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 March 31,
2009
 
 [
       ]
              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 March 31,
2009:     16,309,834
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large
      accelerated filer
               ̈Non-accelerated
      filer
               ̈(Do
      not check if a smaller reporting company)Accelerated
      filer
               ̈Smaller
      reporting company
              þ
  CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING INFORMATION
  The
discussion contained in this 10-Q under the Securities Exchange Act of 1934, as
amended, contains forward-looking statements that involve risks and
uncertainties.  The issuer's actual results could differ significantly
from those discussed herein.  These include statements about our
expectations, beliefs, intentions or strategies for the future, which we
indicate by words or phrases such as "anticipate," "expect," "intend," "plan,"
"will," "we believe," "the Company believes," "management believes" and similar
language, including those set forth in the discussions under "Notes to Financial
Statements" and "Management's Discussion and Analysis or Plan of Operation" as
well as those discussed elsewhere in this Form 10-Q.  We base our
forward-looking statements on information currently available to us, and we
assume no obligation to update them. Statements contained in this Form 10-Q that
are not historical facts are forward-looking statements that are subject to the
"safe harbor" created by the Private Securities Litigation Reform Act of
1995.
 
 1
 
 INFORMATION
SYSTEMS ASSOCIATES, INC.
 
 TABLE OF CONTENTS
 
 
 PART
1.   FINANCIAL INFORMATION
 
 ITEM
1.     FINANCIAL STATEMENTS
 
 
 BALANCE
SHEETS                                                                                                                                                                                                                                                                      3
 
 STATEMENTS
OF
INCOME                                                                                                                                                                                                                                                     
4
 
 STATEMENTS
OF CASH
FLOWS                                                                                                                                                                                                                                           5
 
 NOTES
TO FINANCIAL
STATEMENTS                                                                                                                                                                                                                                6
  ITEM
2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATION                                                                                            
8
  ITEM
3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET
RISK                                                                                                                                                           13
 
 ITEM
4.     CONTROLS AND
PROCEDURES                                                                                                                                                                                                                                                13
 
 PART
II.   OTHER INFORMATION
 
 ITEM
1.     LEGAL
PROCEEDINGS                                                                                                                                                                                                                                                                
13
 
 ITEM
1A.   RISK
FACTORS                                                                                                                                                                                                                                                                           
13
 
 ITEM
2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF
PROCEEDS                                                                                                                                                                
13
 
 ITEM
3.     DEFAULTS UPON SENIOR
SECURITIES                                                                                                                                                                                                                                
13
 
 ITEM
4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS                                                                                                                                                                                13
 
 ITEM
5.     OTHER
INFORMATION                                                                                                                                                                                                                                                             
13
 
 ITEM
6.     EXHIBITS AND REPORTS ON FORM
8-K                                                                                                                                                                                                                              
13
 
 SIGNATURES                                                                                                                                                                                                                                                                                                    14
  2
 Table of Contents
  INFORMATION
      SYSTEMS ASSOCIATES, INC.BALANCE
      SHEETSMARCH
      31, 2009 AND DECEMBER 31, 2008ASSETSMarch
      31,
                              
                              
                              December
      31,2009
                              
                              
                              2008(Unaudited)
                              
                              
                              (Audited)Current
      AssetsCash
      and cash equivalents
                              
                              $
                              58,546
                              
                              
                              $
                              204,768Accounts
      receivable
                              
                              
                              147,636
                              
                              
                              
                              94,121Prepaid
      consulting
                              
                              
                              308,125
                              
                              
                              
                              518,438Total
      Current Assets
                              
                              
                              514,307
                              
                              
                              
                              817,327Property
      and Equipment (net)
                              
                              
                              113,242
                              
                              
                              
                              21,168TOTAL
      ASSETS
                              
                              $
                              627,549
                              
                              
                              $
                              838,495LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable
                              
                              $
                              19,042
                              
                              
                              $
                              10,326Accrued
      expenses
                              
                              
                              937
                              
                              
                              
                              18,396Accrued
      payroll taxes
                              
                              
                              4,641
                              
                              
                              
                              3,003Sales
      tax payable
                              
                              
                              2,498
                              
                              
                              
                              -Other
      liabilities
                              
                              
                              1,200
                              
                              
                              
                              600Deferred
      revenue
                              
                              
                              1,000
                              
                              
                              
                              1,500Total
      Current Liabilities
                              
                              
                              29,318
                              
                              
                              
                              33,825Stockholders'
      EquityCommon
      stock-$.001 par value, 50,000,000 sharesauthorized,
      16,309,834 issued and outstandingfor
      2008 and 2007, respectively
                              
                              
                              16,310
                              
                              
                              
                              16,310Additional
      paid in capital
                              
                              
                              1,587,669
                              
                              
                              
                              1,587,669Retained
      (deficit)
                              
                              
                              (1,005,748
                              )
                              
                              
                              (799,309
                              )Total
      Stockholders' Equity
                              
                              
                              598,231
                              
                              
                              
                              804,670TOTAL
      LIABILITIES AND STOCKHOLDERS'EQUITY
                              
                              $
                              627,549
                              
                              
                              $
                              838,495
  3
 Table of Contents
  INFORMATION
      SYSTEM ASSOCIATES, INC.STATEMENTS
      OF INCOMEFOR
      THE THREE MONTHS ENDED MARCH 31,(UNAUDITED)For
      the Three Months EndedMarch
      31,
                                
                                
                                March
      31,2009
                                
                                
                                2008Revenue
                                
                                $
                                199,084
                                
                                
                                $
                                256,265Cost
      of Sales
                                
                                
                                1,525
                                
                                
                                
                                -Gross
    Profit
                                
                                
                                197,559
                                
                                
                                
                                256,265Operating
      ExpensesAdministrative
      and general
                                
                                
                                60,194
                                
                                
                                
                                92,442Payroll
      and payroll taxes
                                
                                
                                51,426
                                
                                
                                
                                35,623Professional
                                
                                
                                293,189
                                
                                
                                
                                121,202Total
      Operating Expenses
                                
                                
                                404,809
                                
                                
                                
                                249,267(Loss)
      Income Before Other Incomeand
      (Expense)
                                
                                
                                (207,250
                                )
                                
                                
                                6,998Other
      Income (Expense)Interest
      Income
                                
                                
                                811
                                
                                
                                
                                -Consulting
      fees
                                
                                
                                -
                                
                                
                                
                                (1,798
                                )Total
      other income (expense)
                                
                                
                                811
                                
                                
                                
                                (1,798
                                )(Loss)
      Income BeforeIncome
      Taxes
                                
                                
                                (206,439
                                )
                                
                                
                                5,200Provision
      for Income Taxes
                                
                                
                                -
                                
                                
                                
                                1,025Net
      (Loss) Income
                                
                                $
                                (206,439
                                )
                                
                                $
                                4,175Basic
      and Fully Diluted Earnings (Loss) per Share:Basic
      and diluted
                                
                                
                                (0.01
                                )
                                
                                
                                0.00Weighted
      average common sharesoutstanding
                                
                                
                                16,309,834
                                
                                
                                
                                11,403,834
  4
 Table of Contents
  INFORMATION
      SYSTEMS ASSOCIATES, INC.STATEMENTS
      OF CASH FLOWSFOR
      THE THREE MONTHS ENDED MARCH 31,(UNAUDITED)2009
                                  
                                  
                                  2008Cash
      Flows from Operating ActivitiesNet
      (Loss) Income
                                  
                                  $
                                  (206,439
                                  )
                                  
                                  $
                                  4,175Adjustments
      to reconcile net (loss) income tonet
      cash provided from operating activities:Depreciation
      and amortization
                                  
                                  
                                  928
                                  
                                  
                                  
                                  11,992Cumulative
      change in deferred income tax
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,025Common
      stock for services
                                  
                                  
                                  210,313
                                  
                                  
                                  
                                  -(Increase)
      decrease in:Accounts
      receivable
                                  
                                  
                                  (53,515
                                  )
                                  
                                  
                                  (69,530
                                  )Prepaid
      consulting
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,798Increase
      (decrease) in:Accounts
      payable
                                  
                                  
                                  9,653
                                  
                                  
                                  
                                  (300
                                  )Accrued
      expenses
                                  
                                  
                                  (18,396
                                  )
                                  
                                  
                                  -Sales
      tax payable
                                  
                                  
                                  2,498
                                  
                                  
                                  
                                  -Accrued
      payroll taxes
                                  
                                  
                                  2,238
                                  
                                  
                                  
                                  1,983Other
      liabilities
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (500
                                  )Deferred
      revenue
                                  
                                  
                                  (500
                                  )
                                  
                                  
                                  -Net
      Cash (Used in) OperatingActivities
                                  
                                  
                                  (53,220
                                  )
                                  
                                  
                                  (49,357
                                  )Cash
      Flows from Investing ActivitiesComputer
      software development costs
                                  
                                  
                                  (86,507
                                  )
                                  
                                  
                                  -Software
      license agreement - payments received
                                  
                                  
                                  -
                                  
                                  
                                  
                                  27,083Software
      license agreement - marketing costs
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (9,020
                                  )Purchase
      of property and equipment
                                  
                                  
                                  (6,495
                                  )
                                  
                                  
                                  (2,468
                                  )Net
      Cash (Used In) Provided byInvesting
      Activities
                                  
                                  
                                  (93,002
                                  )
                                  
                                  
                                  15,595Cash
      Flows from Financing ActivitiesProceeds
      from note payable - line of credit
                                  
                                  
                                  -
                                  
                                  
                                  
                                  28,805Payments
      made on note payable - line of credit
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (2,000
                                  )Net
      Cash Provided byFinancing
      Activities
                                  
                                  
                                  -
                                  
                                  
                                  
                                  26,805Net
      Change in Cash and CashEquivalents
                                  
                                  
                                  (146,222
                                  )
                                  
                                  
                                  (6,957
                                  )Cash
      and Cash Equivalents atBeginning
      of period
                                  
                                  
                                  204,768
                                  
                                  
                                  
                                  13,326End
      of Period
                                  
                                  $
                                  58,546
                                  
                                  
                                  $
                                  6,369
 5
 Table of Contents
  INFORMATION
SYSTEMS ASSOCIATES, INC.
 NOTES
TO FINANCIAL STATEMENTS
 MARCH
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 Computer
      Aided Facilities Management (CAFM) based asset management
      tools.  The Company also provided services through its insurance
      sales business (discontinued as of March 31,
  2007).
 
 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 ended December 31,
  2008.
 
 Recent Accounting
      Pronouncements
 
 In
      May 2008, the FASB released SFAS No. 162, “The Hierarchy of Generally
      Accepted Accounting Principles.” SFAS No. 162 identifies the sources of
      accounting principles and the framework for selecting the principles used
      in the preparation of financial statements of nongovernmental entities
      that are presented in conformity with generally accepted accounting
      principles in the United States of America.  SFAS No. 162 will
      be effective 60 days following the SEC’s approval of the PCAOB amendments
      to AU Section 411, “The Meaning of Present Fairly in Conformity With
      Generally Accepted Accounting Principles.”  The Company does not
      believe SFAS No. 162 will have a significant impact on the Company’s
      financial statements.
 
 In April
2009, the FASB issued FSP 107-1, “Interim Disclosures about Fair Value of
Financial Instruments” (“FSP 107-1”), which requires disclosures about fair
value of financial instruments for interim reporting periods of publicly traded
companies as well as in annual financial statements.  FSP 107-1 also amends
APB Opinion No. 28, “Interim Financial Reporting”, to require those disclosures
in summarized financial information at interim reporting. FSP 107-1 is effective
for interim reporting periods ending after June 15, 2009, with early adoption
permitted for periods ending after March 15, 2009.  The Company is
currently evaluating the potential impact of FSP 107-1 on its consolidated
financial statement presentation and disclosures.
 Management
does not believe that any other recently issued, but not yet effective,
accounting standards or pronouncements, if currently adopted, would have a
material effect 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.
  NOTE
      2 – CASH AND CASH EQUIVALENT
 
 At
      times throughout the year the Company may maintain certain bank accounts
      in excess of the FDIC insured limits. At March 31, 2009 and 2008, the
      amounts on deposit  at institutions
  were:
 2009
                                    2008
 Wachovia
      Bank (FDIC insured to $250, 000 and
      $100,000                       
      $78,840      
  $13,142
 for
      2009 and 2008, respectively)
 
  NOTE
      3 – PROPERTY AND EQUIPMENT
 2009
                                    2008
 Computer
      software
      (developed)                                                                                $119,120
                                    
                                    $
      119,726
 Computer
      software
      (purchased)                                                                                         590
                                    
                                    1,307
 Web
      site development
                                    4,785        -
 Furniture,
      fixtures, and
      equipment                                                                               24,804
                                    
                                    27,166
 149,299
                                    
                                    148,199
 Less
      accumulated depreciation and
      amortization                                      36,05736,426
 $113,242
                                    
                                    $
111,773
 
 Depreciation
      and amortization
      expense                                                                   $       928
                                    
                                    $
11,992
 
 NOTE
      4 – COMPUTER SOFTWARE DEVELOPED
 
 During
the quarter ended March 31, 2009, the Company began development of an updated
version of the “On Site Physical Inventory” (OSPI) product.  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 Statement of
Position (SOP) 98-1, “Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use” as follows:
 2008
                                    2008
 Development
costs                                                                                       $224,906    $139,900
 Software license agreement – payments
received                                
  (135,257)     (40,625)
 Software license agreement – marketing
costs                                       29,471      20,451
 119,120        119,726
 Less:  accumulated
depreciation and
amortization                                
29,47122,735
 $  89,649   $  96,991
 
 NOTE
5 – 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 three months ended March 31, 2009,
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.
  6
 Table of Contents
  INFORMATION
SYSTEMS ASSOCIATES, INC.
 NOTES
TO FINANCIAL STATEMENTS
 MARCH
31, 2009 AND 2008
  NOTE
6 – INCOME TAXES
  2009
                                    2008
  Provision
for income tax (credit) consists of:
 Current
accrual                                                                                            $     -            
$         -
 Cumulative change in deferred income
tax                                               
_____        -1,025
 $-             $ 1,025
 
 Income tax receivable consists of the
following:
 Federal claim for
refund                                                                             $         - $     637
 
 The Company has the following net
operating
 loss carryovers for income
tax purposes:
 Expiring    2025                                                                                            $     204
 Expiring  
 2026                                                                                          
    82,899
 Expiring   
2027                                                
                                       
    131,828
 Expiring   
2028                                                                                           
 236,311
 $451,242
  NOTE
7 – SUPPLEMENTAL CASH FLOW INFORMATION
 
 Supplemental
      disclosures of cash flow information for the periods ended March 31, 2009
      and 2008 is summarized as follows:
 
 2009
                                    2008
 Cash
      paid during the periods for interest
and
 income
      taxes:
 Income
      taxes                                                                                          
         $           -
                                    
                                    $        -
 Interest                                                                                                      
      $           -
                                    
                                    $   458
 
 Non-Cash
      Investing Activities:
 Balance
      of consulting services for
 contributed
      capital                                                                                    
      $ 518,438
                                    
                                    $        -
 Consulting
      services prepaid for future
      months                                     (308,125)            
       -
 Non-cash
      expense of consulting services for
 contributed
      capital                                                                                   $  210,313
                                    
                                    $        -
  NOTE
8 – OPERATING LEASE
 
 The
Company leases it Palm City, Florida facility.  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 goes into effect June 1, 2009.
  NOTE
9 – NOTE PAYABLE
 
 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 March
31, 2009 and 2008 was $0 and $35,835, respectively.  The interest rate
is the Prime Rate plus 3%.  The President of the Company is a personal
guaranty on the line of credit.
 
 NOTE
10 – 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 will issue 2,000,000
shares at .25 per share for total proceeds of $500,000 over a period of five
months.  The Company has waived the five month period.  To
date the purchases of stock are as follows:
 
 Date
                                          
                                          # of Shares
                                          
                                          
                                          Amount7/15/08
                                          
                                          
                                          400,000
                                          
                                          
                                          $
                                          100,00012/31/08
                                          
                                          
                                          600,000
                                          
                                          
                                          $
                                          150,0005/01/09
                                          
                                          
                                          400,000
                                          
                                          
                                          $
                                          100,0001,400,000
                                          
                                          
                                          $
                                          350,000
 
 NOTE
11 – SHARE BASED PAYMENTS FOR SERVICES
 
 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 $125,000 has been
expensed for the nine months ended September 30, 2008.
 
 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 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.
 
 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.  91.25 hours at a cost of $22,813 was recorded
as expense for the three months ended March 31, 2009.
 
 NOTE
12 – MAJOR CUSTOMERS
 
 One major
customer accounted for $121,411 and $216,598 of revenue for the three months
ended March 31, 2009 and 2008, respectively.  These amounts represent
61% and 85% of the Company’s revenue for the three months ended March 31, 2009
and 2008, respectively.
 
 As of
March 31, 2009 and 2008, this customer accounted for 39% and 81% of accounts
receivable, respectively.
 7
 Table of Contents
  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 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).
 
 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 is the essential solution to revolutionize your data center
operations.  It provides a structured process to consolidate and
standardize operations within the data center, mitigate operational risk, and
apply key best practices (i.e., configuration and change management processes)
to better control operations in the data center.
 
 Aperture
VISTA specifically provides IT Management with the key information and
intelligence to reduce operational risk and improve efficiency in the data
center.  Aperture VISTA enables organizations to achieve significant
improvements in the following areas:
 
 ·
              Improve
      impact analysis, minimize errors and reduce staff requirements associated
      with changes
 ·
              Enable
      proactive infrastructure capacity
planning
 ·
              Facilitate
      the planning and execution of consolidation or relocation
      projects
 ·
              Provide
      alerts for key performance indicators and threshold
    conditions
 ·
              Enforce
      adherence to redundancy requirements and design guidelines to ensure
      availability and business
continuity
 ·
              Reduce
      mean-time-to-repair for outages
 ·
              Ensure
      compliance with standard or regulated
processes
 ·
              Speed
      time-to-market for new application
deployments
  8
 Table of Contents
  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.
 
 The
result is an accurate accounting of corporate assets, their location,
department, condition and value.
 Features:
  ·
              Track
      equipment, furniture and telecom assets in use and in
      inventory
 ·
              Assign
      assets to locations, employees and cost
centers
 ·
              Report
      on condition, depreciation, warranties and maintenance
      histories
 ·
              Inventory
      analysis, including leased vs. owned
assets
 ·
              Track
      assets as individual components or create an asset made up of many
      individual components by recording a bill-of-materials (i.e.
      workstation)
 ·
              Establish
      product standards
 ·
              Create
      purchase orders and track cost, approval and
  supplier
 ·
              Receive
      goods and specify installed
location
 ·
              Track
      warranties, insurance policies and asset leases, including duration and
      payments
 ·
              Create
      multiple stock locations including non-fixed locations such as maintenance
      trucks
 ·
              Track
      parts in stock, establish recommended stock levels and reorder parts for
      stock
  Benefits:
 
 ·
              Track
      the lifecycle of assets from purchase, to relocation to
      disposition
 ·
              Report
      on assets by location, department and
employee
 ·
              Review
      expiring insurance policies, warranties and
  leases
 ·
              Review
      an assets maintenance history including on-demand and preventative
      maintenance work
 ·
              Manage
      parts inventories including allocated parts and
  reordering
 ·
              Compare
      actual furniture to typical furniture by room
  type
 ·
              Keep
      asset locations up to date in AutoCAD drawings or by issuing move
      orders
 
 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
 
 Related
Services
 
 In
connection with our software offerings, we provide the following services to our
customers:
 
 Consulting
 
 A
significant number of our customers request our advice regarding their business
and technical processes, often in conjunction with a scoping exercise conducted
both before and after the execution of a contract.  This advice can
relate to development or streamline of assorted business processes, such as
sourcing or procurement activities, assisting in the development of technical
specifications, and recommendations regarding internal workflow
activities.
 Customization and
Implementation
 
 Based
generally upon the up-front scoping activities, we are able to customize our
solutions as required to meet the customer’s particular needs.  This
process can vary in length depending on the degree of customization, the
resources applied by the customer and the customer’s business
requirements.  We work closely with our customers to ensure that
features and functionality meet their expectations.  We also provide
the professional services work required for the implementation of our customer
solutions, including loading of data, identification of business processes, and
integration to other systems applications.
 
 Training
 
 Upon
completion of implementation (and often during implementation), we train
customer personnel to utilize our Solutions through our administrative
tools.  Training can be conducted in one-on-one or group
situations.  We also conduct “train the trainer”
sessions.
 
 Maintenance and
Support
 
 We
provide regular software upgrades and ongoing support to our
customers.
  We have
been providing consulting, customization and implementation, training,
maintenance and support services to our customers since 1994.
  THIRD
PARTY OFFERINGS
 
 Other Partner
Relationships
  In
addition to the sale of our core solutions and services, we intend to enter into
marketing or co-marketing agreements with companies that offer services that are
complementary to our offerings.  We would market these complementary
services to our customers and prospects and can earn a referral fee if these
services are purchased.  In some cases our marketing partner will be
able to market our solutions to its customers and prospects and can earn a
referral fee.  At the present time, we have two marketing
partners.  They are Forsythe Solutions Group, Inc. and Total Site
Solutions, Inc.
 
 Forsythe
serves as a technology infrastructure solutions provider, helping organizations
across all industries, including Fortune 1000 companies, manage the cost and
risk of their information technology.  Forsythe’s data center services
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.
 
 9
 Table of Contents
  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.
 
 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.
 
 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.
 
 Although
we offer a broad range of asset network and facilities management solutions as
Value Added Resellers, we face significant competition in each of the component
product areas from the following companies:
 
 §
              Enterprise
      asset management – related solutions – Visual Network Design, Inc.,
      ShowRack, Nlyte, Visio§
              Facilities
      Management – related solutions – Archibus
 In
addition, we face competition from organizations that use in-house developers to
develop solutions for certain elements of the asset management.
 
 10
 Table of Contents
  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; VISTA500 by Aperture Technologies,
Inc. and RACKWISE DCM by Visual Network Design.  ISA believes that its
current pricing structure combined with the extensive number of data validation
processes included in its product make it very competitive.  In 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.
  RESULTS OF OPERATIONS FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 
 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.
 
 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.
 
 CRITICAL
ACCOUNTING POLICIES
 
 Revenue
recognition
 
 We
recognize revenue in accordance with SEC Staff Accounting Bulletin No. 104,
“Revenue Recognition” and Emerging Issues Task Force, or EITF, Issue No. 00-21,
“Revenue Arrangements with Multiple Deliverables”.
 Consulting
services and training revenues are accounted for separately from subscription
and support revenues when these services have value to the customer on a
standalone basis and there is objective and reliable evidence of fair value of
each deliverable.  When accounted for separately, revenues are
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 March 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 fir value of the assets.
 
 Software Development
Costs
 
 We
account for costs incurred to develop computer software for internal use in
accordance with Statement of Position (SOP) 98-1, “Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use”.  As
required by SOP 98-1, we capitalize the costs incurred during the application
development 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.
 Revenues
 
 Gross
revenues were $199,084 and $256,265 for the three months ended March 31, 2009
and 2008, respectively.  The decrease is primarily due to the
economy.  In the current economic environment, current clients are
finding it difficult to maintain previous levels of business.  Also,
in order to attract new clients in 2009, the Company has had to reduce the data
discovery rates by 15 percent.  Management feels this is a trend that
will need to be continued through 2009.  Finally, a project to begin
with a new client in 2009 has been delayed as the client’s security team
continues its validation process.
 
 Income /
Loss
 
 We had a
net loss of $206,439 and income of $4,175 from continuing operations for the
three months ended March 31, 2009 and 2008 respectively.  There are
two major reasons for the loss in the quarter. First the Company saw a decrease
in revenue for the first quarter of 2009. Secondly, ISA entered into several
consulting agreements that had an immediate impact on activity for the quarter
by increasing operating expenses.  We expect long term benefits for
these expenditures.  We expected to be breakeven at least through the
fiscal year 2008, partly attributable to the increase in projected revenues
offset by the fair value of expected services to be received.  In
addition, there can be no assurance that we will achieve or maintain
profitability or that our revenue growth can be sustained in the
future.
 
 11
 Table of Contents
  Expenses
  Operating
expenses for the three months ended March 31, 2009 and 2008 were $404,809 and
$249,267, respectively.  The high operating expenses during 2009 were
due primarily to administrative and general expenses, which were $293,189 and
$121,202 for the three months ended march 31, 2009 and 2008
respectively.
  Income
Taxes
 
 There was
no income tax benefit or expense recorded for the three months ended March 31,
2009.  There was an income tax expense of $1,025 recorded for the
three months ended March 31, 2008.
 
 Impact of
Inflation
 
 We
believe that inflation has had a negligible effect on operations during the
three months ended March 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 $53,220 during the three months ended March 31,
2009, compared to cash flows of $49,357 used in operations during the same
period ended March 31, 2008.  Cash flows used in operations during the
three months ended March 31, 2009 were primarily attributable to a net loss of
$206,439 the increase in accounts receivable by $55,515 and partially offset by
the issuance of stock for services of $210,313.  Cash flows used in
operations in 2008 were primarily attributable to net income of $4,175, and the
increase in accounts receivable by $69,530.
  Cash
flows used in investing activities were $86,507 during the three months ended
March 31, 2009, compared to cash flows of $15,595 provided by investing
activities for the same period ended March 31, 2008. Cash flows used in
investing activities in 2009 were attributable to $86,507 in costs incurred for
software development and web page design.  Cash flows provided by
investing activities were attributable to payments received on a software
license agreement, offset by the marketing cost of software licenses agreement
and purchase of property and equipment.
  There
were no cash flows from financing activities for the three months ended March
31, 2009.  Cash flows provided for from financing activities for three
months ended March 31, 2008 are attributable to borrowing from the line of
credit.
 
 We had
cash on hand of $58,546 and net working capital of $484,989 as of March 31,
2009.  Currently, we have enough cash to fund our operations for the
next year.  This is based on current cash flows from financing
activities and projected revenues.  Although it is possible, if the
projected revenues fall short of needed capital we may not be able to sustain
our capital needs.  We have the ability to pay three consulting
agreements with capital.  This has favorably impact our working
capital situation.  If there is any short fall in working capital we
will then need to obtain additional capital through equity or debt financing to
sustain operations for an additional year.  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.
 
 12
 Table of Contents
  ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  The
information to be reported under this item is not required of smaller reporting
companies.
  ITEM 4T. CONTROLS AND
PROCEDURES
  DISCLOSURE CONTROLS AND
      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.
  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 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
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 2008 Annual Report on Form
10-K.  There have been no material changes from the risk factors
previously disclosed in our 2008 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 Officer and 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.
 
 Reports on Form
8-K filed
  (1)
              On
      April 21, 2009, we filed a current report on Form 8-K to announce a
      Consulting Agreement with Rubicon Software Group, plc.
  13
 Table of Contents
 
 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:
      May 10, 2009
                By:
                /s/ Joseph P.
  CoscheraJoseph
      P. Coschera
                  President