UPD Holding (UPDC) 10-K 2010 FY Annual report

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2010
o	TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______________ to _______________
	Commission File Number 001-10320

Tempco, Inc.
(Name of small business issuer in its charter)

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

(480) 272-8745

(Issuer’s telephone number)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.005 par value	OTC BB

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.o Yesx No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.o Yesx No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.x Yeso No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).o Yeso No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).x Yeso No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $2,069,336.

At October 10, 2010, the issuer had outstanding 11,490,016 shares of Common Stock, par value $.005 per share.

DOCUMENTS INCORPORATED BY REFERENCE

None

PART I

Forward-Looking Information

The statements contained in this Annual Report on Form 10-K that are not historical fact are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are based on current expectations that involve a number of risks and uncertainties. These statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” or “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The Company wishes to caution the reader that its forward-looking statements that are not historical facts are only predictions. No assurances can be given that the future results indicated, whether expressed or implied, will be achieved. While sometimes presented with numerical specificity, these projections and other forward-looking statements are based upon 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 of assumptions underlying the Company’s projections and forward-looking statements, many of which are subject to significant uncertainties and contingencies that are beyond the reasonable control of the Company, some of the assumptions inevitably will not materialize, and unanticipated events and circumstances may occur subsequent to the date of this report. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information. Therefore, the actual experience of the Company and the results achieved during the period covered by any particular projections or forward-looking statements may differ substantially from those projected. Consequently, the inclusion of projections and other forward-looking statements should not be regarded as a representation by the Company or any other person that these estimates and projections will be realized. The Company’s actual results may vary materially. There can be no assurance that any of these expectations will be realized or that any of the forward-looking statements contained herein will prove to be accurate.

Item 1. Description of Business.

General

Tempco, Inc. is a Nevada corporation. We were originally incorporated in 1988 as Richard Barrie Fragrances, Inc., a Nevada Corporation. From March 1996 through February 2000, we operated under the name FBR Capital Corp. In February 2000 we changed our name to Vitrix, Inc. which we operated as until November, 2003, when we changed our name to Time America, Inc. In May 2007, we changed our name to NETtime Solutions, Inc. In February, 2008, in connection with the sale of substantially all of our operating assets, we changed the name of the Company from NetTime Solutions, Inc. to Tempco, Inc. and became a shell company. We have no business plan except to seek to acquire or merge with an operating company. Our sole assets are $114,779 in cash and prepaid expenses of $9,824.

Current Business Strategy

In February 2008 we sold all of our operating assets, and since that time the Company has had no ongoing operations. The Board has determined to maintain the Company as a public “shell” corporation, which will seek suitable business combination opportunities. The Board believes that a business combination with an operating company has the potential to create greater value for the Company’s stockholders than a liquidation or similar distribution.

Research and Development

We have not engaged in any material product research and development, nor do we anticipate having any in the next fiscal year.

Acquisitions of Plant and Equipment

We do not anticipate any material acquisitions of plant and equipment in the next fiscal year.

Employees

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

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Effect of Status as a “Shell” Company

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

Item 1A. Risk Factors

We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.

Item IB. Unresolved Staff Comments

Not applicable.

Item 2. Description of Property.

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

Item 3. Legal Proceedings.

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

Item 4. Removed and Reserved

PART II

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Common Stock

Our common stock is quoted on the Over-The-Counter Bulletin Board maintained by the NASD under the symbol “TEMO.OB.” The high and low bid prices of our common stock as reported for the periods presented, by fiscal quarter (i.e. 1^st Quarter = July 1 through September 30), were as follows. The quotations reflect inter-dealer prices, without retail markup, mark-down or commission and may not represent actual transactions.

	High		Low
Fiscal Year Ended:  June 30, 2009
First Quarter	$	0.15	$	0.07
Second Quarter		0.25		0.09
Third Quarter		0.30		0.09
Fourth Quarter		0.30		0.1
Fiscal Year Ended:  June 30, 2010
First Quarter	$	0.35	$	0.15
Second Quarter		0.30		0.07
Third Quarter		0.55		0.07
Fourth Quarter		0.33		0.15

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Holders

As of September 13, there were approximately 80 holders of record of our common stock. This does not include beneficial owners holding stock in street name.

Dividend Policy

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

Equity Compensation Plan Information

The following table sets forth information regarding the number of shares of our common stock that may be issued pursuant to our equity compensation plans or arrangements as of the end of fiscal 2010.

Plan Category	Number of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants and Rights			Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column)
Equity compensation plans approved by security holders		None  (1	)	$	—		600,000  (2	)
Equity compensation plans not approved by security holders		3,452,287  (3	)	$	0.40		—
TOTAL		3,452,287		$	0.40		600,000

(1)	Represents shares of common stock that may be issued pursuant to outstanding options granted under our 1999 Equity Compensation Plan.
(2)	Represents shares of common stock that may be issued pursuant to options available for future grant under our 1999 Equity Compensation Plan.
(3)	Represents (a) an aggregate of 2,572,287 shares of common stock underlying non-statutory stock options approved by the Company’s board of directors and granted to directors and employees of the Company (the “Options”). The options have vesting schedules ranging from immediate vesting to four year vesting and have an exercise price equal to the closing bid price of the common stock on the date of grant and a term of eight to ten years; and (b) an aggregate of 880,000 shares of common stock purchasable upon exercise of warrants issued to various parties in connection with debt and equity offerings and for services rendered by contractors.

Recent Sales of Unregistered Securities

Set forth below is information regarding securities sold by us within the past three fiscal years which were not registered under the Securities Act.

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

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In May 2010, we issued 100,000 shares of common stock for cash in relation to the exercise of a stock option. We received proceeds from the exercise of $9,000.

No underwriters were involved in the foregoing sales of securities. The securities described in the foregoing paragraphs were issued in reliance upon the exemption from the registration requirements of the Securities Act under Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder relating to sales by an issuer not involving any public offering. The purchasers of our securities represented to us in connection with their purchase that they were accredited investors and were acquiring the shares for investment and not distribution, that they could bear the risks of the investment and could hold the securities for an indefinite period of time. The purchasers received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to an effective registration statement or an available exemption from such registration requirement. We did not engage in any general solicitation or advertising in connection with the sales. Unless otherwise indicated, the proceeds from the private offering were used for general working capital needs.

Item 6. Selected Financial Data

We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.

Item 7. Management’s Discussion and Analysis and Plan of Operation.

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our results of operations and financial condition for the periods presented. The following selected financial information is derived from our historical consolidated financial statements and should be read in conjunction with such consolidated financial statements and notes thereto set forth elsewhere herein and the “Forward-Looking Statements” explanation included herein.

Plan of Operation

The Company’s current business objective is to locate suitable business combination opportunities. The Company does not currently engage in any business activities that provide cash flow. As of June 30, 2010, we have approximately $114,000 in cash and cash equivalents. We do not believe this will be sufficient to fund the costs of investigating and analyzing a suitable business combination or to fund general and administrative expenses for the next 12 months. We will have to seek additional funds in order to continue our operations for the next twelve months or until such time as we are able to complete a suitable business combination.

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

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

We believe we will be able to meet these costs through use of existing cash and cash equivalents or additional amounts, as necessary, to be loaned by or invested in us by our stockholders, management or other investors. However, no assurance can be given that we will be able to raise additional capital, when needed or at all, or that such capital, if available, will be on acceptable terms. In the absence of obtaining additional financing, the Company may be unable to fund its operations. Accordingly, the Company’s financial condition could require that the Company seek the protection of applicable reorganization laws in order to avoid or delay actions by third parties, which could materially adversely affect, interrupt or cause the cessation of the Company’s operations. As a result, the Company’s independent registered public accounting firm has issued going concern opinions on the consolidated financial statements of the Company for the fiscal years ended June 30, 2010 and 2009.

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Prior to consummating a business combination transaction, we do not anticipate:

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

Revenue

Since February 2008 we have been in the development stage, and accordingly, there are no revenues reflected in our financial statements for the years ended June 30, 2010 or 2009.

General and Administrative Expenses

For the years ended June 30, 2010 and 2009 we have recorded general and administrative expenses of $113,280 and $260,352, respectively. Our general and administrative expenses in the current year consist primarily of officer’s salaries, legal and accounting fees, and other costs associated with maintaining the company as a publicly traded entity. The decrease in the current year is due to a decrease in professional fees, and a decrease in stock-based compensation. There was no stock based compensation expense in the current year as the options which gave rise to the expense had been fully vested and recorded to expense during at June 30, 2009. From February 5, 2008 (the date of reentering the development stage) through June 30, 2010, we have recorded general and administrative expenses of $451,250.

Net Income

For the years ended June 30, 2010 and 2009, we have reflected net loss of $112,730 and $250,984, respectively. From February 5, 2008 (the date of reentering the development stage) through June 30, 2010, we have reflected net loss of $428,333.

Off-balance sheet arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 8. Financial Statements.

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

Reports of Independent Registered Public Accounting Firms	F-1
Consolidated Balance Sheet	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)	F-5
Consolidated Statements of Cash Flows	F-6
Notes to Consolidated Financial Statements	F-7

Item 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure.

None

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Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 as amended (the “Exchange Act”), as of the end of the period covered by thisAnnual Report on Form 10-K, the Company’s management evaluated, with the participation of the Company’s principal executive and financial officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act). Based on the evaluation of these disclosure controls and procedures, the Company’s chairman of the board and chief executive and financial officer has concluded that the disclosure controls and procedures were effective as of the date of such evaluation to ensure that material information relating to the Company, including its consolidated subsidiaries, was made known to them by others within those entities, particularly during the period in which thisAnnual Report on Form 10-Kwas being prepared.

Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles generally accepted in the United States of America.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting at June 30, 2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) inInternal Control—Integrated Framework. Based on that assessment under those criteria, management has determined that, at June 30, 2010, the Company’s internal control over financial reporting was effective.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting.

There have not been changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of fiscal 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

Subsequent Events

On July 29, 2010 the Company filed a Definitive Proxy Statement, whereby authorized capital of the Company would be increased to 500,000,000 shares of common stock. Additionally, the Board of Directors of the Company would be authorized to change the name of the Company, without further shareholder approval, as deemed necessary to better reflect the Company’s identity.

PART III

Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act.

Information regarding our directors and executive officer is provided below:

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STANLEY L. SCHLOZ, age 67, has been a Director, President and Treasurer since February 4, 2008. Mr. Schloz retired from Motorola in 1998 after a 32-year career in positions advancing from engineering through senior business management. As Director, Tactical Systems Operations of the Space and Systems Technology Group he was responsible for the strategic direction and performance of the electronic fuse business with over $150,000,000 in annual sales, serving US and foreign governments, along with prime contractors. His organization consisted of over 400 program management, engineering, marketing, and manufacturing associates. Mr. Schloz has been engaged in business management consulting since July 2000. He holds the degree of Bachelor of Science in Electrical Engineering from Iowa State University and has done advanced business studies at Arizona State University.

FRED BURSTEIN, age 74, has been a Director and Vice President of the company since February 4, 2008. Since 1960, Mr. Burstein has been a lawyer practicing law in Minneapolis, Minnesota.

ANTHONY SILVERMAN, age 67, became a Director on February 4, 2008 and resigned as a member of our Board of Directors effective September 30, 2009. He continues to assist and advise us in connection with our financing efforts, is the holder, together with his affiliates, of 1,882,640 shares of our common stock. Because of these continuing relationships Mr. Silverman may be considered to be an “affiliate” of the Company.

Mr. Silverman manages his personal investments. He was Founder, Chairman and CEO of Paradise Valley Securities, a registered securities broker-dealer, from 1987 to 1999. For most of his 30-year career in the securities business, Mr. Silverman concentrated in transactions for the financing of micro-cap and small-cap companies. Mr. Silverman has led financings aggregating over $500 million for close to 100 companies, including diverse industries such as airlines, food products, telecommunications, retail, media and life sciences.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

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

Based solely on its review of such forms received by us, or written representations from certain reporting persons, we believe that all Section 16(a) filing requirements applicable to our officers, directors and 10% shareholders were complied with during the fiscal year ended June 30, 2010.

Item 11. Executive Compensation.

The following table summarizes all compensation paid to our Chief Executive Officer for each of the fiscal years ended June 30, 2010 and 2009. We did not have any other executive officers whose total annual salary and bonus exceeded $100,000 for the periods presented.

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards ($)(1)
Stanley L. Schloz,		2010	$	18,000	$	—	$	—
Chief Executive and Financial Officer		2009	$	18,000	$	—	$	—

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SUMMARY COMPENSATION TABLE
(continued)

Name and		Option Awards		Nonequity incentive plan compensation		Non-qualified deferred compensation earnings		All other Compensation		Total
Principal Position	Year	($)(2)		($)		($)		($)		($)
Stanley L. Schloz,	2010	$	—							$	18,000
Chief Executive and Financial Officer	2009		24,342	$	—	$	—	$	—	$	42,342

(1)

Reflects the dollar amount recognized for financial statement reporting purposes in accordance with SFAS 123(R). Amounts are calculated using the closing stock price of each award on the date of grant.

(2)

Reflects dollar amount expensed by us during applicable fiscal years for financial statement reporting purposes pursuant to SFAS 123(R). SFAS 123(R) requires us to determine the overall value of the options as of the date of grant based upon the Black-Scholes method of valuation, and to then expense that value over the service period over which the options become exercisable (vest). See the assumptions made in the valuation of the stock options in the footnotes of our consolidated financial statements.

Item 12. Security Ownership Of Certain Beneficial Owners And Management and Related Stockholder Matters.

The following table sets forth certain information, as of September 13, 2010 concerning the beneficial ownership of shares of Common Stock of the Company by (i) each person known by the Company to beneficially own more than 5% of the Company’s Common Stock; (ii) each Director; (iii) the Company’s Chief Executive Officer; and (iv) all directors and executive officers of the Company as a group. To the knowledge of the Company, all persons listed in the table have sole voting and investment power with respect to their shares, except to the extent that authority is shared with their respective spouse under applicable law.

	Shares Beneficially Owned (1)
Name and Address of Beneficial Owner	Number		Percent of Class
Laurus Capital Management (2)(3)		1,081,923		9.4	%
Anthony Silverman (2)		1,886,640		16.4	%
Stanley L Schloz (2)(4)		698,139		6.1	%
Fred Burstein (2)(5)		719,304		6.3	%

(1)	A person is deemed to be the beneficial owner of securities that can be acquired within 60 days from the date set forth above through the exercise of any option, warrant or right. Shares of common stock subject to options, warrants or rights that are currently exercisable or exercisable within 60 days are deemed outstanding for computing the percentage of the person holding such options, warrants or rights, but are not deemed outstanding for computing the percentage of any other person. The amounts and percentages are based upon 11,490,016 shares of common stock outstanding as of September 13, 2010.
(2)	The address of each of the beneficial owners is as follows: Stanley L. Schloz, 10050 E. Sonoran Vista Circle, Scottsdale, Arizona 85255; Fred Burstein, 510 First Avenue North, Suite 600, Minneapolis, Minnesota 55403; Anthony Silverman, 7625 E. Via Del Reposo, Scottsdale, Arizona 85258; Laurus Capital Management, LLC, 825 Third Avenue, 14th Floor, New York, New York 10022.
(3)	Includes 630,000 shares of common stock underlying warrants that were exercisable on September 13, 2010 or within 60 days thereafter.

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(4)	Includes 500,000 shares of common stock underlying stock options that were exercisable on September 13, 2010, or within 60 days thereafter.
(5)	Includes 600,000 shares of common stock underlying stock options that were exercisable on September 13, 2010, or within 60 days thereafter.

Item 13. Certain Relationships And Related Transactions, and Director Independence.

Except as set forth below, the Company did not have any transactions during fiscal years 2010 and 2009 with any director, director nominee, executive officer, security holder known to the Company to own of record or beneficially more than 5% of the Company’s common stock, or any member of the immediate family of any of the foregoing persons, in which the amount involved exceeded $120,000.

Two of our directors receive monthly compensation in the amount of $1,500 per month for the services they provide to the Company.

A former director receives monthly compensation in the amount of $1,000 as consideration for rent.

A director exercised an option to purchase 100,000 shares of common stock of the company for $9,000.

Director Independence

Our directors, during the fiscal year ended June 30, 2010 were Stanley L. Schloz and Fred Burstein. Mr. Schloz is also our President and Chief Executive and Financial Officer and is therefore not considered independent. While the OTC Bulletin Board does not prescribe independence requirements for board members, the Company believes the remainder of its Board members are “independent” within the meaning of the listing standards of the NADAQ Stock Market.

“Independent director” means a person other than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The following persons shall not be considered independent:

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

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

(i)	compensation for board or board committee service;
(ii)	compensation paid to a Family Member who is an employee (other than an executive officer) of the company;
or
(iii)	benefits under a tax-qualified retirement plan, or non-discretionary compensation.

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

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

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

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

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(ii) payments under non-discretionary charitable contribution matching programs.

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

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

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

Item 14. Principal Accountant Fees and Services.

The following table sets forth fees billed to us by our auditors during the fiscal years ended June 30, 2010 and 2009 for: (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements, (ii) services by our auditors that are reasonably related to the performance of the audit or review of our financial statements and that are not reported as Audit Fees, (iii) services rendered in connection with tax compliance, tax advice and tax planning, and (iv) all other fees for services rendered. All other fees consist primarily of fees incurred to review our registration statement filings, proxy statements, and 8-K’s related to the asset sales.

		June 30, 2010		June 30, 2009
(i)	Audit Fees	$	10,000	$	15,000
(ii)	Audit Related Fees		—		—
(iii)	Tax Fees		—	$	2,500
(iv)	All Other Fees		—	$	8,490

Audit Committee Pre-Approval Policies and Procedures

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

All audit and non-audit services are pre-approved by the Audit Committee, which consists of the members of the board of directors which considers, among other things, the possible effect of the performance of such services on the auditors’ independence. The Audit Committee pre-approves the annual engagement of the principal independent registered public accounting firm, including the performance of the annual audit and quarterly reviews for the subsequent fiscal year, and pre-approves specific engagements for tax services performed by such firm. The Audit Committee has also established pre-approval policies and procedures for certain enumerated audit and audit related services performed pursuant to the annual engagement agreement, including such firm’s attendance at and participation at Board and committee meetings; services associated with SEC registration statements approved by the Board of Directors; review of periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings, such as comfort letters and consents; assistance in responding to any SEC comments letters; and consultations with such firm as to the accounting or disclosure treatment of transactions or events and the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, Public Company Accounting Oversight Board (PCAOB), Financial Accounting Standards Board (FASB), or other regulatory or standard-setting bodies. The Audit Committee is informed of each service performed pursuant to its pre-approval policies and procedures. The Audit Committee has considered the role of Seale and Beers CPAs in providing services to us for the fiscal years ended June 30, 2010 and 2009 and has concluded that such services are compatible with such firm’s independence.

Item 15. Exhibits.

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

10

SIGNATURES

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

	TEMPCO, INC.
	/s/ Stanley L. Schloz,
	Stanley L. Schloz, President and Chief Executive and Financial Officer
	(Principal Executive Officer)
Dated: October 13, 2010

          In accordance with the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signatures	Title	Date
/s/ Stanley L. Schloz	President, CEO, CFO and Director	October 13, 2010
Stanley L. Schloz	(Principal Executive and Financial Officer)
/s/ Fred Burstein	Director	October 13, 2010
Fred Burstein

11

EXHIBIT INDEX

Exhibit Number	Description	By Reference from Document	No. In Document
3.1	Registrant’s Articles of Incorporation	A	3.1
3.1.1	Registrant’s Amendment to its Articles of Incorporation, dated November 7, 1988	A	3.1.1
3.1.2	Registrant’s Amendment to its Articles of Incorporation, dated June25, 1991	B	3.1.2
3.1.3	Registrant’s Certificate of Reverse Stock Split, dated February 15, 1994	C	3.1.3
3.1.4	Registrant’s Certificate of Designation of Series A Preferred Stock, dated June 27, 1996	D	3.1.4
3.1.5	Registrant’s Amendment to Articles of Incorporation, dated June 25, 1996	D	3.1.5
3.1.6	Registrant’s Certificate of Designation of Series B Preferred Stock, dated March 31, 1999	E	3.1.6
3.1.7	Registrant’s Amendment to Articles of Incorporation, dated October 7, 1999.	F	3.1
3.1.8	Certificate of Correction to Certificate of Amendment to Articles of Incorporation of Vitrix, Inc., dated June 16, 2005	H	3.1.8
3.1.9	Registrant’s Amendment to Articles of Incorporation, dated April 20, 2007	J	3.1
3.1.10	Registrant’s Amendment to Articles of Incorporation, dated February4, 2008	L	99.1
3.1.11	Registrant’s Amendment to Articles of Incorporation, dated June __,2009	*	—
3.2	Amended Bylaws of the Registrant	C	3.2
4.1	Registrant’s Form of Common Stock Certificate	A	4.1
10.1	1999 Equity Compensation Plan	E	10.7
10.2	Registration Rights Agreement, dated March 22, 2004, among Time America, Inc. and Laurus Master Fund, Ltd.	G	10.6
10.3	Common Stock Purchase Warrant, dated January 3, 2006, issued to Laurus Master Fund, Ltd.	I	10.4
10.4	Registration Rights Agreement, dated January 3, 2006, between Time America, Inc., a Nevada corporation, and Laurus Master Fund, Ltd.	I	10.5

12

Exhibit Number	Description	By Reference from Document	No. In Document
10.5	Asset Purchase Agreement, dated February 4, 2008, between NETtime Solutions, Inc. (Nevada) and NETtime Solutions, LLC(Arizona)	K	99
22	Matter submitted to vote of securities holders	M	—
31	Certification pursuant to Rules 13a-14(a) and 15d-14(a)(5) of the Securities Exchange Act of 1934	*	—
32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	*	—

*	Filed herewith.
A.	Form S-18 Registration Statement No. 33-25704-NY.
B.	Form 10-K Annual Report of the Registrant for the fiscal year ended June 30, 1991.
C.	Form 10-KSB Annual Report of the Registrant for the fiscal year ended June 30, 1994.
D.	Form 8-K Current Report reporting event on June 28, 1996.
E.	Form 10-KSB Annual Report of the Registrant for the fiscal year ended June 30, 1999.
F.	Form 10-QSB Quarterly Report of the Registrant for the fiscal quarter ended September 30, 1999.
G.	Form 8-K Current Report reporting event on March 22, 2004.
H.	Form 10-KSB Annual Report of the Registrant for the fiscal year ended June 30, 2005.
2I.	Form 10-QSB Quarterly Report of the Registrant for the quarter ended December 31, 2005.
J.	Form 8-K Current Report reporting event on May 10, 2007.
K.	Form 8-K Current Report reporting event on February 8, 2008
L.	Form 8-K/A Current Report reporting event on February 15, 2008
M.	Form DEF-14A Other Definitive Proxy Statement

13

TEMPCO, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS FOR THE
YEARS ENDED JUNE 30, 2010 AND 2009

SEALE AND BEERS, CPAs

PCAOB & CPAB REGISTERED AUDITORS

www.sealebeers.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Tempco, Inc.

(A Development Stage Company)

We have audited the accompanying consolidated balance sheets of Tempco, Inc. (A Development Stage Company) as of June 30, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the years ended June 30, 2010 and 2009, and since reentering development stage on February 5, 2008 through June 30, 2010. These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.  

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tempco, Inc. (A Development Stage Company) as of June 30, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the years ended June 30, 2010 and 2009, and since reentering development stage on February 5, 2008 through June 30, 2010, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 7 to the consolidated financial statements, the Company does not engage in any business activities that provide cash flow and has accumulated a total deficit of $11,589,162, which raises substantial doubt about its ability to continue as a going concern.  Management’s plans concerning these matters are also described in Note 7.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Seale and Beers, CPAs

Seale and Beers, CPAs

Las Vegas, Nevada

October 11, 2010

50 S. Jones Blvd. Suite 202 Las Vegas, NV 89107 Phone: (888)727-8251 Fax: (888)782-2351

F-1

TEMPCO, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS

ASSETS	June 30, 2010			June 30, 2009
Current assets:
Cash and cash equivalents	$	114,779		$	213,943
Prepaid expenses		9,824			10,355
Total current assets		124,603			224,298
Total assets	$	124,603		$	224,298
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	3,638		$	—
Accrued liabilities		397			—
Total current liabilities		4,035			—
Commitments and Contingencies:		—			—
Stockholders’ equity (deficit):
Common stock, $.005 par value 50,000,000 authorized; 11,490,016 and 11,390,881 shares outstanding, net of nil and 6,478,693 treasury shares		89,845			89,349
Additional paid in capital		11,619,885			12,453,732
Accumulated deficit prior to reentering the development stage		(11,160,829	)		(11,160,829	)
Deficit accumulated in the development stage		(428,333	)		(315,603	)
Treasury stock, at cost (6,478,693 shares)		—			(842,351	)
Total stockholders’ equity (deficit)		120,568			224,298
Total liabilities and stockholders’ equity (deficit)	$	124,603		$	224,298

The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements

F-2

TEMPCO, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS

							Cumulative Since
	Year Ended						Reentering
	June 30,						Development Stage on
	2010			2009			February 5, 2008
Costs and expenses
General and administrative	$	77,280		$	175,668		$	293,930
Directors fees		36,000			84,684			157,320
Operating loss		(113,280	)		(260,352	)		(451,250	)
Other income (expense)
Interest expense		—			(219	)		(424	)
Interest income		600			9,637			23,441
Total other income		600			9,418			23,017
Net loss from continuing operations		(112,680	)		(250,934	)		(428,233	)
Provision for income taxes		50			50			100
Net loss	$	(112,730	)	$	(250,984	)	$	(428,333	)
Basic and diluted net loss per common share:	$	(0.01	)	$	(0.02	)
Basic and diluted weighted average common shares outstanding		11,418,124			11,403,654

The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements

F-3

TEMPCO, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS STOCKHOLDERS’ EQUITY (DEFICIT)

	Common Stock						Treasury Stock						Additional Paid in			Accumulated Deficit Prior to rentering Development			Deficit Accumulated Since Reentering the Development Stage on February 5,
	Shares			Amount			Shares			Amount			Capital			Stage			2008			Total
Balance at June 30, 2007		15,030,481			75,153			—			—			9,889,188			(11,799,579	)		—			(1,835,238	)
Stock based compensation		—			—			—			—			62,347			—			—			62,347
Reclassification of restricted shares to equity		351,923			1,760			—			—			205,875			—			—			207,635
Shares surrendered in relation to Asset Sale		—			—			(6,478,693	)		(842,351	)		—			—			—			(842,351	)
Contributed capital adjustment related to Asset Sale		—			—			—			—			2,022,904			—			—			2,022,904
Sale of common stock in April 2008 Private Placement at $.10 per share, net of fees		2,500,000			12,500			—			—			212,500			—			—			225,000
Net income (loss)		—			—			—			—			—			638,750			(64,619	)		574,131
Balance at June 30, 2008		17,882,404			89,413			(6,478,693	)		(842,351	)		12,392,814			(11,160,829	)		(64,619	)		414,428
Stock based compensation		—			—			—			—			60,854			—			—			60,854
Shares surrendered		(12,830	)		(64	)		—			—			64			—			—			—
Net loss		—			—			—			—			—			—			(250,984	)		(250,984	)
Balance at June 30, 2009		17,869,574			89,349			(6,478,693	)		(842,351	)		12,453,732			(11,160,829	)		(315,603	)		224,298
Shares issued for option exercise		100,000			500			—			—			8,500			—			—			9,000
Correction of shares outstanding		(865	)		(4	)		—			—			4			—			—			—
Cancellation of Treasury Shares		(6,478,693	)		—			6,478,693			842,351			(842,351	)		—			—			—
Net loss		—			—			—			—			—			—			(112,730	)		(112,730	)
Balance at June 30, 2010		11,490,016		$	89,845			—			—		$	11,619,885		$	(11,160,829	)	$	(428,333	)	$	120,568

The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements

F-4

TEMPCO, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended June 30,						Cumulative Since Reentering the Development Stage on
	2009			2009			February 5, 2008
Operating activities
Net loss	$	(112,730	)	$	(250,984	)		(428,333	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Loss on settlement of notes receivable		—			69,750			69,750
Accrued interest receivable		—			(14,750	)		(14,750	)
Stock based compensation		—			60,854			87,900
Changes in Assets and Liabilities:
Prepaid expenses		531			(796	)		(22,823	)
Accrued interest receivable		—			7,250			—
Accounts payable		3,638			(9,224	)		3,638
Accrued liabilities		397			—			397
Net cash used by operating activities		(108,164	)		(137,900	)		(304,221	)
Investing activities
Collection of note receivable		—			145,000			145,000
Net cash provided by investing activities		—			145,000			145,000
Financing activities:
Repayment of debt		—			(5,435	)		—
Proceeds from sale of common stock		—			—			225,000
Proceeds from exercise of options and warrants		9,000			—			9,000
Net cash provided (used) by financing activities		9,000			(5,435	)		234,000
Net change in cash and cash equivalents		(99,164	)		1,665			74,779
Cash and cash equivalents at beginning of period		213,943			212,278			40,000
Cash and cash equivalents at end of year	$	114,779		$	213,943		$	114,779
Supplemental disclosures:
Cash paid for income taxes	$	50		$	50		$	50
Cash paid for interest	$	—		$	219		$	424
Non-cash investing and financing activities	$	—		$	—		$	—

The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements

F-5

TEMPCO, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

Tempco, Inc. was incorporated in Nevada in June 1988 as Richard Barrie Fragrances, Inc. Over the years, the Company changed its name several times, most NETtime Solutions, Inc. in January 2007 to Tempco, Inc. on February 4, 2008 to Tempco, Inc. The consolidated financial statements include the accounts of Tempco, Inc. and its wholly-owned subsidiaries (collectively, the “Company”), NETtime Solutions, Inc. an Arizona corporation, and Net Edge Devices, LLC, an Arizona Limited Liability Company. All intercompany accounts and transactions have been eliminated in consolidation.

As Time America, Inc. and NETtime Solutions, Inc. the Company operated as a time and attendance software company. In February, 2008 the time attendance software business was sold (“the 2008 Asset Sale”), and the Company is currently researching other business opportunities. Due to the 2008 Asset Sale, the Company has reentered the development stage and following this sale, the Company has limited operations and therefore the Company is considered a development stage company. The Company intends to locate and combine with an existing company that is profitable or which, in management’s view, has growth potential, irrespective of the industry in which it is engaged. A combination may be structured as a merger, consolidation, exchange of the Company’s common stock for stock or assets or any other form.

Pending negotiation and consummation of a combination the Company anticipates that it will have, aside from carrying on its search for a combination partner, no business activities, and, thus, will have no source of revenue. The Company believes that the cash on hand at June 30, 2010 is not sufficient to fund its operations until the earlier of a combination or a period of one year. If necessary to continue as a going concern, pending consummation of a transaction, the Company intends to either seek additional equity or debt financing. No assurances can be given that such equity or debt financing will be available, nor can there be any assurance that a combination transaction will be consummated. Should the Company be required to incur any significant liabilities prior to a combination transaction, including those associated with the current minimal level of general and administrative expenses, it may not be able to satisfy those liabilities in the event it was unable to obtain additional equity or debt financing.

Reclassifications

Certain prior year balances have been reclassified to conform with current year presentation. These changes have no effect on previously reported net loss.

Note 2 – Summary of Significant Accounting Policies

Principles of Consolidation:

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

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts or revenues and expenses during the period. Actual results could differ from those estimates. Significant estimates include deferred income taxes and fair value of stock-based compensation. It is at least reasonably possible a material change in these estimates may occur in the near term.

Advertising Expense

Advertising costs are expensed when incurred. For the years ended June 30, 2010 and June 30, 2009 we did not incur any advertising costs.

F-6

TEMPCO, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Cash and Cash Equivalents:

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

Concentration of Credit Risk

The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with one financial institution. At times, such balances may be in excess of any insured limits.

Deferred Income Taxes

Deferred income taxes are provided on an asset and liability method, whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, there is uncertainty of the utilization of these assets in future periods. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Income (Loss) Per Share:

Diluted income (loss) per share is computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Potentially dilutive securities are options and warrants that are exercisable into common stock. Dilutive securities are not included in the weighted average number of shares when inclusion would increase the income per share or decrease the loss per share. At June 30, 2010 and 2009, there were options and warrants outstanding to purchase 3,572,287 and 3,692,944, respectively, shares of the Company’s common stock. At June 30, 2010 and 2009, there were no potentially dilutive securities included in the calculation as their effect was anti-dilutive.

Recent Accounting Pronouncements

The Company has implemented all new relevant accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Revenue Recognition

Revenue is recognized when title and risk of loss has been transferred to customer and collectability is reasonably assured. At June 30, 2010 and 2009 we did not have any revenues.

Note 3 – Income Taxes

As of June 30, 2010 and 2009 deferred tax assets consist of the following:

	2010			2009
Federal loss carryforwards	$	2,409,000		$	2,373,000
State loss carryforwards		183,000			271,000
Other		21,000			21,000
		2,613,000			2,665,000
Less: valuation allowances		(2,613,000	)		(2,665,000	)
	$	—		$	—

F-7

TEMPCO, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

As a result of stock ownership changes, the Company’s ability to utilize net operating losses in the future could be limited, in whole or part, under Internal Revenue Code Section 382. The Company was treated as an S-Corporation for income tax purposes through May 13, 1997. As of June 30, 2010 the Company’s federal and state net operating loss carryforwards were approximately $7,527,000 and $2,283,600, respectively, and expire through 2030 as follows:

Expiration June 30,		Federal Net Operating Loss Carryforwards		Expiration June 30,		State Net Operating Loss Carryforwards
	2021	$	1,920,274		2011	$	1,919,918
	2022		687,018		2014		250,984
	2023		179,972		2015		112,730
	2024		1,135,796
	2025		1,335,057
	2026		1,905,260
	2029		250,984
	2030		112,730
		$	7,527,091			$	2,283,632

The Company’s tax expense differed from the statutory rate primarily due to the $36,000 change in the deferred tax asset valuation allowance.

Note 4 – Stockholders’ Equity

The Company has 50,000,000 shares of Common Stock authorized, of which 11,490,811 shares are issued and outstanding. There are also authorized 10,000,000 shares of preferred stock, none of which are issued and outstanding.

The Company cancelled 6,478,693 shares of common stock which had previously been classified as treasury shares.

Stock Options:

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

During fiscal year 2008, the Company issued options to purchase 1,500,000 shares of its common stock for services and Director’s fees. The options vested over a period of 13 months. Included in Directors expense at June 30, 2009 was $48,684 related to the aforementioned options.

F-8

TEMPCO, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The fair value of option grants is estimated as of the date of grant utilizing the Black-Scholes option-pricing model. There have not been any stock options issued since the fiscal year ended June 2008. The assumptions used at the time of the most recent issuances were as follows:

Expected volatility	106	%
Risk-free interest rate	2	%
Expected dividends	0	%
Expected lives (in years)	3

The weighted average fair value at date of grant for options granted during the year ended June 30, 2008 approximated $.06.

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

	Number of Options			Weighted Average Exercise Price
Outstanding at June 30, 2009		2,692,287		$	1.07
Granted		—			—
Exercised		(100,000	)		0.09
Expired		(20,000	)		2.20
Forfeited		—			—
Outstanding at June 30, 2010		2,572,287		$	0.29

During the year ended June 30, 2010, the Company received proceeds of $9,000 from the exercise of an option.

Additional information about outstanding options to purchase the Company’s common stock as of June 30, 2010 is as follows:

		Options Outstanding								Options Exercisable
Exercise Price		Number of Shares		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Aggregate Intrinsic Value		Number of Shares		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Aggregate Intrinsic Value
$	0.91-$0.60		514,520		3.43	$	0.76	$	—		514,520		5.43	$	0.76	$	—
$	0.51-$0.40		385,000		4.71	$	0.46	$	—		385,000		4.71	$	0.46	$	—
$	0.32-$0.30		120,000		2.32	$	0.31	$	—		120,000		2.32	$	0.31	$	—
$	0.16-$0.13		152,767		7.04	$	0.15	$	22,370		152,767		7.04	$	0.15	$	22,370
$	0.09		1,400,000		5.66	$	0.09	$	294,000		1,400,000		5.66	$	0.09	$	294,000
			2,572,287								2,572,287

During the year ended June 30, 2010 the Company did not recognize compensation as all stock options under the Plan had previously vested.

F-9

TEMPCO, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Non-Employee Stock Options and Warrants:

As of June 30, 2010 the Company has warrants outstanding that were issued primarily in connections with prior financing arrangements. Activity relative to these warrants for the year ended June 30, 2010 is as follows:

	Number of Shares		Weighted Average Exercise Price
Warrants outstanding - beginning of year		880,000	$	0.72
Granted		—		—
Expired		—		—
Warrants outstanding - end of year		880,000

All the warrants outstanding as of June 30, 2010 are exercisable and have weighted average remaining life of 1.89 years.

Note 5 – Related Party Transactions

The Company leases office space from a related party in Scottsdale, Arizona on a month to month basis. Monthly rent expense on the lease is $1,000. For the years ended June 30, 2010 and 2009, rent expense was $12,000 per year in relation to the related party lease.

The Company has agreements with its two Directors whereby they receive compensation in the amount of $1,500 per month. For the years ended June 30, 2010 and 2009, the Company has recognized directors fee expense in the amounts of $36,000 and $84,684, respectively. The expense for the year ended June 30, 2009 included $48,684 of stock based compensation expense related to stock options issued during fiscal 2008.

Note 6 – Prepaid Expenses

Prepaid expenses at June 30, 2010 and 2009 represent the unamortized balance of an insurance policy.

Note 7 – Going Concern

At June 30, 2010 the Company does not engage in any business activities that provide cash flow. As of June 30, 2010, we have approximately $114,700 in cash and cash equivalents. We do not believe this will be sufficient to fund the costs of investigating and analyzing a suitable business combination or to fund general and administrative expenses for the next 12 months. We will have to seek additional funds. No assurance can be given that we will be able to raise additional capital, when needed or at all, or that such capital, if available, will be on acceptable terms. The financial statements do not contain any adjustments that might result from these uncertainties.

Note 8 – Subsequent Events

We have adopted authoritative guidance related to “Subsequent Events” and have evaluated for disclosure subsequent events that have occurred after June 30, 2010.

The Company filed a Proxy Statement with the Securities and Exchange Commission on July 29, 2010. Pending shareholder approval, the Company’s authorized capital would be increased from 50,000,000 shares of common stock to 200,000,000. Additionally, the Board of Directors would be authorized to change the name of the Company from Tempco, Inc. to another name they determined would better reflect the identity of the Company.

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