U.S. Securities and Exchange Commission
Washington, D.C. 20549
 
 
FORM 10-Q
 
 
[X]
Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 for the Quarterly Period Ended June 30, 2008

[  ]
Transition Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 for the Transition Period from _______ to _______
 
Commission file number 333-142429
 
 
INFORMATION SYSTEMS ASSOCIATES, INC.
 (Exact name of small business issuer as specified in its charter)
 
 
FLORIDA
65-0493217
(State or other jurisdiction of
(IRS Employer Identification No.)
incorporation or organization)
  
 
2120 SW Danforth Circle, Palm City FL 34990 
(Address of principal executive offices)

(772) 286-3682
(Issuer's telephone number)
 
   
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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.Yes [x]No [ ]

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the exchange act). Yes [ ] No [X]

Number of shares of common stock outstanding as of August 19, 2008:     11,803,834
 
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 definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer 
¨ 
Non-accelerated filer 
¨ (Do not check if a smaller reporting company) 
Accelerated filer 
¨
Smaller reporting company 
þ
 
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
 
    The discussion contained in this 10-Q under the Securities Exchange Act of 1934, as amended, contains forward-looking statements that involve risks and uncertainties. The issuer's actual results could differ significantly from those discussed herein. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the Company believes," "management believes" and similar language, including those set forth in the discussions under "Notes to Financial Statements" and "Management's Discussion and Analysis or Plan of Operation" as well as those discussed elsewhere in this Form 10-Q. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. Statements contained in this Form 10-Q that are not historical facts are forward-looking statements that are subject to the "safe harbor" created by the Private Securities Litigation Reform Act of 1995.
 
 
1
 
 
   
PART I. FINANCIAL INFORMATION
  
   
ITEM 1. FINANCIAL STATEMENTS
3
   
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
8
   
ITEM 3. QUANITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
15
   
ITEM 4. CONTROLS AND PROCEDURES
15
   
PART II. OTHER INFORMATION
  
   
ITEM 1. LEGAL PROCEEDINGS
15
   
ITEM 1A. RISK FACTORS
      15
   
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
15
   
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
15
   
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
15
   
ITEM 5. OTHER INFORMATION
15
   
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
15
   
SIGNATURES
16
   
INDEX TO EXHIBITS
17
 
2
 
ITEM 1.  FINANCIAL STATEMENTS
 
 INFORMATION SYSTEMS ASSOCIATES, INC.
                   
                   
                   
  TABLE OF CONTENTS
                   
                   
                   
                   
                   
FINANCIAL STATEMENTS
        
                   
 
Balance Sheet.........................................................................................................................................................................................................
4
                   
 
Statements of Operations.........................................................................................................................................................................................
5
                   
 
Statements of Cash Flows.......................................................................................................................................................................................
6
                   
 
Notes to the Financial Statements.............................................................................................................................................................................
7
 
3
 
INFORMATION SYSTEMS ASSOCIATES, INC.
BALANCE SHEETS
 
June 30, 2008 and December 31, 2007
             
             
             
   
 June 30,
2008
    
 December 31, 2007
  
   
Unaudited
    
Audited
  
ASSETS
            
             
CURRENT ASSETS
            
Cash and cash equivalent
   $ 108,859     $ 13,326  
Accounts receivable
     100,291       114,175  
  Prepaid Consulting
     -        1,798  
Income tax claims receivable
     637       637  
Deferred income tax credit
     32,739       37,154  
Total current assets
     242,526       167,090  
                 
PROPERTY AND EQUIPMENT (net)
     77,558       139,360  
                 
    $ 320,084     $ 306,450  
                 
                                                                              LIABILITIES AND STOCKHOLDERS' EQUITY          
                 
CURRENT LIABILITIES
                
Note payable - line of credit
   $ 31,524     $ 9,030  
Accounts payable
     56,087       88,066  
Accrued payroll taxes
     6,965       2,476  
Other liabilities
     1,700       1,100  
Total current liabilities
     96,276       100,672  
                 
STOCKHOLDERS' EQUITY
                
Common stock - $.001 par value, 50,000,000 shares
                
authorized, 11,403,834 shares issued and outstanding
     11,404       11,404  
Additional paid in capital
     366,097       366,097  
Retained earnings (deficit)
     (153,693 )     (171,723 )
Total stockholders' equity
     223,808       205,778  
                 
    $ 320,084     $ 306,450  
                 
                 
 
4
 
INFORMATION SYSTEMS ASSOCIATES, INC.
  
STATEMENTS OF OPERATIONS
  
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007
  
   
Unaudited
  
                         
                         
   
For the Three Months end June 30,
    
For the Six Months Ended June 30,
  
   
2008
    
2007
    
2008
    
2007
  
                         
EARNED REVENUES
   $ 473,023     $ 95,732     $ 729,288     $ 151,950  
COST OF GOODS SOLD
     26,524       0       26,524       0  
GROSS PROFIT FROM OPERATIONS
     446,499       95,732       702,764       151,950  
                                 
OPERATING EXPENSES
                                
Administrative and general
     155,730       40,133       248,172       66,430  
Payroll and payroll tax
     42,196       17,602       77,819       31,943  
Professional
     228,828       55,214       350,030       90,219  
Total operating expenses
     426,754       112,949       676,021       188,592  
                                 
OPERATING INCOME (LOSS)
     19,745       (17,217 )     26,743       (36,642 )
                                 
OTHER INCOME (EXPENSE)
                                
Consulting - financing
     (2,500 )     (5,176 )     (4,298 )     (15,052 )
                                 
INCOME (LOSS)  FROM CONTINUING OPERATIONS
                                
BEFORE INCOME TAX (CREDIT)
     17,245       (22,393 )     22,445       (51,694 )
                                 
PROVISION FOR INCOME TAX  (CREDIT)
     3,390       (4,325 )     4,415       (9,970 )
                                 
NET INCOME (LOSS)  FROM  CONTINUING OPERATIONS
     13,855       (18,068 )     18,030       (41,724 )
                                 
DISCONTINUED OPERATIONS
                                
                                 
INCOME (LOSS) FROM OPERATIONS OF DISCONTINUED
                                
BUSINESS BEFORE INCOME TAX (CREDIT)
     0       (9,501 )     0       (9,501 )
                                 
PROVISION FOR INCOME TAX (CREDIT)
     0       (9,501 )     0       (1,830 )
                                 
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS
     0       0       0       (7,671 )
                                 
NET INCOME (LOSS)
   $ 13,855     $ (18,068 )   $ 18,030     $ (49,395 )
                                 
BASICALLY AND FULLY DILUTED  INCOME (LOSS) PER SHARE
                                
CONTINUING OPERATIONS
   $ 0     $ (0 )   $ 0     $ (0 )
DISCONTINUED OPERATIONS
   $ 0     $ 0     $ 0     $ (0 )
TOTAL OPERATIONS
   $ 0     $ (0 )   $ 0     $ (0 )
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING
     11,403,834       11,403,834       11,403,834       11,403,834  
                                 
                                 
 
 
5
 
INFORMATION SYSTEMS ASSOCIATES, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 
Unaudited
                         
                         
                         
               
2008
      
2007
CASH FLOWS FROM OPERATING ACTIVITIES
              
 
Net income (loss)
      
$18,030
      
($49,395)
 
Adjustments to reconcile net income (loss) to cash
              
   
provided (used) by operating activities
              
     
Depreciation and amortization
    
21,632
      
959
     
Cumulative change in deferred income tax
    
4,415
      
(11,800)
     
(Increase) decrease in accounts receivable
    
13,884
      
(10,698)
     
(Increase) decrease in prepaid consulting
    
1,798
      
15,052
     
Increase (decrease) in accounts payable
    
(31,979)
      
9,813
     
Increase (decrease) in accrued payroll
    
0
      
(6,041)
     
Increase (decrease) in accrued payroll taxes
    
4,489
      
2,038
     
Increase (decrease) in other liabilities
    
600
      
600
       
Net cash provided (used) by operating activities
    
32,869
      
(49,472)
                         
CASH FLOWS FROM INVESTING ACTIVITIES
              
 
Computer software development costs
    
0
      
(59,211)
 
Software license agreement - payments received
    
67,708
      
0
 
Software license agreement - marketing costs
    
(18,041)
      
0
 
Purchase of property and equipment
    
(9,497)
      
0
       
Net cash provided (used) by investing activities
    
40,170
      
(59,211)
                         
CASH FLOWS FROM FINANCING ACTIVITIES
              
 
Proceeds from note payable - line of credit
    
29,494
      
0
 
Payments made on note payable - line of credit
    
(7,000)
      
0
       
Net cash provided (used) by financing activities
    
22,494
      
0
                         
NET INCREASE (DECREASE) IN CASH
    
95,533
      
(108,683)
CASH, BEGINNING OF PERIOD
    
13,326
      
178,775
CASH, END OF PERIOD
    
$108,859
      
$70,092
                         
                         
 
6
 
INFORMATION SYSTEMS ASSOCIATES, INC.
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008 and 2007
                     
                     
Note 1 - Statement of Significant Accounting Policies
        
                     
 
Business Activity
            
                     
 
Information Systems Associates, Inc. (Company) was incorporated under the laws of the state of Florida on May 31, 1994. The Company provides services and software system design for the planning and implementation of Computer Aided Facilities Management (CAFM) based asset management tools. The Company also provided services through its insurance sales business (discontinued as of March 31, 2007).
                     
 
Recent Accounting Pronouncements
          
                     
 
In May 2008, the FASB released SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles".   SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States of America. SFAS No. 162 will be effective 60 days following the SEC's approval of the PCAOB amendments to AU Section 411, "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles".  The Company does not believe SFAS No. 162 will have a significant impact on the Company’s financial statements.
 
 
      
                     
Note 2- Cash and Cash Equivalent
          
               
2008
2007
  
   
Wachovia Bank (FDIC insured to $100,000.00)
  
$108,859
$70,092
  
                     
Note 3 - Property and Equipment
          
               
2008
2007
  
                     
 
Computer software (developed for internal use)
  
$88,121
$103,274
  
 
Computer software (purchased)
    
1,307
1,307
  
 
Furniture, fixtures, and equipment
    
34,197
16,750
  
               
123,625
121,331
  
 
Less accumulated depreciation and amortization
  
46,067
11,881
  
               
$77,558
$109,450
  
                     
 
Depreciation and amortization expense
    
$21,632
$959
  
                     
Note 4 - Computer Software Developed for Internal Use
        
                     
 
During the year ended December 31, 2007, the Company completed the development of the of the internal-use software, "On Site Physical Inventory" (OSPI). The OSPI software was developed to be used by the Company for collecting data for information technology assets installed in data centers. The Company began using the OSPI software in October 2007 while providing consultation services for managing the physical
infrastructure of data centers.
                     
 
After implementing the use of the OSPI software,  the Company decided to market the software and  entered into a software license agreement with Aperture Technologies, Inc.
                     
 
The Company has capitalized the cost of the OSPI software using Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" as follows:
 
 
          
               
2008
2007
  
 
Development costs
    
$139,900
$103,274
  
 
Software license agreement - payments received
  
(81,250)
0
  
 
Software license agreement - marketing costs
    
29,471
0
  
               
88,121
103,274
  
 
Less accumulated depreciation and amortization
  
31,331
0
  
               
$56,790
$103,274
  
                     
Note 5 - Income Taxes
          
               
2008
2007
  
 
Provision for income tax (credit) consists of:
          
   
Current accrual
    
$0
$0
  
   
Cumulative change in deferred income tax
  
1,025
(11,800)
  
               
$1,025
($11,800)
  
                     
 
Income tax receivable consists of the following:
          
   
Federal claim for refund
    
$637
    
                     
 
The Company had the following net operating loss carryovers
      
 
for income tax purposes:
          
     
Expiring 2020
    
$204
    
     
Expiring 2021
    
82,899
    
     
Expiring 2022
    
133,233
    
               
$216,336
    
                     
Note 6 - Supplemental Cash Flow Information
          
                     
 
Supplemental disclosures of cash flow information for the periods ended June 30, 2008 and
  
 
2007 is summarized as follows:
          
               
2008
2007
  
 
Cash paid during the periods for interest and income taxes:
      
   
Income taxes
    
$0
$0
  
   
Interest
        
$493
$895
  
                     
                     
Note 7 - Operating Lease
          
                     
 
The Company leases its Palm City Florida facility.  The lease requires monthly payments of $1,400.   The lease commenced on June 1, 2007 and expires on May 31, 2008. The renewed the lease on June 1, 2008 for $1,500 per month
                     
 
The following is a schedule of the lease payments by year under the lease:
    
                     
 
2008
    
10,500
 
          
 
2009
    
7,500
 
          
                     
Note 8 -  Note Payable
          
                     
 
The Company has a line of credit with Wachovia Bank NA.  The line of credit provides for borrowing up to $40,000.  The balance as of June 30, 2008 is $31,524.  The interest rate is Prime Rate plus 3%.  The President is a personal guaranty on the line of credit.
                     
Note 9 - Subsequent Event
          
 
On July, 15, 2008, Information Systems Associates, Inc. (the “Company”) received a subscription in the amount of $100,000 for 400,000 shares of the Company’s common stock from Derek J. Leach (“Leach”) pursuant to an Offshore Stock Purchase Agreement Under terms of the agreement the company will issue 2,000,000 shares at .25 per share for a total proceeds of $400,000 over a period of five months
 
7
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

As used herein the terms "we", "us", "our," the “Registrant,” “ISA” and the "Company" means, Information Systems Associates, Inc., a Florida corporation.

GENERAL DESCRIPTION OF BUSINESS

BUSINESS OVERVIEW
 
We have been in business since May of 1994. During the first twelve (12) years of operation, the primary focus of the business was to offer for sale through ISA’s Value Added Reseller Agreements in place in several of the industry leaders, software products and services that allow companies to track and manage assets, primarily in the realm of corporate real estate and corporate IT network infrastructure including equipment maintain in corporate data centers. We refer to our product and services suite as asset management solutions. Our solutions can reduce sourcing, procurement and tracking costs, improve tracking and monitoring of asset performance and reduce operational downtime.
 
Initially, we were a Business Partner (a/k/a Value Added Reseller) with Aperture Technologies, Inc. of Stamford, CT.  (It should be noted that the term “Business Partner” is somewhat misleading because in reality we are simply a subcontractor for Aperture.  We invite you to examine our contract with Aperture setting forth this subcontracting relationship; it has been attached as Exhibit 10.8.) At that time, Aperture’s Network Management tools (“System”), was one of the leading solutions in its field. For more than five years, Aperture Technologies, Inc. has provided enterprise asset management solutions to customers in the United States, Europe and Asia and Pacific Rim. During this same timeframe, we have offered Aperture’s enterprise asset management solutions to customers and prospects in North America.

The typical Value Added Reseller Agreement allows the vendor’s partner/subcontractor (in this case ISA) the ability to offer to its client’s and prospects a Commercial Off The Shelf  software solution to address a particular business problem. The primary focus of ISAs business is working data center operations, network management department and corporate real estate department to identify and then implement a software solution which addresses their needs based upon extensive research done prior to the selection and culminating in the purchase by the client and implementation by ISA of the chosen solution.

All of the products listed under our Value Added Reseller relationships (Vista, Obtain 24/7, Vision FM, the Facilities Manager, AutoCAD, and RACKWISE DCM) are products developed by third parties.

The products obtained from third parties are done so through executed Value Added Reseller Agreements. Although each of the vendor’s agreements differs to some degree, the basic understandings are the same. Information Systems Associates is authorized by each of the vendors to offer their (the vendor’s software solutions) to Information Systems Associates’ clients. In return, Information Systems Associates receives a commission on the sale of the software. The percentage ranges between twenty (20) and thirty (30) percent of the sale. On occasion, Information Systems Associates provide pre-sales support services to the vendor’s clients. In addition, Information Systems Associates is given the opportunity to implement the software solution and provide training to its clients. On an ongoing basis, Information Systems Associates can and does provide additional consulting services beyond those provided initially to the client.
 
The need for a better way to capture corporate asset information became evident to ISAs management team. After reviewing the methods and technology in use at that time (1ST Quarter 2006) for the purpose of data collection, it was decided within ISA to define a data collection process and subsequently to design and build a software solution capable of delivering quality data (output) through the use of programming techniques that incorporated many of the much needed features and capabilities, especially real time data validation.
 
Our customer list includes a number of leading organizations, such as Northrop Grumman Electronic Systems, National Counsel on Compensation Insurance (NCCI), Blue Cross Blue Shield of Florida, and Comcast Communications.
  
Information Systems Associates, Inc. sells software products and services that allow our customers to track and manage assets, primarily in asset intensive industries. We refer to our product and services suite as asset management solutions. Our solutions can reduce sourcing, procurement and tracking costs, improve tracking and monitoring of asset performance and reduce operational downtime.

We began using Aperture’s Network Management tools (“System”), in June 1995. For more than five years, Aperture has provided enterprise asset management solutions to customers in the United States, Europe and Asia and Pacific Rim. For the past five years, we have provided enterprise asset management solutions to customers in North America.
 
Our customer list includes a number of leading organizations, such as Northrop Grumman Electronic Systems, National Counsel on Compensation Insurance, Blue Cross Blue Shield of Florida, and Comcast Communications.
 
Our application products are also used by corporate Real Estate departments to manage their real property lease obligations (as both tenant and landlord), to determine their company’s use of corporate space, to develop plans for relocations, mergers and acquisitions as it relates to the use of space (office, manufacturing, warehousing).
 
INDUSTRY BACKGROUND AND OVERVIEW
 
Asset management software has existed for more than thirty years, initially through computerized maintenance management systems, and more recently including more comprehensive and robust enterprise asset management and enterprise resource planning solutions. The early computerized maintenance management systems automated daily management of assets, while enterprise resource planning solutions consolidate basic asset information with financial information at the corporate level. Enterprise asset management solutions encompass elements of both, serving as the next evolution of computerized maintenance management system solutions by bridging the gap between asset management and corporate-level planning and tracking requirements.
  
The key value proposition for enterprise asset management solutions is that they can provide a quick and quantifiable return on investment and return on assets. Cost and productivity improvements can immediately and measurably benefit organizations, and thus are highly desirable to potential customers, particularly in difficult economic times where the focus is increasingly bottom line oriented.
 
In addition to enterprise asset management solutions, we offer Facilities solutions. These are natural extensions to enterprise asset management solutions, as organizations seek to extend asset management and corporate-level planning and tracking onto other elements of the asset lifecycle.  The reference to “Facilities solutions” includes software application products that are used by corporate Real Estate departments to manage their real property lease obligations (as both tenant and landlord), to determine their company’s use of corporate space, to develop plans for relocations, mergers and acquisitions as it relates to the use of space (office, manufacturing, warehousing). This term can also apply to software application products used by Data Center Management (Information Technology) to track their computer assets from both a financial perspective as well as their usage and connectivity within the corporate IT (Information Technology) network.
 
8
 
PRODUCTS AND SERVICES

Aperture’s VISTA

Historically, IT organizations have operated as reactive cost centers that customized one-off services at the demands of customers. However, the influx of growing complexities, continual changes and higher demands for "better, faster and cheaper" has instigated a trend towards tighter IT management and control. The new "value-driven" approach, combined with pressures for higher availability and with increased SLA penalties have many IT executives operating under a mantra of "avoid problems before they happen" or "no surprises permitted."
 
The term “SLA penalties” refers to Service Level Agreement performance metrics. In most sophisticated corporate operations, the end user is guaranteed a specific degree of network and application availability. Usually items such as systems maintenance are taken into consideration when guaranteeing this availability as are items like built in redundancy (network circuits and the hardware used to deliver the connectivity) as well as Disaster Recovery plans that would insure the end user a specific level of availability (although typically less than that guaranteed under normal operating conditions) in the event that a natural or other type of disaster cause an interruption in corporate IT services.

In order to reduce operational risk and increase operational efficiency, it is essential for IT organizations to define best practices and implement IT frameworks (for example, the IT Infrastructure Library, ITIL) that create a more service-oriented organization. This includes standardizing and automating IT processes from a disparate set of ad hoc tasks to a cohesive, consolidated environment and developing a central repository of information to create institutional memory for the IT organization.
  
Many organizations have assessed the various facets of the IT organization to improve the logical environment. However, one component which seems to be overlooked quite frequently and that continuously operates within individual silos is the overall physical infrastructure of the data center.

Aperture VISTA is the essential solution to revolutionize your data center operations. It provides a structured process to consolidate and standardize operations within the data center, mitigate operational risk, and apply key best practices (i.e., configuration and change management processes) to better control operations in the data center.

Aperture VISTA specifically provides IT Management with the key information and intelligence to reduce operational risk and improve efficiency in the data center. Aperture VISTA enables organizations to achieve significant improvements in the following areas:

–  
Improve impact analysis, minimize errors and reduce staff requirements associated with changes
–  
Enable proactive infrastructure capacity planning
–  
Facilitate the planning and execution of consolidation or relocation projects
–  
Provide alerts for key performance indicators and threshold conditions
–  
Enforce adherence to redundancy requirements and design guidelines to ensure availability and business continuity
–  
Reduce mean-time-to-repair for outages
–  
Ensure compliance with standard or regulated processes
–  
Speed time-to-market for new application deployments

OBTAIN 24/7
 
The OBTAIN 24/7 software tool enables all the players in the planning process; hardware planners, system programmers, facilities specialists, electricians, vendors and operations to participate in a planning process at their convenience. Change cycles have shortened. There is less time for planning meetings. Yet, the change process is becoming more complex. Fabric switches, trunk cables and patch panels are replacing point-to-point connections. SANS are replacing dedicated storage. Mainframe and open systems are sharing storage devices. The term “SAN” refers to the Storage Area Network physical infrastructure which connects various servers and switches with mass storage devices containing information shared amongst the enterprise (multiple applications).

OBTAIN 24/7 provides the capability to plan multiple scenarios for each hardware change and to keep all planning data in sync with the 'production' data and between competing plans. Common resources such as patch panel slots or switching capability can be reserved to prevent conflicting plans.

Best of all, planners can view the changes and progress in the planning cycle without wasting the time used by other planning methods to keep everyone informed and actively engaged in the process.
 
OBTAIN 24/7 Features

Asset and Connectivity database able to record data for:

–  
All devices, including Mainframe, Open System and Network devices.
–  
Internal device features, control units, logical partitioning.
–  
All device ports, CHPIDs, interface.
–  
Warranty, install/de-install dates, contract and leasing information.
–  
All fiber cables including ESCON, FICON, Fiber Channel, FDDI, etc.
–  
All copper cables including Bus & Tag, SCSI, CAT5, Coax, etc.
–  
All physical connectivity between devices and internal connectivity through switching equipment.
–  
All power equipment and connectivity.
–  
Device racks.
–  
Copper and fiber patch panels and cabinets.
–  
SAN Fabric definition including aliases, zone sets and zone members.
–  
All asset and connectivity data defined once with multiple physical/logical displays of the data from different physical/logical viewpoints.
–  
Able to link an asset to external documents such as Word documents, CAD drawings, spreadsheets, etc.
 
9
 
VisionFM

VisionFM includes a very flexible asset management system capable of tracking everything from building components to office supplies. The Facilities Manager can define complex products such as systems furniture that include a bill-of-materials or simple items such as keys and cell phones that can be assigned directly to individuals.

Once products are defined then assets can be added by inserting symbols in AutoCAD or by using VisionFM forms such as a purchase order. Unique information about each asset can be recorded including a barcode number, purchase date and price. The system then tracks the asset from purchase through to disposition including depreciation, maintenance history, condition, warranties and insurance.

The result is an accurate accounting of corporate assets, their location, department, condition and value.

Features:

–  
Track equipment, furniture and telecom assets in use and in inventory.
–  
Assign assets to locations, employees and cost centers.
–  
Report on condition, depreciation, warranties and maintenance histories.
–  
Inventory analysis, including leased vs. owned assets.
–  
Track assets as individual components or create an asset made up of many individual components by recording a bill-of-materials (i.e. workstation).
–  
Establish product standards.
–  
Create purchase orders and track cost, approval and supplier.
–  
Receive goods and specify installed location.
–  
Track warranties, insurance policies and asset leases, including duration and payments.
–  
Create multiple stock locations including non-fixed locations such as maintenance trucks.
–  
Track parts in stock, establish recommended stock levels and reorder parts for stock. Work orders reserve and use parts in stock.

Benefits:

–  
Track the lifecycle of assets from purchase, to relocation to disposition.
–  
Report on assets by location, department and employee.
–  
Review expiring insurance policies, warranties and leases.
–  
Review an assets maintenance history including on-demand and preventative maintenance work.
–  
Manage parts inventories including allocated parts and reordering.
–  
Compare actual furniture to typical furniture by room type.
–  
Keep asset locations up to date in AutoCAD drawings or by issuing move orders.

RACKWISETM services and products deliver key features to simplify and reduce the time consumed designing, modeling and operating the physical infrastructure of your datacenter.

- Graphical Design & Modeling of Datacenters
- Auto-Build Visual Documentation From Imported Bill of Materials
- Advanced Operations & Reporting
- Modeling and Impact Analysis of Datacenter Designs
- Space, Power, Cooling, and Cable Management
- Generate Detailed Datacenter and Rack Visualizations
- Ensure Racks and the Datacenter are Within Design Limits
- Instantly Find Available Datacenter Resources
- Improve Utilization of Power and Space
- Import, & Document the Datacenter in Minutes
 
Related Services 
 
In connection with our software offerings, we provide the following services to our customers:
 
Consulting. A significant number of our customers request our advice regarding their business and technical processes, often in conjunction with a scoping exercise conducted both before and after the execution of a contract. This advice can relate to development or streamline of assorted business processes, such as sourcing or procurement activities, assisting in the development of technical specifications, and recommendations regarding internal workflow activities.
 
Customization and Implementation. Based generally upon the up-front scoping activities, we are able to customize our solutions as required to meet the customer's particular needs. This process can vary in length depending on the degree of customization, the resources applied by the customer and the customer's business requirements. We work closely with our customers to ensure that features and functionality meet their expectations. We also provide the professional services work required for the implementation of our customer solutions, including loading of data, identification of business processes, and integration to other systems applications.
 
Training. Upon completion of implementation (and often during implementation), we train customer personnel to utilize our Solutions through our administrative tools. Training can be conducted in one-on-one or group situations. We also conduct “train the trainer” sessions.
 
Maintenance and Support. We provide regular software upgrades and ongoing support to our customers.
 
We have been providing consulting, customization and implementation, training, maintenance and support services to our customers since 1994.
 
Third Party Offerings

Other Partner Relationships
 
In addition to the sale of our core solutions and services, we intend to enter into marketing or co-marketing agreements with companies that offer services that are complementary to our offerings. We would market these complementary services to our customers and prospects and can earn a referral fee if these services are purchased. In some cases our marketing partner will be able to market our solutions to its customers and prospects and can earn a referral fee. At the present time, we have two marketing partners. They are Forsythe Solutions Group, Inc. and Total Site Solutions, Inc.

Forsythe serves as a technology infrastructure solutions provider, helping organizations across all industries, including Fortune 1000 companies, manage the cost and risk of their information technology. Forsythe’s data center services offerings help organizations navigate through some of the more infrequent aspects of owning and operating a mission-critical environment—data center planning and information technology relocation. Our data collection solution On Site Physical Inventory and the services offered by us in conjunction with On Site Physical Inventory are perfectly matched to the needs of Forsythe’s customer’s, for whom they (Forsythe) are either planning a new data center, expanding an existing data center or moving a data center to a new location. In the current environment of corporate acquisitions and downsizing, the services offered by Forsythe and in turn complimented by our offerings are well suited for these purposes. We have discussed two data collection opportunities with Forsythe for which we have submitted budgetary information, but neither has gone forward due to the lack of client funding. To date we have not realized any revenue from the relationship with this partner.

Total Site Solutions, Inc. (TSS) specializes in providing a single source solution for companies requiring highly technical facility integration and precision project execution for mission-critical facilities. ISA’s data collection solution On Site Physical Inventory and the services offered by us in conjunction with On Site Physical Inventory are perfectly matched to the needs of Total Site Solutions’ customer’s. We have entered into an agreement with TSS and have received a purchase order to provide integration services for their one of TSS clients. The completion of the deliverables identified in the statement of work is being delayed by the client due to their manpower resource issues.
 
10
 
Business Cycles
 
Since many of our customers are large organizations or quasi-governmental entities, we may experience increasingly longer sales and collection cycles.
 
CUSTOMERS

We provide our solutions to customers in a variety of industries, including: healthcare, public authorities, and financial services sectors.
 
The services provided vary depending upon the needs of the customer and the solution concerned. We collect service fees for implementation and training, and support and maintenance fees.
 
The criteria used to select the customers listed in the business section and other sections of the document are based on their prominence within their industry. For instance, Northrop Grumman is well known within the defense industry as Comcast Communications is known in the cable industry. We do not list companies based upon any specific amount of revenue derived or whether or not they are currently active clients, but rather we have selected these clients based upon the scope of the consulting engagement. This approach provides us with clients from various industries as this sometimes becomes crucial to a prospect in their vendor selection process.

Each engagement with Northrop Grumman is a separate contract and is initiated through a series of actions on the part of both Northrop Grumman and ISA. No long term agreement exists between the two parties. A maintenance contract exists between the two parties for the period ending December 31, 2007. As funds are exhausted or additional software or services are required by Northrop Grumman, they (Northrop Grumman) would issue and RFQ (Request For Quotation) to ISA, and ISA in turn would submit a Statement of Work in response to the RFQ. If accepted, Northrop Grumman’s Purchasing Department would then issue a Purchase Order to ISA for the specific deliverables listed in the Statement of Work. Given the nature of Northrop Grumman’s business (defense contractor) as well as the terms and conditions under which they issue purchase orders, it may not be appropriate to list Northrop Grumman by name in any filing. Such listing would have to be confirmed with Northrop Grumman.

To date, the following services have been provided to Northrop Grumman under the above.

1.  
Updated and customized data entry forms included in the standard VisionFM product
2.  
Added new forms and workflow processes
3.  
Created a training video whose target audience is the end user submitting Work Orders and Move Requests
4.  
Other minor modifications to the VisionFM solution.

SALES AND MARKETING
 
We market our services primarily through referrals from the following companies with whom ISA has either a resellers agreement in place, is authorized to provide consulting service to their client’s or both:
  
Potential customers are identified through direct contact, responses to requests for information, attendance at trade shows and through industry contacts. We principally focus on professionals and ongoing lead generation through our partner relationships and their VAR (Valued Added Reseller) program referrals.

We use reference customers to assist us in our marketing efforts, both through direct contact with potential customers and through site branding and case studies. We also rely on our co-marketing partners to assist in our marketing efforts.

TECHNOLOGY PLATFORM
 
As Valued Added Resellers, Information Systems Associates, Inc. has sought out and identified those solutions that are based upon proven technology platforms and contain the desired functionality to meet or exceed its client’s expectations.
 
Our partner’s technology platform are based on Microsoft core applications, including the Windows operating system and a SQL server and/or Oracle relational database, all residing on scaleable hardware. The software is constructed using HTML and XML framework and resides on N-tier architecture as well as proprietary solutions.
 
ISA is the developer and at this time the exclusive marketer and distributor of on site physical inventory. Our activities as a VAR (Value Added Reseller) are best described as being authorized to resell a partner’s software solution as well as being certified to implement the solution on the client’s hardware and to deliver training in the use and operation of the software application.
 
RESEARCH AND DEVELOPMENT
 
Based on the relative pricing and functionality of products available in the marketplace today, we believe that the opportunity exists for ISA to develop software to compete in a segment of the industry. We believe that this segment is defined as any technology infrastructure (a/k/a data centers) who size (raised floor area) is less than twenty-five thousand square feet in size. Therefore, we have focused our software development and technology efforts on the development of our proprietary software offerings.
  
Our initial software development and technology efforts will be aimed at the defining the core functionality elements of our software application (On Site Physical Inventory), the features and functionality of the follow-up release, the development of new software components, and the integration of superior third party technology into our environment. Productization involves the development of reusable applications to reduce programming time and costs for customer implementations.
 
11
 
COMPETITION
 
The market for each solution comprising our asset management suite is intensely competitive. Many of the companies we compete with have much greater financial, technical, research and development resources than us.
 
The system integration consulting field is comprised of many categories of specialties. There are integrators who specialize in software integration by industry (automotive, manufacturing, pharmaceutical, defense, etc.) and therefore are not considered to be competitors. Our primary competitors in this space are the other Value Added Resellers representing the same products as does Information Systems Associates. The relationship with the vendor (software developers) is crucial in gaining an edge on the competition. This relationship is usually strengthened by such factors as the client relationships that the Value Added Reseller already has in place as well as the Value Added Resellers ability to successfully implement and maintain the vendor’s solution to the vendor’s satisfaction. We believe that Information Systems Associates has developed strong relationships with the solution vendor’s that it represents which in turn has and will continue to provide Information Systems Associates with sales of its consulting service offerings. We at Information Systems Associates believe that the foundation for this relationship is built upon trust.

The data collection services field has been in existence for many industries for years. The idea of hiring outside companies to conduct inventories of corporate data centers is not new either. There are many vendors in this space today that are using techniques that employ the use of text based list or a formatted spread sheet. Information Systems Associates has developed a data collection process for IT assets that employs real time data validation combined bar code scanning which as best as can be determined is unique in the industry. The major importance of this approach is that the data exported (extracted) from Information Systems Associates’ data collection application has been validated and is available to be imported into the client’s asset management solution. This saves a significant amount of time (could be days or even weeks) in researching errors that are uncovered by the application at the time of the data import
 
To become more competitive, we will need to make investments in new product development and improve our market visibility and financial situation.
 
Although we offer a broad range of asset network and facilities management solutions as Value Added Resellers, we face significant competition in each of the component product areas from the following companies:
 
 
•
Enterprise asset management - related solutions -Visual Network Design, Inc., ShowRack, NLyte, Visio)
 
•
Facilities Management - related solutions - Archibus)
 
In addition, we face competition from organizations that use in-house developers to develop solutions for certain elements of the asset management.
 
ISA considers data collection and the software it has developed to perform these services “On Site Physical Inventory” to be one of the two areas of focus for our business. It is the intent of ISA management to promote the software as the practical solution to the specific problems encountered during the data collection process for IT (Information Technology) assets. The promotion of the product and services will occur through marketing via industry trade show exhibition as well as mailings to a targeted audience.

ISA competes for business based on the recommendations of the software vendors for whose product solutions our data collection software is compatible. At the present time, On Site Physical Inventory is compatible with two vendor’s solutions; VISTA500 by Aperture Technologies, Inc. and RACKWISE DCM by Visual Network Design. ISA believes that its current pricing structure combined with the extensive number of data validation processes included in its product make it very competitive. In the recent trade show at which we exhibited in San Francisco, ISA was the only vendor offering a data collection solution. The vast majority of data collection services in existence are focused on the retail industry. Of the competitors that we have been able to identify, our research has not produced any information that would lead us to believe that the competitors can provide the same level of quality services that ISA is capable of delivering with its software solution.

Visual Network Design does not assign exclusive geographical areas to Value Added Resellers as this would limit the VAR’s potential as it relates to the sale of software and services. ISA in now being actively engaged by Visual Network Design to deliver consulting services to its customers (solution installation, data load and training) and plans to offer a “turnkey” service to their clients in which ISA provides the IT asset data collection, Rackwise software installation, data import (using the data collected previously) and client training in the use of the Rackwise software. ISA is training an additional resource for this purpose and intends to make this resource exclusive to Visual Network Design. ISA and VND management have had several discussions regarding the role that ISA will play in supporting Visual Network Design’s deployment of RACKWISE DCM.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007

The following discussion should be read in conjunction with the financial statements included in this report and is qualified in its entirety by the foregoing.
 
FORWARD LOOKING STATEMENTS
Certain statements in this report, including statements of our expectations, intentions, plans and beliefs, including those contained in or implied by "Management's Discussion and Analysis" and the Notes to Financial Statements, are "forward-looking statements", within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are subject to certain events, risks and uncertainties that may be outside our control. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “will”, and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements. These forward-looking statements include statements of management's plans and objectives for our future operations and statements of future economic performance, information regarding our expansion and possible results from expansion, our expected growth, our capital budget and future capital requirements, the availability of funds and our ability to meet future capital needs, the realization of our deferred tax assets, and the assumptions described in this report underlying such forward-looking statements. Actual results and developments could differ materially from those expressed in or implied by such statements due to a number of factors, including, without limitation, those described in the context of such forward-looking statements.

12
 
CRITICAL ACCOUNTING POLICIES

Revenue recognition

We recognize revenue in accordance with SEC Staff Accounting Bulletin No. 104, "Revenue Recognition" and Emerging Issues Task Force, or EITF, Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables".

Consulting services and training revenues are accounted for separately from subscription and support revenues when these services have value to the customer on a standalone basis and there is objective and reliable evidence of fair value of each deliverable. When accounted for separately, revenues are recognized as the services are rendered for time and material contracts, and when the milestones are achieved and accepted by the customer for fixed price contracts.  The majority of our consulting service contracts are on a time and material basis. Training revenues are recognized after the services are performed. For revenue arrangements with multiple deliverables, we allocate the total customer arrangement to the separate units of accounting based on their relative fair values, as determined by the price of the undelivered items when sold separately.

In determining whether the consulting services can be accounted for separately from subscription and support revenues, we consider the following factors for each consulting agreement: availability of the consulting services from other vendors, whether objective and reliable evidence for fair value exists for the undelivered elements, the nature of the consulting services, the timing of when the consulting contract was signed in comparison to the subscription service start date, and the contractual dependence of the subscription service on the customer's satisfaction with the consulting work. If a consulting arrangement does not qualify for separate accounting, we recognize the consulting revenue ratably over the remaining term of the subscription contract. Additionally, in these situations we defer the direct costs of the consulting arrangement and amortize those costs over the same time period as the consulting revenue is recognized. We did not have any revenue arrangements with multiple deliverables for the period ending June 30, 2008.
 
Property, Plant, and Equipment

Property and equipment is stated at cost. Depreciation is provided by the straight-line method over the estimated economic life of the property and equipment (three to ten years). When assets are sold or retired, their costs and accumulated deprecation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the statement of operations.

We recognize an impairment loss on property and equipment when evidence, such as the sum of expected future cash flows (undiscounted and without interest charges), indicates that future operations will not produce sufficient revenue to cover the related future costs, including depreciation, and when the carrying amount of the asset cannot be realized through sale. Measurement of the impairment loss is based on the fair value of the assets.

Software Development Costs

We account for costs incurred to develop computer software for internal use in accordance with Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use". As required by SOP 98-1, we capitalize the costs incurred during the application development stage, which include costs to design the software configuration and interfaces, coding, installation, and testing. Costs incurred during the preliminary project along with post-implementation stages of internal use computer software are expensed as incurred. Capitalized development costs are amortized over a period of three years. Costs incurred to maintain existing product offerings are expensed as incurred. The capitalization and ongoing assessment of recoverability of development costs requires considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, and estimated economic life.

After the development of the internal-use "On Site Physical Inventory" software (OSPI) was complete, we decided to market the software. Proceeds from the licenses of the computer software, net of direct incremental costs of marketing, such as commissions, software reproduction costs, warranty and service obligations, and installation costs, are applied against the carrying cost of that software. No profit will be recognized until aggregate net proceeds from licenses and amortization have reduced the carrying amount of the software to zero. Subsequent proceeds will be recognized in revenue as earned.

Revenues

Gross revenues were $473,023 and $729,288 for the three and six months ended June 30, 2008, respectively, compared to gross revenues of $95,732 and 151,950 for the three and six months ended June 30, 2007. The increase in current period was due primarily to the increased sale of professional services, maintenance contracts and time and materials arrangements. We recognize professional services revenue, which includes installation, training, consulting and engineering services, upon delivery of the services. If the professional service project includes independent milestones, revenue is recognized as milestones are met and upon acceptance from the customer. As part of our ongoing operations to provide services to our customers, incidental expenses, if reimbursable under the terms of the contracts, are billed to customers. These expenses are recorded as both revenues and direct cost of services. We expect revenues to increase during 2008 as our moves toward developing our business plan.

Income / Loss

We had net income of $13,855 and $18,030 from continuing operations for the three and six months ended June 30, 2008, respectively, compared to net loss of $18,068 and $41,724 from continuing operations for the three and six months ended June 30, 2007, respectively. The net income during the current periods was due primarily to the increase in sales, resulting in sufficient gross profit to cover the operating expenses. The loss in 2007 was due to much lower sales as we started developing our business plan. We expect to be breakeven at least through the fiscal year 2008, partly attributable to the increase in projected revenues offset by the fair value of expected services to be received. In addition, there can be no assurance that we will achieve or maintain profitability or that our revenue growth can be sustained in the future.

13
 
Expenses

Operating expenses for the three and six months ended June 30, 2008 were $426,754 and $676,021, respectively, compared to the operating expenses of $112,949 and $188,592 for the same periods ended June 30, 2007, respectively. The high operating expenses during 2008 were due primarily to administrative and general expenses, which were $155,730 and $248,172 for the three and six months ended June 30, 2008, respectively, and professional consulting expenses for services in connection with technology consulting and advisory services, which were $228,828 and $350,030 for the three and six months ended June 30, 2008, respectively.
 
Income Taxes
 
We received income tax benefits of $4,325 and $9,970 for the three and six months ended June 30, 2007.

Impact of Inflation

We believe that inflation has had a negligible effect on operations during the three and six months ended June 30, 2008 and 2007. We believe that we can offset inflationary increases in the cost of revenue by increasing revenue and improving operating efficiencies.
 
Liquidity and Capital Resources

Cash flows provided by operations were $32,869 during the six months ended June 30, 2008, compared to cash flows of $49,472 used in operations during the same period ended June 30, 2007. Cash flows provided by operations during the six months ended June 30, 2008 were primarily attributable to a net income of $18,030, the decrease in accounts receivable by $13,884, partially offset by the increase in accounts payable by $31,979. Cash flows used in operations in 2007 were primarily attributable to a net loss of $49,395, cumulative change in deferred income tax by $11,800 and the increase in accounts receivable by $10,698, partially offset by a decrease in prepayment by $15,052.  

Cash flows provided by investing activities were $40,170 during the six months ended June 30, 2008, compared to cash flows of $59,211 used in investing activities for the same period ended June 30, 2007. Cash flows provided by investing activities in 2008 were attributable to $67,708 in payments received on a software license agreement, offset by the marketing cost of software licenses agreement of $18,041, and purchase of property and equipment of $9,497. Cash flows used in investing activities in 2007 were due solely to the cost of software development.
 
Cash flows provided by financing activities were $22,494 for the six months ended June 30, 2008, due primarily to proceeds from a line of credit with Wachovia Bank NA. The line of credit provides for borrowing up to $40,000. We borrowed $29,494 on the credit line and repaid $7,000 during the six months ended June 30, 2008. We had no cash flows from financing activities during the six months ended June 30, 2007.

Overall, we have funded our cash needs from inception through June 30, 2008 with a series of debt and equity transactions.

We had cash on hand of $108,859 and a working capital of $146,250 as of June 30, 2008. Currently, we have enough cash to fund our operations for the next year. This is based on current cash flows from financing activities and projected revenues. Although it is possible, if the projected revenues fall short of needed capital we may not be able to sustain our capital needs. We will then need to obtain additional capital through equity or debt financing to sustain operations for an additional year. Our current level of operations would require capital of approximately $75,000 to sustain operations through year 2008 and the years thereafter. Modifications to our business plans may require additional capital for us to operate. For example, if we want to offer a greater number of products or increase our marketing efforts, we may need additional capital. Failure to raise capital may result in lower revenues and market share for us. In addition, there can be no assurance that additional capital will be available to us when needed or available on terms favorable to us.
 
Neither Mr. Coschera, nor any other person or entity is liable for, surety or otherwise provides a guarantee for our debt financing from outside resources.
 
Demand for the products and services will be dependent on, among other things, market acceptance of our services, the computer software market in general, and general economic conditions, which are cyclical in nature. Inasmuch as a major portion of our activities is the receipt of revenues from services rendered, our business operations may be adversely affected by our competitors and prolonged recession periods.
 
Our success will be dependent upon implementing our plan of operations and the risks associated with our business plan.

No significant amount of our trade payables has been unpaid within the stated trade term. We are not subject to any unsatisfied judgments, liens or settlement obligations.

14
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information to be reported under this item is not required of smaller reporting companies.
 
ITEM 4T. CONTROLS AND PROCEDURES.
 
DISCLOSURE CONTROLS AND PROCEDURES
 
Our management, including our Principal Executive Officer and Principal Financial Officer, has evaluated the design, operation, and effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon the evaluation performed by our management, including its Principal Executive Officer and Principal Financial Officer, it was determined that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports filed or submitted pursuant to the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including its Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding disclosures
 
Changes in Internal Control Over Financial Reporting

Our Principal Executive Officer and Principal Financial Officer have determined that, during the period covered by this quarterly report, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. They have also concluded that there were no significant changes in our internal controls after the date of the evaluation.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not aware of any pending or threatened legal proceedings, in which we are involved. In addition, we are not aware of any pending or threatened legal proceedings in which entities affiliated with our officers, directors or beneficial owners are involved.
 
ITEM 1A. RISK FACTORS
 
Information regarding risk factors appears in Part I, “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the captions “General Description of Business” and “Cautionary Note Regarding Forward-Looking Statements” contained in this Quarterly Report on Form 10-Q and in “Item 1A. RISK FACTORS” of our 2007 Annual Report on Form 10-KSB. There have been no material changes from the risk factors previously disclosed in our 2007 Annual Report on Form 10-KSB.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
On July, 15, 2008, we received a subscription in the amount of $100,000 for 400,000 shares of our common stock from Derek J. Leach (“Leach”), pursuant to an Offshore Stock Purchase Agreement. Under terms of the agreement we will issue 2,000,000 shares at .25 per share for a total proceeds of $400,000 over a period of five months.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(1)  
Exhibits: Exhibits required to be attached by Item 601 of Regulation S-B are listed in the Index to Exhibits beginning on page 8 of this Form 10-Q, which is incorporated herein by reference.
 
   Reports on Form 8-K filed

(1)  
On July 21, 2008, we filed a current report on Form 8-K to announce an Offshore Stock Purchase Agreement with Derek J. Leach.
   
 
15
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
 
     
   
   
 Information Systems Associates, Inc.
 
Date: August 19, 2008
By:  
/s/ Joseph P. Coschera
 
Joseph P. Coschera
President
 
16
 
INDEX TO EXHIBITS
 
Exhibit No.
  
Description
 
31.1
 
  
 
     
32.1