UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
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FORM
10-K
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
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ACT
OF 1934
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For
the fiscal year ended: December 31, 2009
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Or
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
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ACT
OF 1934
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For
the transition period from: _____________ to
_____________
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Information
Systems Associates, Inc.
(Exact
name of registrant as specified in its charter)
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Florida
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333-142429
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65-0493217
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(State
or Other Jurisdiction
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(Commission
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(I.R.S.
Employer
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of
Incorporation or Organization)
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File
Number)
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Identification
No.)
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1151
SW 30th
Street, Suite E, Palm City, Florida 34990
(Address
of Principal Executive Office) (Zip Code)
(772)
403-2992
(Registrant’s
telephone number, including area code)
N/A
(Former
name or former address, if changed since last report)
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Securities
registered pursuant to Section 12(b) of the Act:
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Title
of each class
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Name
of each exchange on which registered
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None
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Not
Applicable
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Securities
registered pursuant to Section 12(g) of the Act:
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Common
Stock, $0.001 Par Value
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(Title
of Class)
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
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Yes
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ü
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No
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Indicate
by check mark if the registrant is not required to file reports pursuant
to Section 13 or Section 15(d) of the Act.
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Yes
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ü
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No
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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
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required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
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ü
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Yes
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No
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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
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information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this
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Form
10-K.
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Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.
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Large
accelerated filer
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Accelerated
filer
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Non-accelerated
filer
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Smaller
reporting company
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ü
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Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act).
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Yes
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ü
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No
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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. Market Value of
approximately $1,704,000
based on June 30, 2009 closing price of $0.40 per
share.
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Indicate
the number of shares outstanding of each of the registrant’s classes of
common stock, as of the latest practicable date. 18,266,084 as
of December 31, 2009.
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APPLICABLE
ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
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PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
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Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan
confirmed by
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a
court.
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Yes
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No
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DOCUMENTS
INCORPORATED BY REFERENCE
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PART
I
ITEM
1. DECRIPTION OF BUSINESS
As used
herein the terms “we”, “us”, “our”, the “Registrant,” “ISA” and the “Company”
means, Information Systems Associates, Inc., a Florida corporation.
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 maintained 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.
In 1995,
we became 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). At that time, Aperture’s Network
Management tools (“System”), was one of the leading solutions in it
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 ISA’s 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, 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 the vendor’s
software as 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 ISA’s
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. The result was
that by year end of 2007 OSPI
(ON SITE PHYSICAL INVENTORYTM
) was available for resale.
Our
customer list includes a number of leading organizations, such as Northrop
Grumman Electronic Systems, Charles Schwab, Bank of America, Comcast
Communications and General Electric.
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 and to develop plans for
relocations, mergers and acquisitions as it relates to the use of space (office,
manufacturing, warehousing).
On April
17, 2009, we entered into a strategic alliance and became an investor with
Rubicon Software Group, plc. This agreement will create an opening
into the European market as well as provide cost effective software
development.
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 and to
software application products used by Data Center Management (Information
Technology) to track their computer assets from a financial perspective as well
as their usage and connectivity within the corporate IT (Information Technology)
network.
PRODUCTS
AND SERVICES
Aperture’s
VISTA
Historically,
IT organizations have operated as reactive cost centers that customized one-off
services for 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
high 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 facts 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 provides IT Management with the key information and intelligence to reduce
operational risk and improve efficiency in the data center.
VisionFM
Vision FM
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 tracts the asset from purchase through to
disposition including depreciation, maintenance history, condition, warranties
and insurance.
RACKWISE
DMC
RACKWISE
DMCTM
services and products deliver key features to simplify and reduce the time
consumed designing, modeling and operating the physical infrastructure of your
datacenter.
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Graphical
design and marketing of datacenters
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Auto-build
visual documentation from imported bill of
materials
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Advanced
operations and reporting
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Modeling
and impact analysis of datacenter
designs
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Space,
power, cooling, and cable
management
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Generate
detailed datacenter and rack
visualizations
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Ensure
racks and the datacenter are within design
limits
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Instantly
find available datacenter resources
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Improve
utilization of power and space
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Import
and document the datacenter in
minutes
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Rubicon Software
Group
Rubicon
Software works closely with organizations to develop customized software
solutions.
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 develop or streamline 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. On
December 1, 2009, we began offering version 2 of ON SITE PHYSICAL
INVENTORYTM.
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
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
INVENTORYTM, and
the services offered by us in conjunction with ON SITE PHYSICAL
INVENTORYTM
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 concluded two data collection opportunities with
Forsythe.
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
INVENTORYTM
and the services offered by us in conjunction with ON SITE PHYSICAL
INVENTORYTM
are perfectly matched to the needs of Total Site Solutions’
customers. We have entered into an agreement with TSS and have begun
data collection services for two TSS clients.
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, such as Northrop Grumman,
General Electric and Comcast Communications. 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.
We began
our relationship with General Electric in 2008 by providing data center audit
services. This was followed by providing data collection
services. In September, 2008 GE purchased one of the first licenses
for OSPI and all the related handheld devices and support services.
Revenue
for select clients during fiscal year 2009:
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Customer
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Solutions(s)
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Revenue % of Overall
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Comcast
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Aperture
VISTA
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3.09%
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NCCI
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VisionFM
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8.62%
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Emerson
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Aperture
VISTA
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3.76%
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Revenue
for select clients acting as a sub-contractor for Aperture during fiscal year
2008:
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Customer
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Solutions(s)
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Revenue % of Overall
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Verizon
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Aperture
VISTA
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18.01%
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Regions
Bank
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Aperture
VISTA
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6.02%
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Northern
Trust
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Aperture
VISTA
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4.94%
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State
of Minnesota
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Aperture
VISTA
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4.38%
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Rogers
Communication
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Aperture
VISTA
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3.83%
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SALES AND
MARKETING
We market
our services primarily through referrals from companies with whom ISA has either
a reseller’s 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.
Our
strategic alliance agreement with Rubicon will create an opportunity to begin
marketing, initially in the United Kingdom through current Rubicon clients and
then eventually throughout Europe.
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)
whose 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 defining
the core functionality elements of our software application (ON SITE PHYSICAL
INVENTORYTM),
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. Production involves the development of reusable
applications to reduce programming time and costs for customer
implementations.
The
strategic alliance agreement with Rubicon has allowed for the rewrite of ON SITE PHYSICAL
INVENTORYTM,
version 2, on budget and within the prescribed time frame. This relationship
will also provide more favorable pricing for future software
development. ON SITE
PHYSICAL INVENTORYTM,
version 2 became available December 1, 2009.
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 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 vendors 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. A prime example of
this investment is ON SITE
PHYSICAL INVENTORYTM,
version 2 which will provide a cost efficient solution.
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:
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§
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Enterprise
asset management – related solutions – ShowRack, Nlyte,
Visio
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§ 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
INVENTORYTM
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
INVENTORYTM
is compatible with two vendor’s solution; VISTA600 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 a
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 DMC
software installation, data import (using the data collected previously) and
client training in the use of the RACKWISE DMC 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
has had several discussions regarding the role that ISA will play in supporting
Visual Network Design’s deployment of RACKWISE DCM.
PLAN OF
OPERATION
Our major
activity is around the sale of asset management software and services related to
the software. We have recently:
| · |
Received
a Copyright for ON SITE
PHYSICAL INVENTORYTM |
| · |
Received
a Trademark for ON SITE
PHYSICAL INVENTORYTM |
| · |
Retained
a Patent Attorney, Louis J. Brunoforte, who has conducted a search in both
the United States and Trademark Office databases. His opinion
is that that our invention defines patentable subject matter. As such, we
have retained Mr. Brunoforte and have begun (submitted to his offices) all
required documents describing our processes and
software. |
Based on
the discussions we have had with prospective clients, the potential gross
revenue from our Data Collection services alone could be more substantial that
it is currently. We feel this is a conservative estimate of growth as
the limiting factor will be our ability to hire and train qualified individuals.
Initially, we are going to subcontract most of the work until such time as the
revenue pipeline starts to build.
We have
also been retained by Comcast Communications. We believe that the
relationship we have established at that company has positioned us to be their
primary CAFM vendor and will allow us to bid on additional contracts
(services) later this year and next year as well.
Over the
long term our business strategy is to expand our customer base, particularly in
the healthcare, public authorities, and financial services sectors, through
superior software functionality and through the industry expertise of our
employees. In particular, our strategy is comprised of the following
key components:
Expand Joint Venture with
Visual Network Design, Inc. and Increase Our Customer Base
Working
alongside Visual Network Design, Inc., we anticipate an increase in services
revenue due largely to the fact that our core service competencies are in
alignment with the needs of Visual Network Design, Inc.’s customer
base. We have executed a Technical Services Agreement by which ISA is
identified on each services quotation submitted by Visual Network Design, Inc.
to its prospective clients. We are currently in discussions with
Visual Network Design, Inc. management to expand our
relationship. ISA is being considered by Visual Network Design, Inc.
to be the exclusive provider of data collection services for Visual Network
Design’s customers. Visual Network Design Inc. has also indicated its desire to
utilize ISA’s technical services to support their software solution (RACKWISE
DCM) at their client locations which would include the installation,
implementation and training of their clients in the proper use and maintenance
of the RACKWISE DCM solution. With regards to whether or not ISA is
identified on services quotations by Visual Network Design, Inc. along with
other Value Added Resellers, it’s our understanding that Visual Network Design,
Inc. utilizes a specific Value Added Reseller for services required in
Europe. ISA has offered to provide services to Visual Network Design,
Inc's customers in Europe but at this time it is understood by ISA that this
would only happen when and if Visual Network Design, Inc’s Value Added Reseller
servicing Europe was not capable of handling the workload. ISA has
provided Visual Network Design, Inc. with a quotation for data collection
services for its overseas customers.
Strengthen
our position as an enterprise asset management solution integrator and improve
our visibility among target sectors. Information Systems Associates, Inc. has
earned the reputation of a capable solution integrator. While we have
expanded our customer base, Information Systems Associates, Inc. is committed to
solidifying our position as an enterprise asset management company, particularly
among healthcare, public authorities, and financial services
sectors.
Maintain and Enhance Our
Technology
Based on
the relative pricing and functionality of our product and service offerings as
compared with those of our competitors, we consider our service offerings to be
competitive, however it is critical that we continue to maintain and enhance our
approach to delivering technology solutions. It is our understanding
that the current pricing for the services we provide is in some cases
significantly less than that charged by the other solution vendors as it relates
to our systems integration consulting services. Relative to data
collection we believe that based on information received from prospects to which
we have spoken that our data collection services are approximately 20% of the
project implementation cost to the customer. In addition, because our solution
is provided “ready to use” the time (cost) to implement the solution is also
decreased which is a direct savings for the client.
Enter Into and Maximize
Alliances
We have
marketing and other relationships with Visual Network Design, Inc., Knowledge
Flow Corporation and Vision Facilities Management LTD. We believe
that these and future relationships will help provide us with access to
important industry participants and will help increase our brand
awareness.
Seek Acquisitions and
Strategic Investments
We plan
to expand by seeking technologies, products, and services that complement our
existing business. If appropriate opportunities are available, we may
acquire businesses, technologies or products or enter into strategic
relationships that may further diversify revenue sources and product offerings,
expand our customer base or enhance our technology platform.
ITEM
1A. RISK FACTORS
The
following is a summary of material risks and uncertainties which we face in our
business.
Our
Limited Operating History and Lack of Revenues Makes Evaluating Our Business and
Prospects Difficult
While our
competitors have operated software development companies for a significant
period of time, we have only had limited operations and revenues since our
inception in May of 1994. As a result, we have a limited operating
history upon which you can evaluate us and our prospects. In addition, we show a
loss of $1,009,195, $626,108 and $53,633 for the years ended December 31, 2009,
2008 and 2007, respectively.
We
Do Not Expect To Pay Dividends On Our Common Stock.
To date,
we have not paid any dividends on our common stock. We do not anticipate paying
any cash dividends on our common stock in the foreseeable future. Any payment of
future dividends and the amounts thereof will depend upon our earnings,
financial requirements and other factors deemed relevant by our board of
directors.
Now
That Our Common Stock Has Become Tradable On The Over-The-Counter Bulletin
Board, Sales Of Our Common Stock By Our Principal Shareholder Could Affect The
Level Of Public Interest In Our Common Stock As Well As Depress Its
Price.
Now that
our common stock has become tradable on the Over the Counter Bulletin Board,
prospective purchasers will be able to purchase our common stock in the open
market. The Selling Security Holders will be able to sell the shares
covered by this prospectus on the open market. In addition, because
our principal stockholder, Joseph Coschera, owns approximately 34% of our common
stock he may dispose of a substantial percentage of his stock after a one-year
holding period subject to the limitations of Rule 144 under the Securities Act
of 1933, as amended. In general, these limitations impose a maximum sale
requirement equal to the greater of an amount during the preceding three months
of 1% of our outstanding shares or an amount equal to the average weekly
reported volume of trading in our common stock on all national securities
exchanges and/or reported through the automated quotation system of a registered
securities association during the four calendar weeks preceding the filing of a
Rule 144 notice. In addition, there are other requirements imposed by
Rule 144, including manner of sale and other requirements. If
substantial amounts of any of these shares are sold either on the open market or
pursuant to Rule 144, there may be downward price pressures on our common stock
price, causing the market price of our common stock to decrease in
value. In addition, this selling activity could:
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Decrease
the level of public interest in our common
stock;
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Inhibit
buying activity that might otherwise help support the market price of our
common stock; and
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Prevent
possible upward price movements in our common
stock.
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We
May Be Unable To Obtain The Additional Funding Needed To Enable Us To Operate
Profitably In The Future.
We have
no credit facility or other committed sources of capital sufficient to fund our
business plan. We may be unable to establish credit arrangements on
satisfactory terms. If capital resources are insufficient to meet our
future capital requirements, we may have to raise funds to continue development
of our operations. To the extent that additional capital is raised
through the sale of equity and/or convertible debt securities, the issuance of
such securities could result in dilution to our shareholders and/or increased
debt service commitments. If adequate funds are not available, we may
be unable to sufficiently develop our operations to become
profitable.
Our
Principal Stockholder Controls Our Board Of Directors And Thereby Controls Our
Business Affairs In Which Case You Will Have Little Or No Participation In Our
Business Affairs.
Currently,
our President, CEO and Director, Mr. Joseph P. Coschera owns 34% of the
outstanding shares of Information Systems Associates. Mr. Coschera
controls the Board of Directors and therefore controls our business
affairs. In addition, Joseph Coschera, by virtue of his 34% share
ownership percentage, will have significant influence over all matters requiring
approval by our stockholders without the approval of minority
stockholders. In addition, he will be able to elect all of the
members of our Board of Directors, which will allow him to significantly control
our affairs and management. Accordingly, you will be limited in your
ability to affect change in how we conduct our business.
If
We Lose The Services Of Our President, Our Business May Be
Impaired.
Our
success is heavily dependent upon the continued and active participation of our
president, Joseph P Coschera. Mr. Coschera has years of experience in
the financial and assent management software business. The loss of Mr.
Coschera’s services could have a severely detrimental effect upon the success
and development of our business. We do not maintain "key person" life
insurance on Mr. Coschera. There can be no assurance that we will be
able to recruit or retain other qualified personnel, should it be necessary to
do so.
Our
Common Stock Is A “Penny Stock”, And Compliance With Requirements For Dealing In
Penny Stocks May Make It Difficult For Holders Of Our Common Stock To Resell
Their Shares.
The SEC
has adopted rules that regulate broker-dealer practices in connection with
transactions in “penny stocks.” Penny stocks generally are equity
securities with a price of less than $5.00, other than securities registered on
certain national securities exchanges or quoted on NASDAQ, provided that current
price and volume information with respect to transactions in such securities is
provided by the exchange or system. Prior to a transaction in a penny
stock, a broker-dealer is required to:
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deliver
a standardized risk disclosure document prepared by the
SEC;
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provide
the customer with current bid and offer quotation for the penny
stock;
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explain
the compensation of the broker-dealer and its salesperson in the
transaction;
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provide
monthly account statements showing the market value of each penny stock
held in the customer’s account;
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make
a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser’s approval;
and
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provide
a written agreement for the
transaction.
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These
requirements may have the effect of reducing the level of trading activity in
the secondary market for our stock. Because our shares are subject to
the penny stock rules, you may find it more difficult to sell your
shares.
Potential
Fluctuations In Our Financial Results Make Financial Forecasting
Difficult.
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General
economic conditions as well as economic conditions specific to our
industry;
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Our
operating results have varied on a quarterly basis in the past and may
fluctuate significantly as a result of a variety of factors, many of which
are outside our control. Factors that may affect our quarterly operating
results include:
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long
sales cycles, which characterize our
industry
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implementation
delays, which can affect payment and recognition of
revenue;
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any
decision by us to reduce prices for our solutions in response to price
reductions by competitors
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the
amount and timing of operating costs and capital expenditures relating to
monitoring or expanding our business, operations and
infrastructure
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the
timing of, and our ability to integrate, any future acquisition,
technologies or products or any strategic investments or relationships
into which we may enter
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Due to
these factors, our quarterly revenues and operating results are difficult to
forecast. We believe that period-to-period comparisons of our
operating results may not be meaningful and should not be relied upon as an
indication of future performance. In addition, it is likely that in
one or more future quarters, our operating results will fall below the
expectations of securities analysts and investors. In such event, the
trading price of our common shares would almost certainly be materially
adversely affected.
The
Markets In Which We Operate Are Highly Competitive.
The
market for asset lifecycle management solutions is rapidly evolving and
intensely competitive. We face significant competition in each
segment of our business (sourcing, procurement, enterprise asset management and
asset disposition). We expect that competition will further intensify
as new companies enter the different segments of our market and larger existing
companies expand their product lines. If the global economy continues
to lag, we could face increased competition, particularly in the form of lower
prices.
Many of
our competitors have longer operating histories, larger customer bases, greater
brand recognition and significantly greater financial, marketing and other
resources than we. We cannot assure you that we will be able to
compete with them effectively. If we fail to do so, it would have a
material adverse effect on our business, financial condition, cash flows and
results of operations.
Significant
Delays In Product Development Would Harm Our Reputation And Result In Loss Of
Revenue.
If we
experience significant product development delays, our position in the market
would be harmed, and our revenues could be substantially reduced, which would
adversely affect our operating results. As a result of the
complexities inherent in our software, major new product enhancements and new
products often require long development and test periods before they are
released. On occasion, we have experienced delays in the scheduled
release date of new or enhanced products, and we may experience delays in the
future. Delays may occur for many reasons, including an inability to
hire a sufficient number of developers, discovery of bugs and errors or a
failure of our current or future products to conform to industry
requirements. Any such delay, or the failure of new products or
enhancements in achieving market acceptance, could materially impact our
business and reputation and result in a decrease in our revenues.
We
May Have To Expend Significant Resources To Keep Pace With Rapid Technological
Change.
Our
industry is characterized by rapid technological change, changes in user and
customer requirements, frequent new service or product introductions embodying
new technologies and the emergence of new industry standards and
practices. Any of these could hamper our ability to compete or render
our proprietary technology obsolete. Our future success will depend,
in part, on our ability to:
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develop
new proprietary technology that addresses the increasingly sophisticated
and varied needs of our existing and prospective
customers
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anticipate
and respond to technological advances and emerging industry standards and
practices on a timely and cost-effective
basis
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continually
improve the performance, features and reliability of our products in
response to evolving market demands
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license
leading technologies
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We may be
required to make substantial expenditures to accomplish the foregoing or to
modify or adapt our services or infrastructure.
Our
Business Could Be Substantially Harmed If We Have To Correct Or Delay The
Release Of Products Due To Software Bugs Or Errors.
We sell
complex software products. Our software products may contain
undetected errors or bugs when first introduced or as new versions are
released. Our software products may also contain undetected viruses.
Further, software we license from third parties and incorporate into our
products may contain errors, bugs or viruses. Errors, bugs and
viruses may result in any of the following:
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adverse
customer reactions
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negative
publicity regarding our business and our
products
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loss
of or delay in market acceptance
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loss
of revenue or required product
changes
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diversion
of development resources and increased development
expenses
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increased
service and warranty costs
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legal
action by our customers
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increased
insurance costs
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Systems
Defects, Failures Or Breaches Of Security Could Cause A Significant Disruption
To Our Business, Damage Our Reputation And Expose Us To Liability.
We host
certain websites and sub-sites for our customers. Our systems are
vulnerable to a number of factors that may cause interruptions in our ability to
enable or host solutions for third parties, including, among
others:
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damage
from human error, tampering and
vandalism
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telecommunication
failures and capacity limitations
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software
or hardware defects
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Despite
the precautions we have taken and plan to take, the occurrence of any of these
events or other unanticipated problems could result in service interruptions,
which could damage our reputation, and subject us to loss of business and
significant repair costs. Certain of our contracts require that we
pay penalties or permit a customer to terminate the contract if we are unable to
maintain minimum performance levels. Although we continue to take steps to
enhance the security of our systems and ensure that appropriate back-up systems
are in place, our systems are not now, nor will they ever be, fully
secure.
If
We Are Unable To Successfully Protect Our Intellectual Property Or Obtain
Certain Licenses, Our Competitive Position May Be Weakened.
Our
performance and ability to compete are dependent in part on our
technology. We rely on a combination of patent, copyright, trademark
and trade secret laws as well as confidentiality agreements and technical
measures, to establish and protect our rights in the technology we
develop. We cannot guarantee that any patents issued to us will
afford meaningful protection for our technology. Competitors may
develop similar technologies which do not conflict with our
patents. Others may challenge our patents and, as a result, our
patents could be narrowed or invalidated.
Our
software is protected by common law copyright laws, as opposed to registration
under copyright statutes. Common law protection may be narrower than that which
we could obtain under registered copyrights. As a result, we may
experience difficulty in enforcing our copyrights against certain third
parties. The source code for our proprietary software is protected as
a trade secret. As part of our confidentiality protection procedures,
we generally enter into agreements with our employees and consultants and limit
access to, and distribution of, our software, documentation and other
proprietary information. We cannot assure you that the steps we take
will prevent misappropriation of our technology or that agreements entered into
for that purpose will be enforceable. In order to protect our intellectual
property, it may be necessary for us to sue one or more third
parties. While this has not been necessary to date, there is no
guarantee that we will not be required to do so in future to protect our
rights. The laws of other countries may afford us little or no
protection for our intellectual property. We also rely on a variety
of technology that we license from third parties, including our database and
Internet server software, which is used to perform key
functions. These third-party technology licenses may not continue to
be available to us on commercially reasonable terms, or at all. If we
are unable to maintain these licenses or obtain upgrades to these licenses, we
could be delayed in completing or prevented from offering some products or
services.
Others
Could Claim That We Infringe On Their Intellectual Property Rights, Which May
Result In Costly And Time-Consuming Litigation.
Our
success will also depend partly on our ability to operate without infringing
upon the proprietary rights of others, as well as our ability to prevent others
from infringing on our proprietary rights. We may be required at
times to take legal action in order to protect our proprietary
rights. Also, from time to time, we may receive notice from third
parties claiming that we infringe their patent or other proprietary
rights.
We
believe that infringement claims will increase in the technology sector as
competition intensifies. Despite our best efforts, we may be sued for
infringing on the patent or other proprietary rights of others. Such
litigation is costly, and even if we prevail, the cost of such litigation could
harm us. If we do not prevail or cannot fund a complete defense, in
addition to any damages we might have to pay, we could be required to stop the
infringing activity or obtain a license. We cannot be certain that
any required license would be available to us on acceptable terms, or at
all. If we fail to obtain a license, or if the terms of a license are
burdensome to us, this could have a material adverse effect on our business,
financial condition, cash flows and results of operations.
Our
Product Strategy Is Partially Dependent Upon The Continued Acceptance And Use Of
The Internet As A Medium Of Commerce.
Our
success depends in part on the continued growth of the Internet and reliance on
and use of the Internet by businesses. Because use of the Internet as
a source of information, products and services is a relatively recent
phenomenon, it is difficult to predict whether the number of users drawn to the
Internet will continue to increase and whether the market for commercial use of
the Internet will continue to develop and expand.
The
Internet may not be commercially viable for a number of reasons, including
potentially inadequate development of the necessary network infrastructure,
delayed development of enabling technologies and inadequate performance
improvements. In addition, the Internet’s viability as a commercial
marketplace could be adversely affected by delays in the development of services
or due to increased government regulation. Moreover, concern about the security
of transactions conducted on the Internet and the privacy of users may also
inhibit the growth of commerce on the Internet. If the use of the Internet does
not continue to grow or grows more slowly than expected, or if the
infrastructure for the Internet does not effectively support growth that may
occur, our business would be materially and adversely affected.
Our
Business Is Sensitive To The Overall Economic Environment. Any Slowdown In
Information Technology Spending Budgets Could Harm Our Operating
Results.
Any
significant downturn in our customers' markets or in general economic conditions
that results in reduced information technology spending budgets would likely
result in a decreased demand for our products and services, longer selling
cycles and lower prices, any of which may harm our business.
Although
We Have Not Yet Issued Any Preference Shares, If Issued, Our Preference Shares
Could Prevent Or Delay A Takeover That Some Or A Majority Of Shareholders
Consider Favorable.
Our Board
of Directors, without any further vote of our shareholders, may issue preference
shares and determine the price, preferences, rights and restrictions of those
shares. The rights of the holders of common shares will be subject
to, and may be adversely affected by, the rights of the holders of any series of
preference shares that may be issued in the future. That means, for
example, that we can issue preference shares with more voting rights, higher
dividend payments or more favorable rights upon distribution than those for our
common shares. If we issue certain types of preference shares in the
future, it may also be more difficult for a third party to acquire a majority of
our outstanding voting shares and such issuance may, in certain circumstances,
deter or delay mergers, tender offers or other possible transactions that may be
favored by some or a majority of our shareholders.
EMPLOYEES
We have
three employees, Joseph P. Coschera, Loire Lucas and Shirley Walker. Joseph P.
Coschera is a full-time employee and Loire Lucas and Shirley Walker are part
time employees.
REPORTS
TO SECURITY HOLDERS
We are
not required to deliver an annual report to security holders and will not
voluntarily deliver a copy of the annual report to security
holders. If we should choose to create an annual report, it will
contain audited financial statements. We intend to file all of our
required information with the SEC. We plan to file our Forms 10-K,
10-Q, and all other forms that are or may become applicable with the
SEC.
The
public may read and copy any materials that are filed by us with the SEC at the
SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C.
20549. The Public may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The
statements and forms filed by us with the SEC have been filed electronically and
are available for viewing or copy on the SEC maintained Internet site that
contains reports, proxy and information statements, as well as other information
regarding issuers that file electronically with the SEC. The Internet
address for this site can be found at http://www.sec.gov.
ITEM
2. PROPERTIES
We do not
own any real property nor do we have any contracts or options to acquire any
real property in the future. Presently, we are renting an office
located at Suite E, 1151 SW 30th
Street, Palm City FL 34990. We occupy 1,208 square
feet. This space is adequate for our present and our planned future
operations. We pay approximately $1,278.00 per month in rent for use
of this space.
We also
own computer equipment and office furniture for our business. We own
several computers, handhelds, storage drives, and network devices which we use
to conduct business. These devices are used in the development of our
software products. We also own standard office furniture including
desks, chairs, and other personal property relating to our
industry. All of this equipment is in good condition. The
net book value of property and equipment is $25,741
ITEM
3. LEGAL PROCEEEDINGS
From time
to time we are involved in legal proceedings arising in the ordinary course of
our business. On April 24, 2009, Phuture World, Inc. filed a complaint in the
case captioned Phuture World, Inc. v. Information Systems Associates, Inc. and
Joseph Coschera, Case No. 562009 CA 3086, 19th Judicial Circuit in and for St.
Lucie County Florida. Phuture World alleges that the Company and its
President breached the terms of a certain software development contract, and it
seeks damages in excess of $15,000. The Company terminated the software
contract at issue in the case prior to the filing of the case, and it no longer
uses the services of Phuture World. The Company is contesting this lawsuit
and believes that it has defenses to the claims made by Phuture World and that
the allegations made against the President, who acted at all time on the
Company's behalf in dealing with the plaintiff, are frivolous. The Company
intends to vigorously defend itself and believes that it has damage claims of
its own that it intends to pursue against Phuture World for Phuture World's
failure to provide the software required under the contract between Phuture
World and the Company. The Company believes that the outcome of this
lawsuit will not have a material adverse effect on our financial condition, cash
flows or results of operations.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None.
PART
II
ITEM
5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDERS MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION
Our
shares of common stock are quoted on the Over-The-Counter Bulletin
Board. The Over-The-Counter Bulletin Board is a quotation medium for
subscribing members only. Only market makers can apply to quote securities on
the Over-The-Counter Bulletin Board. We cannot guarantee that we will
obtain a market maker or such a quotation. Although we will seek a
market maker for our securities, our management has no agreements,
understandings or other arrangements with market makers to begin making a market
for our shares. There is no limited trading activity in our
securities, and there can be no assurance that a regular trading market for our
common stock will ever be developed, or if developed, will be
sustained.
A
shareholder in all likelihood, therefore, will not be able to resell their
securities should he or she desire to do when eligible for public
resale. Furthermore, it is unlikely that a lending institution will
accept our securities as pledged collateral for loans unless a regular trading
market develops. We have no plans, proposals, arrangements or
understandings with any person with regard to the development of a trading
market in any of our securities.
AGREEMENTS
TO REGISTER
Not
applicable.
STOCKHOLDERS
As of
December 31, 2009 there were 43 stockholders of record of our common
stock.
SHARES
ELIGIBLE FOR FUTURE SALE
Upon
effectiveness of the registration statement effective on January 24, 2008, only
the 5,193,834 shares of common stock sold in this offering will be freely
tradable without restrictions under the Securities Act of 1933. The shares held
by our affiliates will be restricted by the resale limitations under Rule 144
under the Securities Act of 1933.
In
general, under Rule 144 as currently in effect, any of our affiliates and any
person or persons whose sales are aggregated who has beneficially owned his or
her restricted shares for at least one year, may be entitled to sell in the open
market within any three-month period a number of shares of common stock that
does not exceed the greater of (i) 1% of the then outstanding shares of our
common stock, or (ii) the average weekly trading volume in the common stock
during the four calendar weeks preceding such sale. Sales under Rule 144 are
also affected by limitations on manner of sale, notice requirements, and
availability of current public information about us. Non-affiliates, who have
held their restricted shares for one year, may be entitled to sell their shares
under Rule 144 without regard to any of the above limitations, provided they
have not been affiliates for the three months preceding such sale.
Further,
Rule 144A as currently in effect, in general, permits unlimited resale of
restricted securities of any issuer provided that the purchaser is an
institution that owns and invests on a discretionary basis at least $100 million
in securities or is a registered broker-dealer that owns and invests $10 million
in securities. Rule 144A allows our existing stockholders to sell their shares
of common stock to such institutions and registered broker-dealers without
regard to any volume or other restrictions. Unlike under Rule 144, restricted
securities sold under Rule 144A to non-affiliates do not lose their status as
restricted securities.
The
availability for sale of substantial amounts of common stock under Rule 144
could adversely affect prevailing market prices for our securities.
DIVIDENDS
We have
not declared any cash dividends on our common stock since our inception and do
not anticipate paying such dividends in the foreseeable future. We
plan to retain any future earnings for use in our business. Any decisions as to
future payment of dividends will depend on our earnings and financial position
and such other factors, as the Board of Directors deems relevant.
DIVIDEND
POLICY
All
shares of common stock are entitled to participate proportionally in dividends
if our Board of Directors declares dividends out of the funds legally
available. These dividends may be paid in cash, property or
additional shares of common stock. We have not paid any dividends
since our inception and presently anticipate that all earnings, if any, will be
retained for development of our business. Any future dividends will
be at the discretion of our Board of Directors and will depend upon, among other
things, our future earnings, operating and financial condition, capital
requirements, and other factors.
Our
shares are "Penny Stocks" within the Meaning of the Securities Exchange Act of
1934.
Our
Shares are "penny stocks" within the definition of that term as contained in the
Securities Exchange Act of 1934, generally equity securities with a price of
less than $5.00. Our shares will then be subject to rules that impose
sales practice and disclosure requirements on certain broker-dealers who engage
in certain transactions involving a penny stock.
Under the
penny stock regulations, a broker-dealer selling penny stock to anyone other
than an established customer or "accredited investor" must make a special
suitability determination for the purchaser and must receive the purchaser's
written consent to the transaction prior to the sale, unless the broker-dealer
is otherwise exempt. Generally, an individual with a net worth in
excess of $1,000,000 or annual income exceeding $200,000 individually or
$300,000 together with his or her spouse is considered an accredited
investor. In addition, unless the broker-dealer or the transaction is
otherwise exempt, the penny stock regulations require the broker-dealer to
deliver, prior to any transaction involving a penny stock, a disclosure schedule
prepared by the Securities and Exchange Commission relating to the penny stock
market. A broker-dealer is also required to disclose commissions
payable to the broker-dealer and the Registered Representative and current bid
and offer quotations for the securities. In addition a broker-dealer
is required to send monthly statements disclosing recent price information with
respect to the penny stock held in a customer's account, the account’s value and
information regarding the limited market in penny stocks. As a result
of these regulations, the ability of broker-dealers to sell our stock may affect
the ability of Selling Security Holders or other holders to sell their shares in
the secondary market. In addition, the penny stock rules generally
require that prior to a transaction in a penny stock, the broker-dealer make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the
transaction.
These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules. These additional sales practice and disclosure
requirements could impede the sale of Information Systems Associate's
securities, if our securities become publicly traded. In addition,
the liquidity for Information Systems Associate's securities may be adversely
affected, with concomitant adverse affects on the price of Information Systems
Associate's securities. Our shares may someday be subject to such
penny stock rules and our shareholders will, in all likelihood, find it
difficult to sell their securities.
ITEM
6. SELECTED FINANCIAL DATA
Not
required for smaller reporting companies.
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
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 Consolidated 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, our expansion and acquisition strategy, our ability
to achieve operating efficiencies, our dependence on network infrastructure,
capacity, telecommunications carriers and other suppliers, industry pricing and
technology trends, evolving industry standards, domestic and international
regulatory matters, general economic and business conditions, the strength and
financial resources of our competitors, our ability to find and retain skilled
personnel, the political and economic climate in which we conduct operations and
the risk factors described from time to time in our other documents and reports
filed with the Securities and Exchange Commission (the "Commission"). Additional
factors that could cause actual results to differ materially from the
forward-looking statements include, but are not limited to: 1) our ability to
successfully develop, manufacture and deliver our products on a timely basis and
in the prescribed condition; 2) our ability to compete effectively with other
companies in the same industry; 3) our ability to raise sufficient capital in
order to effectuate our business plan; and 4) our ability to retain our key
executives.
OUR
COMPANY
We were
incorporated in Florida on May 31, 1994 to engage in the business of developing
software for the financial and asset management industries. We are
currently engaged and plan to continue in the sale of asset management software
for both corporate real estate and corporate information technology
networks. Our executive offices are currently located 1151 SW 30th
Street, Suite E, Palm City, FL 34990. Our telephone number is (772)
403-2992. Information Systems Associates, Inc. is a "Solution Provider"
positioned to develop and deliver comprehensive asset management systems for
both real estate and data center assets. 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). Utilizing the latest Computer Aided Facilities
Management (CAFM) Technology solutions generally available provides the end-user
with enhanced application usability. We offer project assessment and
development, process review and recommendations as well as project management
and training services necessary to successfully achieve your
objectives.
Our
company delivers turnkey software and service solutions that give financial
institutions and large corporations control of their corporate
assets. Our asset solutions address Data Center equipment inventory,
Space Utilization, Power and Connectivity management, Office Space and
Occupancy, Office Equipment and Furniture, and Real Estate Portfolio
Management.
In
conjunction with our CAFM solutions, ISA now offers state of the art asset data
collection services focusing on the enterprise IT infrastructure. The
data collection service is based on our solution ON SITE PHYSICAL
INVENTORYTM.
RESULTS
OF OPERATIONS
Because
this is only a financial summary, it does not contain all the financial
information that may be important to you. It should be read in conjunction with
the consolidated financial statements and related notes presented in a later
section.
The
following tables set forth certain operating information in dollars and as a
percentage of net sales:
|
|
|
For
the Years Ended December 31,
|
|
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
% of Net Sales
|
|
Amount
|
|
% of Net Sales
|
|
Increase
(Decrease)
|
|
|
Revenue
|
$ 780,244
|
|
100.00%
|
|
$
1,225,461
|
|
100.00%
|
|
$(445,217)
|
|
|
Cost
of sales
|
37,567
|
|
4.81%
|
|
44,689
|
|
3.65%
|
|
(7,122)
|
|
|
Gross
profit
|
742,677
|
|
95.19%
|
|
1,180,772
|
|
96.35%
|
|
(438,095)
|
|
|
Operating
expenses
|
1,751,433
|
|
224.47%
|
|
1,769,356
|
|
144.38%
|
|
(17,923)
|
|
|
Loss
before other income (expenses)
|
(1,008,756)
|
|
-129.29%
|
|
(588,584)
|
|
-48.03%
|
|
(420,172)
|
|
|
Other
income (expenses), net
|
(439)
|
|
-0.06%
|
|
267
|
|
0.02%
|
|
(706)
|
|
|
Income
(loss) before income taxes
|
(1,009,195)
|
|
-129.34%
|
|
(588,317)
|
|
-48.01%
|
|
(420,878)
|
|
|
Provision
for income taxes
|
-
|
|
0.00%
|
|
37,791
|
|
3.08%
|
|
(37,791)
|
|
|
Net
loss
|
$ (1,009,195)
|
|
-129.34%
|
|
$ (626,108)
|
|
-51.09%
|
|
$ (383,087)
|
Year ended December 31, 2009
compared to December 31, 2008
Gross
revenues were $780,244 and $1,225,461 for the years ended December 31 2009 and
2008, respectively. The decrease in current period was due primarily
to the decreased 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 2010 as we implement our business plan.
Gross
profit was $742,677 and $1,180,772 for the years ended December 31 2009 and
2008, respectively, while gross margin percentage for the same period was 95.19%
and 96.35%. The primary cost for 2009 was software, while the primary
cost for 2008 were handheld units.
Operating
expenses for the years December 31, 2009 and 2008 were $1,751,433 and
$1,769,356, respectively. Increases in Payroll and Professional Fees
were offset by decreases in Administrative and General Expenses. Two new
positions were added to Payroll in 2009
We
recognized an income tax expense of $37,791 for the year ended December 31,
2008.
We had a
net loss of $1,009,195 and $626,108 from continuing operations for the years
ended December 31, 2009 and 2008, respectively. There are two major
reasons for the loss in the year. ISA entered into several consulting
agreements that had an immediate impact on activity for the year by increasing
operating expenses. We expect long term benefits for these
expenditures. Secondly, the Company realized a significant decrease
in the sale of professional services.
STATEMENT
OF FINANCIAL CONDITION
|
|
|
As
of December 31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Available
cash
|
|
$ |
21,047 |
|
|
$ |
204,768 |
|
|
Total
current assets
|
|
$ |
254,045 |
|
|
$ |
817,327 |
|
|
Property
and equipment, net
|
|
$ |
174,288 |
|
|
$ |
21,168 |
|
|
Investments
|
|
$ |
60,559 |
|
|
$ |
- |
|
|
Total
assets
|
|
$ |
488,892 |
|
|
$ |
838,495 |
|
|
Current
liabilities
|
|
$ |
113,316 |
|
|
$ |
33,825 |
|
|
Stockholders’
equity
|
|
$ |
375,576 |
|
|
$ |
804,670 |
|
|
Total
liabilities and stockholders’ equity
|
|
$ |
488,892 |
|
|
$ |
838,495 |
|
December 31 2009 compared to
December 31, 2008
Available
cash was $21,047 and $204,768 as of December 31, 2009 and 2008,
respectively. The decrease is primarily due to decreases in sales of
professional services in 2009.
Total
current assets were $488,892 and $838,495 as of December 31, 2009 and 2008
respectively. The decrease is primarily due to the recognition of
expense from Prepaid Consulting. The original contracts concluded in
2009.
Property
and equipment were $174,288 and $21,168 as of December 31, 2009 and 2008
respectively. The increase is due primarily to the capitalization of software
development costs for version 2 of ON SITE PHYSICAL
INVENTORYTM
Current
liabilities were $113,316 and $33,825 as of December 31, 2009 and 2008
respectively. This amount has increased as the company had several large
expenses booked at year end.
IMPACT OF
INFLATION
We
believe that inflation has had a negligible effect on operations during the
years ended December 31, 2009 and 2008. 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 used in operations were $183,645 and $145,204 for the years ended December
31, 2009 and 2008, respectively. Cash flows used in operations in
2009 were primarily attributable to a net loss of $1,009,195. This
was partially offset by common stock issued for services of $671,438 in prepaid
consulting, a decrease in accounts receivable of $59,312 and an increase in
accounts payable of 82,626. Cash flows used in operations in
2008 were primarily attributable to a net loss of $626,108. There was
an increase of $458,360 in prepaid consulting and a decrease in accounts payable
of $77,740.
Cash
flows provided/ (used) in investing activities were ($173,407) and $95,676 for
the years ended December 31, 2009 and 2008, respectively. Cash flows
used in investing activities in 2009 were from the cost of developing software
for resale. Cash flows provided by investing activities in 2008 were
attributable to payments received for software license agreement, less marketing
cost and the purchases of property and equipment.
Cash
flows provided by financing activities were $173,331 and $240,970 for the years
ended December 31, 2009 and 2008, respectively. Cash flows provided
by financing activities for 2009 were attributable to the sale of stock and
additional borrowing. Cash flows provided by financing activities in 2008 were
funded from the additional sale of stock.
Overall,
we have funded our cash needs from inception through December 31, 2009 and 2008
with a series of debt and equity transactions.
We had
cash on hand of $21,047 and a working capital of $140,729 as of December 31,
2009. 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 $300,000 to sustain operations through year
2010. 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.
Mr.
Coschera is a personal guarantor on a line of credit to provide additional
working capital to the Company. As of December 31, 2009 there was borrowings
against the line of credit in the amount of $20,055. No 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. In as much 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.
OFF
BALANCE SHEET ARRANGEMENTS
We have
no-off balance sheet contractual arrangements, as that term is defined in Item
303(a)(4) of Regulation S-K.
CRITICAL
ACCOUNTING POLICIES
Our
consolidated financial statements have been prepared in accordance with U.S.
generally accepted accounting principles. The preparation of these financial
statements requires management to make estimates and judgments. We believe that
the determination of the carrying value of our inventories and long-lived
assets, the valuation allowance of deferred tax assets and valuation of
share-based payment compensation are the most critical areas where management’s
judgments and estimates most affect our reported results. While we believe our
estimates are reasonable, misinterpretation of the conditions that affect the
valuation of these assets could result in actual results varying from reported
results, which are based on our estimates, assumptions and judgments as of the
balance sheet date.
Revenue
Recognition
The
Company recognizes revenue in accordance with SEC Staff Accounting Bulletin No.
104, "Revenue Recognition" and FASB Accounting Standards Codification 605-25,
“Revenue Recognition Multiple-element Arrangements” (formerly 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
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 these 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 December
31, 2009.
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 depreciation 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
The
Company accounts for costs incurred to develop computer software for internal
use in accordance with FASB Accounting Standards Codification 350-40
“Internal-Use Software” (formerly Statement of Position (SOP) 98-1, "Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use”)
". As required by ASC 350-40, we capitalize the costs incurred during
the application development state, 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
INVENTORYTM
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 cost, warranty and service obligations, and installation cost, 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.
On
December 1, 2009, the Company released Version 2 of the “On Site Physical
Inventory” software (OSPI) for sale in the marketplace. The Company
accounts for internally produced software with FASB Accounting Standard
Codification 985-20 “Cost of Software To Be Sold, Leased, or Otherwise Marketed”
(formally SFAS 86,”Accounting for the Costs of Computer software to be Sold,
Leased or Otherwise Marketed). Costs were capitalized when the second
version was established as technically feasible and will be written off on a
straight line method over the estimated useful life.
RECENTLY
ADOPTED ACCOUNTING PRONOUNCEMENTS
In
June 2009, FASB approved the FASB Accounting Standards Codification (“the
Codification”) as the single source of authoritative nongovernmental GAAP. All
existing accounting standard documents, such as FASB, American Institute of
Certified Public Accountants, Emerging Issues Task Force and other related
literature, excluding guidance from the Securities and Exchange Commission
(“SEC”), have been superseded by the Codification. All other non-grandfathered,
non-SEC accounting literature not included in the Codification has become
nonauthoritative. The Codification did not change GAAP, but instead introduced a
new structure that combines all authoritative standards into a comprehensive,
topically organized online database. The Codification is effective for interim
or annual periods ending after September 15, 2009, and impacts the
Company’s financial statements as all future references to authoritative
accounting literature will be referenced in accordance with the Codification.
There have been no changes to the content of the Company’s financial statements
or disclosures as a result of implementing the Codification during the year
ended December 31, 2009.
Accounting
Standards Codification (“ASC”) 855 “Subsequent Events”, previously SFAS No. 165
“Subsequent Events” established general standards of accounting for and
disclosure of events that occur after the balance sheet date, but before the
financial statements are issued or available to be issued (“subsequent events”).
An entity is required to disclose the date through which subsequent events have
been evaluated and the basis for that date. For public entities, this is the
date the financial statements are issued. ASC No. 855 does not apply to
subsequent events or transactions that are within the scope of other GAAP and
did not result in significant changes in the subsequent events reported by the
Company. ASC No. 855 became effective for interim or annual periods ending
after June 15, 2009 and did not impact the Company’s financial statements.
The Company evaluated for subsequent events through the issuance date of the
Company’s financial statements. No recognized or non-recognized subsequent
events were noted.
ASC 810
“Consolidation”, previously SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements an amendment of ARB No. 51” changed the
accounting and reporting for minority interests such that they will be
recharacterized as noncontrolling interests and classified as a component of
equity. ASC No. 810 became effective for fiscal years beginning after
December 15, 2008 with early application prohibited. The Company
implemented ASC No. 810 at the start of fiscal 2009.
The
Company presents noncontrolling interests (previously shown as minority
interest) as a component of equity on its consolidated balance sheets. Minority
interest expense is no longer separately reported as a reduction to net income
on the consolidated income statement, but is instead shown below net income
under the heading “net income attributable to noncontrolling interests.” The
adoption of ASC No. 810 did not have any other material impact on the
Company’s financial statements.
RECENTLY
ADOPTED ACCOUNTING PRONOUNCEMENTS – NOT YET ADOPTED
ASC 810
“Consolidation”, SFAS No. 167 “Amendments to FASB Interpretation No. 46(R)”
amends FASB Interpretation No. 46(R) “Consolidation of Variable Interest
Entities” regarding certain guidance for determining whether an entity is a
variable interest entity and modifies the methods allowed for determining the
primary beneficiary of a variable interest entity. The amendments include:
(1) the elimination of the exemption for qualifying special purpose
entities, (2) a new approach for determining who should consolidate a
variable-interest entity, and (3) changes to when it is necessary to
reassess who should consolidate a variable-interest entity. ASC No. 810 is
effective for the first annual reporting period beginning after
November 15, 2009, with earlier adoption prohibited. The Company will adopt
ASC No. 810 in fiscal 2010 and does not anticipate any material impact on
the Company’s financial statements.
ASC
105-10 “Generally Accepted Accounting Principles”, SFAS No. 162, “The Hierarchy
of Generally Accepted Accounting Principles” 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.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISKS
We are
exposed to market risks, including changes in interest rates. The interest
payable under our credit facility, under which we had $20,055 at December 31,
2009, is based on a specified bank’s prime interest rate and, therefore, is
affected by changes in market interest rates. Historically, the effects of
movements in the market interest rates have been immaterial to our operating
results, as we have not borrowed to any significant degree.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
Report
of Independent Registered Public Accounting
Firm
|
|
14
|
|
|
|
Balance
Sheet
|
|
15
|
|
|
|
Statements of
Operations
|
|
16
|
|
|
|
Statements
of Stockholders’ Equity
|
|
17
|
|
|
|
Statements
of Cash Flows
|
|
18
|
|
|
|
Notes
to Financial Statements
|
|
19
to 26
|
|
|
|
|
|
|
|
|
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and
Stockholders
of Information Systems Associates, Inc.
We have
audited the accompanying balance sheets of Information Systems Associates, Inc.
as of December 31, 2009 and 2008, and the related statements of operations,
stockholders’ equity and comprehensive (loss), and cash flows for each of the
years in the two-year period ended December 31, 2009. Information Systems
Associates Inc.’s management is responsible for these financial statements. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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 Information Systems Associates,
Inc. as of December 31, 2009 and 2008, and the results of its operations and its
cash flows for each of the years in the two-year period ended December 31, 2009
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 18, the
Company has incurred significant losses. The Company’s viability is
dependent upon its ability to obtain future financing and the success of its
future operations. These factors raise substantial doubt as to the
Company’s ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/Lake
& Associates CPA’s LLC
Lake
& Associates CPA’s LLC
Boca
Raton, Florida
March 9,
2010
|
INFORMATION
SYSTEMS ASSOCIATES, INC.
|
|
BALANCE
SHEETS
|
|
DECEMBER
31,
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
21,047 |
|
|
$ |
204,768 |
|
|
Accounts
receivable
|
|
|
34,809 |
|
|
|
94,121 |
|
|
Prepaid
consulting
|
|
|
190,500 |
|
|
|
518,438 |
|
|
Prepaid
expenses
|
|
|
7,689 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Assets
|
|
|
254,045 |
|
|
|
817,327 |
|
|
|
|
|
|
|
|
|
|
|
|
Property
and Equipment (net)
|
|
|
174,288 |
|
|
|
21,168 |
|
|
|
|
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
60,559 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$ |
488,892 |
|
|
$ |
838,495 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
|
Note payable
- line of credit
|
|
$ |
20,055 |
|
|
$ |
- |
|
|
Note
payable - insurance
|
|
|
3,276 |
|
|
|
- |
|
|
Accounts
payable
|
|
|
66,910 |
|
|
|
10,326 |
|
|
Accrued
expenses and other laibilities
|
|
|
21,196 |
|
|
|
21,999 |
|
|
Deferred
revenue
|
|
|
1,879 |
|
|
|
1,500 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Liabilities
|
|
|
113,316 |
|
|
|
33,825 |
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
Common
stock-$.001 par value, 50,000,000 shares
|
|
|
|
|
|
|
|
|
|
authorized,
18,266,084 and 16,309,834 issued
|
|
|
|
|
|
|
|
|
|
and
outstanding for 2009 and 2008, respectively
|
|
|
18,266 |
|
|
|
16,310 |
|
|
Additional
paid in capital
|
|
|
2,179,213 |
|
|
|
1,587,669 |
|
|
Accumulated
deficit
|
|
|
(1,808,504 |
) |
|
|
(799,309 |
) |
|
Accumulated
other comprehensive
|
|
|
|
|
|
|
|
|
|
income
(loss)
|
|
|
(13,399 |
) |
|
|
- |
|
|
Total
Stockholders' Equity
|
|
|
375,576 |
|
|
|
804,670 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS'
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
$ |
488,892 |
|
|
$ |
838,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEE
ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
|
|
|
INFORMATION
SYSTEM ASSOCIATES, INC.
|
|
STATEMENTS
OF OPERATIONS
|
|
FOR
THE YEARS ENDED DECEMBER 31,
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
780,244 |
|
|
$ |
1,225,461 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of Sales
|
|
|
37,567 |
|
|
|
44,689 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
742,677 |
|
|
|
1,180,772 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
Administrative
and general
|
|
|
308,437 |
|
|
|
427,164 |
|
|
Payroll
and payroll taxes
|
|
|
224,206 |
|
|
|
161,448 |
|
|
Professional
|
|
|
1,218,790 |
|
|
|
1,180,744 |
|
|
Total
Operating Expenses
|
|
|
1,751,433 |
|
|
|
1,769,356 |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
Before Other Income
|
|
|
|
|
|
|
|
|
|
and
(Expense)
|
|
|
(1,008,756 |
) |
|
|
(588,584 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other
Income (Expense)
|
|
|
|
|
|
|
|
|
|
Interest
income, net
|
|
|
191 |
|
|
|
267 |
|
|
Loss
on sale of assets
|
|
|
(630 |
) |
|
|
- |
|
|
Total
Other Income (Expense)
|
|
|
(439 |
) |
|
|
267 |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
From Operations Before
|
|
|
|
|
|
|
|
|
|
Income
Taxes
|
|
|
(1,009,195 |
) |
|
|
(588,317 |
) |
|
|
|
|
|
|
|
|
|
|
|
Provision
for Income Taxes
|
|
|
- |
|
|
|
37,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Loss)
|
|
|
(1,009,195 |
) |
|
|
(626,108 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other
Comprehensive (Loss)
|
|
|
|
|
|
|
|
|
|
Unrealized
(loss) on securities:
|
|
|
|
|
|
|
|
|
|
Arising
during the year
|
|
|
(13,399 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Total
other comprehensive (loss)
|
|
|
(13,399 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
(Loss)
|
|
$ |
(1,022,594 |
) |
|
$ |
(626,108 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and Fully Diluted (Loss) per Share:
|
|
|
|
|
|
|
|
|
|
Basic
and fully diluted
|
|
$ |
(0.06 |
) |
|
$ |
(0.05 |
) |
|
Weighted
average common shares
|
|
|
|
|
|
|
|
|
|
outstanding
|
|
|
17,187,439 |
|
|
|
12,818,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEE
ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
|
|
|
INFORMATION
SYSTEMS ASSOCIATES, INC.
|
|
STATEMENTS
OF STOCKHOLDERS' EQUITY
|
|
FOR
THE YEARS ENDED DECEMBER 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Paid In Capital
|
|
|
|
|
|
Accumulated Other Comprehensive Income
Loss)
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Preferred Stock
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
January 1, 2008
|
|
|
11,409,834 |
|
|
$ |
11,410 |
|
|
|
- |
|
|
$ |
- |
|
|
$ |
367,569 |
|
|
$ |
(173,201 |
) |
|
$ |
- |
|
|
$ |
205,778 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock for services
|
|
|
3,900,000 |
|
|
|
3,900 |
|
|
|
- |
|
|
|
- |
|
|
|
971,100 |
|
|
|
- |
|
|
|
- |
|
|
|
975,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of stock
|
|
|
1,000,000 |
|
|
|
1,000 |
|
|
|
- |
|
|
|
- |
|
|
|
249,000 |
|
|
|
- |
|
|
|
- |
|
|
|
250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(626,108 |
) |
|
|
- |
|
|
|
(626,108 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2008
|
|
|
16,309,834 |
|
|
$ |
16,310 |
|
|
|
- |
|
|
$ |
- |
|
|
$ |
1,587,669 |
|
|
$ |
(799,309 |
) |
|
$ |
- |
|
|
$ |
804,670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
January 1, 2009
|
|
|
16,309,834 |
|
|
$ |
16,310 |
|
|
|
- |
|
|
$ |
- |
|
|
$ |
1,587,669 |
|
|
$ |
(799,309 |
) |
|
$ |
- |
|
|
$ |
804,670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock for services
|
|
|
956,250 |
|
|
|
956 |
|
|
|
- |
|
|
|
- |
|
|
|
342,544 |
|
|
|
- |
|
|
|
- |
|
|
|
343,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of stock
|
|
|
1,000,000 |
|
|
|
1,000 |
|
|
|
- |
|
|
|
- |
|
|
|
249,000 |
|
|
|
- |
|
|
|
- |
|
|
|
250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,009,195 |
) |
|
|
- |
|
|
|
(1,009,195 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
loss on investment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(13,399 |
) |
|
|
(13,399 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2009
|
|
|
18,266,084 |
|
|
$ |
18,266 |
|
|
|
- |
|
|
$ |
- |
|
|
$ |
2,179,213 |
|
|
$ |
(1,808,504 |
) |
|
$ |
(13,399 |
) |
|
$ |
375,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INFORMATION
SYSTEMS ASSOCIATES, INC.
|
|
STATEMENTS
OF CASH FLOWS
|
|
FOR
THE YEARS ENDED DECEMBER 31,
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Operating Activities
|
|
|
|
|
|
|
|
Net
(Loss)
|
|
$ |
(1,009,195 |
) |
|
$ |
(626,108 |
) |
|
Adjustments
to reconcile net (loss) to net
|
|
|
|
|
|
|
|
|
|
cash
provided from operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
19,657 |
|
|
|
22,208 |
|
|
Cumulative
change in deferred income tax
|
|
|
- |
|
|
|
37,154 |
|
|
Common
stock for services
|
|
|
671,438 |
|
|
|
458,360 |
|
|
(Loss)
on abandonment of fixed assets
|
|
|
630 |
|
|
|
308 |
|
|
|
|
|
|
|
|
|
|
|
|
(Increase)
decrease in:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
59,312 |
|
|
|
20,054 |
|
|
Prepaid
expenses
|
|
|
(7,689 |
) |
|
|
- |
|
|
Income
tax claim receivable
|
|
|
- |
|
|
|
637 |
|
|
Increase
(decrease) in:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
82,626 |
|
|
|
(77,740 |
) |
|
Accrued
expenses and other laibilities
|
|
|
(803 |
) |
|
|
18,423 |
|
|
Deferred
revenue
|
|
|
379 |
|
|
|
1,500 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash (Used in) Operating
|
|
|
|
|
|
|
|
|
|
Activities
|
|
|
(183,645 |
) |
|
|
(145,204 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
Computer
software devleopment costs
|
|
|
(159,203 |
) |
|
|
- |
|
|
Software
license agreement - payments received
|
|
|
- |
|
|
|
123,215 |
|
|
Software
license agreement - marketing costs
|
|
|
- |
|
|
|
(18,041 |
) |
|
Purchase
of property and equipment
|
|
|
(14,204 |
) |
|
|
(9,498 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
Cash (Used In)
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
(173,407 |
) |
|
|
95,676 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
Proceeds
from line of credit
|
|
|
20,055 |
|
|
|
- |
|
|
Payments
made on line of credit
|
|
|
- |
|
|
|
(9,030 |
) |
|
Borrowings
from note payable
|
|
|
9,615 |
|
|
|
- |
|
|
Payments
made on note payable
|
|
|
(6,339 |
) |
|
|
- |
|
|
Proceeds
from issuance of stock
|
|
|
150,000 |
|
|
|
250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
173,331 |
|
|
|
240,970 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Change in Cash and Cash
|
|
|
|
|
|
|
|
|
|
Equivalents
|
|
|
(183,721 |
) |
|
|
191,442 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents at
|
|
|
|
|
|
|
|
|
|
Beginning
of period
|
|
|
204,768 |
|
|
|
13,326 |
|
|
|
|
|
|
|
|
|
|
|
|
End
of Period
|
|
$ |
21,047 |
|
|
$ |
204,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEE
ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
|
|
INFORMATION
SYSTEMS ASSOCIATES, INC.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
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 Data
Center Management Information Systems (DCMIS) based asset management
tools.
|
|
|
For
the purposes of the Statement of Cash Flows, the Company considers liquid
investments with an original maturity of three months or less to be a cash
equivalent.
|
|
|
Concentrations of
Credit Risk
|
|
|
The Company grants credit
to its customers during the normal course of business. The
Company performs ongoing credit evaluations of its customers' financial
condition and generally requires no collateral from its
customers.
|
At times
throughout the year the Company may maintain certain bank accounts in excess of
the FDIC insured limits. At December 31, 2009 and 2008, amounts on
deposit at institutions did not exceed FDIC insured limits.
The
Company recognizes revenue in accordance with SEC Staff Accounting Bulletin No.
104, "Revenue Recognition" and FASB Accounting Standards Codification 605-25,
“Revenue Recognition Multiple-element Arrangements” (formerly 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 the Company’s 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.
Revenue
Recognition (cont’d)
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 periods ending December 31, 2009
and 2008.
Comprehensive
Income (Loss)
The
Company adopted FASB Accounting Standards Codification 220 “Comprehensive Income
(formerly SFAS No. 130, "Reporting Comprehensive Income”), which establishes
standards for the reporting and display of comprehensive income and its
components in the financial statements.
Comprehensive
income (loss) is the total of (1) net income (loss) plus (2) all other changes
in the net assets arising from non-owner sources, which are referred to as
comprehensive income. The Company has presented statements of income
which includes other comprehensive income or loss.
Income Taxes
Income
taxes are provided in accordance FASB Accounting Standards Codification 740
“Income Taxes” (formerly SFAS No. 109, "Accounting for Income
Taxes). A deferred tax asset or liability is recorded for all
temporary differences between financial and tax and net operating loss carry
forwards. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion
or the entire deferred tax asset will not be realized. Deferred tax
assets and liabilities are adjusted for the effect of changes in tax laws and
rates on the date of enactment.
Fair Value of Financial
Instruments
The
carrying amounts reported in the balance sheet for cash, accounts receivable and
payables and loans payable approximate fair value based on the short-term
maturity of these instruments. The carrying value of the Company’s
long-term debt approximated its fair value based on the current market
conditions for similar debt instruments.
INFORMATION
SYSTEMS ASSOCIATES, INC.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
NOTE 1 – STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (cont’d)
Accounts Receivable
Accounts
receivable are stated at estimated net realizable value. Accounts
receivable are comprised of balances due from customers net of estimated
allowances for uncollectible accounts. In determining the collections on the
account, historical trends are evaluated and specific customer issues are
reviewed to arrive at appropriate allowances.
Property 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.
The
Company recognizes 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.
Impairment of Long-Lived
Assets
The
Company evaluated the recoverability of its property, equipment, and other
assets in accordance with FASB Accounting Standards Codification 360 “Property,
Plant and Equipment” (formerly SFAS 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets”), which requires recognition of impairment of
long-lived assets in the event the net book value of such assets exceed the
estimated future undiscounted
cash flows attributable to such assets or the business to which such intangible
assets relate.
Software
Development Costs
The
Company accounts for costs incurred to develop computer software for internal
use in accordance with FASB Accounting Standards Codification 350-40
“Internal-Use Software” (formerly Statement of Position (SOP) 98-1, "Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use”)
". As required by ASC 350-40, the Company capitalizes 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 one to
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.
Software
Development Costs
After the
development of the internal-use "On Site Physical Inventory” software (OSPI) was
complete, the Company 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.
On
December 31, 2009, the Company released Version 2 of the “On Site Physical
Inventory” software (OSPI) for sale in the marketplace. The Company
accounts for internally produced software with FASB Accounting Standard
Codification 985-20 “Cost of Software To Be Sold, Leased, or Otherwise Marketed”
(formally SFAS 86,”Accounting for the Costs of Computer software to be Sold,
Leased or Otherwise Marketed). Costs were capitalized when the second
version was established as technically feasible and will be written off on a
straight line method over the estimated useful life.
Share-Based
Payments
The
Company accounts for payments of goods and services with stock with FASB
Accounting Standards Codification 719 “Compensation-Stock Compensation”
(formerly SFAS No. 123 (R), “Share-Based Payments”, which establishes standards
for transactions in which an entity exchanges its equity instruments for goods
and services.
This
standard requires a public entity to measure the cost of employee services using
an option-pricing model, such as the Black-Scholes Model, received in exchange
for an award of equity instruments based on the grant-date fair value of the
award. Shares of common stock issued for services rendered by a third
party are recorded at the fair market value of the shares issued or services
rendered, whichever is more readily determinable.
Dividends
The
Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid or declared since inception.
Advertising
Expenses
Advertising
costs are expensed as incurred. For the years ended December 31, 2009
and 2008 advertising expenses totaled $983 and $557, respectively.
INFORMATION
SYSTEMS ASSOCIATES, INC.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
NOTE 1 – STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (cont’d)
Earnings
(Loss) Per Share
The
Company reports earnings (loss) per share in accordance with FASB Accounting
Standards Codification 260 “Earnings per Share” (formerly SFAS 128, “Earnings
per Share”). This statement requires dual presentation of basic and diluted
earnings (loss) with a reconciliation of the numerator and denominator of the
loss per share computations. Basic earnings per share amounts are
based on the weighted average shares of common outstanding. If
applicable, diluted earnings per share assume the conversion, exercise or
issuance of all common stock instruments such as options, warrants and
convertible securities, unless the effect is to reduce a loss or increase
earnings per share. Accordingly, this presentation has been adopted
for the periods presented. There were no adjustments required to net
income for the period presented in the computation of diluted earnings per
share. There were no common stock equivalents (CSE) necessary for the
computation of diluted loss per share.
Recent
Accounting Literature
FASB Accounting
Standards Codification
(Accounting Standards Update (“ASU”)
2009-01)
In
June 2009, FASB approved the FASB Accounting Standards Codification (“the
Codification”) as the single source of authoritative nongovernmental GAAP. All
existing accounting standard documents, such as FASB, American Institute of
Certified Public Accountants, Emerging Issues Task Force and other related
literature, excluding guidance from the Securities and Exchange Commission
(“SEC”), have been superseded by the Codification. All other non-grandfathered,
non-SEC accounting literature not included in the Codification has become
nonauthoritative. The Codification did not change GAAP, but instead introduced a
new structure that combines all authoritative standards into a comprehensive,
topically organized online database. The Codification is effective for interim
or annual periods ending after September 15, 2009, and impacts the
Company’s financial statements as all future references to authoritative
accounting literature will be referenced in accordance with the Codification.
There have been no changes to the content of the Company’s financial statements
or disclosures as a result of implementing the Codification during the year
ended December 31, 2009.
As a
result of the Company’s implementation of the Codification during the year ended
December 31, 2009, previous references to new accounting standards and
literature are no longer applicable. In the current financial statements, the
Company will provide reference to both new and old guidance to assist in
understanding the impacts of recently adopted accounting literature,
particularly for guidance adopted since the beginning of the current fiscal year
but prior to the Codification.
Subsequent
Events
(Included in Accounting Standards
Codification (“ASC”) 855 “Subsequent Events”, previously SFAS No. 165
“Subsequent Events”)
SFAS
No. 165 established general standards of accounting for and disclosure of
events that occur after the balance sheet date, but before the financial
statements are issued or available to be issued (“subsequent events”). An entity
is required to disclose the date through which subsequent events have been
evaluated and the basis for that date. For public entities, this is the date the
financial statements are issued. ASC No. 855 does not apply to subsequent
events or transactions that are within the scope of other GAAP and did not
result in significant changes in the subsequent events reported by the Company.
ASC No. 855 became effective for interim or annual periods ending after
June 15, 2009 and did not impact the Company’s financial statements. The
Company evaluated for subsequent events through the issuance date of the
Company’s financial statements. No recognized or non-recognized subsequent
events were noted.
Determination of
the Useful Life of Intangible Assets
(Included in ASC 350 “Intangibles —
Goodwill and Other”, previously FSP SFAS No. 142-3 “Determination of the
Useful Lives of Intangible Assets”)
ASC
No. 350 amended the factors that should be considered in developing renewal
or extension assumptions used to determine the useful life of a recognized
intangible asset under previously issued goodwill and intangible assets topics.
This change was intended to improve the consistency between the useful life of a
recognized intangible asset and the period of expected cash flows used to
measure the fair value of the asset under topics related to business
combinations and other GAAP. The requirement for determining useful lives must
be applied prospectively to intangible assets acquired after the effective date
and the disclosure requirements must be applied prospectively to all intangible
assets recognized as of, and subsequent to, the effective date. ASC No. 350
became effective for financial statements issued for fiscal years beginning
after December 15, 2008, and interim periods within those fiscal years. The
adoption of ASC No. 350 did not impact the Company’s financial
statements.
Noncontrolling
Interests
(Included in ASC 810
“Consolidation”, previously SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements an amendment of ARB
No. 51”)
ASC
No. 810 changed the accounting and reporting for minority interests such
that they will be recharacterized as noncontrolling interests and classified as
a component of equity. ASC No. 810 became effective for fiscal years
beginning after December 15, 2008 with early application prohibited. The
Company implemented ASC No. 810 at the start of fiscal 2009.
INFORMATION
SYSTEMS ASSOCIATES, INC.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
NOTE 1 – STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (cont’d)
Noncontrolling
Interests (cont’d)
The
Company presents noncontrolling interests (previously shown as minority
interest) as a component of equity on its consolidated balance sheets. Minority
interest expense is no longer separately reported as a reduction to net income
on the consolidated income statement, but is instead shown below net income
under the heading “net income attributable to noncontrolling interests.” The
adoption of ASC No. 810 did not have any other material impact on the
Company’s financial statements.
Consolidation of
Variable Interest Entities — Amended
(To be included in ASC 810
“Consolidation”, SFAS No. 167 “Amendments to FASB Interpretation No.
46(R)”)
ASC
No. 810 amends FASB Interpretation No. 46(R) “Consolidation of
Variable Interest Entities” regarding certain guidance for determining whether
an entity is a variable interest entity and modifies the methods allowed for
determining the primary beneficiary of a variable interest entity. The
amendments include: (1) the elimination of the exemption for qualifying
special purpose entities, (2) a new approach for determining who should
consolidate a variable-interest entity, and (3) changes to when it is
necessary to reassess who should consolidate a variable-interest entity. ASC
No. 810 is effective for the first annual reporting period beginning after
November 15, 2009, with earlier adoption prohibited. The Company will adopt
ASC No. 810 in 2010 and does not anticipate any material impact on the
Company’s financial statements.
The
Hierarchy of Generally Accepted Accounting Principles
(To be included in ASC 105-10
“Generally Accepted Accounting Principles”, SFAS No. 162, “The Hierarchy of
Generally Accepted Accounting Principles”)
ASC No.
105-10 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. ASC
No. 105-10 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 ASC No. 105-10 will have a significant impact on the Company’s financial
statements.
Certain
reclassifications have been made to the prior period financial statements
presented to conform to 2009. Such reclassifications had no effect on reported
income.
Use of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
|
|
NOTE
2 – CASH AND CASH EQUIVALENT
|
|
|
|
2009
|
|
|
2008
|
|
|
Wachovia
Bank (FDIC insured to $250,000.00)
|
|
$ |
20,805 |
|
|
$ |
204,768 |
|
|
Petty
cash
|
|
|
242 |
|
|
|
- |
|
|
Total
cash and cash equivalent
|
|
$ |
21,047 |
|
|
$ |
204,768 |
|
|
|
NOTE
3 – PROPERTY AND EQUIPMENT
|
|
|
|
2009
|
|
|
2008
|
|
|
Computer
software (developed for internal use)
|
|
$ |
191,817 |
|
|
$ |
32,614 |
|
|
Computer
software (purchased)
|
|
|
590 |
|
|
|
590 |
|
|
Web
site development
|
|
|
10,072 |
|
|
|
- |
|
|
Furniture,
fixtures, and equipment
|
|
|
26,047 |
|
|
|
23,093 |
|
|
|
|
|
228,526 |
|
|
|
56,297 |
|
|
Less
accumulated depreciation and amortization
|
|
|
54,238 |
|
|
|
35,129 |
|
|
Property
and equipment (net)
|
|
$ |
174,288 |
|
|
$ |
21,168 |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization expense
|
|
$ |
19,657 |
|
|
$ |
22,208 |
|
|
|
NOTE
4 – COMPUTER SOFTWARE DEVELOPED FOR INTERNAL
USE
|
In 2009,
the Company completed development of an updated version of the “On Site Physical
Inventory” (OSPI) product. Version 2 was available as of December 1,
2009. During the year ended December 31, 2007, the Company completed the
development of the initial version of, “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.
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 FASB Accounting
Standards Codifications 350-40 “Internal Use Software” (formerly Statement of
Position (SOP) 98-1, “Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use”) as follows:
|
|
|
2009
|
|
|
2008
|
|
|
Development
costs
|
|
$ |
297,603 |
|
|
$ |
138,400 |
|
|
Software
license agreement – payments received
|
|
|
(135,257 |
) |
|
|
(135,257 |
) |
|
Software
license agreement – marketing costs
|
|
|
29,471 |
|
|
|
29,471 |
|
|
|
|
|
191,817 |
|
|
|
32,614 |
|
|
Less: accumulated
depreciation and amortization
|
|
|
43,000 |
|
|
|
29,471 |
|
|
|
|
$ |
148,818 |
|
|
$ |
3,143 |
|
INFORMATION
SYSTEMS ASSOCIATES, INC.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
NOTE
5 – INVESTMENT
On April
17, 2009, the Company entered into a strategic alliance agreement with Rubicon
Software Group, lpc (a company registered under the laws of England and Wales).
The Company will be Rubicon’s exclusive agent in the United States for reselling
Rubicon’s software and services. In return, Rubicon will be a software
development partner and provide consulting services to the Company.
The
Company agreed to purchase 2,500,000 ordinary shares for a subscription price of
$.02 (two pence) a share. The total cost of the subscription was $50,000 or
$73,958, USD. Within ninety days of the subscription date, the Company could
purchase an additional 2,500,000 shares at the same subscription price in
British pounds. The ninety day period has lapsed with the Company not
purchasing any additional shares.
Also, the
Company has the ability, over the next three years, of subscribing to a maximum
5,000,000 warrant shares. Each warranted share will be at a subscription price
of £.05 (five pence) per share and will be issued in offerings of 100,000
shares. The number of subscripted shares will be based on gross
revenue received by Rubicon Software Group, lpc.
Securities
investments not classified as either held-to-maturity or trading securities are
classified as available-for-sale securities. Available-for-sale
securities are recorded at fair value in investments and other assets on the
balance sheet, with the change in fair value during the period excluded from
earnings and recorded net of taxes as a component of other comprehensive
income.
Available
–for-sale securities were as follows:
|
|
December 31,
2009 |
|
|
December 31, 2008 |
| Type
of securities: |
Cost |
Market |
|
|
|
Cost
|
|
Market
|
|
| Common
stock |
$73,958
|
$
60,559 |
($13,399) |
|
|
$ - |
|
$ - |
$ - |
| Total |
$73,968
|
$
60,559 |
($
13,399) |
|
|
$ - |
|
$ - |
$ - |
|
|
NOTE
6 – FAIR VALUE MEASUREMENTS
In 2009,
the Company implemented FASB Accounting Standards Codification 850 “Fair Value
Measurements and Disclosures” (formerly SFAS 157, “Fair Value Measurements”),
relative to its financial assets and liabilities that are recognized or
disclosed at fair value in the financial statements at least
annually.
In
determining the fair value of investments held by the Company, the Level 1
valuation technique of “Quoted Market Price in Active Market” was implemented as
the Company was able to obtain a quote from the London Stock Exchange as of
December 31, 2009.
As of
December 31, 2009 the Company’s investments that are carried at fair value on a
recurring basis include the following:
|
|
|
|
|
|
Fair Value Measurements
Using
|
|
|
|
|
Total
|
|
|
Quoted
Prices in Active Markets
(Level 1)
|
|
|
Significant
Other Observable Inputs
(Level 2)
|
|
|
Significant Unobservable
Inputs
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available
–for-sale securities
|
|
$ |
60,559 |
|
|
$ |
60,559 |
|
|
$ |
- |
|
|
$ |
- |
|
NOTE
7 – NET (LOSS) PER SHARE
Basic
earning per share (EPS) is computed by dividing net (loss) by the weighted
average number of common shares outstanding, and the dilutive EPS adds the
dilutive effect of stock options and other stock equivalents. For the
years ended December 31, 2009 and 2008, outstanding options to purchase an
aggregate of 15,000,000 shares of stock were excluded from the computation of
dilutive earnings per share because the inclusion would have been
anti-dilutive.
NOTE
8 – INCOME TAXES
The
provision for income taxes for the year ended December 31, 2008 was $37,791 as
the Company increased its valuation allowance for taxes.
Deferred
tax assets reflect the net tax effects of net operating losses and tax credit
carryforwards and temporary differences between the carrying amounts used for
income tax purposes.
Significant
components of the Company’s deferred tax assets are as follows:
|
|
|
2009
|
|
|
2008
|
|
|
Net
operating losses
|
|
$ |
325,247 |
|
|
$ |
88,742 |
|
|
Common
stock for services
|
|
|
21,520 |
|
|
|
65,235 |
|
|
Capital
loss carryover
|
|
|
1,181 |
|
|
|
1,181 |
|
|
Contributions
|
|
|
251 |
|
|
|
251 |
|
|
|
|
|
348,199 |
|
|
|
155,409 |
|
|
Less: deferred
tax liabilities
|
|
|
(5,521 |
) |
|
|
(6,072 |
) |
|
|
|
|
342,678 |
|
|
|
149,337 |
|
|
Valuation
allowance
|
|
|
(342,678 |
) |
|
|
(149,337 |
) |
|
Net
tax asset
|
|
$ |
- |
|
|
$ |
- |
|
A
reconciliation of income tax at the statutory rate to the Company’s effective
rate is as follows:
|
|
|
2009
|
|
|
2008
|
|
|
Computed
tax at the expected statutory rate
|
|
|
15.00 |
% |
|
|
15.00 |
% |
|
State
income tax – net of federal tax benefit
|
|
|
4.78 |
% |
|
|
4.78 |
% |
|
Income
tax expense – effective rate
|
|
|
19.78 |
% |
|
|
19.78 |
% |
INFORMATION
SYSTEMS ASSOCIATES, INC.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
NOTE 8 – INCOME TAXES
(cont’d)
Realization
of the deferred tax asset is dependent on future earnings, if any, the timing of
which is uncertain. Accordingly, the Company’s net deferred tax asset
has been fully offset by a valuation allowance.
|
|
2009
|
2008
|
|
The
Company has the following net operating
|
|
|
|
loss
carryovers for income tax purposes:
|
|
|
|
Expiring
2026
|
$
82,899
|
$
82,899
|
|
Expiring
2027
|
131,828
|
131,828
|
|
Expiring
2028
|
236,311
|
236,311
|
|
Expiring
2029
|
1,202,060
|
-
|
|
|
$1,653,098
|
$451,038
|
For tax
year 2008, the Company has applied for a change in accounting method with the
Internal Revenue Service to report under the accrual method of accounting rather
than report under the cash-basis method.
This
change in accounting method will require the Company to recognize additional
taxable income of $100,456. The Internal Revenue Services allows for
this income to be recognized pro rata over four years. To that end, the Company
will recognize $25,114 of income in each year through December 31,
2011.
NOTE
9 – SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental
disclosures of cash flow information for the periods ended December 31, 2009 and
2008 is summarized as follows:
|
|
|
2009
|
|
|
2008
|
|
|
Cash
paid during the periods for interest and
|
|
|
|
|
|
|
|
income
taxes:
|
|
|
|
|
|
|
|
Income
taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
Interest
|
|
$ |
175 |
|
|
$ |
2,628 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash
Investing Activities:
|
|
|
|
|
|
|
|
|
|
Balance
of consulting services for contributed capital
|
|
$ |
518,438 |
|
|
$ |
1,798 |
|
|
Acquisition
of consulting services for
|
|
|
|
|
|
|
|
|
|
contributed
capital
|
|
|
343,500 |
|
|
|
975,000 |
|
|
Consulting
services prepaid for future months
|
|
|
(190,500 |
) |
|
|
(518,438 |
) |
|
Non-cash
expense of consulting services for
|
|
|
|
|
|
|
|
|
|
contributed
capital
|
|
$ |
671,438 |
|
|
$ |
458,360 |
|
|
Sale
of common stock
|
|
$ |
100.000 |
|
|
|
- |
|
|
Reduction
to accounts payable
|
|
|
(26,042 |
) |
|
|
- |
|
|
Investment
|
|
|
(73,958 |
) |
|
|
- |
|
|
Net
change in cash proceeds
|
|
$ |
- |
|
|
$ |
- |
|
INFORMATION
SYSTEMS ASSOCIATES, INC.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
NOTE
10 – EMPLOYEE BENEFITS
The
Company has a SIMPLE Plan (Plan) to provide retirement and incidental benefits
for its employees. Employees may contribute from 1% to 15% of their
annual compensation to the Plan, limited to a maximum annual amount as set
periodically by the Internal Revenue Service. The Company matches employee
contributions dollar for dollar up to the IRS maximum. All matching
contributions vest immediately. Such contributions to the Plan are
allocated among eligible participants in the proportion of their salaries to the
total salaries of all participants. Company matching contributions to the Plan
for the periods ended December 31, 2009 and 2008 totaled $4,200 and $3,600,
respectively.
The
Company has a medical reimbursement plan that reimburses officers for all out of
pocket medical expenses not covered by the Company provided insurance
plan. Company expenses under the medical reimbursement plan for the
periods ended December 31, 2009 and 2008 totaled $21,782 and $17,631,
respectively.
NOTE
11 – OPERATING LEASE
The
Company leases its corporate offices. The lease requires monthly
payments of $1,400. The lease commenced on June 1, 2007 and expired
on May 31, 2008. This lease was renewed for an additional year,
concluding May 31, 2009.
On March
2, 2009 the lease was renewed for $1,200 per month. The Company holds
an additional option to renew the lease “at the market price.” This renewed
lease went into effect June 1, 2009. The rent expense as of December
31, 2009 and 2008 was $16,614 and $18,773, respectively.
NOTE
12 – NOTE PAYABLE - LINE OF CREDIT
The
Company has a line of credit with Wachovia Bank N.A. The line of
credit provides for borrowings up to $40,000. The balances as of
December 31, 2009 and 2008 were $20,055 and $0, respectively. The
interest rate is the Prime Rate plus 3%. The President of the Company
is a personal guarantor on the line of credit.
NOTE
13 – NOTE PAYABLE - INSURANCE
The
Company has incurred short term financing for the purchase of
insurance. The note was for $9,735. The interest rate on
the debt is 4.959% and will be repaid through May 31, 2010. The outstanding
balance as of December 31, 2009 is $ 3,276.
NOTE
14 – COMMON STOCK
In 2008,
the Company entered into an agreement with Derek J. Leach (“Leach”) to purchase
common stock. Under terms of the agreement, the Company will issue
2,000,000 shares at $.25 per share for total proceeds of $500,000 over a period
of five months. The Company had waived the five month
period. The purchases of stock are as follows:
|
Date
|
|
# of Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
7/15/08
|
|
|
400,000 |
|
|
$ |
100,000 |
|
|
12/31/08
|
|
|
600,000 |
|
|
$ |
150,000 |
|
|
4/22/09
|
|
|
400,000 |
|
|
$ |
100,000 |
|
|
07/23/09
|
|
|
600,000 |
|
|
$ |
150,000 |
|
|
|
|
|
2,000,000 |
|
|
$ |
500,000 |
|
NOTE
15 – SHARE BASED PAYMENTS FOR SERVICES
On
September 11, 2009, the Company entered into an agreement to receive a variety
of corporate consulting services. The contract will run for one year at a rate
of $2,000 per month. In addition, the consultants will receive a commencement
bonus of 300,000 shares of company common stock. Shares were valued
at current market price. Expenses of $89,000 were recorded for the year ended
December 31, 2009.
On
September 8, 2008, the Company entered into an agreement to receive consulting
services. The consultants will provide 400 hours of service for
400,000 shares of common stock. All services will be accounted for at
a rate of $250 an hour. 174.25 hours and 76.25 hours at a cost of
$43,563 and $19,063 respectively, were recorded as expense for the years ended
December 31, 2009 and 2008.
On July
31, 2008, the Company formalized an agreement in place since January 1, 2008, to
receive a variety of consultant services for 500,000 shares of the Company’s
common stock. The stock was valued at a prevailing market rate of
$.25 per share. The agreement was concluded on September 1, 2008 and
stock was issued.
On
September 12, 2008, the Company entered into agreements with three companies to
receive a variety of consulting services. Each agreement has a term
of one year starting August 1, 2008 and remuneration will be
$250,000 per annum. Each subsequent year, the annual rate will
increase $12,500 while the agreement is in effect. The Company has
the option of paying the consultants in cash or common stock. The
Company has decided to issue 1,000,000 shares of stock to the consulting firms
as payment for services. The value of stock will be at $.25 per
share. A pro-rata portion of this agreement of $437,500 and $312,500
has been expensed for the years ended December 31, 2009 and 2008,
respectively.
On July
7, 2009 a notice of non renewal was forwarded to two of three
companies, but one remaining company will continue providing services starting
August 1, 2009 at an agreed to rate of $262,500. The Company issued
656,200 shares of common stock for the service provided. Through December 32,
2009, $109,375 has been expensed.
INFORMATION
SYSTEMS ASSOCIATES, INC.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
NOTE 15 – SHARE BASED PAYMENTS FOR
SERVICES (cont’d)
All three
consultants were issued a series of options as follows:
1,000,000 share option to acquire
shares at $1.00 per share
1,000,000 share option to acquire
shares at $2.00 per share
1,000,000 share option to acquire
shares at $3.00 per share
1,000,000 share option to acquire
shares at $4.00 per share
1,000,000 share option to acquire
shares at $5.00 per share
To
determine the valuation of the options, FASB Accounting Standards Codification
718, “Compensation – Stock Compensation” (formerly FASB 123(R)) requires a
valuation technique to estimate the fair value of the options
issued. The Black-Sholes Model incorporates the various
characteristics for proper valuation. As of September 30, 2008, the
valuation of the options was determined to be $0.
All
issued options expire three years from the date of exercise.
Following
is a summary of the status of options outstanding as of December 31, 2009 and
2008 respectively:
|
|
|
For
the Year Ended December31, 2009
|
|
|
For
the Year Ended December31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Weighted
Average Exercise Price
|
|
|
Shares
|
|
|
Weighted
Average Exercise Price
|
|
|
Outstanding
at beginning of year
|
|
|
15,000,000 |
|
|
$ |
3.00 |
|
|
|
- |
|
|
$ |
- |
|
|
Granted
|
|
|
- |
|
|
|
- |
|
|
|
15,000,000 |
|
|
|
3.00 |
|
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Forfeited
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Expired
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Outstanding
at end of period
|
|
|
15,000,000 |
|
|
$ |
3.00 |
|
|
|
15,000,000 |
|
|
$ |
3.00 |
|
|
Exercisable
at end of period
|
|
|
15,000,000 |
|
|
$ |
3.00 |
|
|
|
15,000,000 |
|
|
$ |
3.00 |
|
|
Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average remaining contractual term
|
|
|
|
|
|
|
1.59 |
|
|
|
|
|
|
|
2.59 |
|
|
Aggregated
intrinsic value
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
Weighted
average grant date fair value
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
Exercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average remaining contractual term
|
|
|
|
|
|
|
1.59 |
|
|
|
|
|
|
|
2.59 |
|
|
Aggregated
intrinsic value
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
NOTE
16 – MAJOR CUSTOMERS
One major
customer accounted for $634,357 and $963,158 of revenue for the years ended
December 31, 2009 and 2008 respectively. These amounts represent 81%
and 79% of the Company’s revenue for the years ended December 31, 2009 and 2008
respectively.
As of
December 31, 2009 and 2008, this customer accounted for 41% and 73% of accounts
receivable, respectively.
NOTE
17 – SUBSEQUENT EVENTS
We
evaluated subsequent events through the date and time our financial statements
were issued on March 9, 2010. The Company drew $19,000 on its line of
credit through March 9, 2010.
NOTE
18 – GOING CONCERN
As
reflected in the accompanying financial statements, the Company had a net
operating loss for the year ended December 31, 2009 of
$1,009,195. The total accumulated deficit as of December 31, 2009 was
$1,808,504. The ability of the Company to continue as a going concern
is dependent on the Company’s ability to further implement its business plan and
raise capital. The financial statements do not included any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
ITEM 9. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS
AND PROCEDURES
We
maintain disclosure controls and procedures designed to ensure that information
required to be disclosed in reports filed under the Securities Exchange Act of
1934 (“Exchange Act”) is recorded, processed, summarized and reported within the
specified time periods. Our Chief Executive Officer and Chief
Financial Officer (collectively, the “Certifying Officers”) are responsible for
maintaining our disclosure controls and procedures. The controls and
procedures established by us are designed to provide reasonable assurance that
information required to be disclosed by the issuer in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Commission’s rules and
forms.
As of the
end of the period covered by this report, the Certifying Officers evaluated the
effectiveness of our disclosure controls and procedures. Based on the
evaluation, the Certifying Officers concluded that our disclosure controls and
procedures were effective to provide reasonable assurance that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the applicable rules and forms, and that it is accumulated
and communicated to management, including the Certifying Officers, as
appropriate, to allow timely decisions regarding required
disclosure.
The
Certifying Officers have also concluded, based on their evaluation of our
controls and procedures that as of December 31, 2009, our internal controls over
financial reporting are effective and provide a reasonable assurance of
achieving their objective.
The
Certifying Officers have also concluded that there was no change in our internal
controls over financial reporting identified in connection with the evaluation
that occurred during our fourth fiscal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT
DIRECTORS
AND EXECUTIVE OFFICERS
Article
III, of our Bylaws provides that the first Board of Directors and all subsequent
Boards of the Corporation shall consist of (Joseph P Coschera), unless and until
otherwise determined by vote of a majority of the entire Board of
Directors. Our officers are appointed by the Board of Directors and
serve at the pleasure of the Board. We have entered into employment
agreements with our executive officers (Joseph P. Coschera and Loire A. Lucas).
The term of each of the agreements is five (5) years renewable at the end of
each period by mutual agreement.
|
Name
|
Age
|
Position
|
|
|
|
|
|
Joseph
Coschera
|
61
|
President
and Director
|
|
Loire
Lucas
|
51
|
Vice
President and Director
|
| Michael
R. Hull |
56 |
Chief
Financial Officer |
Joseph
Coschera
Joseph
Coschera is the founder and President of Information Systems Associates, Inc.
which he opened in the summer of 1992 for business. Prior to forming
ISA Joe held the position of Vice President with JPMorgan
Chase. Joe’s career at JPMC spanned 18 years rising from the position
of Systems Engineer to Manager of Facilities and Hardware Planning for the
Retail Banking Division. Joe’s responsibilities were extremely
diverse and included space planning for the Division’s staff, facilities and
hardware planning for several mega data centers and the network operation
centers. In addition, he managed the Planning and Implementation
Group whose responsibilities included the planning, acquisition and deployment
of the technology infrastructure throughout the bank’s branch banking
network. Joe served as both a team member and project manager during
his tenure. He managed such projects as the deployment of state of
the art banking technology (ATMs and Platform Automation) to more than 200
branches on three different occasions as well as data center mergers and
build-outs. Joe was recognized for his contributions related to the
relocation and consolidation of several large data processing
centers. It was that experience that Joe utilized as the foundation
for ISA’s service offerings.
Currently
Joe is leading ISA’s development efforts as well as new business development and
business partner relationships. Joe is also serving as Chief
Financial Officer and Principal Accounting Officer for ISA. Joseph
Coschera's financial experience came as a result of
his previously holding a position as Vice President with JPMorgan
Chase, which spanned 18 years rising from the position of Systems Engineer to
Manager of Facilities and Hardware Planning for the Retail Banking
Division. Joe’s responsibilities were extremely diverse and
included direct interaction with financial departments. As part of
managing the deployment of state of the art banking technology (ATMs and
Platform Automation) to more than 200 branches, Joe had extensive interaction
with the financial systems departments in order to perform his tasks
better. He has kept up to date with the Sarbanes-Oxley Act of 2002
via the Internet. He has also reviewed PCAOB guidance from its web
site and has read the portion of the SEC web site that deals with the Office of
Chief Accountant. He surrounds himself with CPA's and reads 10-Q's
and 10-K's from other companies. He also reads PPC checklists which
mandate the exact detail disclosure requirements that will be expected of him
once the company is fully reporting.
Loire
Lucas
Loire
Lucas began her career with the NCR Corporation upon graduation from Florida
Atlantic University in 1982 where she received her Bachelors of Applied
Science. As a Systems Engineer, she worked on banking clients
projects in Europe and Africa. Upon her return from Africa, she
continued to work at corporate headquarters in Dayton,
Ohio. Following her headquarters position, Loire transferred to NCR’s
New York Sales office where she worked with major financial institutions
managing their banking platform migration to state of the art hardware and
software platforms.
Michael R.
Hull
Michael
R. Hull became our
Chief Financial Officer in September 2009. Since January 2010,
he has been Managing Director of Accounting Outsource Solutions LLC, which
provides CFO and related services to businesses, including Information Systems
Associates. Mr. Hull is not an employee and Accounting Outsource Solutions
provides our financial reporting functions through Mr. Hull on a part-time
basis. From January 2008 through December 2009, Mr. Hull was the Managing
Director - CFO Services for WSR Consulting, Inc. in Palm City,
Florida. From December 2006 through November 2007,
Mr. Hull was Chief Financial Officer of BabyUniverse, Inc. in Jupiter,
Florida. From December 2004 to December 2006 Mr. Hull was a
consultant with Resources Global Professionals in Fort Lauderdale, Florida.
Prior to December 2004 Mr. Hull spent eight years as CFO of BCT
International, Inc. in Fort Lauderdale and eleven years in public accounting
with the South Florida audit practice of Price Waterhouse.
Other
than those persons mentioned above, we have one other employee, Shirley Walker
who provides accounting services to ISA.
Family
Relationships
Loire
Lucas is married to Joe Coschera
ARTICLES
AND BYLAWS
Article
III, of our Bylaws provides that the first Board of Directors and all subsequent
Boards of the Corporation shall consist of (Joseph P Coschera), unless and until
otherwise determined by vote of a majority of the entire Board of
Directors. The Board of Directors or shareholders all have the power,
in the interim between annual and special meetings of the shareholders, to
increase or decrease the number of Directors of the Corporation. A Director need
not be a shareholder of the Corporation unless the Certificate of Incorporation
of the Corporation or the Bylaws so require. The first Board of
Directors shall hold office until the first annual meeting of shareholders and
until their successors have been duly elected and qualified or until there is a
decrease in the number of Directors. Thereinafter, Directors will be
elected at the annual meeting of shareholders and shall hold office until the
annual meeting of the shareholders next succeeding his election, unless their
terms are staggered in the Articles of incorporation of the Corporation (so long
as at least one-fourth in number of the Directors of the Corporation are elected
at each annual shareholders’ meeting) or these Bylaws, or until his prior death,
resignation or removal. Any Director may resign at any time upon
written notice of such resignation to the Corporation.
LEGAL
PROCEEDINGS
No
officer, director, or persons nominated for such positions and no promoter or
significant employee of our Company has been involved in legal proceedings that
would be material to an evaluation of our management.
AUDIT
COMMITTEE
We do not
have a separately designated standing audit committee. Pursuant to
Section 3(a)(58)(B) of the Exchange Act, the entire Board of Directors acts as
an audit committee for the purpose of overseeing the accounting and financial
reporting processes, and audits of our financial statements. The
Commission recently adopted new regulations relating to audit committee
composition and functions, including disclosure requirements relating to the
presence of an "audit committee financial expert" serving on its audit
committee. In connection with these new requirements, our Board of Directors
examined the Commission's definition of "audit committee financial expert" and
concluded that we do not currently have a person that qualifies as such an
expert. We have had minimal operations for the past two (2)
years. Presently, there are only four (4) directors serving on our
Board, and we are not in a position at this time to attract, retain and
compensate additional directors in order to acquire a director who qualifies as
an "audit committee financial expert", but we intend to retain an additional
director who will qualify as such an expert, as soon as reasonably practicable.
While neither of our current directors meets the qualifications of an "audit
committee financial expert", each of our directors, by virtue of his past
employment experience, has considerable knowledge of financial statements,
finance, and accounting, and has significant employment experience involving
financial oversight responsibilities. Accordingly, we believe that
our current directors capably fulfill the duties and responsibilities of an
audit committee in the absence of such an expert.
CODE OF
ETHICS
We have
adopted a code of ethic (the "Code of Ethics") that applies to our principal
chief executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions. A
draft of the Code of Ethics is in Exhibit 14.1 hereto. The Code of
Ethics is being designed with the intent to deter wrongdoing, and to promote the
following:
|
·
|
Honest
and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships
|
|
·
|
Full,
fair, accurate, timely and understandable disclosure in reports and
documents that a small business issuer files with, or submits to, the
Commission and in other public communications made by the small business
issuer
|
|
·
|
Compliance
with applicable governmental laws, rules and
regulations
|
|
·
|
The
prompt internal reporting of violations of the code to an appropriate
person or persons identified in the
code
|
|
·
|
Accountability
for adherence to the code
|
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under
Section 16(a) of the Exchange Act, all executive officers, directors, and each
person who is the beneficial owner of more than 10% of the common stock of a
company that files reports pursuant to Section 12 of the Exchange Act, are
required to report the ownership of such common stock, options, and stock
appreciation rights (other than certain cash-only rights) and any changes in
that ownership with the Commission. Specific due dates for these
reports have been established, and we are required to report, in this Form 10-K,
any failure to comply therewith during the fiscal year ended December
2009. We believe that all of these filing requirements were satisfied
by our executive officers, directors and by the beneficial owners of more than
10% of our common stock. In making this statement, we have relied solely on
copies of any reporting forms received by it, and upon any written
representations received from reporting persons that no Form 5 (Annual Statement
of Changes in Beneficial Ownership) was required to be filed under applicable
rules of the Commission.
ITEM 11. EXECUTIVE
COMPENSATION
The
following table sets forth certain information regarding the annual and
long-term compensation for services in all capacities to us for the prior fiscal
years ended December 31, 2009 and 2008, of those persons who were
either the chief executive officer during the last completed fiscal year or any
other compensated executive officers as of the end of the last completed fiscal
year.
|
EXECUTIVE
COMPENSATION
|
|
Summary
Compensation Table
|
|
Name
and Principal
Position
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Award
|
|
|
Option
Award
|
|
|
Non-Equity
Incentive Plan Compensation
|
|
|
Nonqualified
Deferred Compensation Earning
|
|
|
All Other
Compensation
|
|
|
Total
|
|
|
Joseph
Coschera, President
|
2009
|
|
|
150,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3.432 |
|
|
|
153,432 |
|
|
2008
|
|
|
120,000 |
|
|
|
5,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,254 |
|
|
|
127,254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loire
Lucas, Vice President
|
2009
|
|
|
8,750 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
8,750 |
|
|
2008
|
|
|
8,750 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
8,750 |
|
The basis
for the bonuses issued to Joseph Coschera is based upon the
following:
|
·
|
Additional
time and travel spent developing new partnerships with companies such as
Visual Network Design
|
|
·
|
Development
of new client relationships done through on site product and solution
presentations and attendance at industry trade
shows
|
|
·
|
The
additional time spent involved in the development, design and testing of
the data collection process known as ON SITE PHYSICAL
INVENTORYTM
|
The basis
for the bonuses issued to Loire Lucas is based upon the following:
|
·
|
Participation
in and support functions related to the documentation for the data
collection process known as ON SITE PHYSICAL
INVENTORYTM
|
|
·
|
Increase
in revenue contribution to the bottom line as compared to the previous
fiscal year
|
The approval for both actions came from
Joseph Coschera.
We plan
to continue to compensate Mr. Coschera and Ms. Lucas in a similar manner into
the foreseeable future provided we have enough funds to do so.
ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following tables set forth the ownership, as of December 31, 2009, of our common
stock (a) by each person known by us to be the beneficial owner of more than 5%
of our outstanding common stock; (b) by each of our directors, and (c) by all
executive officers and our directors as a group. To the best of our
knowledge, all persons named have sole voting and investment power with respect
to such shares, except as otherwise noted. The notes accompanying the
information in the table below are necessary for a complete understanding of the
figures provided below. As of December 31, 2009, there were
18,266,084 shares of common stock outstanding.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS (1) (2)
|
Title
of Stock
|
Name
and Address
|
#
of Shares
|
Current
% Owned
|
|
Common
Stock
|
Aquatica
Investments Ltd
Grove
House, 4th
floor
Nassau
Bahamas
|
3,000,000
|
16.42%
|
|
Common
Stock
|
Bespoke
Advisory Services LLC
3339
Virginia Street PH20
Coconut
Grove, FL 33133
|
1,656,250
|
9.07%
|
|
Common
Stock
|
Cede
& Co.
PO
Box 222
Bowling
Green Station
New
York, NY 10274
|
916,000
|
5.01%
|
|
Common
Stock
|
Joseph
Coschera
2120
SW Danforth Circle
Palm
City, FL 34990
|
6,200,000
|
33.94%
|
|
Common
Stock
|
Green
Enterprises SAL
Sodeco
Square, 16th
FL
Achrafieh,
Beirut, Lebanon
|
1,000,000
|
5.47%
|
|
Common
Stock
|
Derek
J. Leach
31
Palace Gate, Flat 2
London,
UK W85LZ
|
2,000,000
|
10.95%
|
|
Common
Stock
|
Old
Firm Energy Corp.
35
Barrack Rd., 3rd
FL
Belize
City, Belize
|
1,000,000
|
5.47%
|
SECURITY
OWNERSHIP OF OFFICERS AND DIRECTORS (2)
|
Title
of Stock
|
Name
and Address
|
#
of Shares
|
Current
% Owned
|
|
Common
Stock
|
Joseph
Coschera
|
6,200,000
|
33.94%
|
|
Common
Stock
|
Loire
Lucas
|
0
|
0.00%
|
|
Common
Stock
|
All
Officers and Directors as a Group (2)
|
6,200,000
|
33.94%
|
(1)
Pursuant to Rule 13-d-3 under the Securities Exchange Act of 1934, as amended,
beneficial ownership of a security consists of sole or shared voting power
(including the power to vote or direct the voting) and/or sole or shared
investment power (including the power to dispose or direct the disposition) with
respect to a security whether through a contract, arrangement, understanding,
relationship or otherwise. Unless otherwise indicated, each person
indicated above has sole power to vote, or dispose or direct the disposition of
all shares beneficially owned. We are unaware of any shareholders
whose voting rights would be affected by community property laws.
(2) This
table is based upon information obtained from our stock
records. Unless otherwise indicated in the footnotes to the above
tables and subject to community property laws where applicable, we believe that
each shareholder named in the above table has sole or shared voting and
investment power with respect to the shares indicated as beneficially
owned.
CHANGES
IN CONTROL
There are
currently no arrangements, which would result in a change in our
control.
ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
On January 12, 2006, the Company’s
shareholders approved an increase in the number of authorized common shares to
50,000,000. Also it was decided to decrease in the par value of each
common share from $1.00 to $.001 per share. In addition the
shareholders authorized 20,000,000 of preferred shares at a par value of $.001
per share.
During
the period ended December 31, 2008 1,000,000 shares of common stock were sold
for cash.
During
the period ended December 31, 2008, 3,900,000 shares of stock were issued to
financial consultants as share based payments. The shares were valued
at market value at the date of agreement. The shares were valued
using the most recent sale of stock.
During
the period ended December 31, 2009 1,000,000 shares of common stock were sold
for cash.
During
the period ended December 31, 2009, 956,250 shares of stock were issued to
financial consultants as share based payments. The shares were valued
at market value at the date of agreement. The shares were valued
using the most recent sale of stock.
ITEM 14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES
Fees
Billed For Audit and Non-Audit Services
The
following table represents the aggregate fees billed for professional audit
services rendered to the independent auditor, Lake & Associates CPA’s LLC,
("Lake") for our audit of the annual financial statements for the years ended
December 31, 2009, 2008 and 2007. Audit fees and other fees of
auditors are listed as follows:
|
Year
Ended December 31,
|
|
2009
|
|
|
2008
|
|
|
|
Lake
|
|
|
Lake
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit
Fees (1)
|
|
$ |
20,750 |
|
|
|
(3 |
) |
|
$ |
24,500 |
|
|
|
(3) |
|
Audit-Related
Fees (3)
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
Tax
Fees (4)
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
All
Other Fees (5)
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
Total
Accounting fees and Services
|
|
$ |
20,750 |
|
|
|
|
|
|
$ |
24,500 |
|
|
|
|
|
|
(1)
|
Audit Fees. These are
fees for professional services for the audit of our annual financial
statements, and for the review of the financial statements included in our
filings on Form 10-K and Form 10-Q, and for services that are normally
provided in connection with statutory and regulatory filings or
engagements.
|
|
|
(2)
|
The
amounts shown for Lake in 2009 and 2008 relate to (i) the audit of
our annual financial statements for the fiscal year ended December 31,
2009 and 2008, and (ii) the review of the financial statements
included in our filings on Form 10-K and Form 10-Q..
|
|
|
(3)
|
Audit-Related Fees.
These are fees for the assurance and related services reasonably related
to the performance of the audit or the review of our financial
statements.
|
|
|
(4)
|
Tax Fees. These are
fees for professional services with respect to tax compliance, tax advice,
and tax planning.
|
|
|
(5)
|
All Other Fees. These
are fees for permissible work that does not fall within any of the other
fee categories, i.e., Audit Fees, Audit-Related Fees, or Tax
Fees.
|
Pre-Approval Policy For
Audit and Non-Audit Services
We do not
have a standing audit committee, and the full Board performs all functions of an
audit committee, including the pre-approval of all audit and non-audit services
before we engage an accountant. All of the services rendered by Lake
& Associates CPA’s LLC were pre-approved by our Board of
Directors.
We are
presently working with our legal counsel to establish formal pre-approval
policies and procedures for future engagements of our
accountants. The new policies and procedures will be detailed as to
the particular service, will require that the Board or an audit committee
thereof be informed of each service, and will prohibit the delegation of
pre-approval responsibilities to management. It is currently
anticipated that our new policy will provide (i) for an annual pre-approval, by
the Board or audit committee, of all audit, audit-related and non-audit services
proposed to be rendered by the independent auditor for the fiscal year, as
specifically described in the auditor's engagement letter, and (ii) that
additional engagements of the auditor, which were not approved in the annual
pre-approval process, and engagements that are anticipated to exceed previously
approved thresholds, will be presented on a case-by-case basis, by the President
or Controller, for pre-approval by the Board or audit committee, before
management engages the auditors for any such purposes. The new policy
and procedures may authorize the Board or audit committee to delegate, to one or
more of its members, the authority to pre-approve certain permitted services,
provided that the
estimated fee for any such service does not exceed a specified dollar amount (to
be determined). All pre-approvals shall be contingent on a finding,
by the Board, audit committee, or delegate, as the case may be, that the
provision of the proposed services is compatible with the maintenance of the
auditor's independence in the conduct of its auditing functions. In
no event shall any non-audit related service be approved that would result in
the independent auditor no longer being considered independent under the
applicable rules and regulations of the Securities and Exchange
Commission.
(a) On
December 31, 2009, our Chief Executive Officer and Chief Financial Officer made
an evaluation of our disclosure controls and procedures. In our
opinion, the disclosure controls and procedures are adequate because the systems
of controls and procedures are designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows for the respective periods being presented. Moreover,
the evaluation did not reveal any significant deficiencies or material
weaknesses in our disclosure controls and procedures.
(b) There
have been no significant changes in our internal controls or in other factors
that could significantly affect these controls since the last
evaluation.
ITEM
15. EXHIBITS AND REPORTS ON FORM 8-K
1. The
following financial statements of Information Systems Associates, Inc are
included in Part II, Item 7:
|
Independent
Autitors' Report
|
14
|
| Balance
Sheet-December 31, 2009 |
15 |
|
Statements
of Operations - for the years ended December 31, 2009 and
2008
|
16
|
|
Statements
of Cash Flows - for the years ended December 31, 2009 and
2008
|
17
|
|
Statements
of Stockholders’ Equity - for the years ended December 31, 2009and
2008
|
18
|
|
Notes
to Financial Statements
|
19
to 26
|
2.
Exhibits
None.
SIGNATURES
In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned majority of the Board of Directors, thereunto duly
authorized.
|
|
|
|
|
|
|
INFORMATION
SYSTEMS ASSOCIATES, INC.
|
|
|
|
|
Date:
|
|
/s/ Joseph P. Coschera
|
|
|
|
Joseph
P. Coschera
|
|
|
|
President,
CEO
|
| |
|
|
| Date: |
|
/s/
Michael R. Hull
|
| |
|
Michael
R. Hull |
| |
|
CFO,
Principal Accounting Officer |