |       | 224,316                         |       | 524,243 |   | 653,294 |   |
|                                             |       |                             |       |                            |       |   |   |   |   |
| **Total Cost of Revenues**                       |       | 692,775                          |       | 909,259                         |       | 2,288,779 |   | 2,354,581 |   |
|                                             |       |                             |       |                            |       |   |   |   |   |
| **Gross  Profit**                                |       | 678,597                          |       | 813,901                         |       | 2,615,525 |   | 2,378,747 |   |
|                                             |       |                             |       |                            |       |   |   |   |   |
| **Costs  and Expenses:**                         | ** ** | ** **                       | ** ** | ** **                      | ** ** | ** ** | ** ** | ** ** | ** ** |
| Sales and marketing                              |       | 232,712                          |       | 530,413                         |       | 976,429 |   | 1,662,105 |   |
| Research and development                         |       | 363,490                          |       | 383,600                         |       | 1,293,322 |   | 1,130,750 |   |
| General and administrative                       |       | 379,952                          |       | 299,616                         |       | 1,133,582 |   | 1,020,417 |   |
|                                             |       |                             |       |                            |       |   |   |   |   |
| **Total Costs and Expenses**                     |       | 976,154                          |       | 1,213,629                       |       | 3,403,333 |   | 3,813,272 |   |
|                                             |       |                             |       |                            |       |   |   |   |   |
| **Net  Loss from Operations**                    |       | (297,557                         | )          | (399,728                        | )          | (787,808 | ) | (1,434,525 | ) |
|                                             |       |                             |       |                            |       |   |   |   |   |
| **Other  Income (Expense):**                     | ** ** | ** **                       | ** ** | ** **                      | ** ** | ** ** | ** ** | ** ** | ** ** |
| Interest expense                                 |       | (169,346                         | )          | (186,057                        | )          | (555,148 | ) | (504,554 | ) |
| Gain on sale of assets                           |       | 2,012,035                        |       | —                          |       | 2,012,035 |   | — |   |
| Loss on debt extinguishment                      |       | —                           |       | (298,108                        | )          |   |   | (298,108 | ) |
| Other                                            |       | 79,635                           |       | 425,848                         |       | 263,751 |   | 464,267 |   |
| Interest income                                  |       | 17                               |       | 2,238                           |       | 3,321 |   | 11,070 |   |
|                                             |       |                             |       |                            |       |   |   |   |   |
|                                             |       | 1,922,341                        |       | (56,079                         | )          | 1,723,959 |   | (327,325 | ) |
|                                             |       |                             |       |                            |       |   |   |   |   |
| **Net  Income (Loss)**                           |       | $                                | 1,624,784  |                            | $          | (455,807 | ) | $ | 936,151 |   | $ | (1,761,850 | ) |
|                                             |       |                             |       |                            |       |   |   |   |   |
| **Basic  and Diluted Loss per Share**            |       | $                                | 0.11       |                            | $          | (0.03 | ) | $ | 0.06 |   | $ | (0.12 | ) |
|                                             |       |                             |       |                            |       |   |   |   |   |
| **Basic  Weighted Average Shares Outstanding**   | ** ** | 14,884,459                       | ** ** | 14,996,083                      | ** ** | 14,737,090 | ** ** | 14,632,738 | ** ** |
| **Diluted  Weighted Average Shares Outstanding** | ** ** | 15,135,028                       | ** ** | 14,996,083                      | ** ** | 14,934,577 | ** ** | 14,632,738 | ** ** |

 

See Notes toConsolidated Financial Statements

3

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#### **NETTIME SOLUTIONS, INC. AND SUBSIDIARIES**

CONSOLIDATEDSTATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THEYEAR ENDED JUNE 30, 2006 AND

THE NINE MONTHPERIOD ENDED MARCH 31, 2007 (Unaudited)
| ** **                              | ** ** | **Common Stock** | ** ** | **Contributed** | ** ** | **Accumulated** | ** ** | ** **  | ** ** |
|-----------------------------------------|------------|-----------------------|------------|-----------------|------------|-----------------|------------|-------------|------------|
| ** **                              | ** ** | **Shares**            | ** ** | **Amount**      | ** ** | **Capital**     | ** ** | **Deficit** | ** ** | **Total** | ** ** |
|                                    |       |                  |       |            |       |            |       |        |       |   |   |
| Balance at June  30, 2005               |       | 14,251,552            |       | $               | 71,258     |            | $          | 9,269,497   |       | $ | (9,994,280 | ) | $ | (653,525 | ) |
|                                    |       |                  |       |            |       |            |       |        |       |   |   |
| Exercise of  stock options              |       | 4,500                 |       | 22              |       | 1,653           |       | —      |       | 1,675 |   |
| Conversion of  debt to common stock     |       | 446,429               |       | 2,233           |       | 247,767         |       | —      |       | 250,000 |   |
| Induced  conversion of debt             |       | —                |       | —          |       | 40,179          |       | —      |       | 40,179 |   |
| Transfer of  warrants to liability      |       | —                |       | —          |       | (102,900        | )          | —      |       | (102,900 | ) |
| Share-based  awards compensation        |       | —                |       | —          |       | 129,183         |       | —      |       | 129,183 |   |
| Recission of  common stock for services |       | (50,000               | )          | (250            | )          | (31,250         | )          | —      |       | (31,500 | ) |
| Issuance of  common stock warrants      |       | —                |       | —          |       | 36,969          |       | —      |       | 36,969 |   |
| Net loss                                |       | —                |       | —          |       | —          |       | (1,945,735  | )          | (1,945,735 | ) |
| Balance at June  30, 2006               |       | 14,652,481            |       | 73,263          |       | 9,591,098       |       | (11,940,015 | )          | (2,275,654 | ) |
|                                    |       |                  |       |            |       |            |       |        |       |   |   |
| Exercise of  stock options              |       | 3,000                 |       | 15              |       | 435             |       | —      |       | 450 |   |
| Exercise of  stock warrants             |       | 25,000                |       | 125             |       | 3,625           |       | —      |       | 3,750 |   |
| Share-based  awards compensation        |       | —                |       | —          |       | 95,372          |       | —      |       | 95,372 |   |
| 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                              |       | —                |       | —          |       | —          |       | 936,151     |       | 936,151 |   |
| Balance at March 31,  2007 (unaudited)  |       | 15,010,481            |       | $               | 75,053     |            | $          | 9,836,880   |       | $ | (11,003,864 | ) | $ | (1,091,931 | ) |

 

See Notes to Consolidated Financial Statements

4

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#### **NETTIME SOLUTIONS, INC. AND SUBSIDIARIES**

CONSOLIDATEDSTATEMENTS OF CASH FLOWS (UNAUDITED)
| ** **                                                    | ** ** | **Nine Months Ended** | ** ** |
|---------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                    | ** ** | **March 31,**              | ** ** |
| ** **                                                    | ** ** | **2007**                        | ** ** | **2006** | ** ** |
| ** **                                                    | ** ** | **(unaudited)**                 | ** ** | **(unaudited)** | ** ** |
| **Increase  (Decrease) in Cash and Cash Equivalents:**        | ** ** | ** **                      | ** ** | ** ** | ** ** |
| **Cash flows from operating activities:**                     | ** ** | ** **                      | ** ** | ** ** | ** ** |
| Net Income (Loss)                                             |       | $                               | 936,151    |   | $ | (1,761,850 | ) |
| Adjustments to reconcile net income (loss) to net             |       |                            |       |   |   |
| cash provided (used) by operating activities:                 |       |                            |       |   |   |
| Gain on sale of assets                                        |       | (2,012,035                      | )          | — |   |
| Depreciation                                                  |       | 111,694                         |       | 90,605 |   |
| Share based compensation expense                              |       | 95,372                          |       | 113,730 |   |
| Common stock, stock options and warrants issued for  services |       | 148,000                         |       | 213,104 |   |
| Induced conversion of debt charge                             |       | —                          |       | 40,179 |   |
| Inventory relinquished as part of asset sale                  |       | (283,603                        | )          | — |   |
| Changes in Assets and Liabilities:                            |       |                            |       |   |   |
| Accounts receivable-trade                                     |       | 775,550                         |       | (281,584 | ) |
| Accounts receivable-other                                     |       | —                          |       | (530,428 | ) |
| Inventory                                                     |       | 511,901                         |       | (286,543 | ) |
| Deferred loan costs and other current assets                  |       | 70,073                          |       | (15,900 | ) |
| Other assets                                                  |       | 157,440                         |       | 72,180 |   |
| Accounts payable                                              |       | (117,414                        | )          | 128,623 |   |
| Accrued liabilities                                           |       | (72,664                         | )          | 288,520 |   |
| Deferred revenue                                              |       | (296,879                        | )          | 129,203 |   |
| **Net cash provided (used) by operating activities**          |       | 23,586                          |       | (1,800,161 | ) |
|                                                          |       |                            |       |   |   |
| **Cash flows from investing activities:**                     | ** ** | ** **                      | ** ** | ** ** | ** ** |
| Purchase of property and equipment                            |       | (23,826                         | )          | (187,053 | ) |
| Proceeds from sale of assets                                  |       | 665,024                         |       | — |   |
| Restricted cash held in escrow                                |       | (250,000                        | )          | — |   |
| **Net cash provided (used) by investing activities**          |       | 391,198                         |       | (187,053 | ) |
|                                                          |       |                            |       |   |   |
| **Cash flows from financing activities:**                     | ** ** | ** **                      | ** ** | ** ** | ** ** |
| Repayment of debt                                             |       | (733,021                        | )          | (1,209,111 | ) |
| Proceeds from exercise of options and warrants                |       | 4,200                           |       | 1,600 |   |
| Proceeds from debt                                            |       | 318,341                         |       | 2,500,000 |   |
| **Net cash provided (used) by financing activities**          |       | (410,480                        | )          | 1,292,489 |   |
|                                                          |       |                            |       |   |   |
| Net change in  cash and cash equivalents                      |       | 4,304                           |       | (694,725 | ) |
|                                                          |       |                            |       |   |   |
| Cash and cash  equivalents at beginning of period             |       | 615,204                         |       | 1,361,717 |   |
|                                                          |       |                            |       |   |   |
| Cash and cash  equivalents at end of period                   |       | $                               | 619,508    |   | $ | 666,992 |   |
|                                                          |       |                            |       |   |   |
| **Supplemental  disclosure of cash flow information:**        | ** ** | ** **                      | ** ** | ** ** | ** ** |
| Interest paid                                                 |       | $                               | 326,951    |   | $ | 201,254 |   |
| Income taxes paid                                             |       | $                               | —     |   | $ | — |   |
|                                                          |       |                            |       |   |   |
| **Noncash  investing and financing activities:**              | ** ** | ** **                      | ** ** | ** ** | ** ** |
| Conversion of debt to equity                                  |       | $                               | —     |   | $ | 250,000 |   |
| Gain on sale of  assets                                       |       | $                               | —     |   | $ | 425,848 |   |

 

See Notes toConsolidated Financial Statements

5

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## **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Note A -Basis of Presentation and Interim Consolidated Financial Statements**

On April 20, 2007,the Company filed a Certificate of Amendment to its Articles of Incorporationwith the Nevada Secretary of State to change the corporate name of TimeAmerica, Inc., a Nevada corporation, to NETtime Solutions, Inc.  The effective date of the parent corporatename change is May 10, 2007.  The Companyfiled a Second Amendment to the Articles on Incorporation with the ArizonaCorporation Commission to change the corporate name of its wholly-ownedsubsidiary, Time America, Inc., a Arizona corporation, to NETtime Solutions,Inc.  The effective date of thesubsidiary corporate name change is January 22, 2007.

NETtime Solutions,Inc. is a holding corporation (formerly Time America, Inc.).  Our operations are conducted through ourwholly-owned subsidiaries, one of which is also named NETtime Solutions, Inc(formerly Time America, Inc.).  Our otherwholly-owned subsidiary is NetEdge Devices, LLC.  Unless the context indicates otherwise,references to the Company in this report shall include NETtime Solutions (theparent company organized in Nevada), NETtime Solutions, Inc. (our wholly-ownedsubsidiary organized in Arizona) and NetEdge Devices, LLC, an Arizona limitedliability company.

The accompanying unaudited consolidated financialstatements of NETtime Solutions, Inc. and subsidiaries have been prepared inaccordance with generally accepted accounting principles (“GAAP”), pursuant tothe rules and regulations of the Securities and Exchange Commission, and areunaudited.  Accordingly, they do notinclude all the information and footnotes required by GAAP for completefinancial 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 resultsfor the nine month period ended March 31, 2007, may not be indicative of theresults for the entire year.  Thesefinancial statements should be read in conjunction with the Company’s AnnualReport on Form 10-KSB for the fiscal year ended June 30, 2006.

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 results could differ from theseestimates.

**Note B -Income (Loss) Per Share:**

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.

Dilutedearnings per share are computed based on the weighted average number of sharesof common stock and dilutive securities outstanding during the period.  Dilutive securities are options and warrantsthat are freely exercisable into common stock at less than the prevailingmarket price. Dilutive securities are not included in the weighted averagenumber of shares when inclusion would increase the earnings per share ordecrease the loss per share.

6

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**Note C - Stock BasedCompensation:**

Prior to July 1, 2005,the Company accounted for stock-based compensation arrangements in accordancewith the provisions of Accounting Principles Board Opinion No. 25, “Accountingfor Stock Issued to Employees,” (“APB 25”). Accordingly, compensation expense, if any, was measured as the excess ofthe underlying stock price over the exercise price on the date of grant.  The Company complied with the disclosureprovisions of Statement of Financial Accounting Standards Board No. 123 (“SFAS123”) “Accounting for Stock Based Compensation” as amended by SFAS 148 “Accountingfor Stock-Based Compensation-Transition and Disclosure,” which requiredpro-forma disclosure of compensation expense associated with stock optionsunder the fair value method.

Effective July 1, 2005,the Company adopted the fair value recognition provisions of Statement ofFinancial Accounting Standards Board No. 123(R), “Share—Based Payment,” usingthe modified prospective-transition method. Under this transition method, compensation expense recognized for thethree months ended and nine months ended March 31, 2007 includes:  (a) compensation expense for all share-basedpayments granted prior to, but not yet vested as of June 30, 2005 based on thegrant date fair value estimated and (b) compensation expense for allshare-based payments granted subsequent to June 30, 2005, based on the grantdate fair value estimated in accordance with the provisions of SFAS 123(R).  Results for prior periods have notbeen restated.  The fair value of option grants is estimatedas of the date of grant utilizing the Black-Scholes option-pricing model andamortized to expense over the options’ vesting period.

Asa result of the adoption of SFAS 123(R), the Company’s net income for the ninemonth period ended March 31, 2007 is $95,372 lesser than if it had continued toaccount for share-based compensation under APB 25.  The Company’s net loss for the nine monthperiod ended March 31, 2006 is $113,730 greater than if it had accounted forshare-based compensation under APB 25.

**Note D - Long-term Debt:**

In August 2006, the Company amended the terms ofits term note with Laurus Master Funds, Ltd. (“Laurus”) to change the monthlyprincipal payment for the period of September 2006 through February 2007 from$66,667 to $30,000.  The deferredprincipal amount has been added as a balloon payment at the end of theterm.  In January 2007, the term note waspaid in full (see Note F – Asset Sale).

In July 2006,the Company amended the terms of its note agreements with Frances Simek todefer the monthly principal payments for the period of July 2006 throughDecember 2006.  The amortization periodof the note was increased by six months to compensate for the deferredprincipal payments.

In December2006, the Company entered into a subordinated note agreement with FrancesSimek.  The note is 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. The Company amendedthe terms of this note agreement with Frances Simek to defer the monthlyprincipal payments through December 2007.

In February 2007, the Company amended theterms of all its note agreements with Frances Simek to defer the monthlyprincipal payments through December 2007. The amortization period of the note was increased by 12 months to compensatefor the deferred principal payments.  TheCompany issued 100,000 shares of its Common Stock to Frances Simek inconsideration for consent to interest only payments through December 2007.

7

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**Note E - New Accounting Pronouncements:**

In February2007, the Financial Accounting Standards Board issued Statement of FinancialAccounting Standards No. 159, “The Fair Value Option for Financial Assetsand Financial Liabilities—Including an amendment of Statement of FinancialAccounting Standards Statement No. 115” (“SFAS 159”), which permitsentities to choose to measure many financial instruments and certain otheritems at fair value at specified election dates. A business entity is requiredto report unrealized gains and losses on items for which the fair value optionhas been elected in earnings at each subsequent reporting date. This statementis expected to expand the use of fair value measurement. SFAS 159 is effectivefor financial statements issued for fiscal years beginning afterNovember 15, 2007, and interim periods within those fiscal years. TheCompany has not determined the impact of SFAS 159 on its financial position.

InSeptember 2006, the Financial Accounting Standard Board issued a Statementof Financial Accounting 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 afterNovember 15, 2007, and interim periods within those fiscal years. Theadoption of SFAS 157 is not expected to have a material affect on our financialposition or results of operations.

**Note F – Asset Sales**

On January 16,2007, NETtime Solutions, Inc (formerly Time America, Inc.)., a Nevadacorporation (the “Company”), along with its subsidiaries, NETtime Solutions,Inc., an Arizona corporation (formerly Time America, Inc.), and NetEdgeDevices, LLC, an Arizona limited liability company, entered into an AssetPurchase Agreement with Synel Industries, Inc., an Israeli registeredcorporation (“Synel”). Under the agreement, Synel purchased the Company’sreseller sales channel, source code and related intellectual property for theCompany’s GENESIS, HourTrack, and TA7000 product series, certain use rightsassociated with the Company’s NETtime source code, and all of the Company’srights associated with the “Time America” name. The sale closed on January 22,2007.  In relation to the sale, on April20, 2007, the Company filed a Certificate of Amendment to the Articles ofIncorporation with the Nevada Secretary of State to change the corporate nameof Time America, Inc., a Nevada corporation, to NETtime Solutions, Inc.  The effective date of the corporate namechange is May 10, 2007.

Under theagreement, the purchase price for the acquired assets is $2.5 million, $250,000of which is being held in escrow pending resolution of certain post-closingobligations are fulfilled. Other contingent consideration under the agreementfor the acquired assets consists of royalty payments, payable to the Companyquarterly over the four year period ending January 15, 2011, equal to 5% of therevenue derived from Synel’s U.S. sales of TA7000 units outside of Synel’sestablished U.S. customer base. Additionally, Synel purchased certain of theCompany’s TA7000 inventory for $140,000. A portion of the proceeds from thesale were used to repay its Secured Convertible Term Note with Laurus, datedJanuary 3, 2006.  In addition, theCompany issued 100,000 shares of its Common Stock to Laurus in considerationfor Laurus’s consent to extending the maturity date of the Company’s existingrevolving note with Laurus, the asset sale to Synel, and the corporate namechange.

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TheCompany does not distinguish operationally or financially its activities otherthan gross product sales between its sales channels and as such the Company hasnot accounted for the sale as discontinued operations under SFAS No. 144 “Accountingfor the Impairment or Disposal of Long-Lived Assets.”

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 direct sales businesswere sold, including a copy of the source code and other intellectual propertyrelating to the Company’s NETtime, HourTrack and GENESIS time and attendancesoftware products, related ASP and maintenance contracts, and certain specifieddirect 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 existing customer ASP contractsand 40% of the total consideration for the existing maintenance contracts.  The remaining consideration for themaintenance contracts is payable quarterly over the 14-month period followingthe closing. The Company was also required to transition additional ASPcustomers during the six months following the closing, which the Company waspaid for at the time of such transfers. Additionally, for the 12-month period following the closing, the Companywas to receive monthly royalty payments equal to 27.5% of the revenues inconnection with the direct channel sales opportunities specified at closing.Subsequently, there were no royalties payments received in connection with thedirect channel sales opportunities specified at closing.

**Note G – Basis of Presentation and Going Concern:**

ThroughMarch 31, 2007, the Company had sustained recurring losses from operations, andas of May 11, 2007, the Company estimates that its working capital and fundsgenerated from operations are sufficient to fund the Company’s operations forthe next six months.  This estimate takesinto account the asset sale on January 16, 2007, as discussed in Note Fabove.  These conditions raisesubstantial doubt about the ability of the Company to continue as a goingconcern.  During fiscal 2007, the Companyexpects to meet its working capital and other cash requirements with itscurrent cash reserves, cash generated from operations, its borrowing capacityunder its two credit facilities, the asset sale as discussed in Note F above,and other financing as required.  Whilethe Company believes that it will succeed in attracting additional capital, therecan be no assurance that the Company’s efforts will be successful.  The Company’s continued existence isdependent upon its ability to achieve and maintain profitable operations bycontrolling expenses.  However, there canbe no assurance that the Company’s efforts to achieve and maintain profitableoperations will be successful.  Thefinancial statements do not include any adjustments that might result from theoutcome of these uncertainties.

**Note H – Subsequent Events:**

OnApril 20, 2007, the Company filed a Certificate of Amendment to the Articles ofIncorporation with the Nevada Secretary of State to change the corporate nameof Time America, Inc., a Nevada corporation to NETtime Solutions Inc.  The effective date of the parent corporatename change is May 10, 2007.

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

### **Critical Accounting Policies**

Our significantaccounting policies are described in the audited consolidated financialstatements and notes thereto includedin our Annual Report on Form 10-KSB for the year ended June 30, 2006.  We believe our most critical accountingpolicies are revenue recognition, software development costs, allowance forpotentially uncollectible accounts receivable and valuation of stock-basedcompensation.

We license software and sell data collectionhardware and related ancillary products to end-user customers through ourdirect sales force. Our software license revenue is earned from perpetuallicenses of off-the-shelf software requiring no or minor modification orcustomization. The software license, data collection hardware and relatedancillary product revenues from our customers are generally recognized when:

·                  Persuasive evidence of an arrangement exists,which is typically when a non-cancelable sales and software license agreementor purchase order has been signed;

·                  Delivery, which is typically FOB shippingpoint, is complete for the software (either physically or electronically), datacollection hardware and related ancillary products;

·                  The customer’s fee is deemed to be fixed ordeterminable and free of contingencies or significant uncertainties;

·                  Collectibility is probable; and

·                  Objectiveevidence of fair value exists for all undelivered elements, typicallymaintenance and professional services.

Thefair value of the undelivered elements is deferred and the remaining portion ofthe arrangement fee is allocated to the delivered elements and is recognized asrevenue, assuming all other conditions for revenue recognition have beensatisfied. Substantially all of our sales agreements contain allocations of thepurchase price among the various elements of the arrangement.  If we cannot determine the fair value of anyundelivered element included in an arrangement, we will defer revenue until allelements are delivered, services are performed or until fair value can beobjectively determined.

Aspart of an arrangement, customers typically purchase maintenance contracts aswell as professional services from us. Maintenance services include telephone and web-based support as well asrights to unspecified upgrades and enhancements, when and if we make themgenerally available. Professional services are typically for implementation,installation of the software and data collection hardware, training, buildinginterfaces and custom features, and running test data.

Revenuesfrom maintenance services are recognized ratably over the term of themaintenance contract period, which is usually one year.  Maintenance services are typically statedseparately in an arrangement. We have classified the value of revenuespertaining to the contractual maintenance obligations that exist for the12-month period subsequent to the balance sheet date as a current liability,and the contractual obligations with a term beyond 12 months, if present, as anon-current liability.

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Revenuesfrom customer support services are recognized as the services aredelivered.  Revenues from professionalservices are generally recognized based on vendor-specific objective evidenceof fair value when:

·                  A non-cancelable agreement for the serviceshas been signed or a customer’s purchase order has been received;

·                  The professional services have beendelivered;

·                  The customer’s fee is deemed to be fixed ordeterminable and free of contingencies or significant uncertainties; and

·                  Collectibilityis probable.

Vendor-specificobjective evidence of fair value is based upon the price charged when theseservices are sold separately and are typically an hourly rate for professionalservices and a per-class rate for training. Based upon our experience incompleting professional services, we have determined that these services aretypically delivered within a 12-month period subsequent to the contract signingand therefore we classify deferred professional services as a currentliability.

Ourarrangements with customers do not include any rights of return or priceprotection. Our arrangements with customers generally include our standardacceptance provision. Our standard acceptance provision states that thecustomer’s acceptance of the products shall be deemed to occur upon completionof running our standard diagnostic tests.

Atthe time we enter into an arrangement, we assess the probability of collectionof the fee and the terms granted to the customer.  The typical payment terms include a depositand subsequent payments, based on specific due dates, such that all paymentsfor the software license, data collection hardware and related ancillaryproducts, as well as services included in the original arrangement, areordinarily due within one year of contract signing.

Ifthe arrangement includes a substantive acceptance provision, we defer revenuenot meeting the criterion for recognition under Statement of Position 97-2, “SoftwareRevenue Recognition,” and classify this revenue as deferred revenue, includingdeferred product revenue. This revenue is recognized, assuming all otherconditions for revenue recognition have been satisfied, when the uncertaintyregarding acceptance is resolved as generally evidenced by written acceptanceor payment of the arrangement fee. If the payment terms for the arrangement areconsidered extended, we defer revenue on the arrangement until the payment ofthe arrangement fee becomes due. The deferred amounts related to arrangementswith extended payment terms are removed from deferred revenue and accountsreceivable, as we have determined that these amounts do not represent eitherreceivables or deferred revenue until the payment becomes due. We report theallocated fair value of revenues related to the product element of arrangementsas a current liability because of the expectation that these revenues will berecognized within 12 months of the balance sheet date.

Wecapitalize software development costs in accordance with Statement of FinancialAccounting Standards No. 86, “Accounting for the Costs of Computer Software tobe Sold, Leased, or Otherwise Marketed.” Capitalization of software developmentcosts begins upon the establishment of technological feasibility of theproduct.  The establishment of technological feasibility and the ongoingassessment of the recoverability of these costs requires considerable judgmentby management with respect to certain external factors including, but notlimited to, anticipated future gross product revenue, estimated economic life,and changes in software and hardware technology.  Amortization ofcapitalized software development 

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costs begins when theproducts are available for general release to customers and is computed on aproduct-by-product basis using straight-line amortization with useful lives offive years or, if less, the remaining estimated economic life of theproduct.  Amounts related to internal software development that could becapitalized under this statement were deemed immaterial for the periodspresented.

We provide forpotentially uncollectible accounts receivable by use of the allowancemethod.  The allowance is provided basedupon a review of the individual accounts outstanding, and our prior history ofuncollectible accounts receivable.  It is our practice to record anestimated allowance for sales returns and adjustments based on historicalexperience and to record individual charges for sales returns and adjustmentsdirectly to revenue as incurred.

Determining theappropriate fair value model and calculating the fair value of share-basedpayment awards requires the input of highly subjective assumptions, includingthe expected life of the share-based payment awards and stock price volatility.The assumptions used in calculating the fair value of share-based payment awardsrepresent management’s best estimates, but these estimates involve inherentuncertainties and the application of management judgment. As a result, iffactors change and we use different assumptions, our stock-based compensationexpense could be materially different in the future. In addition, we arerequired to estimate the expected forfeiture rate and only recognize expensefor those shares expected to vest. If our actual forfeiture rate is materiallydifferent from our estimate, the stock-based compensation expense could besignificantly different from what we have recorded in the current period.

### **Results of Operations for the Three and NineMonths Ended March 31, 2007 and 2006**

This analysis does not retroactively take into account the sale of theCompany’s reseller activity in January 2007 as discussed in Note F in thefinancial statements.  The Company doesnot distinguish operationally or financially its activities other than grossproduct sales between its sales channels and as such the Company has notaccounted for the sale as discontinued operations under SFAS No. 144 “Accountingfor the Impairment or Disposal of Long-Lived Assets”.  The Company expects to experience asignificant decrease in both revenue and operating expenses as a result of thesale.

*Revenues:*
| ** ** | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** ** | ** ** | **March 31,   2007**   | ** ** | **March 31,  2006**        | ** ** | **Percent   Change** | ** ** | **March 31,   2007** | ** ** | **March 31,  2006** | ** ** | **Percent   Change** | ** ** |
|       |       |                             |       |                            |       |   |   |   |   |   |   |   |   |
| Revenues   |       | $                                | 1,371,372  |                            | $          | 1,723,160 |   | (20 | )%  | $ | 4,904,304 |   | $ | 4,733,328 |   | 4 | % |
|            |            |                                  |            |                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

See “ProductSales” and “Service Revenue” below for a discussion regarding the change.

*ProductSales:*
| ** **                                    | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|-----------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                    | ** ** | **March 31,  2007**         | ** ** | **March 31,   2006**  | ** ** | **Percent   Change** | ** ** | **March 31,   2007** | ** ** | **March 31,  2006** | ** ** | **Percent   Change** | ** ** |
|                                          |       |                             |       |                            |       |   |   |   |   |   |   |   |   |
| Product sales                                 |       | $                                | 917,262    |                            | $          | 1,256,006 |   | (27 | )%  | $ | 3,486,975 |   | $ | 3,322,927 |   | 5 | % |
| Product sales as a  percent of total revenues |       | 67                               | %          | 73                              | %          | — |   | 71 | % | 70 | % | — |   |
|                                               |            |                                  |            |                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

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Productsales revenue was approximately $917,000 and $1,256,000 for the three monthsended March 31, 2007 and 2006, respectively, a decrease of $339,000 or27%.  The decrease in product sales forthe three months ended March 31, 2007, as compared to the same period in theprior year, was primarily attributable to a decrease of approximately $700,000in reseller product sales as a result of the asset sale in January 2007, asdiscussed in Note F above.  The Companyhad increased sales to a Fortune 100 company of approximately $590,000. Thisincrease was partially offset by a decrease of direct product sales ofapproximately $229,000.

Productsales revenue was approximately $3,487,000 and $3,323,000 for the nine monthsended March 31, 2007 and 2006, respectively, an increase of $164,000 or5%.  The increase in product sales forthe nine months ended March 31, 2007, as compared to the same period in theprior year, was primarily attributable to increased sales to a Fortune 100company of approximately $865,000.  Thisincrease was partially offset by a decrease of approximately $672,000 inreseller product sales as a result of the asset sale in January 2007, asdiscussed in Note F above.

*ServiceRevenue:*
| ** **                                      | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|-------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                      | ** ** | **March 31,  2007**         | ** ** | **March 31,   2006**  | ** ** | **Percent   Change** | ** ** | **March 31,   2007** | ** ** | **March 31,  2006** | ** ** | **Percent   Change** | ** ** |
|                                            |       |                             |       |                            |       |   |   |   |   |   |   |   |   |
| Service revenue                                 |       | $                                | 454,110    |                            | $          | 467,154 |   | (3 | )%  | $ | 1,417,329 |   | $ | 1,410,401 |   | 0 | % |
| Service revenue as a  percent of total revenues |       | 33                               | %          | 27                              | %          | — |   | 29 | % | 30 | % | — |   |
|                                                 |            |                                  |            |                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

Thedecrease in our service revenue in the current quarter was primarilyattributable to an approximately $35,000 decrease in our NETtime softwareservice revenue and a $36,000 decrease in maintenance revenue over the prioryear period.  These decreases are due tothe asset sale in January 2007 as discussed in Note F in the financialstatements.  This decrease was partiallyoffset by an increase of approximately $57,000 in implementation and trainingrevenue.

Theincrease in our service revenue in the nine month period was primarilyattributable to an approximately $137,000 increase in our implementation and trainingrevenue and a $70,000 increase in our NETtime software service revenue over theprior year period.  This increase waspartially offset by a decrease of approximately $200,000 in maintenance revenueas a result of the sale of certain maintenance contracts on March 31, 2006 anddecreases for the current quarter as discussed above.

*GrossProfit:*
|                       | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|-----------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **            | ** ** | **March 31,   2007**   | ** ** | **March 31,   2006**  | ** ** | **March 31,   2007** | ** ** | **March 31,   2006** | ** ** |
| Product gross  margin |       | 42                               | %          | 45                              | %          | 49 | % | 49 | % |
| Service gross  margin |       | 66                               | %          | 52                              | %          | 63 | % | 54 | % |
| Total gross margin    |       | 49                               | %          | 47                              | %          | 53 | % | 50 | % |

 

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Ourgross profit percentage on products is typically between 50% to 60% dependingupon the mix of software versus hardware sales and the makeup of hardwaresales.  The increased sales to a Fortune100 company for the current quarter and nine months ended March 31, 2007,resulted in lower than typical product gross margins.  Our product revenue is comprised of softwareand hardware sales, with hardware sales yielding a significantly lower grossprofit than software sales.   Hardwarerevenue is primarily derived from the sale of two versions of general datacollection terminals, badge terminals and biometric units.  The gross profit is greater on badge terminalsthan biometric units because we add value to our badge terminals by installingsoftware on the terminals.

Ourgross profit percentage on services revenue increased as we were able toincrease our implementation and training revenue while also reducing our laborcosts.  In addition, we also increasedour NETtime software service revenue that does not require substantialadditional costs to increase the volume of users on the service.

*OperatingExpenses:*
| ** **                                               | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|----------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                               | ** ** | **March 31,   2007**   | ** ** | **March 31,   2006**  | ** ** | **Percent   Change** | ** ** | **March 31,   2007** | ** ** | **March 31,   2006** | ** ** | **Percent   Change** | ** ** |
|                                                     |       |                             |       |                            |       |   |   |   |   |   |   |   |   |
| Total costs and  expenses                                |       | $                                | 976,154    |                            | $          | 1,213,629 |   | (20 | )%  | $ | 3,403,333 |   | $ | 3,813,272 |   | (11 | )% |
| Total costs and  expenses as a percent of total revenues |       | 71                               | %          | 70                              | %          | — |   | 69 | % | 81 | % | — |   |
|                                                          |            |                                  |            |                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

*Sales and Marketing Expense:*
| ** **                                                  | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|-------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                                  | ** ** | **March 31,   2007**   | ** ** | **March 31,   2006**  | ** ** | **Percent   Change** | ** ** | **March 31,   2007** | ** ** | **March 31,   2006** | ** ** | **Percent   Change** | ** ** |
|                                                        |       |                             |       |                            |       |   |   |   |   |   |   |   |   |
| Sales and  marketing expense                                |       | $                                | 232,712    |                            | $          | 530,413 |   | (56 | )%  | $ | 976,429 |   | $ | 1,662,105 |   | (41 | )% |
| Sales and marketing  expense as a percent of total revenues |       | 17                               | %          | 31                              | %          | — |   | 20 | % | 35 | % | — |   |
|                                                             |            |                                  |            |                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

Thedecrease in sales and marketing expenses in the current quarter is primarilyattributable to lower costs as the result of the asset sales as discussed inNote F above.  As a result of thesesales, our sales and marketing labor expense decreased by approximately$216,000, advertising and promotion expenses decreased by approximately$40,000, and travel expense decreased by approximately $12,000.

Thedecrease in sales and marketing expenses in the nine month period is alsoprimarily attributable to lower costs as the result of the asset sales.  As a result of these sales, our sales andmarketing labor expense decreased by approximately $367,000, advertising andpromotion expenses decreased by approximately $172,000, and travel expensedecreased by approximately $73,000.

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*Research and Development Expense:*
| ** **                                                       | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|------------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                                       | ** ** | **March 31,   2007**   | ** ** | **March 31,   2006**  | ** ** | **Percent   Change** | ** ** | **March 31,   2007** | ** ** | **March 31,   2006** | ** ** | **Percent   Change** | ** ** |
| Research and  development expense                                |       | $                                | 363,490    |                            | $          | 383,600 |   | (5 | )%  | $ | 1,293,322 |   | $ | 1,130,750 |   | 14 | % |
| Research and  development expense as a percent of total revenues |       | 27                               | %          | 22                              | %          | — |   | 26 | % | 24 | % | — |   |
|                                                                  |            |                                  |            |                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

Thedecrease in research and development expenses in the current quarter isprimarily attributable to lower hardware and equipment costs.  This decrease was partially offset by anincrease in consulting costs associated with the development in our customsolution for a Fortune 100 company, development of our data collection terminaland enhancement of our software offerings.

Theincrease in research and development expenses in the nine month period isprimarily attributable to consulting, labor and other costs associated with thedevelopment of our custom solution for a Fortune 100 company, development inour data collection terminal and enhancement of our software offerings.

*Generaland Administrative Expense:*
| ** **                                                         | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|--------------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                                         | ** ** | **March 31,   2007**   | ** ** | **March 31,   2006**  | ** ** | **Percent   Change** | ** ** | **March 31,   2007** | ** ** | **March 31,   2006** | ** ** | **Percent   Change** | ** ** |
| General and  administrative expense                                |       | $                                | 379,952    |                            | $          | 299,616 |   | 27 | % | $ | 1,133,582 |   | $ | 1,020,417 |   | 11 | % |
| General and  administrative expense as a percent of total revenues |       | 28                               | %          | 17                              | %          | — |   | 23 | % | 22 | % | — |   |
|                                                                    |            |                                  |            |                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

Theincrease in general and administrative expenses in the current quarter isprimarily attributable to an increase in our allowance for doubtfulaccounts.  This increase was partiallyoffset by a decrease in general and administrative labor expense.

Theincrease in general and administrative expenses for the nine month period wasprimarily due to an increase in our allowance for doubtful accounts andincreased accounting fees and expenses associated with the preparation andfiling of a registration statement with the Securities and Exchange Commission.

Other Income(Expense):
| ** **                                             | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|--------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                             | ** ** | **March 31,  2007**         | ** ** | **March 31,   2006**  | ** ** | **Percent   Change** | ** ** | **March 31,   2007** | ** ** | **March 31,   2006** | ** ** | **Percent   Change** | ** ** |
|                                                   |       |                             |       |                            |       |   |   |   |   |   |   |   |   |
| Other income  (expense)                                |       | $                                | 1,922,341  |                            | $          | (56,079 | ) | 3528 | % | $ | 1,723,959 |   | $ | (327,325 | ) | 627 | % |
| Other income (expense)  as a percent of total revenues |       | 140                              | %          | 3                               | %          | — |   | 35 | % | 7 | % | — |   |
|                                                        |            |                                  |            |                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

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Otherincome (expense) consists primarily of interest expense and other income on thegainon sale of assets.  The increase in other income isprimarily due to an increase in other income from the gains on asset sales.

# **Liquidity and Capital Resources**

Cash Flow Highlights:
|                                     | ** ** | **Nine Months Ended March 31,** | ** ** | **Percentage** | ** ** |
|-------------------------------------|------------|-----------------------------------------------------|------------|----------------|------------|
| ** **                          | ** ** | **2007**                                            | ** ** | **2006**       | ** ** | **Change** | ** ** |
| Net cash from  operations           |       | $                                                   | 23,586     |           | $          | (1,800,161 | ) | 101 | % |
| Purchase of  property and equipment |       | $                                                   | (23,826    | )              | $          | (187,053 | ) | 87 | % |
| Repayment of  debt                  |       | $                                                   | (733,021   | )              | $          | (1,209,111 | ) | 39 | % |
| Proceeds from  debt                 |       | $                                                   | 318,341    |           | $          | 2,500,000 |   | (87 | )% |
| Net change in  cash                 |       | $                                                   | 4,304      |           | ($694,725  | ) | 101 | % |
| Cash at end of  period              |       | $                                                   | 619,508    |           | $          | 666,992 |   | (7 | )% |

 

AtMarch 31, 2007, we had a working capital deficit of $267,434, compared toworking capital deficit of $580,808 at June 30, 2006.  Cash and cash equivalents at those datesamounted to $619,508 and $615,204, respectively.  As of March 31, 2007, restricted cash andcash equivalents represents funds held in escrow as part of the January 2007asset sale discussed in Note F in our financial statements. We have funded ouroperations for the past six years primarily through a combination of sales ofequity securities and debt financing.

*Operating Activities*.  Cash flow from operating activities was$23,586. Although we had net income of $936,151, this was primarily due to thegain on sale of assets of $2,012,035 and changes in our operating assets andliabilities.

*Investment Activities*. Cashprovided by investing activities was $391,198 and was primarily attributable toproceeds from the asset sale as discussed in Note F and offset by restrictedcash held in escrow. Our use of cash for property and equipment includesinvestments in information systems and infrastructure to support operations.

*Financing Activities*.   Cash flows used by financing activities was$410,480 for the current period primarily as the result of $733,021 in debtpayments. The cash flows used by financing activities was partially offset bydebt proceeds of  $318,341, of which$300,000 was from a financing transaction completed during the second quarterof fiscal year 2007.

Ourliquidity is affected by many factors, some based on the normal ongoingoperations of our business and others related to the uncertainties of the timeand attendance industry and global economies. Although we believe our cash requirements will continue to fluctuatebased on the timing and extent of these factors, we believe that our currentcash reserves, cash generated from operations, cash received from recent assetsales, recent financings, and our borrowing capacity under our two creditfacilities, will be 

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sufficient tosatisfy commitments for capital expenditures and other cash requirements forthe next six months. At March 31, 2007, we had approximately $657,000outstanding under our $1,500,000 revolving note.  Wecan borrow up to the $1,500,000 limit, provided we have sufficient eligibleaccounts receivable and inventory balances. We also have $250,000 in unused capacity under a line of credit with ashareholder of the Company.

The ability toraise additional capital in public or private markets will primarily bedependent upon prevailing market conditions and the demand for our products andservices.  No assurance can be given thatwe will be able to raise additional capital, when needed or at all, or thatsuch capital, if available, will be on acceptable terms. In the absence ofobtaining additional financing, the Company may be unable to fund itsoperations and may experience defaults under certain of its contractualagreements, including our credit facilities and lease agreements for ourcorporate headquarters.  Our leaseagreements are subject to termination in the event of a default.  Certain of the parties to these agreementscould take legal action against the Company to collect amounts owed tothem.  Accordingly, the Company’sfinancial condition could require that the Company seek the protection ofapplicable reorganization laws in order to avoid or delay actions by thirdparties, which could materially adversely affect, interrupt or cause thecessation of the Company’s operations. As a result, the Company’s independentcertified public accountants have issued a going concern opinion on theconsolidated financial statements of the Company for the fiscal year ended June30, 2006.

# **Subsequent Events**

On April 20, 2007, the Company filed a Certificate of Amendment to theArticles of Incorporation with the Nevada Secretary of State to change thecorporate name of Time America, Inc., a Nevada corporation to NETtime SolutionsInc.  The effective date of the parentcorporate name change is May 10, 2007.

**Item3. Controls and Procedures.**

An evaluation as of the endof the period covered by this report was carried out under the supervision andwith the participation of our management, including our Chief Executive Officerand Chief Financial Officer, of the effectiveness of the design and operationof our disclosure controls and procedures (as defined in Rule 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation,the Chief Executive Officer and Chief Financial Officer concluded that thosedisclosure controls and procedures were effective in providing reasonableassurance that information required to be disclosed by us in the reports thatwe file or submit under the Securities Exchange Act of 1934, as amended, isrecorded, processed, summarized and reported within the time periods specifiedin the Commission’s rules and forms. In addition, there has been no change inour internal control over financial reporting (as defined in Rule 13a-15(f) and15d-15(f) under the Securities Exchange Act of 1934) that occurred during theperiod covered by this report that has materially affected, or is reasonablylikely to materially affect, our internal control over financial reporting.

It should be noted that anysystem of controls, however well designed and operated, can provide onlyreasonable, not absolute, assurance that the objectives of the system aremet.  In addition, the design of any controlsystem is based in part upon certain assumptions about the likelihood of futureevents.  Because of these and otherinherent limitations of control systems, there can be no assurance that anydesign will succeed in achieving its stated goals under all potential futureconditions, regardless of how remote.

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# **FORWARD-LOOKING INFORMATION**

The statementscontained in this Quarterly Report on Form 10-QSB that are not historical factare forward-looking statements (as such term is defined in the PrivateSecurities Litigation Reform Act of 1995), within the meaning of Section 27A ofthe Securities 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 these forward-looking statements that are nothistorical facts are only predictions. No assurances can be given that the future results indicated, whetherexpressed or implied, will be achieved. While sometimes presented with numerical specificity, these projectionsand other forward-looking statements are based upon a variety of assumptionsrelating to the business of the Company, which, although considered reasonableby the Company, may not be realized. Because of the number and range of assumptions underlying the Company’sprojections and forward-looking statements, many of which are subject tosignificant uncertainties and contingencies that are beyond the reasonablecontrol of the Company, some of the assumptions inevitably will notmaterialize, and unanticipated events and circumstances may occur subsequent tothe date of this report.  Theseforward-looking statements are based on current expectations and the Companyassumes no obligation to update this information.  Therefore, the actual experience of theCompany and the results achieved during the period covered by any particularprojections or forward-looking statements may differ substantially from thoseprojected.  Consequently, the inclusionof projections and other forward-looking statements should not be regarded as arepresentation by the Company or any other person that these estimates andprojections will be realized, and actual results may vary materially.  There can be no assurance that any of theseexpectations will be realized or that any of the forward-looking statementscontained herein will prove to be accurate.

##### **PART II — OTHER INFORMATION**

**Item 1.Legal Proceedings.**

The Company is from timeto time involved in legal proceedings arising from the normal course ofbusiness.   As of the date of thisreport, the Company is not currently involved in any legal proceedings.

**Item 6.Exhibits**
|   | (a)    | The following exhibits are filed herewith pursuant  to Regulation S-B. |
|--------|--------|------------------------------------------------------------------------|
|   |   |                                                                   |
|   | 31.1   |                                                                   | Section 302  Certification of Chief Executive Officer |
|   |   |                                                                   |   |
|   | 31.2   |                                                                   | Section 302  Certification of Chief Financial Officer |
|   |   |                                                                   |   |
|   | 32     |                                                                   | Section 906  Certifications |

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**SIGNATURES**

In accordance with the requirements of the SecuritiesExchange Act of 1934, the registrant caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.
|                 | NETTIME SOLUTIONS, INC.               |
|----------------------|---------------------------------------|
|                 |                                  |
|                 |                                  |
| Dated: May 15,  2007 |                                  |
|                 | By                                    |  /s/ Bahan Sadegh |   |
|                 | Bahan Sadegh                          |
|                 | President and Chief Executive Officer |
|                 | (Principal Executive Offices)         |

 

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