UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C.
 
 FORM
10-KSB
 (Mark
One)
 
 x
              Annual
      Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934
 
 For
      the fiscal year ended June 30, 2007,
or
 
 o
              Transition
      report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934
 
 Commission
file number 0-21555
 
 AMASYS
CORPORATION
 (Name of
Small Business Issuer in its charter)
  Delaware
              
              54-1812385(State or
      other jurisdiction
              
              (I.R.S.
      Employerof
      incorporation or organization)
              
              Identification
      No.)
  625
      N. Washington Street, Suite 301, Alexandria, Virginia
  22314(Address of
      principal executive office)
  Issuer’s
telephone number, including area code: (703)
797-8111
 
 Securities
registered pursuant to Section 12(b) of the Act: None
 
 Securities
registered pursuant to Section 12(g) of the Act:
 
 Common Stock, par value
$0.01 per share
 (Title of
class)
 
 Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.   Yesx No
o
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
 
 Indicate
by check mark whether the registration is a shell company (as defined by Rule
12b-2 of the Exchange Act) Yes o No x
 
 The
Company knows of no trading in its Common Stock since its
inception.  As of June 30, 2007, there were 1,775,880 shares of stock
held by non-affiliates.
 
 As of
June 30, 2007, 6,669,210 shares of the common stock of the registrant were
outstanding.
  
  PART
I
  Item 1.
              Business
  Company
History
 
 AMASYS
Corporation (“AMASYS” or the “Company”) was incorporated in Delaware in 1992,
and in 1996 received all remaining assets of Infotechnology, Inc. (“Infotech”),
a Delaware company, following the completion of Infotech’s Chapter 11 Bankruptcy
reorganization, in accordance with an Assignment and Assumption Agreement, dated
October 11, 1996, and effective as of June 21, 1996.  As a result of a
series of transactions during the 1980’s, Infotech, then principally engaged in
the information and communications business, acquired equity interests in Comtex
News Network, Inc. (“Comtex”) and Analex Corporation (“Analex”), formerly known
as Hadron, Inc.  The Company’s business was the maintenance of its
equity interest in and note receivable from Comtex and equity interest in
Analex.  During September and October 2006, the Company liquidated its
equity interests in Comtex and Analex.
 
 On July
2, 2001, the Company filed the following reports with the Securities and
Exchange Commission (the “SEC”):  Annual Report on Form 10-K for the
year ended June 30, 2000; the Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000; the Quarterly Report on Form 10-Q for the quarter
ended December 31, 2000; and the Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001.  Prior to these filings, the Company had not
filed reports with the SEC except for a Form 8-A, filed in October 1996, for
registration of its common and preferred shares of stock, and a Form 12B-25,
filed in December 1996, in which it disclosed that it was unable to file its
Form 10-Q for the quarter ended December 31, 1996 because of the difficulty
associated with the preparation of the Company’s initial financial statements as
successor to Infotech.  The Annual Report on Form 10-K for the year
ended June 30, 2002 was timely filed.  The Annual Report on Form 10-K
for the year ended June 30, 2003 was filed on November 7, 2003.  The
Quarterly Report on Form 10-QSB for the quarter ended December 31, 2003 was
filed on February 20, 2004 pursuant to a Form 12b-25 filed on February 17,
2004.  The Annual Report on Form 10-KSB for the year ended June 30,
2004 was filed on October 7, 2004 pursuant to a Form 12b-25 filed on September
27, 2004.  The Annual Report on Form 10-KSB for the year ended June
30, 2005 was filed on September 28, 2005 and was amended on January 19, 2007 and
March 22, 2007.  The Annual Report on Form 10-KSB for the year ended
June 30, 2006 was filed on October 9, 2007.  All subsequent quarterly
reports of the Company through the March 31, 2007 reporting period have been
filed with the SEC and the Company intends to file all subsequent quarterly
reports with the SEC as soon as possible.
 
 Overview
 
 AMASYS is
the successor to Infotech, pursuant to Infotech’s bankruptcy
proceeding.  Until September 25, 2006, AMASYS’ primary assets were its
equity interest in and note receivable (the “Note”) from Comtex and an equity
interest in Analex.  AMASYS owned 16% of the outstanding equity of
Comtex, while the remainder was publicly owned.
 
 2
  On
September 25, 2006, the Company exchanged the equity investment in Comtex common
stock and the Note Receivable from Comtex of $856,954, for 55,209 shares of the
AMASYS Series A Preferred stock.  Therefore, at June 30, 2007, the
Company no longer had an equity interest in either the common stock of Comtex or
the Note from Comtex.
 
 During
October 2006, the Company sold the remaining 21,000 shares of common stock of
publicly-held Analex, a defense contractorspecializing in systems engineering and
developing innovativetechnical intelligence solutions in
support of U.S. national security.  Therefore, at June 30, 2007, the
Company no longer had an equity interest in Analex.
 
 Since the
Company redeemed and converted all of its outstanding Series A Preferred Stock
at the end of September 2006, starting October 1, 2006 the Company has not
conducted any business operations.  All of the Company's operating
results and cash flows reported in the accompanying financial statements from
its inception are considered to be those related to development stage activities
and represent the 'cumulative from inception' amounts from its development stage
activities required to be reported pursuant to Statements of Financial
Accounting Standards (SFAS) No. 7, Development Stage Enterprises.
 
 Employees
 
 At June 30, 2007, the Company used
the services of two consultants, both of whom serve as officers of the
Company.  The Company has no employees.
 
 Subsequent
Events
 
 On
November 15, 2007, the Company executed a $15,000 note with C.W. Gilluly, the
Chairman, President and CEO of the Company, pursuant to which C.W. Gilluly
advanced the Company $15,000 at a rate of 12% per annum.
 
 On
January 24, 2008, the Company executed a $5,000 note with Private Capital Group,
LLC, pursuant to which Private Capital Group, LLC advanced the Company $5,000 at
a rate of 12% per annum.
 
 On June
23, 2008, the Company executed a $15,000 note with C.W. Gilluly, pursuant to
which C.W. Gilluly advanced the Company $15,000 at a rate of 12% per
annum.
 
 On
September 16, 2008, the Company executed a $25,000 note with C.W. Gilluly,
pursuant to which C.W. Gilluly advanced the Company $25,000 at a rate of 12% per
annum.
 
 There are 6,669,210 shares of common
stock outstanding at June 30, 2007.
 
 As
previously reported, Robert F. Delaney retired from the board of directors
effective November 26, 2006.
 
 3
  Item 2.
                Properties
 The Company owns no real
estate.  The Company leases certain space from Comtex on a
month-to-month basis.  During fiscal 2007, the Company paid $1,695 to
Comtex for the pro rata portion of its office and administrative expenses to
Comtex for its use of the facilities at 625 N. Washington Street, Alexandria,
Virginia.
  Item 3.
              Legal
    Proceedings
 AMASYS has no outstanding, material
legal proceedings.
  Item 4.
              Submission of Matters to a Vote
      of Security Holders
  None.
  4
  PART
II
  Item 5.
              Market for Registrant’s Common
      Equity and Related Stockholder
Matters
  The
Company’s Common Stock, par value $.01 per share (“Common Stock”), has not
traded since its initial registration on Form 8-A with the SEC.  There
is no established public trading market for the Common Stock.
 
 The approximate number of holders of
record of the Company’s Common Stock as of June 30, 2007 was 474.
 
 The Company has never declared or paid
a cash dividend on its Common Stock and does not anticipate the declaration or
payment of cash dividends to shareholders in the foreseeable
future.
 
 In accordance with the Company’s
Stock Option Plan, Dr. Gilluly received a grant of 350,000 options in November
1996, at an exercise price of $0.01 per share.  On November 15, 2006,
Dr. Gilluly exercised his options to purchase 350,000 restricted shares (out of
a total of 900,000 options) and the Company issued 350,000 restricted shares to
him.  The remaining 550,000 options expired on November 16,
2006.
 
 On May
24, 2007 the Company announced it had executed a $10,000 note with Private
Capital Group, LLC, pursuant to which Private Capital Group, LLC advanced the
Company $10,000 at a rate of 10% per annum.  Additionally, the Company
granted an issuance of 1,000,000 shares of restricted common stock and a warrant
to issue an additional 1,000,000 shares of restricted common stock at an
exercise price of $0.01 per share as an inducement for Private Capital Group,
LLC to make the loan.  Private Capital Group, LLC is affiliated with
World Mineral Corporation, which signed the Agreement and Plan of Share Exchange
by and among AMASYS Corporation, World Mineral Corporation and the shareholders
of World Mineral Corporation, dated September 26, 2006.
 
 Similarly,
the Company entered into a $10,000 note and warrant agreement with its Chairman
and Chief Executive Officer, C.W. Gilluly, on the same terms as described
above.
 
 Set forth below is certain information
as of June 30, 2007 regarding equity compensation to directors and executive
officers of the Company that has been approved by stockholders.
 
 Equity
      compensationplans approved bystockholders
              
              Number
      of securities to be issued upon exercise of outstanding options
      andrights
              
              
              Weighted
      average
                exercise
      price
              
              
              Number
      of securitiesremaining available for issuance under
      planStock
      Option Plan
              
              
              0
              
              
              $
              0.00
              
              
              
              0Total
              
              
              0
              
              
              $
              0.00
              
              
              
              0
  5
  Item
      6.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
  The following discussion and analysis
of our financial condition and results of operations should be read in
conjunction with our financial statements and related notes appearing elsewhere
in this report.  This discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions.  Actual
results may differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including but not limited to the
risks discussed in this report.
 
 The Company employs no staff with
financial expertise, rather it relies on part-time outside professionals for
such expertise.
 
 Critical
Accounting Policies
 
 Our financial statements were
prepared in conformity with U.S. generally accepted accounting
principles.  As such, management is required to make certain
estimates, judgments and assumptions that they believe are reasonable based upon
the information available.  These estimates and assumptions affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expense during the periods
presented.  The significant accounting policies which management
believes are the most critical to aid in fully understanding and evaluating our
reported financial results include the following:
 
 Derivatives
 
 SFAS 133 establishes accounting and
reporting standards for derivative instruments and requires that all derivatives
be recorded on the balance sheet at fair value.  Additionally, the
accounting for changes in fair value depends on whether the derivative
instrument is designated and qualifies as part of a hedging relationship and, if
so, the nature of the hedging activity.  Changes in the fair value of
derivatives that do not qualify for hedge treatment are recognized currently in
earnings.
 
 We had a Note from Comtex and in
August 2001, the Note was amended to include a provision that allows us to
convert all or a portion of the outstanding principal amount, plus accrued
interest, into common stock of Comtex.  In accordance with SFAS 133,
we accounted for this conversion option as an embedded derivative.  As
a result, the conversion option was being carried at fair value determined using
a Black-Scholes model with changes in the fair value being recognized currently
in earnings.  As previously reported, on September 25, 2006, the
Company exchanged the Note for shares of the AMASYS Series A Preferred stock.
Therefore,as of June
30, 2007, the balance of the derivative asset was $-0- and for the fiscal year
ended June 30, 2007, we recognized other expense of $(377,059) due to the
decrease in value of this derivative.
  6
  Investment
in Comtex
 
 As
previously reported, on September 25, 2006, the Company exchanged the equity
investment in Comtex common for shares of the AMASYS Series A Preferred
stock.  Therefore, at June 30, 2007, the Company no longer had an
equity interest in the common stock of Comtex.  At June 30, 2006, we
had a 16% ownership interest in Comtex.  Since we had the ability to
significantly influence the operations of Comtex, we accounted for our
investment in Comtex under the equity method of accounting.  We could
significantly influence the operations of Comtex since (i) if we converted our
note receivable-related party into shares of Comtex, we would have a 21%
ownership interest in Comtex, (ii) the Company as well as our Chairman and CEO
are Comtex’s largest individual shareholders, (iii) the Company and our Chairman
and CEO have a combined ownership interest in Comtex of 36%, and (iv) our
Chairman is the Chairman of the Board of Comtex.  During the year
ended June 30, 2007, we recognized income of $9,127 for our share of Comtex
income and during the year ended June 30, 2006, we recognized losses of $71,934
for our share of Comtex losses.
 
 Valuation
of Deferred Tax Assets
 
 We recognize deferred tax assets and
liabilities based on the difference between the financial statement and tax
bases of assets and liabilities.  We regularly review our deferred tax
assets for recoverability and establish a valuation allowance based on
historical taxable income, projected future taxable income and the expected
timing of the reversals of existing temporary differences.  Based upon
the level of historical taxable income and projections for future taxable income
over the periods in which the net operating loss carryforwards are available to
reduce income taxes payable, we have established a full valuation allowance
against the deferred tax assets.
 
 Results
of Operations
 
 Comparison of the fiscal
year ended June 30, 2007 to the fiscal year ended June 30,
2006
 
 The Company had net loss of
$(432,828) in fiscal year 2007 compared to net income of $281,531 in fiscal year
2006.  The decrease is explained below.
 
 Operating costs and
expenses.  Operating costs and expenses decreased $(117,524) to
$92,362 in fiscal year 2007 primarily due to a decrease in all elements of
professional fees as the Company’s operations ceased and the Company entered
into development stage operations. General and administrative fees similarly
decreased in response to dwindling financial resources and cessation of current
operations.
 
 Other income
(expense):  Other income (expense) decreased $(831,883) from
other income of $491,417 in fiscal year 2006 to other expense of $(340,466) in
fiscal year 2007, primarily due to a decrease of $(377,059) in the value of the
derivative asset, which was written off as a result of the exchange of the Note
and the Comtex common stock for the Series A preferred stock of the
Company.  The Company recorded the derivative asset as a result of the
conversion feature of the Note in 2001; with the Note no longer an asset of the
Company after the exchange for the preferred stock, the derivative ceased to be
an asset as well and the Company no longer received interest income from the
Note nor continued to accrete the discount into current income, further reducing
other income.  Since the Company sold all remaining shares of its
Analex common stock to finance operations, gains from sales of the short-term
investment decreased $(43,323) as well.
 
 7
  Liquidity
and Capital Resources
 
 The Company had net working capital
of $(6,046) at June 30, 2007.  The Company has had minimal operating
activity since commencing operations in 1996 and is now relying on loans from
related parties as funding sources since the Company can no longer expect to
meet its short-term obligations through payments of interest from the Note and
from the sales of equity interests in Analex.
 
 Cautionary
Statements Concerning Forward-Looking Statements
 
 Except for the historical information
contained herein, the matters discussed in this Form 10-KSB include
forward-looking statements within the meaning of Section 21E of the Securities
and Exchange Act of 1934.  These forward-looking statements may be
identified by reference to a future period or by use of forward-looking
terminology such as “anticipate”, “expect”, “could”, “may” or other words of a
similar nature.  Forward-looking statements, which the Company
believes to be reasonable and are made in good faith, are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those expressed in any forward-looking statement made by, or on behalf of,
the Company.
 
 Going
Concern Uncertainties
 
 As of the date of this annual report,
there is doubt regarding our ability to continue as a going concern as we have
not generated sufficient cash flow to fund our business operations and loan
commitments.  Our future success and viability, therefore, are
dependent upon our ability to generate capital financing.  The failure
to generate sufficient revenues or raise additional capital may have a material
and adverse effect upon the Company and our shareholders.
 
 Commitments
and Contingencies
 
 On September 26, 2006, AMASYS signed an
agreement to acquire all of the shares of common stock of World Mineral
Corporation, a Nevada corporation (WMC) from WMC shareholders in exchange for an
aggregate of 14,775,000 newly issued shares of AMASYS common
stock.  To date the transaction has not been completed.
 
 8
  Item
      7.
              Financial
      Statements
  The information required
by this item is set forth under Item 13, which is incorporated herein by
reference.
 Item
      8.
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
   None.
  Item
      8A.
              Controls
      and Procedures
  Under the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer, we
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-15 (e) and 15d-15(e) under the
Exchange Act) as of the end of the period covered by this annual
report.  Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that, as of the end of the period covered by
this annual report, our disclosure controls and procedures were effective to
ensure that information required to be disclosed in the reports that the Company
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms.
  Item
      8B.
              Other
      Information
  None.
  9
  PART
III
  Item
      9.
              Directors
      and Executive Officers of the Registrant; Compliance with Section 16(a) of
      the Exchange Act.  Directors
 
 The following table contains
information as of June 30, 2007 as to each Director of the Company:
  Name
                
                Since
                
                DirectorAge
                
                Office Held
      with the
    CompanyC.W. Gilluly,
      Ed.D.
                
                1992
                
                61
                
                Chairman of
      the Board, President and
      Chief Executive OfficerRobert J.
      Lynch, Jr. (1, 2)
                
                1992
                
                74
                
                DirectorThomas E.
      McMahan (1, 2)
                
                1992
                
                64
                
                Director
 (1)
              Member
      of the Audit Committee.
 (2)
              Member
      of the Compensation Committee
 
 C.W.
GILLULY, Ed.D. has served as Chairman of the Board, President and Chief
Executive Officer of the Company since June 1992.  Dr. Gilluly served
as President of Comtex from June 1992 until May 1993, as Chief Executive Officer
from June 1992 until September 1997, as Chairman of the Board from June 1992
until December 2002, and as Vice-Chairman from December 2002 through June
2003.  He continues to serve as a Director of Comtex and has served as
Chairman of the Board since February 2004.  Dr. Gilluly served on the
Board of Directors of Analex until March 2003, where he was Chairman of the
Board from October 1994 until January 2001, and also served as Chief Executive
Officer from May 1993 through March 2000.
 
 ROBERT J. LYNCH, JR. is the
President of American & Foreign Enterprises, Inc., a private corporation
managing U.S. and international investments in industrial and real estate
opportunities, for whom he has worked for thirty-seven years. Mr. Lynch also
serves as a Director of Comtex.  Mr. Lynch has been designated as the
financial expert serving on the Audit Committee.
 
 THOMAS E. MCMAHAN is the founder of
McMahan Associates, a private corporation that provides strategic investment
advice and counsel to the financial information industry.  From 1995
to 2000, Mr. McMahan served as senior vice president for corporate development
for MERGENT, INC., a $60 million diversified financial information
business.  Mr. McMahan served as General Manager of Shark Information
Systems, a subsidiary of Infotechnology, Inc., in 1993 and served as Vice
President for Business Development of Infotechnology, Inc. in
1990.  From 1972 though 1990, Mr. McMahan served in various capacities
at McGraw-Hill/Standard & Poor’s, including Senior Vice President and Chief
of Staff of Standard & Poor’s Trader Services from 1988 through1990.
 
 10
  Executive
Officer
 
 As of June 30, 2007, the only executive
officer of the Company who is not also a Director of the Company is S. Amber
Gordon, the Corporate Secretary of the Company.
 
 S. AMBER
GORDON (52) was appointed corporate secretary and treasurer of the company in
October 1996.  Ms. Gordon also serves as the Corporate Secretary of
Comtex, a position she has held since May 1996.  Ms. Gordon has been
the president of S.A. Gordon Enterprises, Inc., a financial relations and
marketing communications firm, since 1985.  Ms. Gordon also served in
senior management positions, the most recent of which was Executive Vice
President of Analex, an information technology company serving the intelligence
community, from June 1991 through August 2000.
 
 Section
16(A) Beneficial Ownership Reporting Compliance
 
 Section 16(a) of the Exchange Act
requires the Company’s executive officers and Directors, and persons who own
more than 10% of a registered class of the Company’s equity securities, to file
reports of ownership and changes in ownership with the SEC.  Executive
officers, Directors and greater than 10% stockholders are required by the SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
 
 Based solely on a review of copies
of such reports of ownership furnished to the Company, or written
representations that no forms were necessary, the Company believes that during
the past fiscal year, its executive officers, Directors and greater than 10%
beneficial owners complied with all applicable filing requirements.
 
 Code
of Ethics
 
 The Company has not adopted a code
of ethics given its limited operations.
  11
  Item
      10.
              Executive
      Compensation
 
 Summary
Compensation Table
 
 The
following table sets forth information concerning all compensation paid or
accrued by the Company to its President and Chief Executive Officer, during the
fiscal year ended June 30, 2007.  Neither Dr. Gilluly nor any other
officer of the Company receives compensation in excess of $100,000 per
year.
 
 Annual
      Compensation
              
              
              Long-Term
                Compensation
      AwardsName
      and
                Principal Position
              
              Fiscal
                Year
              
              Salary
              
              
              Bonus
              
              
              Stock
      Options
                Granted
              
              
              All
      Other
                CompensationC.W.
      Gilluly (1)
              
              2007
              
              $
              12,000
              
              
              
              —
              
              
              
              —
              
              
              $
              487Chairman
              
              2006
              
              $
              36,000
              
              
              
              —
              
              
              
              —
              
              
              $
              6,8052005
              
              $
              36,000
              
              
              
              —
              
              
              
              —
              
              
              $
              6,805
 
 (1)
              Dr.
      Gilluly did not receive any salary from 1992 through fiscal
      2003.  In 1996, he received a grant of stock options, described
      below.
 
 Stock
Option Grants
 
 No stock
options were granted during the fiscal year ended June 30, 2007.  In
accordance with the Company’s Stock Option Plan, Dr. Gilluly received a grant of
350,000 options in November 1996, at an exercise price of $0.01 per
share.  On November 15, 2006, Dr. Gilluly exercised his options to
purchase 350,000 restricted shares (out of a total of 900,000 options) and the
Company issued 350,000 restricted shares to him.  The remaining
550,000 options expired on November 16,
2006.
  Options
Exercised and Year-End Option Values
 
 The
following table sets forth certain information regarding the value of
unexercised options held by the named executive officer as of June 30,
2007.
 
 Fiscal
Year-End Option Values (1)
  Shares
                Acquired
      upon
                Exercise
      of
              
              
              Value
      Realized
                From
      Exercise
              
              
              Number
      of Shares
                Underlying
      Unexercised
                Options
      at June 30, 2007
              
              
              Value
      of Unexercised
                In-the-Money
      Options
                at
      June 30, 2007Name
              
              Options
              
              
              Of Options
              
              
              Exercisable
              
              
              Unexercisable
              
              
              Exercisable
              
              
              UnexercisableC.W.
      Gilluly
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              $
              —
              
              
              $
              —


(1)
              As
      there has been no trading in the Company’s stock since its formation, the
      Company determined that the market value of its common stock approximates
      its exercise price of $.01; however, there can be no assurance that this
      is an accurate reflection of the market
value.
  12
  Stock
Option Plan
 
 The Company’s Stock Option Plan was
approved pursuant to the Confirmation of the Third Amended Plan of
Reorganization of Infotech on June 21, 1994 and was effective as of the
Effective Date of the Plan, on June 21, 1996.  The Plan provided for
the issuance of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended, and non-qualified stock options in
order to recruit and retain key employees, consultants and
Directors.  The Plan expired on November 16, 2006.
 
 Compensation
of Directors
 
 The Company pays non-employee members
of the Board $1,000 per quarter,
$500 per board meeting, and $250 per audit committee meeting, plus travel
expenses incurred in connection with attendance at Board
meetings.  During fiscal year 2007, each of the Company’s non-employee
Directors received compensation as shown below for services rendered to the
Company.
 
 Director
Compensation
 
 Name
              
              Fees
      earned or paid in cash
                ($)(1)
              
              
              Stock
      awards
                ($)
              
              
              Option
      awards
                ($)
              
              
              Non-equity
      incentive plan compensation($)
              
              
              Nonqualified
      deferred compensation earnings
                ($)
              
              
              All
      other compensation  ($)
              
              
              Total
                ($)Robert
      F. Delaney
              
              $
              2,000
              
              
              
              --
              
              
              
              --
              
              
              
              ---
              
              
              
              ---
              
              
              
              ---
              
              
              $
              2,000Robert
      J. Lynch, Jr.
              
              $
              4,500
              
              
              
              --
              
              
              
              --
              
              
              
              ---
              
              
              
              ---
              
              
              
              ---
              
              
              $
              4,500Thomas
      E. McMahan
              
              $
              4,500
              
              
              
              --
              
              
              
              --
              
              
              
              ---
              
              
              
              ---
              
              
              
              ---
              
              
              $
              4,500
 
 
 Fees
earned or paid in cash represents annual fees, annual retainer and committee
fees paid to Directors.
  Employment
Agreements
 
 The Company has no employment
agreements.
  13
  Compensation
Committee Report on Executive Compensation
 
 Compensation
for the President and Chief Executive Officer
 
 The
Committee reports that during the fiscal year ended June 30, 2007, Dr. Gilluly
received payment of $12,000 as compensation for his services as President and
Chief Executive Officer of the Company.
  Submitted by the Compensation
      CommitteeRobert J. Lynch,
      Jr.Thomas E.
      McMahan
  Compensation
Committee Interlocks and Insider Participation
 
 None
  Item
      11.
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
  The
following table sets forth information as of June 30, 2007, regarding the
beneficial ownership of the Company’s Common Stock of (i) each person known to
the Company to be the beneficial owner, within the meaning of Section 13(d) of
the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), of more
than 5% of the outstanding shares of Common Stock, (ii) each Director of the
Company, (iii) each executive officer of the Company named in the Summary
Compensation Table (see “Executive Compensation”) and (iv) all executive
officers and Directors of the Company as a group.  Unless otherwise
indicated, the address of each named beneficial owner is c/o AMASYS Corp., 625
North Washington Street, Suite 301, Alexandria, Virginia
22314.  Except to the extent indicated in the footnotes, each of the
beneficial owners named below has sole voting and investment power with respect
to the shares listed.
 
 Name
      and Address of
                Beneficial
      Owner
              Amount
      and Nature of
                Beneficial
      Ownership
              Percentage
                of Class
      (1)Tepco
      Ltd.
              2,069,080
              23.87%The
      Continental Building25
      Church Street,Hamilton
      HM 12, BermudaPrivate
      Capital Group, LLC
              2,000,000
              23.07Two
      Grand Central Tower140
      E. 45th
      Street, Suite 15CNew
      York, NY 10017C.W.
      Gilluly, Chairman and CEO
              2,427,048
              28.0
  14
  Robert
      J. Lynch, Jr., Director
                6,245
      (2)
                *
 Thomas
      E. McMahan, Director
              27,043
              *Joshua
      Angel
              191,578
              2.21c/o
      Herrick, Feinstein LLP2
      Park AvenueNew
      York, NY 10016Bruce
      Frankel Estate
              128,901
              1.49c/o
      Cole, Schotz PA900
      Third Ave, 16th
      FloorNew
      York, NY 10022All
      Directors and Executive Officers as a group (4
    persons)
              2,460,991
              28.39*
      Less than 1%
 
 (1)
              Beneficial
      ownership is direct unless otherwise indicated and includes warrants that
      are exercisable within 60 days.  The percentage of beneficial
      ownership of all Directors and executive officers as a group is based on
      the sum of the total number of shares outstanding and all outstanding
      warrants held by Directors and executive officers that are exercisable
      within 60 days.
 
 (2)
              Includes
      245 shares held by Mr. Lynch’s
wife.
  Item
      12.
              Certain
      Relationships and Related
  Transactions
  Dr.
Gilluly serves as Chairman of the Board and Chief Executive Officer of the
Company.  Dr. Gilluly also serves as Chairman of the Board of
Directors of Comtex.  Mr. Lynch, a Director of the Company, also
serves as a Director of Comtex.
 
 15
  PART
IV
  Item
      13.
              Exhibits
      and Reports on Form
8-K
  (a)
    1.
              
              Financial
      StatementsReport of
      Independent Registered Public Accounting Firm (Turner, Stone &
      Company, L.L.P)
              F-1Balance Sheet at
      June 30, 2007
              F-2Statements of
      Operations for the fiscal years ended June 30, 2007 and 2006
              F-3Statements of
      Stockholders’ Equity for the fiscal years ended June 30, 2007 and
      2006
              F-4 to
  F-5Statements of Cash
      Flows for the fiscal years ended June 30, 2007 and
    2006
              F-6 to
  F-7Notes to Financial
      Statements
              F-82.
              
              Financial Statement
      SchedulesThe
      schedules for which provision is made in the applicable accounting
      regulation of the Securities and Exchange Commission are not required
      under the related instructions or are inapplicable and therefore have been
      omitted.3.
              
              Exhibits
  Number
              
              Description1.1
              
              Specimen
      certificate for the Common Stock, $.01 par value, of the Registrant
      (incorporated by reference to the Company’s Form 8-A filed on October 15,
      1996).2.1
              
              Third
      Joint Chapter 11 Plan of Reorganization for Infotechnology, Inc. dated
      March 30, 1994, as confirmed by the Bankruptcy Court (incorporated by
      reference to the Company’s Form 8-A filed on October 15,
      1996).2.2
              
              Order
      Confirming Third Joint Plan of Reorganization dated as of June 23, 1994 of
      Infotechnology, Inc. and Questech Capital Corporation (incorporated by
      reference to the Company’s Form 8-A filed on October 15,
      1996).
  16
  2.3
              
              Assignment
      and Assumption Agreement between the Company and Infotechnology, Inc.
      (incorporated by reference to the Company’s Form 8-A filed on October 15,
      1996).3.1
              
              Restated
      Certificate of Incorporation of AMASYS Corporation (incorporated by
      reference to the Company’s Form 8-A filed on October 15,
      1996).3.2
              
              Bylaws
      of AMASYS Corporation (incorporated by reference to the Company’s Form 8-A
      filed on October 15, 1996).10.1
              
              AMASYS
      Corporation Stock Option Plan (incorporated by reference to the Company’s
      Form 10-K, for the year ended June 30, 2000, filed on July 2,
      2001).10.2
              
              Second
      Amendment to Amended, Consolidated and Restated 10% Senior Subordinated
      Secured Note between the Company and Comtex News Network, Inc.
      (incorporated by reference to the Company’s Form 10-K, for the year ended
      June 30, 2001, filed on September 28, 2001).10.3
              
              Payment
      and Release Agreement between the Company and the Pension benefit Guaranty
      Corporation dated February 1, 2002. (incorporated by reference to the
      Company’s Form 10-Q, for the quarter ended December 31, 2001, filed on
      February 13, 2002).10.4
              
              Note
      between the Company and C.W. Gilluly dated December 21, 2001.
      (incorporated by reference to the Company’s Form 10-Q, for the quarter
      ended December 31, 2001, filed on February 13, 2002).10.5
              
              Note
      between the Company and C.W. Gilluly dated February 12, 2002.
      (incorporated by reference to the Company’s Form 8-K filed on February 20,
      2002).31.1
              
              Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.31.2
              
              Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.32.1
              
              Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.32.2
              
              Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.
 
 (b)           Reports
on Form 8-K
 
 On May 24, 2007 the Company filed a
Form 8-K for Entry into a Material Definitive Agreement whereby it announced it
had received an infusion of $20,000 in order to continue its operations in the
near-term.  The Company executed a $10,000 note with Private Capital
Group, LLC, pursuant to which Private Capital Group, LLC advanced the Company
$10,000 at a rate of 10% per annum.  Additionally, the Company granted
an issuance of 1,000,000 shares of restricted common stock and a warrant to
issue an additional 1,000,000 shares of restricted common stock at an exercise
price of $0.01 per share as an inducement for Private Capital Group, LLC to make
the loan.  Private Capita l Group, LLC is affiliated with World
Mineral Corporation, which signed the Agreement and Plan of Share Exchange by
and among AMASYS Corporation, World Mineral Corporation and the shareholders of
World Mineral Corporation, dated September 26, 2006.
 
 17
  Similarly,
the Company entered into a note and warrant agreement with its Chairman and
Chief Executive Officer, C.W. Gilluly, on the same terms as described
above.
  Item
      14.
              Principal
      Accountant Fees and
Services
  Our Audit
Committee is responsible for appointment of the Company’s independent registered
public accounting firm.  During the year ended June 30, 2007, the
Company engaged Turner, Stone & Company, LLP and ceased using Kaiser Scherer
& Schlegel, PLLC to conduct its annual audit and quarterly reviews of the
financial statements and to provide services in connection with the SEC proxy
statement filing.
 
 The
following table sets forth aggregate fees billed to the Company by its principal
accountants for the fiscal years ended June 30, 2007 and 2006.
 
 Fiscal
      Years Ended June 30,2007
              
              
              2006Audit
      Fees
              
              $
              9,111
              
              
              $
              32,374Audit-Related
      Fees
              
              
              —
              
              
              
              —Tax
      Fees
              
              
              —
              
              
              
              —All
      Other
      Fees
              
              
              —
              
              
              
              —
 
 Fees for
audit services include fees associated with the annual audit and the reviews of
the Company’s quarterly reports on Form 10-QSB.
 
 The Audit Committee’s policy is to
pre-approve all audit and non-audit services provided by the independent
registered public accounting firm, either by approving an engagement prior to
the engagement or pursuant to a pre-approval policy with respect to particular
services.  These services may include audit services, review services,
and other services.  The independent registered public accounting firm
and management are required to periodically report to the full Audit Committee
regarding the extent of services provided by the independent registered public
accounting firm in accordance with the pre-approval, and the fees for the
services performed to date.
 
 18
  SIGNATURES
 
 
 Pursuant to the requirements of Section
13 or 15(d) 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.
 
 Date:  October
8, 2008
 AMASYS
      CORPORATIONBy:
              /s/ C.W.
      GillulyC.W. Gilluly,
      Ed.D.President and Chief
      Executive Officer(Principal Executive
      Officer andPrincipal Financial
      and Accounting Officer)
  Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
  DIRECTORS:Signature
              
              Title
              
              Date/s/ C.W.
      Gilluly
              
              Chairman
      and Director
              
              October 8,
      2008C.W. Gilluly,
      Ed.D./s/ Robert J. Lynch,
      Jr.
              
              Director
              
              October 8,
      2008Robert J. Lynch,
      Jr./s/ Thomas E.
      McMahan
              
              Director
              
              October 8,
      2008Thomas E.
      McMahan
  19
 
 Report of Independent
Registered Public Accounting Firm
 
 
 To the
Board of Directors and Shareholders of
 AMASYS
Corporation
 
 We have
audited the accompanying balance sheet of AMASYS Corporation (a development
stage company) (the “Company”) as of June 30, 2007, and the related statements
of operations, changes in stockholders’ equity (deficit) and cash flows for each
of the years in the two year period ended June 30, 2007 and for the period
October 1, 2006 through June 30, 2007.  These financial statements are
the responsibility of the Company’s management.  Our responsibility is
to express an opinion on these financial statements based on our
audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of AMASYS Corporation as of June 30,
2007, and the results of its operations and cash flows for each of the years in
the two year period ended June 30, 2007 and for the period October 1, 2006
through June 30, 2007, in conformity with accounting principles generally
accepted in the United States of America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 1 to the
financial statements, the Company has no business operations and has a net
working capital deficiency, both of which raise substantial doubt about its
ability to continue as a going concern.  Management's plans in regard
to these matters are also described in Note 1.  The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
 
 
 /s/
Turner, Stone & Company, L.L.P.
 Certified
Public Accountants
 Dallas,
Texas
 October
8, 2008
  F-1
  AMASYS
Corporation
 (A
Development Stage Company)
 Balance
Sheet
 
 June
      30,
                  2007AssetsCurrent
      assets:Cash
                
                $
                7,862Prepaid
      expenses
                
                
                700Total
      current assets
                
                
                8,562Total
      assets
                
                $
                8,562Liabilities
      and Stockholders’ DeficitCurrent
      liabilities:Accounts
      payable and accrued expenses
                
                $
                6,585Accounts
      payable, related parties
                
                
                8,023Total
      current liabilities
                
                
                14,608Long-term
      liabilities:Notes
      payable, related parties
                
                
                20,197Total
      liabilities
                
                
                34,805Commitments
      and contingencies (Note 11)Stockholders’
      deficit:Preferred
      stock, $.01 par value, 1,000,000 shares authorized, none issued or
      outstanding
                
                
                -Common
      stock, $0.01 par value; 20,000,000 shares authorized; 6,669,210 shares
      issued and outstanding
                
                
                66,692Additional
      paid-in capital
                
                
                317,045Retained
      deficit (including loss of
      $46,218 accumulated from entering development
stage)
                
                
                (409,980
                )Total
      stockholders’ deficit
                
                
                (26,243
                )Total
      liabilities and stockholders’ deficit
                
                $
                8,562
 
 See
accompanying notes.
 F-2
  AMASYS
Corporation
 (A
Development Stage Company)
 Statements
of Operations
 
 June
      30,
                
                
                Cumulative2007
                
                
                2006
                
                
                From
      Entering Development
                  Stage
                  October
      1, 2006Operating
      costs and expenses:Professional
      services
                
                $
                77,170
                
                
                $
                187,851
                
                
                $
                27,035General
      and administrative
                
                
                14,854
                
                
                
                22,035
                
                
                
                11,579Interest
      expense
                
                
                338
                
                
                
                —
                
                
                
                338Total
      operating costs and expenses
                
                
                92,362
                
                
                
                209,886
                
                
                
                38,952Other
      income (expense):Stock
      issued for loans
                
                
                (20,000
                )
                
                
                —
                
                
                
                (20,000
                )Gain
      on sale of short-term investment
                
                
                26,905
                
                
                
                70,228
                
                
                
                12,734Interest
      income
                
                
                43,409
                
                
                
                177,955
                
                
                
                —Equity
      in earnings (losses) of Comtex
                
                
                9,127
                
                
                
                (71,934
                )
                
                
                —(Loss)
      gain on derivative asset
                
                
                (377,059
                )
                
                
                315,168
                
                
                
                —Total
      other (expense) income
                
                
                (317,618
                )
                
                
                491,417
                
                
                
                7,266(Loss)
      income before income taxes
                
                
                (409,980
                )
                
                
                281,531
                
                
                
                (46,218
                )Provision
      for income taxes
                
                
                —
                
                
                
                —
                
                
                
                —Net
      (loss) income
                
                $
                (409,980
                )
                
                $
                281,531
                
                
                $
                (46,218
                )(Loss)
      income per share (Note 3):Basic
                
                $
                (0.10
                )
                
                $
                0.08Diluted
                
                $
                (0.10
                )
                
                $
                0.07Weighted
      average number of shares outstanding:Basic
                
                
                4,033,507
                
                
                
                2,207,350Diluted
                
                
                4,033,507
                
                
                
                4,167,350
 
 
 See
accompanying notes.
 F-3
  AMASYS
Corporation
 (A
Development Stage Company)
 Statements
of Stockholders’ Equity (Deficit)
 Years
Ended June 30, 2007 and 2006
  AccumulatedAccumulated
                
                
                Retained
                
                
                DeficitAdditional
                
                
                Other
                
                
                Earnings
                
                
                DuringPreferred
      Stock
                
                
                Common
      Stock
                
                
                Paid-In
                
                
                Comprehensive
                
                
                (Accumulated
                
                
                DevelopmentShares
                
                
                Amount
                
                
                Shares
                
                
                Amount
                
                
                Capital
                
                
                Income
                
                
                Deficit)
                
                
                Stage
                
                
                TotalBalance,
      June 30, 2005
                
                
                196,000
                
                
                $
                1,960
                
                
                
                2,207,350
                
                
                $
                22,073
                
                
                $
                799,485
                
                
                $
                178,474
                
                
                $
                1,448
                
                
                $
                -
                
                
                $
                1,003,440Unrealized
      loss on short-term investment
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (140,701
                )
                
                
                -
                
                
                
                -
                
                
                
                (140,701
                )Net
      income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                281,531
                
                
                
                -
                
                
                
                281,531Comprehensive
      income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                140,830.Balance,
      June 30, 2006
                
                
                196,000
                
                
                
                1,960
                
                
                
                2,207,350
                
                
                
                22,073
                
                
                
                799,485
                
                
                
                37,773
                
                
                
                282,979
                
                
                
                -
                
                
                
                1,144,270Issuance
      of common stock upon redemption of preferred stock
                
                
                (196,000
                )
                
                
                (1,960
                )
                
                
                2,111,860
                
                
                
                21,119
                
                
                
                (482,440
                )
                
                
                -
                
                
                
                (282,979
                )
                
                
                -
                
                
                
                (746,260
                )Issuance
      of restricted common stock upon exercise of options
                
                
                -
                
                
                
                -
                
                
                
                350,000
                
                
                
                3,500
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,500Issuance
      of restricted common stock as inducement to make loans
                
                
                -
                
                
                
                -
                
                
                
                2,000,000
                
                
                
                20,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                20,000Recognition
      of loss on sale of marketable equity securities
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (37,773
                )
                
                
                -
                
                
                
                -
                
                
                
                (37,773
                )Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (363,762
                )
                
                
                (46,218
                )
                
                
                (409,980
                )Comprehensive
      loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (447,753
                )Balance,
      June 30, 2007
                
                
                -
                
                
                $
                -
                
                
                
                6,669,210
                
                
                $
                66,692
                
                
                $
                317,045
                
                
                $
                -
                
                
                $
                (363,762
                )
                
                $
                (46,218
                )
                
                $
                (26,243
                )
  See
accompanying notes.
 F-4
  AMASYS
Corporation
 (A
Development Stage Company)
 Statements
of Stockholders’ Equity (Deficit)
 Years
Ended June 30, 2007 and 2006
  2007
                
                
                2006
                
                
                Cumulative
      from
                  Entering
                  Development
      Stage
                  October
      1, 2006Disclosure
      of reclassification amount:Unrealized
      holding losses arising during period
                
                $
                (10,868
                )
                
                $
                (70,473
                )
                
                $
                (3,531
                )Less:  reclassification
      adjustment for realized gainsincluded
      in net loss
                
                
                26,905
                
                
                
                70,228
                
                
                
                12,734Net
      unrealized losses on securities
                
                $
                (37,773
                )
                
                $
                (140,701
                )
                
                $
                (
      16,265
                )
  
 See
accompanying notes.
 F-5
  AMASYS
Corporation
 (A
Development Stage Company)
 Statements
of Cash Flows
 
 June
      30,
                
                
                Cumulative
                  From
      Entering Development
                  Stage2007
                
                
                2006
                
                
                October
      1, 2006Operating
      activities:Net
      (loss) income
                
                $
                (409,980
                )
                
                $
                281,531
                
                
                $
                (46,218
                )Adjustments
      to reconcile net (loss) income to net cash used in operating
      activities:Stock
      issued for loans
                
                
                20,000
                
                
                
                —
                
                
                
                20,000Amortization
      of note receivable discount
                
                
                (21,949
                )
                
                
                (92,260
                )
                
                
                —Loss
      (gain) on derivative asset
                
                
                377,059
                
                
                
                (315,168
                )
                
                
                —Gain
      on sale of short-term investment
                
                
                (26,905
                )
                
                
                (70,228
                )
                
                
                (12,734
                )Equity
      in (earnings) losses of Comtex
                
                
                (9,127
                )
                
                
                71,934
                
                
                
                —Changes
      in operating assets and liabilities:Prepaid
      expenses
                
                
                (700
                )
                
                
                —
                
                
                
                (700
                )Accounts
      payable and accrued expenses
                
                
                (19,908
                )
                
                
                30,312
                
                
                
                (20,300
                )Accounts
      payable, related parties
                
                
                720
                
                
                
                —
                
                
                
                495Net
      cash used in operating activities
                
                
                (90,790
                )
                
                
                (93,879
                )
                
                
                (59,457
                )Investing
      activities:Proceeds
      from sale of short-term investment
                
                
                63,532
                
                
                
                104,475
                
                
                
                40,570Net
      cash provided by investing activities
                
                
                63,532
                
                
                
                104,475
                
                
                
                40,570Financing
      activities:Proceeds
      from issuance of common stock
                
                
                3,500
                
                
                
                —
                
                
                
                3,500Proceeds
      from notes payable, related parties
                
                
                20,000
                
                
                
                
                
                
                
                20,000Net
      cash provided by financing activities
                
                
                23,500
                
                
                
                —
                
                
                
                23,500Net
      (decrease) increase in cash
                
                
                (3,758
                )
                
                
                10,596
                
                
                
                4,613Cash
      at beginning of period
                
                
                11,620
                
                
                
                1,024
                
                
                
                3,249Cash
      at end of period
                
                $
                7,862
                
                
                $
                11,620
                
                
                $
                7,862
 
 See
accompanying notes.
 F-6
  AMASYS
Corporation
 (A
Development Stage Company)
 Statements
of Cash Flows
 
 Non cash
transactions:
 
 On
September 25, 2006, AMASYS redeemed its Series A Preferred Stock in
consideration of the outstanding promissory note, its investment in common stock
of Comtex News Network, Inc. and the issuance of 2,111,860 shares of AMASYS
Common stock.  The following table illustrates the non-cash effect of
the above transaction.
 
 Note
      receivable, net of discount of $148,478
                
                $
                703,412Issuance
      of 2,111,860 shares of common stock
                
                
                21,119Derivative
      asset
                
                
                42,848Retirement
      of preferred stock
                
                
                (1,960
                )Retained
      earnings
                
                
                (282,979
                )Paid
      in capital
                
                
                (482,440
                )$
                -
 
 
 See
accompanying notes.
 F-7
  AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
 June 30,
2007
 
 1.  Organization
and Basis of Presentation
 
 AMASYS
Corporation (the “Company”) was incorporated in Delaware in 1992, and in 1996
received all of the remaining assets of Infotechnology, Inc. (“Infotech”), a
Delaware company, following the completion of Infotech’s Chapter 11 Bankruptcy
reorganization, in accordance with an Assignment and Assumption Agreement, dated
October 11, 1996 and effective as of June 21, 1996.
 
 Basis of Presentation and
Going Concern Uncertainty
 
 The
financial statements of the Company have been prepared assuming the Company will
continue as a going concern.  However, the Company has sustained
losses and as of June 30, 2007 the Company has no business operations and has a
net working capital deficiency.  These conditions, among others, give
rise to substantial doubt about the Company's ability to continue as a going
concern.  Management is continuing to seek additional equity capital
to fund a merger or acquisition or to purchase an ongoing
business.  Until such time, the Company anticipates its working
capital needs will be funded through notes from its major
stockholders.  Management believes these steps will provide the
Company with adequate funds to sustain its continued existence.  There
is, however, no assurance that the steps taken by management will meet all of
the Company's needs or that it will continue as a going concern.  The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
 
 Development Stage
Activities
 
 Since the
Company redeemed and converted all of its outstanding Series A Preferred Stock
the end of September 2006, starting October 1, 2006 the Company has not
conducted any business operations. All of the Company's operating results and
cash flows reported in the accompanying financial statements from October 1,
2006 are considered to be those related to development stage activities and
represent the 'cumulative from inception' amounts from its development stage
activities required to be reported pursuant to Statement of Financial Accounting
Standards (SFAS) No. 7, Development Stage Enterprises.
 
 2.  Summary
of Significant Accounting Policies
 
 Cash and Cash
Flows
 
 The
Company considers all short-term securities purchased with a maturity of three
months or less to be cash equivalents.
 
 Use of
Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 revenue and
expenses during the reporting period.  Actual results could differ
from those estimates.
  F-8
  AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
 Concentrations of Credit
Risk
 
 The
Company’s financial instruments that are subject to credit risk consist
primarily of cash. Cash is maintained with a financial institution, which has
high credit standing.
 
 Derivative
Instruments
 
 SFAS 133
establishes accounting and reporting standards for derivative instruments and
requires that all derivatives be recorded on the balance sheet at fair
value.  Additionally, the accounting for changes in fair value depends
on whether the derivative instrument is designated and qualifies as part of a
hedging relationship and, if so, the nature of the hedging
activity.  Changes in the fair value of derivatives that do not
qualify for hedge treatment are recognized currently in earnings.
 
 As
discussed in Note 4, the Company had a note receivable–related party from
Comtex.  In August 2001, the Note was amended to include a provision
that allowed the Company to convert all or a portion of the outstanding
principal amount, plus accrued interest, into common stock of
Comtex.  In accordance with SFAS 133, the Company accounted for this
conversion option as an embedded derivative.  As a result, the
conversion option was carried at fair value determined using a Black-Scholes
model with changes in the fair value recognized currently in
earnings.
 
 For the
past twelve years, the Company has engaged the services of a CPA firm to prepare
derivative asset valuations.  The procedures utilized to compute the
derivative asset evaluation using the Black-Scholes model were originally
established by a major, international accounting firm.  These
procedures have been consistently followed since inception.
 
 The Note
was exchanged for the Preferred Stock of the Company in September 2006, thus
eliminating the derivative.  As of June 30, 2007 the balance of the
derivative asset was $-0- and for the fiscal years ended June 30, 2007 and 2006,
and for the period from October 1, 2006 through June 30, 2007, the Company
recognized other (expense) income of $(377,059),  $315,168, and $-0-
respectively, due to the (decrease) increase in value of this derivative during
the reporting periods.
  F-9
  AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
 The fair
value of the derivative instrument was estimated quarterly using the following
assumptions:
 
 Quarter
      Ended (UNAUDITED)September
      30, 2005
                
                
                December
      31, 2005
                
                
                March
      31,
                  2006
                
                
                June
      30,
                  2006Risk
      free rate of interest
                
                
                4
                %
                
                
                4
                %
                
                
                4
                %
                
                
                4
                %Expected
      dividend rate
                
                
                0
                %
                
                
                0
                %
                
                
                0
                %
                
                
                0
                %Expected
      life in years
                
                
                2.75
                
                
                
                2.5
                
                
                
                2.25
                
                
                
                2.0Per
      share market price of Comtex stock
                
                $
                0.63
                
                
                $
                0.41
                
                
                $
                0.19
                
                
                $
                0.85Conversion
      factor
                
                $
                0.90
                
                
                $
                0.95
                
                
                $
                0.95
                
                
                $
                1.00Number
      of shares under option
                
                
                952,171
                
                
                
                902,057
                
                
                
                902,057
                
                
                
                856,954Volatility
      rate
                
                
                107.00
                %
                
                
                102.00
                %
                
                
                111.00
                %
                
                
                117.00
                %Derivative
      asset value
                
                $
                342,782
                
                
                $
                162,370
                
                
                $
                45,103
                
                
                $
                419,907
  As
indicated in the above table, the primary fluctuations in the fair value of the
derivative instrument are the volatility rate, per share market price of Comtex
stock, conversion factor and number of shares under option.
 
 Short-Term
Investment
 
 The
Analex common stock was fully liquidated during the first quarter of fiscal year
2007 and the proceeds used to fund continuing operations.  Under
Statement of Financial Accounting Standard No. 115, Accounting for Certain Investments
in Debt and Equity Securities, the Company had classified its investment
in Analex as an “available-for-sale” security.  As a result, the
investment was carried at fair value, with unrealized gains and losses, net of
tax, reported as a separate component of stockholders’
deficit.  Realized gains and losses on sales of securities were
included in earnings using the specific identification method.
 
 During
the fiscal years ended June 30, 2007 and 2006, and for the period from October
1, 2006 through June 30, 2007, the Company reclassified unrealized gains to
realized gains of $26,905, $70,228, and $12,733 respectively, on the
available-for-sale security included as a separate component of stockholders’
equity due to the sale of securities.
  F-10
  AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
 Investment in Common Stock –
Related Party
 
 The
Comtex common stock was exchanged for the Preferred Stock of the Company in
September 2006, thus at June 30, 2007, the Company no longer had an ownership
interest in Comtex. However, at June 30, 2006 the Company had a 16% ownership
interest in Comtex. The Company evaluated the applicability of the provisions of
FASB Interpretation No. 46, Consolidation of Variable Interest
Entities (FIN 46),to its equity investment in
Comtex.  Specifically, the Company determined that Comtex was not a
variable interest entity because the requirements of paragraphs 4(h) and 5 of
FIN 46 were not met:
 
 1.
                AMASYS
      did not participate in the design or redesign of Comtex2.
                Comtex’s
      activities neither involved nor were conducted on behalf of
      AMASYS3.
                AMASYS’
      equity and subordinated debt were less than half of the total of Comtex’s
      equity, subordinated debt and other subordinated financial support, based
      on the fair values of the interests in Comtex4.
                Comtex’s
      activities were not primarily related to securitizations or other forms of
      asset-backed financing or single-lessee leasing
    arrangements
 
 The
Company did have the ability to significantly influence the operations of Comtex
and the Company accounted for its investment in Comtex under the equity method
of accounting.  The Company could significantly influence the
operations of Comtex since (i) if the Company converted its note
receivable-related party into shares of Comtex, the Company would have had a 21%
ownership interest in Comtex, (ii) the Company as well as the Company’s Chairman
and CEO were Comtex’s largest individual shareholders, (iii) the Company and the
Company’s Chairman and CEO had a combined ownership interest in Comtex of 36%
and (iv) the Company’s Chairman and Chief Executive Officer was concurrently
serving as Chairman of Comtex.  During the year ended June 30, 2007,
the Company recognized $9,127 for our share of Comtex earnings and for the year
ended June 30, 2006, the Company recognized expense of $71,934 for our share of
Comtex losses.
 
 At June
30, 2006, the Company’s equity share of Comtex losses had exceeded the Company’s
basis in the investment in common stock – related party, accounted for under
equity method accounting.  Additional losses in excess of basis were
accounted for as an adjustment to the basis of other investments in the investee
(note receivable from Comtex) held by the Company in accordance with EITF 98-13,
(“EITF 98-13”), Accounting by an Equity Method
Investor for Investee Losses When the Investor Has Loans to and Investments in
Other Securities of the Investee.  Subsequent investee income
had been recorded as adjustments to the adjusted basis of the other investments
in the reverse order of the application of the investor’s share of the
investee’s losses.  As of June 30, 2006, equity in Comtex losses had
caused a reduction in the basis to the Note of $14,191 to $842,763 and reduced
the basis in the investment in common stock–related party to $-0-.
  F-11
  AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
  Income
Taxes
 
 The
Company accounts for income taxes in accordance with SFAS 109, Accounting for Income
Taxes.  Under this standard, deferred tax liabilities and
assets are determined based on the difference between the financial statement
and tax bases of assets and liabilities using the enacted tax rates in effect
for the year in which the differences are expected to
reverse.  Deferred tax assets are reduced by a valuation allowance
when the Company cannot make the determination that it is more likely than not
that some portion or all of the related tax asset will be realized.
 
 Stock-Based
Compensation
 
 SFAS No.
123 (“SFAS 123”), Accounting
for Stock-Based Compensation, requires that companies either recognize
compensation expense for grants of stock options and other equity instruments
based on fair value, or provide pro forma disclosure of net income (loss) and
net income (loss) per share in the notes to the financial
statements.  SFAS No. 148 (“SFAS 148”), Accounting for Stock-Based
Compensation-Transition and Disclosure, amends SFAS 123.  SFAS
148 provides alternative methods of transition for a voluntary change to the
fair value-based method of accounting for stock-based employee compensation and
amends the disclosure requirements of SFAS 123 to require disclosures in both
the annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results.
 
 In
December 2004, the FASB issued SFAS No. 123R, (SFAS 123R), Share-Based Payment, amending
SFAS 123 to require companies to record as expense the fair value of
equity-based compensation, including stock options, over the applicable vesting
period.  SFAS 123R also requires more extensive disclosures concerning
stock options than required under current standards.  The new rule
applies to option grants made after adoption, as well as options that have not
vested at the date of adoption.  SFAS 123R became effective no later
than interim and annual periods beginning after December 15, 2005 for small
business issuers.  The adoption of SFAS 123R did not have a
significant effect on the Company’s financial statements as its stock options
are fully vested.
 
 Comprehensive Income
(Loss)
 
 Comprehensive
income (loss) is defined as the change in equity of a business enterprise during
a period from non-owner sources. The Company’s comprehensive income (loss)
included unrealized gains (losses) on its short-term investment, as well as
reclassification adjustments resulting from gains on sales of short-term
investments that were realized and included in net income in the related
period.  In accordance with paragraphs 18 through 20 of SFAS 130,
these gains had also been included in Other Comprehensive Income as unrealized
holding gains in the period in which they arose.  These gains were,
therefore, deducted from Other Comprehensive Income to avoid including them
twice.
 
 F-12
  AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
 During
the year ended June 30, 2007 and 2006, and for the period from October 1, 2006
through June 30, 2007, the Company reclassified realized gains of $26,905,
$70,228, and $12,734, respectively.
 
 Accumulated
other comprehensive income of $37,773 at June 30, 2006 represented the Company’s
unrealized gain on its short-term investment.
 
 In
October 2006, the Company sold the remaining shares of the short-term investment
and reclassified all adjustments resulting from gains on sales of that
short-term investment as realized gains and included them in net
income.
 
 Earnings per
Share
 
 Basic
earnings per share (“EPS”) is computed by dividing net income available to
common stockholders by weighted average common shares
outstanding.  Diluted EPS is computed similarly, except that it
includes the assumed exercise of stock options and the conversion of Preferred
Stock as long as the effect is not anti-dilutive.
 
 Fair Value of Financial
Instruments
 
 Cash
accounts payable and other accrued expenses are carried at amounts which
reasonably approximate their fair values because of the relatively short
maturity of those instruments.
 
 3.  Investment
in Common Stock – Related Party
 
 On
September 25, 2006, the Company exchanged its equity investment in Comtex common
stock and the Note Receivable from Comtex of $856,954 for 55,209 shares of the
AMASYS Series A Preferred Stock.  Therefore, at June 30, 2007, the
Company no longer had an equity interest in either the common stock of Comtex or
the Note from Comtex.  However, at June 30, 2006, the Company had a
16% ownership interest in Comtex.  The following information presents
condensed balance sheet information as of June 30, 2006 and condensed income
statement information for the year ended June 30, 2006:
 
 June
      30,2006
                  (audited)Current
      assets
                
                $
                2,753,365Other
      assets
                
                
                215,299Current
      liabilities
                
                
                1,379,127Long-term
      liabilities
                
                
                858,968
 
 F-13
 AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
 
 Year
      Ended
                  June
      30,2006
                  (audited)Revenues
                
                $
                7,676,524Gross
      profit
                
                
                4,001,153Net
      income (loss)
                
                
                (458,107
                )
 
 4.  Note
Receivable – Related Party
 
 The
Company was assigned a note receivable from Comtex in connection with the
Assignment and Assumption Agreement, which was initially recorded at its
estimated fair value.  In June 1999, the note was amended to include
outstanding interest of approximately $254,000 into the principal amount of the
note receivable, which was due July 1, 2002.  The note bore interest
at 10% and was collateralized by a continuing interest in all receivables,
purchase orders, and all patents and technology then or thereafter held or
received by Comtex.
 
 In August
2001, the Company and Comtex signed an amendment to the Note Payable to AMASYS,
(Second Amendment to Amended, Consolidated and Restated 10% Senior Subordinated
Secured Note) (the “Amended Note”) extending the term of the Amended Note from
July 1, 2002 until July 1, 2008.  In addition to the extension of the
term, the Amended Note included a provision for the Company to convert all or a
portion of the outstanding principal amount, plus accrued interest, into common
stock of Comtex.  The Amended Note was convertible at a price of $1.00
per share, which price increased by $0.10 upon each anniversary of the
amendment.
 
 On
December 9, 2003, the Company and Comtex executed an amendment to the Amended
Note for the purpose of reducing the price at which the Amended Note may be
converted into common stock of Comtex.   Pursuant to the Third
Amendment, the Company agreed to subordinate the Amended Note to both Comtex’s
note payable to its former landlord and pursuant to Comtex’s financing agreement
with a third party financial institution.  In consideration for these
subordination agreements, Comtex agreed to reduce the conversion price
stipulated in the Amended Note from the previously-stated conversion price of
$1.20 per share to $0.75 per share, and to increase this conversion price by
$0.05 every one hundred and eighty (180) days thereafter, until June 9, 2008,
when the conversion price would reach $1.20 per share.  This was to be
the final increase before the Note matured on 1 July 2008.  At the
date of the amendment, the conversion price of the Amended Note was in excess of
the stock price.  In September 2006, the Company exchanged its
ownership interest in the Note for Preferred Stock of the
Company.  However, as of June 30, 2006 and just prior to the exchange,
the Amended Note had a principal balance of $856,954.  Interest paid
to AMASYS totaled approximately $21,424 and $86,000 for the years 2007 and
2006.  At June 30, 2006, the Company recognized losses in excess of
basis of the investment in Comtex stock as an adjustment to the basis of the
Note of $14,191 (See Note 2).
  F-14
  AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
 Quarter
      Ended (UNAUDITED)September
      30,
                  2005
                
                
                December
      31,
                  2005
                
                
                March
      31,
                  2006
                
                
                June
      30,
                  2006Beginning
      balance Note Receivable-Related Party
                
                $
                856,954
                
                
                $
                856,954
                
                
                $
                856,954
                
                
                $
                856,954Equity
      in (earnings) losses allocated to the Note basis
                
                $
                0
                
                
                $
                0
                
                
                $
                0
                
                
                $
                (14,191
                )EITF
      98-10 Adjustment
                
                $
                0
                
                
                $
                0
                
                
                $
                0
                
                
                $
                0Discount
      on Note Receivable
                
                $
                (239,622
                )
                
                $
                (216,557
                )
                
                $
                (193,492
                )
                
                $
                (170,427
                )Ending
      balance of Note Receivable-Related Party
                
                $
                617,332
                
                
                $
                640,397
                
                
                $
                663,462
                
                
                $
                672,336
 
 Since
Comtex had experienced prior year losses, the Company evaluated the Note for
collectibility.  As a result, the Company evaluated whether or not
there was an impairment loss by comparing the fair value of the collateral
(including cash and security interest in the accounts receivable of Comtex) to
the carrying value of the Note of $672,336.  Since the fair value of
the collateral exceeded the carrying value of the Note, the Company did not
record an impairment charge at June 30, 2006.
 
 The
Company calculated the fair value of the conversion option to be $701,486 as of
the date of the amendment using a Black-Scholes option-pricing
model.  The $701,486 represented a discount on the Amended Note, which
the Company was accreting into earnings over the life of the Amended Note under
the effective interest method.  For the years ended June 30, 2007 and
2006, and for the period from October 1, 2006 through June 30, 2007, the Company
recognized interest income of $43,409, $177,955, and $1, respectively, which
included $21,949, $92,260, and $-0-, respectively, related to accretion of the
discount.  The effective interest rate on the Amended Note was
21%.
 
 5.  Related
Party Transactions
 
 Leases
 
 The
Company leases certain space from Comtex on a month-to-month
basis.  For the years ended June 30, 2007 and 2006, and for the period
from October 1, 2006 through June 30, 2007, the Company incurred rent expense of
$1,695, $3,632, and $700, respectively, to Comtex which is included in general
and administrative expenses in the Company’s statements of
operations.  In addition, certain Comtex employees provide accounting
and corporate services to the Company.  For the years ended June 30,
2007 and 2006, and for the period from October 1, 2006 through June 30, 2007,
the Company paid consulting fees of $18,000, $54,000, and $4,500, respectively,
which is included in professional services in the Company’s statements of
operations.
  F-15
  AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
 Notes
payable, related parties
 
 During
the year ended June 30, 2007, the Company received $10,000 from Private Capital
Group, L.L.C., a shareholder of the Company.  This note has an
interest rate of 10% per annum, is unsecured and had an original due date of
December 31, 2007.  The note was extended with the same terms and a
due date of December 31, 2008.  As of June 30, 2007, accrued interest
payable totaled $99 and is due at maturity.  Accrued interest is
included in the notes payable, related parties balance.  As an
inducement to make the loan, the Company issued 1,000,000 shares of restricted
common stock with a fair market value of $10,000 (par value) and issued a
warrant for an additional 1,000,000 shares of restricted common stock with an
exercise price of $.01 per share.  The warrants have a fair market
value of $0.
 
 During
the year ended June 30, 2007, the Company received $10,000 from Dr. C.W.
Gilluly, the Company’s Chairman of the Board, President and Chief Executive
Officer.  This note has an interest rate of 10% per annum, is
unsecured and had an original due date of December 31, 2007.  The note
was extended with the same terms and a due date of December 31,
2008.  As of June 30, 2007, accrued interest payable totaled $98 and
is due at maturity.  Accrued interest is included in the notes
payable, related parties balance.  As an inducement to make the loan,
the Company issued 1,000,000 shares of restricted common stock with a fair
market value of $10,000 (par value) and issued a warrant for an additional
1,000,000 shares of restricted common stock with an exercise price of $.01 per
share.  The warrants have a fair market value of $0.
  F-16
 AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
   6.  Earnings
Per Share
 
 The
following table sets forth the computation of basic and diluted earnings per
share:
 
 Year
      Ended June 30,2007
                
                
                2006Numerator:Net
      (loss) income
                
                $
                (409,980
                )
                
                $
                281,531Preferred
      stock dividends
                
                
                -0-
                
                
                
                (98,000
                )Numerator
      for basic earnings per share
                
                
                (409,980
                )
                
                
                183,531Effect
      of dilutive securities
                
                
                -0-
                
                
                
                98,000Numerator
      for diluted earnings per share
                
                $
                (409,980
                )
                
                $
                281,531Denominator:Denominator
      for basic earnings per share – weighted average shares
                
                
                4,033,507
                
                
                
                2,207,350Effect
      of dilutive securities:Convertible
      preferred stock
                
                
                -0-
                
                
                
                1,960,000Denominator
      for diluted earnings per share
                
                
                4,033,507
                
                
                
                4,167,350Basic
      earnings per share
                
                $
                (0.10
                )
                
                $
                0.08Diluted
      earnings per share
                
                $
                (0.10
                )
                
                $
                0.07
 
 For the
year ended June 30, 2006, the 900,000 shares issuable upon the exercise of stock
options have been excluded from the computation since their effect was not
dilutive.
 
 7.  Income
Taxes
 
 The
following table reconciles the Company’s statutory tax rate to the effective tax
rate:
  Year
      ended June 30,
                
                
                CumulativeFrom EnteringDevelopment
      Stage2007
                
                
                2006
                
                
                October
      1, 2006Tax
      benefit (expense) at statutory rate
                
                $
                140,000
                
                
                
                34
                %
                
                $
                (95,000
                )
                
                
                (34
                %)
                
                $
                15,700
                
                
                
                34
                %Reconciling
      items:State
      income taxes
                
                
                16,000
                
                
                
                4
                %
                
                
                (11,100
                )
                
                
                (4
                %)
                
                
                1,800
                
                
                
                4
                %Valuation
      allowance
                
                
                (156,000
                )
                
                
                (38
                )%
                
                
                106,100
                
                
                
                38
                %
                
                
                (17,500
                )
                
                
                (38
                )%Effective
      tax rate
                
                $
                0
                
                
                
                0.0
                %
                
                $
                0
                
                
                
                0.0
                %
                
                $
                0
                
                
                
                0.0
                %
  F-17
 AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
  Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amount of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes.  Significant components of
deferred tax assets as of June 30, 2007 and 2006 are as follows:
 
 June
      30,
                  2007
                
                
                June
      30,
                  2006Deferred
      tax assets:Net
      operating losses carryforwards
                
                $
                471,188
                
                
                $
                504,706Discount
      on note receivable- related party
                
                
                -0-
                
                
                
                64,694Equity
      method reporting
                
                
                -0-
                
                
                
                51,090Total
      deferred tax assets
                
                
                471,188
                
                
                
                620,490Deferred
      tax liabilities:Derivative
      asset
                
                
                -0-
                
                
                
                (159,397
                )Total
      deferred tax liabilities
                
                
                (-0-
                )
                
                
                (159,397
                )Net
      deferred tax asset
                
                
                471,188
                
                
                
                461,093Valuation
      allowance
                
                
                (471,188
                )
                
                
                (461,093
                )Deferred
      tax asset, net
                
                $
                —
                
                
                $
                —
 
 
 
 A
reconciliation of net income (loss) per books with net loss per return is as
follows:
 
 June
      30,2007
                
                
                2006Net
      income (loss), per books
                
                $
                (409,980
                )
                
                $
                281,531Income
      subject to tax not recorded on the books:Non
      deductible items
                
                
                100Gain
      on sale of short-term investment
                
                
                15,299
                
                
                
                7,270(Income)
      expense recorded on the books not included on the return:Amortization
      of discount on note receivable – related party
                
                
                (21,949
                )
                
                
                (92,260
                )Equity
      in losses (earnings) of Comtex
                
                
                (9,127
                )
                
                
                71,934(Gain)  loss
      on derivative asset
                
                
                377,059
                
                
                
                (315,168
                )Net
      loss, per return
                
                $
                (48,598
                )
                
                $
                (46,693
                )
  F-18
  AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
 Income
      tax expense, per return
                
                $
                - 0
      -
                
                
                $
                - 0
      -Available
      net operating loss (NOL) carryover from prior tax years
                
                
                1,329,574
                
                
                
                7,511,175NOL
      generated
                
                
                28,598
                
                
                
                46,693Total
      NOL carryover to future years
                
                
                1,358,172
                
                
                
                7,557,868NOL
      expiring
                
                
                136,897
                
                
                
                6,228,294NOL
      available to future years
                
                $
                1,221,275
                
                
                $
                1,329,574
 
 In
assessing the realizability of deferred tax assets, management considers whether
it is more likely than not that some, or all, of the deferred tax asset will not
be realized.  The ultimate realization of the deferred tax asset is
dependent upon the generation of future taxable income during the periods in
which the net operating loss carryforwards are available.  Management
considers projected future taxable income, the scheduled reversal of deferred
tax liabilities and available tax planning strategies that can be implemented by
the Company in making this assessment.  Based upon the level of
historical taxable income and projections for future taxable income over the
periods in which the net operating loss carryforwards are available to reduce
income taxes payable, management has established a valuation allowance such that
the net deferred tax asset is $0 as of June 30, 2007.  The net change
in the valuation allowance during 2007 was an increase of $10,095, due primarily
to the expiration of net operating loss carryovers and elimination of deferred
tax assets and liabilities through the exchange of Series A Preferred Stock of
the Company for Comtex common stock and the Note.
 
 As of
June 30, 2007 the Company had net operating loss carryforwards for federal
income tax purposes of approximately $1.2 million, which will expire through
2027.  Utilization of these net operating losses may be subject to
limitations under IRC Section 382, in the event of significant changes in stock
ownership of the Company.  To the extent the Company is able to
utilize available tax loss carryforwards that arose from operations in tax years
prior to June 21, 1996, any benefit realized will be credited to additional
paid in capital.
 
 8.  Stockholders’
Equity
 
 Preferred
Stock
 
 The
Company is authorized to issue 1,000,000 shares of preferred stock, of which
196,000 shares had been designated as Series A Preferred Stock (the “Preferred
Stock”) and were issued and outstanding at June 30, 2006.  The
Preferred Stock was originally issued to Pension Benefit Guaranty Corporation
(PBGC) in connection with the Assignment and Assumption
Agreement.  The Preferred Stock was convertible into shares of common
stock of the Company at the rate of 10 shares of common stock for each share of
Preferred Stock.  Holders of the Preferred Stock were entitled to
receive dividends, when, as, and if, declared by the Board of Directors at a
cumulative annual rate of $.50 per share.  The holders were entitled
to a liquidation preference of $10 per share, plus an amount equal to any
accrued but unpaid dividends to the payment date.  No such dividends
had been declared.  The holders of the Preferred Stock were entitled
to vote, along with the common stockholders, based on each share of Preferred
Stock, except in certain circumstances, which require an affirmative vote of a
majority of the holders of Preferred Stock.  The Company had the right
to redeem the Preferred Stock, after payment of the PBGC Note, at a price equal
to the greater of $10.50 per share or an amount computed based on market value,
as defined, plus accrued but unpaid dividends.  At June 30, 2006, the
aggregate cumulative preferred dividends were $980,000.
  F-19
  AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
  On
September 25, 2006 AMASYS executed agreements to redeem from the holders of its
Preferred Stock, pro rata to their respective ownership interests, 55,209 shares
of AMASYS Series A Preferred Stock (the “Series A”) in consideration for: (a)
AMASYS’ entire interest in the outstanding promissory note in favor of AMASYS
made by Comtex News Network, Inc. (Comtex) in the principal amount of $857,000;
and (b) 2,153,437 shares of Comtex common stock.  Pursuant to the
agreement, the holders of the Series A converted the balance of the Series A
shares, together with any and all rights to accrued but unpaid dividends
thereon, into 2,111,860 shares of AMASYS Common Stock.  Therefore,
effective September 25, 2006, AMASYS no longer has issued and outstanding any
Series A Preferred Stock.
 
 Note
9.  Stock Options
 
 The
Company adopted a Stock Option Plan (the “Plan”) under which 950,000 shares of
common stock were reserved for issuance upon exercise of granted stock
options.  The Plan provided for grants of incentive stock options to
eligible employees, officers, and Directors of the Company.  Eligible
employees were defined as any persons regularly employed by the Company,
including key employees and consultants.  In November 1996, 950,000
stock options were granted with an exercise price equal to fair value at the
date of grant.  The term of the options granted under the Plan could
not exceed 10 years and the stock options granted were vested
immediately.
 
 On
November 15, 2006, C.W. Gilluly, the president of the Company, exercised his
options to purchase 350,000 shares of common stock (out of a total of 900,000
options outstanding) and the Company issued 350,000 restricted shares to
him.  The remaining 550,000 options expired on November 16,
2006.
 
 At June
30, 2006, 900,000 stock options were outstanding and exercisable.  The
exercise price of all options was $0.01 per share.  The weighted
average remaining contractual life of options outstanding at June 30, 2006 was
0.3 years and the options expired on November 16, 2006.
 Information
with respect to stock options under the Plan is as follows:
  F-20
 AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
   2007
                
                
                2006Shares
                
                
                Price
                
                
                Total
                
                
                Shares
                
                
                Price
                
                
                TotalOutstanding,
      beginning of year
                
                
                900,000
                
                
                $
                0.01
                
                
                $
                9,000
                
                
                
                900,000
                
                
                $
                0.01
                
                
                $
                9,000Granted
                
                
                -
                
                
                
                0.01
                
                
                
                -
                
                
                
                -
                
                
                
                0.01
                
                
                
                -Expired
      / Cancelled
                
                
                (550,000
                )
                
                
                0.01
                
                
                
                (5,500
                )
                
                
                -
                
                
                
                0.01
                
                
                
                -Exercised
                
                
                (350,000
                )
                
                
                0.01
                
                
                
                (3,500
                )
                
                
                -
                
                
                
                0.01
                
                
                
                -Outstanding,
      end of year
                
                
                -
                
                
                
                0.01
                
                
                
                -
                
                
                
                900,000
                
                
                
                0.01
                
                
                $
                9,000Exercisable
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                900,000
 
 There
were no stock options outstanding at June 30, 2007.
 
 10.  Stock
Warrants
 
 During
the year ended June 30, 2007, the Company issued two (2) warrants as part of an
incentive for two notes payable, related parties.  The warrants are
for the purchase of 2,000,000 shares of restricted common stock at an exercise
price of $.01.  The warrants have a fair market value of $-0- using
the Black Scholes method of calculation and the warrants expire in
2017.
 
 11.  Commitments
and Contingencies
 
 On
September 26, 2006, AMASYS signed an agreement to acquire all of the shares of
common stock of World Mineral Corporation, a Nevada corporation (WMC) from WMC
shareholders in exchange for an aggregate of 14,775,000 newly issued shares of
AMASYS common stock.  To date the transaction has not been
completed.  WMC is managed by Private Capital Group, L.L.C., a
significant shareholder of the Company.
 
 F-21
  AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
 
 12.  Selected
Quarterly Financial Information (Unaudited)
 
 The
following is a summary of the quarterly results of operations for the years
ended June 30, 2007 and 2006.
 
 Quarter
      EndedSeptember
      30, 2006
                
                
                December
      31, 2006
                
                
                March
      31,
                  2007
                
                
                June
      30,
                  2007Operating
      costs and expenses
                
                $
                53,410
                
                
                $
                15,509
                
                
                $
                13,893
                
                
                $
                9,550Other
      (expense) income
                
                
                (330,352
                )
                
                
                12,734
                
                
                
                -0-
                
                
                
                -0-Net
      (loss) income
                
                
                (383,762
                )
                
                
                (2,775
                )
                
                
                (13,893
                )
                
                
                (9,550
                )Net
      (loss) income per share:Basic
                
                $
                (0.09
                )
                
                $
                (0.00
                )
                
                $
                (0.00
                )
                
                $
                0.00Diluted
                
                $
                (0.09
                )
                
                $
                (0.00
                )
                
                $
                (0.00
                )
                
                $
                0.00Weighted
      averagenumber
      of shares:Basic
                
                
                4,319,210
                
                
                
                4,494,211
                
                
                
                4,669,210
                
                
                
                4,669,210Diluted
                
                
                4,319,210
                
                
                
                4,494,211
                
                
                
                4,669,210
                
                
                
                4,669,210Quarter
      EndedSeptember
      30, 2005
                
                
                December
      31, 2005
                
                
                March
      31,
                  2006
                
                
                June
      30,
                  2006Operating
      costs and expenses
                
                $
                70,616
                
                
                $
                41,461
                
                
                $
                71,325
                
                
                $
                26,486Other
      (expense) income
                
                
                306,454
                
                
                
                (134,798
                )
                
                
                (83,843
                )
                
                
                403,605Net
      (loss) income
                
                
                235,838
                
                
                
                (176,259
                )
                
                
                (155,168
                )
                
                
                377,119Net
      (loss) income per share:Basic
                
                $
                0.10
                
                
                $
                (0.09
                )
                
                $
                (0.08
                )
                
                $
                0.16Diluted
                
                $
                0.06
                
                
                $
                (0.09
                )
                
                $
                (0.08
                )
                
                $
                0.09Weighted
      averagenumber
      of shares:Basic
                
                
                2,207,350
                
                
                
                2,207,350
                
                
                
                2,207,350
                
                
                
                2,207,350Diluted
                
                
                4,167,350
                
                
                
                2,207,350
                
                
                
                2,207,350
                
                
                
                4,167,350
 
 F-22
  AMASYS
Corporation
 (A
Development Stage Company)
 Notes to
Financial Statements
 
 Note
13.  Subsequent Events
 
 On
November 15, 2007, the Company executed a $15,000 note with C.W. Gilluly, the
Chairman, President and Chief Executive Officer of the Company, pursuant to
which C.W. Gilluly advanced the Company $15,000 at a rate of 12% per
annum.
 
 On
January 24, 2008, the Company executed a $5,000 note with Private Capital Group,
LLC, pursuant to which Private Capital Group, LLC advanced the Company $5,000 at
a rate of 12% per annum.
 
 On June 23, 2008, the Company executed
a $15,000 note with C.W. Gilluly, its president, pursuant to which C.W. Gilluly
advanced the Company $15,000 at a rate of 12% per annum.
 
 On
September 16, 2008, the Company executed a $25,000 note with C.W. Gilluly,
pursuant to which C.W. Gilluly advanced the Company $25,000 at a rate of 12% per
annum.
 
 As
previously reported, Robert F. Delaney retired from the board of directors
effective November 27, 2006.