U.S. Securities and Exchange Commission
 Washington, D.C. 20549


FORM 10-Q
 
 
  [X]
Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 for the Quarterly Period Ended September 30, 2010
 
 [  ]
Transition Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 for the Transition Period from _______ to _______
 
 Commission file number 333-142429
 
 
 
 INFORMATION SYSTEMS ASSOCIATES, INC.
 (Exact name of small business issuer as specified in its charter)
 
 
 FLORIDA
65-0493217(State or other jurisdiction of
(IRS Employer Identification No.)incorporation or organization)
 
 1151 W 30thStreet, Ste E Palm City, FL 34990
 (Address of principal executive offices)
 
 (772) 403-2992
 (Issuer's telephone number)
  
 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]
 
 Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the exchange act). Yes [ ] No [X]
 
 Number of shares of common stock outstanding as of September 30, 2010:     21,566,084
 
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large accelerated filer
 ̈Non-accelerated filer
 ̈(Do not check if a smaller reporting company)Accelerated filer
 ̈Smaller reporting company
þ
 
 1
  INFORMATION SYSTEMS ASSOCIATES, INC.
 
 TABLE OF CONTENTS
  PART 1.   FINANCIAL INFORMATION
 PART I
Page No.Financial StatementsItem 1.  Consolidated Financial Statements
3Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations
11Item 3.  Quantitative and Qualitative Disclosures About Market Risk
18Item 4. Controls and Procedures
18PART IIItem 1.  Legal Proceedings
19Item 1A. Risk Factors
19Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
19Item 3.  Defaults Upon Senior Securities
19Item 4.  Submission of Matters to a Vote of Security Holders
19Item 5.  Other Information
19Item 6.  Exhibits and Reports on 8-K
19Signatures
20
  2
 
 INFORMATION SYSTEMS ASSOCIATES, INC.BALANCE SHEETSASSETSSeptember 30,


December 31,2010


2009(Unaudited)


(Audited)Current AssetsCash and cash equivalents

$
57,811


$
21,047Accounts receivable


198,568



34,809Prepaid consulting


195,875



190,500Prepaid expenses


11,713



7,689Total Current Assets


463,967



254,045Property and Equipment (net)


47,601



174,288Other AssetsInvestments


-



60,559TOTAL ASSETS

$
511,568


$
488,892
 .
 See Notes to Condensed Financial Statements
 3
 INFORMATION SYSTEMS ASSOCIATES, INC.BALANCE SHEETSLIABILITIES AND STOCKHOLDERS' EQUITYSeptember 30,


December 31,2010


2009(Unaudited)


(Audited)Current LiabilitiesAccounts payable

$
76,323


$
66,910Accrued expenses and other liabilities


73,531



21,196Note payable - line of credit


37,863



20,055Note payable - insurance


5,505



3,276Note payable -shareholder


25,000



-Deferred revenue


4,442



1,879Total Current Liabilities


222,664



113,316Total Liabilities


222,664



113,316Stockholders' EquityCommon stock-$.001 par value, 50,000,000 sharesauthorized, 21,566,084 and 18,266,084 issued andoutstanding as of September 30,  2010and December 31, 2009, respectively


21,566



18,266Additional paid in capital


2,655,912



2,179,213Accumulated deficit


(2,388,574
)


(1,808,504
)Accumulated other comprehensive (loss)


-



(13,399
)Total Stockholders' Equity


288,904



375,576TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY

$
511,568


$
488,892
 
 See Notes to Condensed Financial Statements
 
 4
 
 INFORMATION SYSTEMS ASSOCIATES, INC.STATEMENTS OF OPERATIONSFOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,(UNAUDITED)For the Three Months Ended


For the Nine Months EndedSeptember 30,


September 30,2010


2009


2010


2009Revenue

$
305,933


$
271,533


$
797,573


$
606,865Cost of Sales


10,698



625



25,138



35,670Gross Profit


295,235



270,908



772,435



571,195Operating ExpensesAdministrative and general


164,680



88,615



456,628



206,942Payroll and payroll taxes


48,355



52,790



184,146



156,269Professional


194,221



275,201



664,414



865,403Total Operating Expenses


407,256



416,606



1,305,188



1,228,614(Loss) Income Before Other Incomeand (Expense)


(112,021
)


(145,698
)


(532,753
)


(657,419
)Other Income (Expense)Interest Income


-



2



-



827Loss on sale of security


(31,194
)


-



(47,347
)


-Miscellaneous income


-



-



30



-Total other income (expense)


(31,194
)


2



(47,317
)


827Net (Loss)


(143,215
)


(145,696
)


(580,070
)


(656,592
)Other Comprehensive (Loss)Unrealized gain/(loss) on securities:Arising during the quarter


17,794



(12,600
)


13,399



1,242Total other comprehensive (loss)


17,794



(12,600
)


13,399



1,242Comprehensive (Loss)

$
(125,421
)

$
(158,296
)

$
(566,671
)

$
(655,350
)Basic and Fully Diluted Earnings (Loss) per Share:Basic and diluted

$
(0.01
)

$
(0.01
)

$
(0.03
)

$
(0.04
)Weighted average common sharesoutstanding


21,016,086



16,811,222



19,245,253



17,594,001
 
 See Notes to Condensed Financial Statements
 
 5
 INFORMATION SYSTEMS ASSOCIATES, INC.STATEMENTS OF CASH FLOWSFOR THE NINE MONTHS ENDED SEPTEMBER 30,(UNAUDITED)2010


2009Cash Flows from Operating ActivitiesNet (Loss)

$
(580,070
)

$
(656,592
)Adjustments to reconcile net (loss)  tonet cash provided from operating activities:Depreciation and amortization


127,353



3,728Loss on sale of investment


47,347



-Common stock for services


314,624



517,188(Increase) decrease in:Accounts receivable


(163,759
)


(47,635
)Prepaid expenses


(4,024
)


(9,921
)Increase (decrease) in:Accounts payable


9,413



9,467Accrued expenses and other liabilities


68,946



(9,109
)Other liabilities


-



100Deferred revenue


2,563



(1,500
)Net Cash (Used in) Operating Activities


(177,607
)


(194,274
)Cash Flows from Investing ActivitiesComputer software development costs


-



(128,389
)Purchase of property and equipment


(666
)


(9,149
)Proceeds from sale of investment


10,000



-Purchase of Investment


-



(73,958
)Net Cash (Used In) Provided byInvesting Activities


9,334



(211,496
)Cash Flows from Financing ActivitiesProceeds/(payments) from note payable - line of credit


17,808



-Proceeds/(payments) made on note payable - insurance


2,229



5,242Proceeds from issuance of stock


160,000



250,000Proceeds/(payments) from note payable - shareholders


25,000



-Net Cash Provided by  Financing Activities


205,037



255,242Net Change in Cash and Cash Equivalents


36,764



(150,528
)Cash and Cash Equivalents atBeginning of period


21,047



204,768End of Period

$
57,811


$
54,240
 
 See Notes to Condensed Financial Statements
  6
  INFORMATION SYSTEMS ASSOCIATES, INC.
 NOTES TO FINANCIAL STATEMENTS
 SEPTEMBER 30, 2010 AND 2009
  NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
 
 Business Activity
 
 Information Systems Associates, Inc. (Company) was incorporated under the laws of the State of Florida on May 31, 1994.  The Company provides services and software system design for the planning and implementation of Computer Aided Facilities Management (CAFM) based asset management tools.
 
 Results of operations for interim periods presented are not necessarily indicative of results of operations that might be expected for future interim periods or for the full fiscal year ending December 31, 2010.
 
 Recent Accounting Pronouncements
 
 In February, 2010, the FASB issued an amendment to Accounting Standards Codification 855, “Subsequent Events”.  An entity is required to disclose the date through which subsequent events have been evaluated and the basis for that date. This created potential conflicts with issuers who also filed with the Securities and Exchange Commission.  An entity that is defined as an “SEC filer” is not required to disclose the date through which subsequent events have been evaluated. This amendment is effective for interim periods ending after September 30, 2010.
 
 The Company does not believe the amendment to Topic 855 will have a significant impact on the Company’s financial statements.
 
 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.
 
 Reclassifications
 
 Certain reclassifications have been made to the prior period financial statements presented to conform to 2010. Such reclassifications have no effect on reported income.
 
 
 NOTE 2 - CASH AND CASH EQUIVALENT
 
 As of

September 30, 2010


As of

December 31, 2009Wachovia Bank (FDIC insured to $250,000)

$
57,634


$
20,805Petty cash


177



242Total cash and cash equivalent

$
57,811


$
21,047
  NOTE 3 - PROPERTY AND EQUIPMENT
  As of

September 30, 2010


As of

December 31, 2009Computer software (developed)

$
191,817


$
191,817Computer software (purchased)


590



590Web site development


10,072



10,072Furniture, fixtures, and equipment


26,713



26,047229,192



228,526Less accumulated depreciation and amortization


181,591



54,238$
47,601


$
174,288
 
 
 
 
 
 
 
 
 Depreciation and amortization expense for property and equipment was $127,353 and $ 3,728 for the nine months ended September 30, 2010 and 2009, respectively.
 
 NOTE 4 - COMPUTER SOFTWARE DEVELOPED
 
 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
 
 The Company has capitalized the cost of the OSPI software using FASB Accounting Standards Codifications 350-40 “Internal Use Software” as follows:
  As of

September 30,2010


As of

December 31,2009Development costs

$
297,603


$
297,603Software license agreement – payments received


(135,257
)


(135,257
)Software license agreement – marketing costs


29,471



29,471191,817



191,817Less:  accumulated depreciation and amortization


164,760



43,000$
27,057


$
148,818
 
 7
 INFORMATION SYSTEMS ASSOCIATES, INC.
 NOTES TO FINANCIAL STATEMENTS
 SEPTEMBER 30, 2010 AND 2009
  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 $73,958. 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.
  On April 30, 2010 the Company entered into an agreement whereby 2,500,000 shares of stock held in Rubicon Software Group, lpc were sold to Rubicon.  In remuneration for this stock the Company received $10,000 and was relieved from paying $16,611 worth of outstanding invoices. In connection with this transaction, the Company recorded a loss on sale of security of $47,347.
 
 NOTE 6 – NET (LOSS) PER SHARE
 
 Basic earning per share (EPS) is computed by dividing net (loss) by the weighted average number of common shares outstanding.  The dilutive EPS adds the dilutive effect of stock options and other stock equivalents.  During the nine months ended September 30, 2010, 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 7 – INCOME TAXES
 
 Income tax expense for the nine months ended September 30, 2010 and 2009 are based on the Company’s estimate of the effective tax rate expected to be applicable for the full year.  The rate differs from the U.S. statutory rate primarily due to state taxes.
 
 The Company has the following net operating
 loss carryovers for federal income tax purposes:
  Expiring 2026      82,899
 Expiring 2027    131,828
 Expiring 2028    236,311
 Expiring 2029 1,202,600
 $1,653,638
  NOTE 8 – SUPPLEMENTAL CASH FLOW INFORMATION
 
 Supplemental disclosures of cash flow information for the periods ended September 30, 2010 and 2009 is summarized as follows:
  2010


2009Cash paid during the periods for interest andincome taxes:Income taxes

$
-


$
-Interest

$
1,945


$
-
 
 8
  INFORMATION SYSTEMS ASSOCIATES, INC.
 NOTES TO FINANCIAL STATEMENTS
 SEPTEMBER 30, 2010 AND 2009
  NOTE 8 – SUPPLEMENTAL CASH FLOW INFORMATION(cont’d)
  Non-Cash Investing Activities:Balance of consulting services forcontributed capital

$
470,500


$
518,438Consulting services prepaid for future months


(169,208)



(114,750)Non-cash expense of consulting services forcontributed capital

$
301,292


$
403,688Forgiveness of vendor invoices for stock heldas investment

$
16,611


$
-
 NOTE 9 – OPERATING LEASE
 
 The Company leases its Palm City, Florida facility.  On March 2, 2009 the lease was renewed for $1,200 per month.  The Company held 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 September 30, 2010 and 2009 was $11,502 and $12,780, respectively.
 
 NOTE 10 – 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 balance as of September 30, 2010 and December 31, 2009 was $37,863 and $20,055, 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 11 – NOTE PAYABLE - INSURANCE
 
 On August 31, 2010, the Company incurred short term financing for the purchase of insurance. The note was for $5,720.  The interest rate on the debt is 4.96% and will be repaid May 31, 2011. The balance as of September 30, 2010 was $ 5,505.
 
 On September 14, 2009 the Company 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 the note was repaid May 17, 2010. The balance as of December 31, 2009 was $3,276.
 
 NOTE 12 – NOTE PAYABLE – SHAREHOLDER
  In February, 2010, the Company obtained financing from a shareholder for working capital purposes. The amount of $32,500 will be repaid in eighteen months.  Interest accrues at a rate of 6% per annum.  There is no penalty for early payment. On August 12, 2010 the shareholder was repaid $7,500.
  NOTE 13 – COMMON STOCK
 
 In 2008, the Company entered into an agreement with Derek J. Leach (“Leach”) to purchase stock.  Under terms of the agreement, the Company issued 2,000,000 shares at .25 per share for total proceeds of $500,000. The purchases are as follows:
 
 Date

# of Shares


Amount7/15/08


400,000


$
100,00012/31/08


600,000


$
150,0004/22/09


400,000


$
100,00007/23/09


600,000


$
150,0002,000,000


$
500,000
 
 NOTE 14 – SHARE BASED PAYMENTS FOR SERVICES
 
 In May 2010, the Company issued 200,000 shares of restricted common stock to two directors.  The stock will vest in May 2011. Shares were valued at the current market price of $.20 per share.
 
 On May 1, 2010 the Company entered into an agreement to receive website design and development, internet marketing and search engine optimization for one year. The consultants received 100,000 shares of company common stock.  Shares were valued at a current market price of $.20 per share.
 
 On April 29, 2010 the Company entered into an agreement to receive assistance in the development of new data center management technologies. The consultants will also investigate a variety of associated topics regarding data center management. This agreement will run for one year. The consultants received 1,000,000 shares of company common stock.  Shares were valued at a current market price of $.20 per share.
 
 On April 15, 2010 the Company entered into an agreement to receive marketing strategies, digital media and social media strategies to expand the Company’s investor base and improve shareholder communication. The consultants received 400,000 shares of company common stock.  Shares were valued at a current market price of $.15 per share.
 
 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 received a commencement bonus of 300,000 shares of company common stock.  Shares were valued at current market price.
 
 On September 8, 2008, the Company entered into an agreement to receive consulting services.  The consultants will provide 400 hours of service for 100,000 shares of common stock.  All services will be accounted for at a rate of $250 an hour.  116 hours and 143.75 hours at a cost of $ 29,000 and $35,938 were recorded as expense for the nine months ended September 30, 2010 and 2009.
 
 9
 
 INFORMATION SYSTEMS ASSOCIATES, INC.
 NOTES TO FINANCIAL STATEMENTS
 SEPTEMBER 30, 2010 AND 2009
  NOTE 14 – SHARE BASED PAYMENTS FOR SERVICES(cont’d)
 
 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 had the option of paying the consultants in cash or common stock.  The Company 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 these agreements of $153,125 and $481,250 has been expensed for the nine months ended September 30, 2010 and 2009.
 
 On May 25, 2010 a notice of non renewal, was sent to the one consulting company that continued to provide services from August 1, 2009 to July 31, 2010 at an agreed to rate of $262,500.  The Company issued 656,200 shares of common stock for the service provided.
 
 On July 7, 2009 a notice of non renewal was forwarded to the other two companies.
 
 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, ASC 718-10 requires a valuation technique to estimate the fair value of the options issued.  The Black-Scholes Model incorporates the various characteristics for proper valuation.  As of September 30, 2008, the valuation of the options was determined to be $0.
 
 NOTE 15 – MAJOR CUSTOMERS
 
 One major customer accounted for $727,751 of revenue while two major customers accounted for $565,584 revenue for the nine months ended September 30, 2010 and 2009, respectively.  These amounts represent 91% and 93% of the Company’s revenue for the nine months ended September 30, 2010 and 2009, respectively.
 
 As of September 30, 2010 and 2009, these customers accounted for 72% and 66% of accounts receivable, respectively.
  10
 
 ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 
 As used herein the terms “we”, “us”, “our”, the “Registrant,” “ISA” and the “Company” means, Information Systems Associates, Inc., a Florida corporation.
 
 GENERAL DESCRIPTION OF BUSINESS
 
 BUSINESS OVERVIEW
 
 We have been in business since May of 1994.  During the first twelve (12) years of operation, the primary focus of the business was to offer for sale, through ISA’s Value Added Reseller Agreements in place in several of the industry leaders, software products and services that allow companies to track and manage assets, primarily in the realm of corporate real estate and corporate IT network infrastructure including equipment 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 Avocent Huntsville Corp. (formally 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 Avocent).  At that time, Avocent’s Network Management tools (“System”), was one of the leading solutions in it field.  For more than five years, Avocent Huntsville Corp.(formally 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 Advocent’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, 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, Inc. 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 Inc. receives a commission on the sale of the software.  The percentage ranges between twenty (20) and thirty (30) percent of the sale.  On occasion, the Company provides pre-sales support services to the vendor’s clients.  In addition, Information Systems Associates, Inc. is given the opportunity to implement the software solution and provide training to its clients.  On an ongoing basis, ISA 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, Verizon, Huntington National Bank, T-Mobile USA, Inc., Cardinal Health, Inc. 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.
 
 11
 
 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 IT (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
 
 Advocent’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.
 
 VISTA600 by Avocent Huntsville Corp. 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.
 
 12
 
 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.
 
 ·
Graphical design and marketing of datacenters
 ·
Auto-build visual documentation from imported bill of materials
 ·
Advanced operations and reporting
 ·
Modeling and impact analysis of datacenter designs
 ·
Space, power, cooling, and cable management
 ·
Generate detailed datacenter and rack visualizations
 ·
Ensure racks and the datacenter are within design limits
 ·
Instantly find available datacenter resources
 ·
Improve utilization of power and space
 ·
Import and document the datacenter in minutes
 
 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 development 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.
 
 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.
 
 13
 
 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.  We began 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.
 
 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 INVENTORYTM.  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 the 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
 
 14
 
 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:
 Enterprise asset management - related solutions - ShowRack, Nlyte, Visio

Facilities Management - related solutions - Archibus In addition, we face competition from organizations that use in-house developers to develop solutions for certain elements of the asset management.
 
 ISA considers data collection and the software it has developed to perform these services ON SITE PHYSICAL 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 Avocent Huntsville Corp. (formally 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.
  FORWARD LOOKING STATEMENTS
 
 Certain statements in this report, including statements of our expectations, intentions, plans and beliefs, including those contained in or implied by “Management’s Discussion and Analysis” and the Notes to Financial Statements, are “forward-looking statements”, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “”Exchange Act”), that are subject to certain events, risks and uncertainties that may be outside our control.  The words “believe”, “expect”, “anticipate”, “Optimistic”, “intend”’ “will”, and similar expressions identify forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date on which they are made.  We undertake no obligation to update or revise any forward-looking statements.
  These forward-looking statements include statements 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.
 
 15
 
 CRITICAL ACCOUNTING POLICIES
 
 Revenue recognition
 
 We recognize revenue in accordance with ASC 605-10 “Revenue Recognition” and ASC 605-25 “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 September 30, 2010.
 
 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 fir 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”.  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 the estimated useful life.  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 INVENTORYTM” 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”.  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.
 
 16
 
 RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
 
 The following discussion should be read in conjunction with the financial statements include in this report and is qualified in its entirety by the foregoing.
 
 Revenues
 
 Gross revenues were $305,933 and $797,573 for the three and nine months ended September 30, 2010, respectively, compared to gross revenues of $271,533 and $606,865 for the three and nine months ended September 30, 2009.  The increase in 2010 revenue is due primarily to the increased sale of professional services, maintenance contracts and time and materials arrangements primarily to two new customers. We recognize professional services revenue, which includes installation, training, consulting and engineering services, upon delivery of the services.
 
 Income / Loss from Operations
 
 We had a net loss of $125,421 and $566,671 from operations for the three and nine months ended September 30, 2010, respectively.  We had a net loss of $158,296 and $655,350 from operations for the three and nine months ended September 30, 2009, respectively. We have begun the amortization of the Software Development Costs in 2010 and taken on additional Consulting Expenses. This will add to Company overhead in the near future. We have also needed to take on additional administrative costs in order to position sales growth for the balance of 2010. There can be no assurance that we will achieve or maintain profitability or that our revenue growth can be sustained in the future.
 
 Expenses
 
 Operating expenses for the three and nine months ended September 30, 2010 were $407,256 and $1,305,188, respectively.  Operating expenses for the three and nine months ended September 30, 2009 were $416,606 and $1,228,614, respectively The higher operating expenses during 2010 were due primarily to Administrative and General Expenses, which were $456,628 and $206,942 for the nine months ended September 30, 2010 and 2009 respectively. This increase in Administrative and General Expenses is primarily due to the increase in Travel and Entertainment of $85,868 and the increase of Amortization of Software of $121,760.
 
 Income Taxes
 
 There was no income tax benefit or expense recorded for the nine months ended September 30, 2010 and 2009.
 
 Impact of Inflation
 
 We believe that inflation has had a negligible effect on operations during the nine months ended September 30, 2010 and 2009.  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 $177,607 and $194,274 during the nine months ended September 30, 2010 and 2009. Cash flows used in operations during the nine months ended September 30, 2010 were primarily attributable to a net loss of $580,070 and an increase in accounts receivable of $163,759 and was partially offset with an increase in accounts payable of $68,946and issuance of stock for services of $314,624. Cash flows used in operations during the nine months ended September 30, 2009 were primarily attributable to a net loss of $656,592 and partially offset by the issuance of stock for services of $517,188.
 
 Cash flows provided by investing activities were $9,334 as compared to cash flows used in investing activities of $211,496 during the nine months ended September 30, 2010 and 2009, respectively. Cash flows provided by investing activities in 2010 were attributable primarily to the sale of an investment. Cash flows used in investing activities in 2009 were attributable to $128,389 in costs incurred for software development (OSPI, v2) and web page design and $73,958 used in the purchase of common stock in Rubicon Software Group, plc.
 
 Cash flows provided by financing activities were $205,037 and $255,242 during the nine months ended September 30, 2010 and 2009. Cash flows provided by financing activities were attributable to additional borrowing on the line of credit; proceeds from the issuance of stock and borrowing from a shareholder. Cash flows provided for from financing activities were $255,242 for nine months ended September 30, 2009 and attributed to proceeds from the issuance of common stock and incurring of a note payable.
 
 17
 
 We had cash on hand of $57,811 and net working capital of $241,303 as of September 30, 2010.  If the projected revenues fall short of needed capital we may not be able to sustain our capital needs.  Our current level of operations would require additional capital 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.
 
 Demand for the products and services will be dependent on, among other things, market acceptance of our services, the computer software market in general, and general economic conditions, which are cyclical in nature.  Inasmuch as a major portion of our activities is the receipt of revenues from services rendered, our business operations may be adversely affected by our competitors and prolonged recession periods.
 
 Our success will be dependent upon implementing our plan of operations and the risks associated with our business plan.
 
 No significant amount of our trade payables has been unpaid within the stated trade term.  We are not subject to any unsatisfied judgments, liens or settlement obligations.
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 The information to be reported under this item is not required of smaller reporting companies.
 
 ITEM 4. CONTROLS AND PROCEDURES
  DISCLOSURE CONTROLS AND PROCEDURESOur management, including our Principal Executive Officer and Principal Financial Officer, has evaluated the design, operation, and effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”).  There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.  Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.  Based upon the evaluation performed by our management, including its Principal Executive Officer and Principal Financial Officer, it was determined that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports filed or submitted pursuant to the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including its Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding disclosures
 
 Changes in Internal Control Over  Financial Reporting
 
 Our Principal Executive Officer and Principal Financial Officer have determined that, during the period covered by this quarterly report, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.  They have also concluded that there were no significant changes in our internal controls after the date of the evaluation.
 
 18
 
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 
 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 originally alleged that the Company and its President breached the terms of a certain software development contract, and it sought damages in excess of $15,000.  The plaintiff dropped all claims against the President and eliminated some of its other claims against the Company. 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.  The Company is vigorously defending itself and has filed and is pursuing damage claims of its own 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 1A. RISK FACTORS
 
 Information regarding risk factors appears in Part I, “Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the captions “General Description of Business” and “Cautionary Note Regarding Forward-Looking Statements” contained in this Quarterly Report on Form 10-Q and in “Item 1A. RISK FACTORS” of our 2009 Annual Report on Form 10-K.  There have been no material changes from the risk factors previously disclosed in our 2009 Annual Report on Form 10-K.
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
 None.
 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
 
 None.
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 None.
 
 ITEM 5. OTHER INFORMATION
 
 None.
 
 
 ITEM 6. EXHIBITS
 
 Exhibit No.

Description31.1

Certification of Chief Executive Officer31.2

Certification of Chief Financial Officer32.1

Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.32.2

Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
 
 Reports on Form 8-K filed
 
 None
 
 19
 
 SIGNATURES
 
 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
 Information Systems Associates, Inc.Date: November 12, 2010
By:
/s/ Joseph P. CoscheraJoseph P. Coschera

Chief Executive OfficerDate: November 12, 2010
By:
/s/ Michael R. HullMichael R. Hull

Chief Financial Officer