UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





(Mark
one)


x
            QUARTERLY
      REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
quarterly period ended June 30, 2009





OR





 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from _____________ to ______________.





Commission
file number 0-50490





INNER
SYSTEMS, INC.


(Exact
name of registrant as specified in its charter)





New
      York
                  
                  11-3447096(State
      or other jurisdiction of
                  
                  (I.R.S.
      Employerincorporation
      or organization)
                  
                  Identification
      No.)





1895 Byrd
Drive, East Meadow, NY 11554





(Address
of principal executive offices)





(516)
794-2179





(Issuer's
telephone number)





N/A





(Former
name, former address and former fiscal year,


if
changed since last report)





Check whether the issuer (1) filed
all reports required to be filed by Section 13 or 15(d) of the Exchange Act of
1934 during the past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.





YES x  NO  ̈





Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Website, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such
files).





YES  ̈   NO
 ̈




Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company.





Large
      accelerated filer
                     ̈
                    Accelerated
      filer
                     ̈Non-accelerated
      filer
                     ̈
                    Smaller
      reporting company
                    x





Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act):





YES x  NO  ̈





The
number of shares outstanding of the issuer's Common Stock, $.001 par value per
share, as of August 1, 2009, is 1,000,000.







TABLE OF
CONTENTS







PART
      I - FINANCIAL INFORMATIONITEM
      1.
              INTERIM
      FINANCIAL STATEMENTS
              3ITEM
      2.
              MANAGEMENT'S
      DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION
              12ITEM
      3
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
              13ITEM
      4A(T).
              CONTROLS
      AND PROCEDURES
              13PART
      II - OTHER INFORMATIONITEM
      1.
              LEGAL
      PROCEEDINGS
              14ITEM
      1A
              RISK
      FACTORS
              14ITEM
      2.
              UNREGISTERED
      SALES OF EQUITY SECURITIES
              14ITEM
      3.
              DEFAULTS
      UPON SENIOR SECURITIES
              14ITEM
      4.
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
              14ITEM
      5.
              OTHER
      INFORMATION
              15ITEM
      6.
              EXHIBITS
              15SIGNATURES
              15


2




PART
I. FINANCIAL INFORMATION





ITEM
1.  FINANCIAL STATEMENTS





INNER
SYSTEMS, INC.


(A
Development Stage Company)





CONDENSED
BALANCE SHEETS


(unaudited)







June
      30,
                          
                          
                          December
      31,2009
                          
                          
                          2008ASSETSCURRENT ASSETSCash
                          
                          $
                          809
                          
                          
                          $
                          2,705TOTAL
      ASSETS
                          
                          $
                          809
                          
                          
                          $
                          2,705LIABILITIES AND STOCKHOLDERS'
      DEFICIENCYCURRENT LIABILITIESAccrued
      interest and other expenses
                          
                          $
                          52,485
                          
                          
                          $
                          46,080Notes
      payable
                          
                          
                          209,670
                          
                          
                          
                          201,170TOTAL
      LIABILITIES
                          
                          
                          262,155
                          
                          
                          
                          247,250STOCKHOLDERS' DEFICIENCYPreferred
      stock, par value $0.001; 5,000,000 shares authorized, no shares issued and
      outstanding
                          
                          
                          -
                          
                          
                          
                          -Common
      stock, par value $0.001; 20,000,000 shares authorized, 1,000,000
      shares issued and outstanding
                          
                          
                          1,000
                          
                          
                          
                          1,000Additional
      paid in capital
                          
                          
                          9,000
                          
                          
                          
                          9,000Deficit
      accumulated during the development stage
                          
                          
                          (271,346
                          )
                          
                          
                          (254,545
                          )TOTAL
      STOCKHOLDERS' DEFICIENCY
                          
                          
                          (261,346
                          )
                          
                          
                          (244,545
                          )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                          
                          $
                          809
                          
                          
                          $
                          2,705





See notes
to unaudited condensed financial statements.


3




INNER
SYSTEMS, INC.
 (A
Development Stage Company)
 
 CONDENSED
STATEMENTS OF OPERATIONS
 (unaudited)
  
 
 Three Months Ended
                    June30,
                  
                  
                  Six Months Ended
                    June30,
                  
                  
                  Cumulative
                    from
                    August
      9,
                    2000
                    (Inception)
                    to
      June 30,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008
                  
                  
                  2009NET
      SALES
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -GENERAL
      AND ADMINISTRATIVE EXPENSES
                  
                  
                  7,632
                  
                  
                  
                  20,777
                  
                  
                  
                  10,643
                  
                  
                  
                  22,731
                  
                  
                  
                  221,816INTEREST
      EXPENSE
                  
                  
                  3,138
                  
                  
                  
                  2,761
                  
                  
                  
                  6,158
                  
                  
                  
                  5,275
                  
                  
                  
                  39,530IMPAIRMENT
      OF REORGANIZATION VALUE
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  10,000NET
      LOSS
                  
                  $
                  (10,770
                  )
                  
                  $
                  (23,538
                  )
                  
                  $
                  (16,801
                  )
                  
                  $
                  (28,006
                  )
                  
                  $
                  (271,346
                  )PER
      SHARE INFORMATIONBasic
      and diluted, net loss per share
                  
                  $
                  (.01
                  )
                  
                  $
                  (.02
                  )
                  
                  $
                  (.02
                  )
                  
                  $
                  (.03
                  )Basic
      and diluted, weighted average shares outstanding
                  
                  
                  1,000,000
                  
                  
                  
                  1, 000, 000
                  
                  
                  
                  1,000,000
                  
                  
                  
                  1,000,000
 
 SEE NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS.


4




CONDENSED
STATEMENTS OF CASH FLOWS


(unaudited)










Cumulative
      fromAugust
      9, 2000Six
      Months Ended
                      
                      
                      (Inception)June 30,
                      
                      
                      through
      June 30,2009
                      
                      
                      2008
                      
                      
                      2009CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                      
                      $
                      (16,801
                      )
                      
                      $
                      (28,006
                      )
                      
                      $
                      (271,346
                      )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Impairment
      of reorganization value
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      10,000Changes
      in operating liabilities:Accrued
      interest and other expenses
                      
                      
                      6,405
                      
                      
                      
                      7,414
                      
                      
                      
                      52,485NET
      CASH USED IN OPERATING ACTIVITIES
                      
                      
                      (10,396
                      )
                      
                      
                      (20,592
                      )
                      
                      
                      (208,861
                      )CASH
      FLOWS FROM INVESTING ACTIVITIES
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      —CASH
      FLOWS FROM FINANCING ACTIVITIESIssuance
      of Notes Payable
                      
                      
                      8,500
                      
                      
                      
                      21,000
                      
                      
                      
                      209,670NET
      (DECREASE) INCREASE IN CASH
                      
                      
                      (1,896
                      )
                      
                      
                      408
                      
                      
                      
                      809CASH- Beginning
                      
                      
                      2,705
                      
                      
                      
                      2,375
                      
                      
                      
                      —CASH -
      Ending
                      
                      $
                      809
                      
                      
                      $
                      2,783
                      
                      
                      $
                      809





See notes
to unaudited condensed financial statements




5





INNER
SYSTEMS, INC.


(A
Development Stage Company)





NOTES TO
CONDENSED FINANCIAL STATEMENTS


(unaudited)





NOTE 1 -
Formation, Nature of
Business and Going Concern





Inner
Systems, Inc. (the "Company"), a Delaware company, was organized in May 1997.
The Company was in the business of providing concession services. On May 21,
1999, the Company filed a voluntary petition for reorganization pursuant to
Chapter 11 of the United States Bankruptcy Code. The petition was filed in the
United States Bankruptcy Court for the Eastern District of New York and its plan
of reorganization was confirmed on August 9, 2000 ("Inception Date"). As of that
date, 1,000,000 shares of common stock were issued.





Pursuant
to the plan of reorganization, the Company sold its operations to an unrelated
third party. Effective August 9, 2000, the Company is in the development stage
and is seeking to raise capital to fund possible acquisitions. The Company is
actively searching for acquisition targets. As of August 1, 2009 the Company had
not identified any such targets.





The
Company has not commenced principal operations as of June 30, 2009 and there is
no assurance that the Company will have the ability to carry out its business
plan without raising sufficient debt or equity financing. Through June 30, 2009
the Company has raised $209,670 from debt financing (Note 4). Additional funds
will be necessary. Although the Company intends to obtain either additional debt
or equity financing, there can be no assurance that it will be successful. These
factors raise substantial doubt as to the Company's ability to continue as a
going concern. The financial statements do not include any disclosures that
might be necessary should the Company be unable to continue as a going
concern.





NOTE 2 -
Basis of
Presentation





The
accompanying unaudited condensed financial statements reflect all adjustments,
which are, in the opinion of management, necessary to make the financial
position, results of operations and cash flows not misleading as of June 30,
2009 and for all periods presented. All such adjustments are of a normal
recurring nature. The results of operations for the three months ended June 30,
2009 are not necessarily indicative of the results that may be expected for any
other interim period or the full year. The condensed financial statements should
be read in conjunction with the notes to the financial statements and in
conjunction with the Company's audited financial statements for the period
August 9, 2000 (Inception) through December 31, 2008, which are included in the
Company's annual report on Form 10-K for the year ended December 31, 2008. The
accounting policies used to prepare the condensed financial statements are
consistent with those described in the December 31, 2008 financial
statements.





6





INNER
SYSTEMS, INC.


(A
Development Stage Company)





NOTES TO
CONDENSED FINANCIAL STATEMENTS


(unaudited)







NOTE 3 -
Summary of Significant
Accounting Principles





STOCK
BASED COMPENSATION





In
December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 123R "Share Based
Payment." This statement is a revision of SFAS No. 123 and supersedes APB
Opinion No. 25, and its related implementation guidance. SFAS No. 123R addresses
all forms of share based payment ("SBP") awards including shares issued under
employee stock purchase plans, stock options, restricted stock and stock
appreciation rights. Under SFAS No. 123R, SBP awards result in a cost that will
be measured at fair value on the awards' grant date, based on the estimated
number of awards that are expected to vest. The Company adopted the provisions
of SFAS 123R as of January 1, 2006. The adoption of SFAS No. 123R did not have a
material effect on the Company's financial position, results of operations or
cash flows, as the Company has not issued any SBP awards.





USE OF
ESTIMATES IN THE FINANCIAL STATEMENTS





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.





LOSS PER
SHARE





The
Company adopted the provisions of SFAS No. 128, "Earnings per Share." SFAS No.
128 requires the presentation of basic and diluted earnings per share ("EPS").
Basic EPS is computed by dividing the net loss by the weighted-average number of
common shares outstanding for the period. Diluted EPS includes the potential
dilution that could occur if options or other contracts to issue common stock
were exercised or converted. During the period August 9, 2000 (Inception)
through June 30, 2009, no options or other contracts to issue common stock were
issued or entered into. Shares issuable upon conversion of the Company's
convertible notes have been excluded from earnings per share as they were
anti-dilutive. Accordingly, basic and diluted earnings per share are identical.
See Note 4 for the issuance of Senior Convertible Promissory Notes, which
contain a contingent conversion feature.





7


INNER
SYSTEMS, INC.


(A
Development Stage Company)





NOTES TO
CONDENSED FINANCIAL STATEMENTS


(unaudited)







NOTE 3 -
Summary of Significant
Accounting Principles, continued





ACCOUNTING
FOR UNCERTAINTY IN INCOME TAXES





The
Company adopted Financial Accounting Standards Board's Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement
No. 109" ("FIN 48"), effective January 1, 2007. FIN 48 clarifies the accounting
for uncertainty in income taxes recognized in financial statements and requires
the benefit of a tax position to be recognized in the financial statements if
that position is more likely than not of being sustained by the taxing
authority. FIN 48 was applied to all open tax years as of the date of
effectiveness. FIN 48 also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure and
transition. There were no unrecognized tax benefits as of June 30, 2009. The
Company has identified its federal tax return and its state tax return in New
York as "major" tax jurisdictions, as defined in FIN 48. Based on the Company's
evaluation, it has concluded that there are no significant uncertain tax
positions requiring recognition in the Company's financial statements. The
Company's evaluation was performed for tax years ended 2004 through 2008, the
only periods subject to examination. The Company believes that its income tax
positions and deductions will be sustained upon audit and does not anticipate
any adjustments that will result in a material change to its financial position.
In addition, the Company did not record a cumulative effect adjustment related
to the adoption of FIN 48. The Company has elected to classify interest and
penalties incurred on income taxes, if any, as income tax expense. No interest
or penalties on income taxes have been recorded during the three months ended
June 30, 2009 or any prior period. The Company does not expect its unrecognized
tax benefit position to change during the next twelve months. Management is
currently unaware of any issues under review that could result in significant
payments, accruals or material deviations from its position. The adoption of FIN
48 did not have a material effect on our financial position, results of
operations or cash flows.





RECENT
ACCOUNTING PRONOUNCEMENTS





In
September 2006, the Financial Accounting Standard Board issued SFAS No. 157
“Fair Value Measurement” that provides enhanced guidance for using fair value to
measure assets and liabilities. The standard applies whenever other standards
require (or permit) assets or liabilities to be measured at fair value. The
standard does not expand the use of fair value in any new
circumstances.





This
Statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. Earlier application is encouraged, provided that the reporting entity has
not yet issued financial statements for that fiscal year, including financial
statements for an interim period within that fiscal year. Currently this
pronouncement has no effect on our financial statements.





In
July 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an
interpretation of FASB Statement No. 109 (FIN 48), which provides
clarification related to the process associated with accounting for uncertain
tax positions recognized in consolidated financial statements. FIN 48
prescribes a more-likely-than-not threshold for financial statement recognition
and measurement of a tax position taken, or expected to be taken, in a tax
return. FIN 48 also provides guidance related to, among other things,
classification, accounting for interest and penalties associated with tax
positions, and disclosure requirements. Currently this pronouncement has no
effect on our financial statements.




8




INNER
SYSTEMS, INC.


(A
Development Stage Company)





NOTES TO
CONDENSED FINANCIAL STATEMENTS


(unaudited)










NOTE 3 -
Summary of Significant
Accounting Principles, continued





FSP FAS
123(R)-5 was issued on October 10, 2006. The FSP provides that instruments that
were originally issued as employee compensation and then modified, and that
modification is made to the terms of the instrument solely to reflect an equity
restructuring that occurs when the holders are no longer employees, then no
change in the recognition or the measurement (due to a change in classification)
of those instruments will result if both of the following conditions are met:
(a). There is no increase in fair value of the award (or the ratio of intrinsic
value to the exercise price of the award is preserved, that is, the holder is
made whole), or the anti-dilution provision is not added to the terms of the
award in contemplation of an equity restructuring; and (b). All holders of the
same class of equity instruments (for example, stock options) are treated in the
same manner. The provisions in this FSP shall be applied in the first reporting
period beginning after the date the FSP is posted to the FASB website.
Currently, this pronouncement has no effect on our financial
statements.





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159
permits entities to choose to measure, on an item-by-item basis, specified
financial instruments and certain other items at fair value. Unrealized gains
and losses on items for which the fair value option has been elected are
required to be reported in earnings at each reporting date. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007, the provisions of
which are required to be applied prospectively. Currently this pronouncement has
no effect on our financial statements.





In
December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised
2007), Business Combinations, which replaces SFAS No 141. The statement retains
the purchase method of accounting for acquisitions, but requires a number of
changes, including changes in the way assets and liabilities are recognized in
the purchase accounting. It also changes the recognition of assets acquired and
liabilities assumed arising from contingencies, requires the capitalization of
in-process research and development at fair value, and requires the expensing of
acquisition-related costs as incurred. SFAS No. 141R is effective
for business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008. The adoption of SFAS 141 is not currently expected to have a material
effect on the Company’s financial position, results of operations, or cash
flows.





In
December 2007, the FASB issued SFAS No. 160. “Noncontrolling Interests in
Consolidated Financial Statements-and Amendment of ARB No. 51.” SFAS 160
establishes accounting and reporting standards pertaining to ownership interests
in subsidiaries held by parties other than the parent, the amount of net income
attributable to the parent and to the noncontrolling interest, changes in a
parent’s ownership interest, and the valuation of any retained noncontrolling
equity investment when a subsidiary is deconsolidated. This statement also
establishes disclosure requirements that clearly identify and distinguish
between the interests of the parent and the interests of the noncontrolling
owners. SFAS 160 is effective for fiscal years beginning on or after December
15, 2008. The adoption of SFAS 160 is not currently expected to have a material
effect on the Company’s financial position, results of operations, or cash
flows.




9


INNER
SYSTEMS, INC.


(A
Development Stage Company)





NOTES TO
CONDENSED FINANCIAL STATEMENTS


(unaudited)







NOTE 3 -
Summary of Significant
Accounting Principles, continued





In March
2008, the Financial Accounting Standards Board (FASB) issued FASB Statement No.
161, Disclosures about
Derivative Instruments and Hedging Activities. The new standard is
intended to improve financial reporting about derivative instruments and hedging
activities by requiring enhanced disclosures to enable investors to better
understand their effects on an entity’s financial position, financial
performance, and cash flows. It is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, with early
application encouraged. The company is currently evaluating the impact of
adopting SFAS. No. 161 on its financial statements.





Effective
January 1, 2009, the Company adopted Financial Accounting Standards Board's
(FASB) Statement No. 160 (FAS 160), “Noncontrolling Interests in Consolidated
Financial Statements – an Amendment of ARB No. 51.” FAS 160 changed the
accounting and reporting for minority interests, which will be recharacterized
as noncontrolling interests and classified as a component of equity.  FAS
160 required retrospective adoption of the presentation and disclosure
requirements for existing minority interests.  All other requirements of
FAS 160 will be applied prospectively.  The adoption of FAS 160 did not
have a material impact on the Corporation’s financial statements.





NOTE 4 -
Notes
Payable





The
Company financed operations through loans from various investors. Originally,
these loans were evidenced by Demand Promissory Notes bearing interest at the
rate of 6% per annum; however, these Demand Promissory Notes were exchanged for
Senior Convertible Promissory Notes (the "Notes"), which are convertible into
shares of the Company's common stock. The Notes, which represent $209,670 in the
aggregate, continue to bear interest at the rate of 6% per annum and are
generally due at the earlier of December 31, 2009, or a Change of Control
Transaction (as defined below). Additionally, the Notes are only convertible
when the Company consummates a Change of Control Transaction. A Change in
Control Transaction shall mean (i) a sale of all or substantially all of the
Company's assets, (ii) a transaction (or series of transactions, including
merger, consolidation or other reorganization of the Company, or issuance of
additional shares of capital stock of the Company other than in connection with
capital raising transactions) which results in the holders of the Company's
capital stock prior to the transaction owning less than 50% of the voting power,
on a fully diluted, as-converted basis for all outstanding classes thereof, of
the Company's capital stock after the transaction or (iii) a liquidation,
dissolution or winding up of the Company. The Notes are convertible at various
rates ranging from $.005 to $.40 per share. Since the conversion feature in the
Notes is contingent on a future event outside the control of the investors, the
contingent beneficial conversion feature, valued at approximately $130,175, will
not be recognized until the contingency is resolved. At June 30, 2009, interest
of $39,530 is accrued.




10


INNER
SYSTEMS, INC.


(A
Development Stage Company)





NOTES TO
CONDENSED FINANCIAL STATEMENTS


(unaudited)










NOTE 4 -
Notes
Payable





The
holders of the Notes were also granted Registration Rights with respect to the
shares of common stock issuable upon conversion of the Notes, if they are
converted. These rights are evidenced by a Registration Rights Agreement between
the Company and the holders of the Notes; such registration rights do not become
effective until a Change in Control transaction occurs.





NOTE 5 -
Trading Cancellation
of "Old Shares"





In 2007,
it came to the attention of management that the shares trading under the symbol
"ISYM" were the shares of common stock held by the pre-petition shareholders of
the Company (the "Old Shares"). As previously disclosed in our public filings,
these 3,198,948 shares of common stock, compromising the Old Shares issued to
the pre-petition shareholders, were cancelled when the Company emerged form
bankruptcy on August 9, 2000. Effective August 9, 2000, these Old Shares had no
value and should not have been trading. As a result, in June 2007, the Company
advised The Depositary Trust & Clearing Corporation and the CUSIP Service
Bureau that these shares were cancelled and should not be trading. Management
does not believe that the trading and cancellation of these shares poses a
contingent liability to the Company.




11


ITEM
      2.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





LIQUIDITY
AND CAPITAL RESOURCES





We continue to finance the Company's
operations through the issuance and sale of the Notes. In addition, during the
quarter ended June 30, 2009, we borrowed an additional $5,000. These funds were
utilized to satisfy accrued expenses and general administrative expenses
included in our Statement of Operations for the three months ended June 30,
2009. We are seeking to acquire business entities that will generate cash from
operations.





We currently rely on loan proceeds or
proceeds from the sale of our securities to fund our operations. There is no
assurance that we will be able to continue generating funds from loans by
investors. We are seeking to acquire business entities that will generate cash
from operations.





For the fiscal year ending December
31, 2009, we anticipate incurring a loss as a result of expenses associated with
compliance with the reporting requirements of the Exchange Act, and expenses
associated with locating and evaluating acquisition candidates. We anticipate
that until a business combination is completed with an acquisition candidate, we
will not generate revenues. We may also continue to operate at a loss after
completing a business combination, depending upon the performance of the
acquired business.





PLAN OF
OPERATIONS AND NEED FOR ADDITIONAL FINANCING





During the fiscal year ending
December 31, 2009, we plan to continue with efforts to seek, investigate, and,
if warranted, acquire one or more properties or businesses. We also plan to file
all required periodic reports and to maintain our status as a fully-reporting
company under the Exchange Act. In order to proceed with our plans for the next
year, it is anticipated that we will require additional capital in order to meet
our cash needs. These include the costs of compliance with the continuing
reporting requirements of the Exchange Act as well as any costs we may incur in
seeking business opportunities.





Based upon our current cash reserves,
we do not have adequate resources to meet our short-term or long-term cash
requirements. No specific commitments to provide additional funds have been made
by management, the principal stockholders or other stockholders, and we have no
current plans, proposals, arrangements or understandings with respect to the
sale or issuance of additional securities prior to the location of a merger or
acquisition candidate. Accordingly, there can be no assurance that any
additional funds will be available to us to allow us to cover our expenses.
Notwithstanding the foregoing, to the extent that additional funds are required,
we anticipate receiving such funds in the form of advancements from current
stockholders without issuance of additional shares or other securities, or
through the private placement of restricted securities rather than through a
public offering. As a result, these conditions raise substantial doubt about our
ability to continue as a going concern.


12





CRITICAL
ACCOUNTING POLICIES





The preparation of financial
statements and related disclosures 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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. For example,
unexpected changes in market conditions or a downturn in the economy could
adversely affect actual results. Estimates are used in accounting for, among
other things, legal liability and contingencies. Estimates and assumptions are
reviewed periodically and the effects of revisions are reflected in the
Financial Statements in the period they are determined to be
necessary.





ITEM
      3.
            QUANTITATIVE AND
      QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
applicable.





ITEM
      4T.
            CONTROLS
      AND PROCEDURES





The Company's management, which is
comprised solely of John M. Sharpe, Jr., has carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-15(c) and 5d-15(c). Based upon that
evaluation, our chief executive officer and chief financial officer concluded
that our disclosure controls and procedures were not effective as of the end of
the period covered by this report. This material weakness is the result of the
Company's complete dependence upon John M. Sharpe, Jr., who acts as both chief
executive officer and chief financial officer, and the lack of staff with public
accounting experience.




13





Although this constitutes a material
weakness in the Company's financial reporting, management has decided that, in
light of the Company's financial situation and limited operations, the risks
associated with the dependence upon Mr. Sharpe as compared to the potential
benefits of adding new employees, does not justify the expenses that would need
to be incurred to remedy this situation. Management will periodically
re-evaluate this situation. If the situation changes and/or sufficient capital
is obtained, it is the Company's intention to increase staffing to mitigate the
current dependence upon Mr. Sharpe and limited experience with public
accounting.





CHANGES
IN CONTROL OVER FINANCIAL REPORTING





There have been no changes in our
internal controls over financial reporting or other factors which has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.





PART II -
OTHER INFORMATION





ITEM
      1.
            LEGAL
      PROCEEDINGS





Not
applicable.





ITEM
      1A.
            RISK
      FACTORS





As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, the Company
is not required to provide information required by this Item regarding the risks and
uncertainties related to the company's business.





ITEM
      2.
            UNREGISTERED SALES OF
      EQUITY SECURITIES AND USE OF
PROCEEDS





Not
applicable.





ITEM
      3.
            DEFAULTS UPON SENIOR
      SECURITIES





Not
applicable.





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





Not
applicable.




14





ITEM
      5.
            OTHER
      INFORMATION





In June 2007, it came to the
attention of management that the shares trading under the symbol "ISYM" were the
shares of common stock held by the pre-petition shareholders of the Company (the
"Old Shares"). As previously disclosed in our public filings, these 3,198,948
shares of common stock, comprising the Old Shares issued to the pre-petition
shareholders, were cancelled when the Company emerged from bankruptcy on August
9, 2000. Effective August 9, 2000, these Old Shares had no value and should not
have been trading. As a result, in June 2007, the Company advised The Depository
Trust & Clearing Corporation and the CUSIP Service Bureau that these shares
were cancelled and should not be trading. We obtained a new CUSIP number, or
identification number, for the 1,000,000 shares issued to the holders of various
claims pursuant to our Plan of Reorganization and the Order of the Bankruptcy
Court approving the Plan of Reorganization and these shares began trading under
the symbol "INSY" on May 12, 2008. Management does not believe that the trading
and cancellation of these shares poses a contingent liability to the
Company.





ITEM
      6.
            EXHIBITS





31       Certification
of CEO and CFO Pursuant to Section 302 of the Sarbanes Oxley Act of
2002





32       Certification
of CEO and CFO Pursuant to Section 906 of the Sarbanes Oxley Act of
2002





SIGNATURES





In accordance with the requirements
of the Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.





INNER
      SYSTEMS, INC.Date:    August
      13, 2009
                  
                  By:
                  /s/ John M. Sharpe, Jr.John
      M. Sharpe,  Jr.,
President




15