U.S.
      Securities and Exchange Commission


Washington,
        D.C. 20549
  
 
 FORM
        10-Q
  
 [X]           
        QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT
        OF
        1934
 
 For
        the Quarterly Period Ended March
        31, 2008
 
 [
        ]            
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT
        OF
        1934
 For the Transition Period From ____to _____
  
 BLUESKY
        SYSTEMS, CORP.
 (Exact
        name of small business issuer as specified in its charter)
  
 Pennsylvania
              05-6141009(State
                  or other jurisdiction of
              (IRS
                  Employer identification No.)incorporation
                  or organization)
  191
        Chestnut Street,
        Springfield, MA. 01103
 (Address
        of principal executive offices)
 
 (413)
        734-3116
 (Issuer's
        telephone number)
  
 Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or for such shorter
        period
        that the registrant was required to file such reports), and (2) has been
        subject
        to such filing requirements for the past 90 days. Yes [x] No [ ]
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act). Yes [  ] No [X]
 
 Number
        of
        shares of common stock outstanding as of May 15, 2008: 15,793,933
 
  Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, a non-accelerated filer, or a smaller reporting company.
        See
        definitions of “large accelerated filer”, “accelerated filer” and “smaller
        reporting company” in Rule 12b-2 of the Exchange Act.
  Large
                  accelerated filer
               ̈Non-accelerated
                  filer
               ̈(Do
                  not check if a smaller reporting company)Accelerated
                  filer
               ̈Smaller
                  reporting company
              þ
 
 1
  INDEX
                  TO FORM 10-QPage
                  No.PART
                  IItem
                  1.  Consolidated Financial StatementsConsolidated Balance Sheet - as of March 31, 2008 (Unaudited)
              3Consolidated
                  Statements of Operations – Three Months Ended March 31, 2008 and 2007
                  (Unaudited)
              4Consolidated
                  Statements of Cash Flows - Three Months Ended March 31, 2008 and
                  2007
                  (Unaudited)
              5Notes to Consolidated Financial
                  Statements (Unaudited)
              6Item
                  2.  Management's Discussion and Analysis of Financial Condition And
                  Results of Operations
              7Item
                  3.Quantitative
                  and Qualitative
                  Disclosures on Market Risk
              11Item
                  4T.Controls
                  and Procedures
              11PART
                  IIItem
                  1.Legal Proceedings
              11Item
                  1A. Risk Factors
              11Item
                  2.  Unregistered Sales
                  of Equity Securities and Use of Proceeds
              11Item
                  3.Defaults
                  Upon Senior Securities
              11Item
                  4.Submission
                  of Matters to a Vote
                  of Security Holders
              11Item
                  5.Other Information
              11Item
                  6.Exhibitsand
                  Reports on Form
                  8-K
              11
 
 2
 Table
            of Contents
 
 ITEM
        1.
  BLUESKY
                    SYSTEMS,
                    CORP.Consolidated
                    Balance
                    SheetAt
                      March 31,
                      2008Assets:Current
                    assetsCash
                
                
                
                
                $                      10Total
                    current
                    assets
                
                
                
                10Fixed
                    assetsProperty
                    and
                    equipment
                
                
                161,513Accumulated
                    depreciation
                
                
                (30,491)Total
                    fixed
                    assets
                
                
                
                
                131,022Total
                    assets
                
                
                
                
                
                $           131,032Liabilities
                    and Stockholders'
                    DeficitCurrent
                    liabilitiesAccounts
                    payable and other current
                    liabilities
                $                3,871Current
                    portion of mortgage
                    payable
                
                8,447Total
                    current
                    liabilities
                
                
                
                12,318Long-term
                    mortgage
                    payable
                
                
                160,337Total
                    liabilities
                
                
                
                
                172,655Stockholders'
                    DeficitCommon
                    stock, (50,000,000 shares
                    authorized, 15,793,933 shares issuedand
                    outstanding, par value $.001
                    per share)
                15,794Additional
                    paid-in
                    capital
                
                
                273,275Retained
                    deficit
                
                
                
                (330,692)Total
                    stockholders'
                    deficit
                
                
                
                (41,623)Total
                    liabilities and
                    stockholders' deficit
                
                
                $           131,032
  3
 Table
            of Contents
  BLUESKY
                    SYSTEMS,
                    CORP.Consolidated
                    Statements of
                    OperationsFor
                    the Three Months Ended
                    March 31, 2008 and 20073
                    Months
                    Ended
                3
                    Months
                    Ended3/31/2008
                
                3/31/2007Rental
                    income
                
                
                $
                7,500
                
                $                 7,425Total
                    revenue
                
                
                7,500
                
                7,425Selling,
                    general and
                    administrative expenses
                
                3,054
                
                7,443Net
                    ordinary income
                    (loss)
                
                
                4,446
                
                (18)Interest
                    expense
                
                
                (2,979)
                
                (3,000)Net
                    income
                    (loss)
                
                $
                1,467
                
                $                (3,018)Net
                    income (loss) per share,
                    basic and fully diluted
                $
                *
                
                $                  *Weighted
                    Average Common
                    Shares Outstanding
                
                15,793,933
                
                15,793,933*
                    = Less than $.01 per
                    share.The
                    accompanying notes are an
                    integral part of these consolidated financial
                    statements
  4
 Table
            of Contents
  BLUESKY
                    SYSTEMS,
                    CORP.Consolidated
                    Statements of Cash
                    FlowsFor
                    the Three Months Ended
                    March 31, 2008 and 20073
                    Months
                    Ended
                
                
                3
                    Months
                    Ended3/31/2008
                
                
                3/31/2007CASH
                    FLOWS FROM OPERATING
                    ACTIVITIES:Net
                    income
                    (loss)
                
                $
                1,467
                
                
                $
                (3,018
                )Adjustments
                    to reconcile net
                    income (loss) to net cashprovided
                    by (used in)
                    operating activities:Depreciation
                
                
                2,311
                
                
                
                2,311(Increase)
                    decrease in
                    operating assets:Accounts
                    receivable
                
                
                -
                
                
                
                (1,908
                )Increase
                    (decrease) in
                    operating liabilities:Accounts
                    payable and other
                    current liabilities
                
                
                (2,381
                )
                
                
                1,012NET
                    CASH PROVIDED BY (USED
                    IN) OPERATING ACTIVITIES
                
                
                1,397
                
                
                
                (1,603
                )CASH
                    FLOWS FROM FINANCING
                    ACTIVITIES:Contribution
                    of capital from
                    majority shareholder
                
                
                725
                
                
                
                3,600Principal
                    repayments of long
                    term debt
                
                
                (2,112
                )
                
                
                (1,974
                )NET
                    CASH PROVIDED BY (USED
                    IN) FINANCING ACTIVITIES
                
                
                (1,387
                )
                
                
                1,626NET
                    INCREASE IN CASH AND CASH
                    EQUIVALENTS
                
                
                10
                
                
                
                23CASH
                    AND CASH
                    EQUIVALENTS:Beginning
                    of
                    period
                
                
                -
                
                
                
                43End
                    of
                    period
                
                $
                10
                
                
                $
                66OTHER
                    SUPPLEMENTAL CASH FLOW
                    DISCLOSURES:Cash
                    paid during the period
                    for interest
                
                $
                2,979
                
                
                $
                3,000Cash
                    paid during the period
                    for income taxes
                
                $
                -
                
                
                $
                -The
                    accompanying notes are an
                    integral part of these consolidated financial
                    statements
  5
 Table
            of Contents
  BLUESKY
        SYSTEMS, CORP.
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
        31,
        2008 (UNAUDITED)
  NOTE
        1 -
        BASIS OF PRESENTATION
 
 The
        consolidated financial statements of BlueSky Systems, Corp. (the "Company"),
        included herein were prepared, without audit, pursuant to rules and regulations
        of the Securities and Exchange Commission. Because certain information and
        notes
        normally included in consolidated financial statements prepared in accordance
        with accounting principles generally accepted in the United States of America
        were condensed or omitted pursuant to such rules and regulations, these
        consolidated financial statements should only be read in conjunction with
        the
        consolidated financial statements and notes thereto included in our audited
        consolidated financial statements as included in our Form 10-KSB for the
        year
        ended December 31, 2007.
 
 Interim
        Financial Information
 
 The
        unaudited interim consolidated financial statements have been prepared in
        accordance with United States generally accepted accounting principles for
        interim financial information. In the opinion of management, all adjustments
        considered necessary for a fair presentation of the financial position, results
        of operations and cash flows as of (at) March 31, 2008, and 2007, have been
        included. Readers of these consolidated financial statements should note
        that
        the interim results for the three month period ended March 31, 2008 is not
        necessarily indicative of the results that may be expected for the fiscal
        year
        as a whole.
 
 NOTE
        2 -
        SIGNIFICANT ACCOUNTING POLICIES
 
 Background
        - BlueSky
        Systems, Corp. (“The Company”) was organized under the laws of the State of
        Pennsylvania in June 2004 as a C-Corporation.  The Company owns one
        subsidiary, School Street Second Corp. (“The Subsidiary”). The purpose of
        the Subsidiary is to buy, sell, rent, and improve any and all aspects of
        real
        estate. The Subsidiary currently owns one building in Chicopee,
        Massachusetts.
 
 Basis
        of Presentation
        - The consolidated financial statements included herein include the amounts
        of
        BlueSky Systems, Corp. and its subsidiary prepared under the accrual basis
        of
        accounting. All material intercompany accounts and transactions have been
        eliminated.
 
 Management's
        Use of
        Estimates - The preparation of consolidated 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 disclosures of contingent
        assets
        and liabilities at the date of consolidated financial statements and the
        reported amounts of revenue and expenses during the reporting period. Actual
        results could differ from those estimates.
 
 NOTE
        3 –
NOTES PAYABLE
 
 Mortgages
        incurred for the purchase of the rental property consist of the
        following:
 
 Secured
        Commercial Mortgage to an unrelated party, dated May 27, 2005, bearing 6.75%
        interest. Original amount was $185,000. $168,784 balance at March 31,
        2008.
 
 NOTE
        4 -
        GOING CONCERN
 
 As
        shown
        in the accompanying consolidated financial statements, we have suffered
        recurring losses from operation to date. We have a net deficiency of $330,692
        as
        of March 31, 2008. These factors raise substantial doubt about our ability
        to
        continue as a going concern.
 
 Management's
        plans in regard to this matter are to raise equity capital and seek strategic
        relationships and alliances in order to increase revenues in an effort to
        generate positive cash flow. Additionally, we must continue to rely upon
        equity
        infusions from investors in order to improve liquidity and sustain operations.
        The consolidated financial statements do not include any adjustments that
        might
        result from the outcome of this uncertainty.
 
 6
 Table
            of Contents
  ITEM
        2.  
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
  BlueSky
        Systems, Corp. is hereby providing cautionary statements identifying important
        factors that could cause our actual results to differ materially from those
        projected in forward-looking statements made in this quarterly report on
        Form
        10-Q. Any statements that express, or involve discussions as to, expectations,
        beliefs, plans, objectives, assumptions or future events or performance (often,
        but not always, through the use of words or phrases such as "likely will
        result," "are expected to," "will continue," "is anticipated," "estimated,"
        "intends," "plans" and "projection") are not historical facts and may be
        forward-looking statements and involve estimates and uncertainties which
        could
        cause actual results to differ materially from those expressed in the
        forward-looking statements. Accordingly, any such statements are qualified
        in
        their entirety by reference to, and are accompanied by, the following key
        factors that have a direct bearing on our results of operations: the absence
        of
        contracts with customers or suppliers; our ability to maintain and develop
        relationships with customers and suppliers; our ability to successfully
        integrate acquired businesses or new brands; the impact of competitive products
        and pricing; supply constraints or difficulties; the retention and availability
        of key personnel; and general economic and business conditions.
 
 We
        caution that the factors described herein could cause actual results to differ
        materially from those expressed in any forward-looking statements and that
        the
        investors should not place undue reliance on any such forward-looking
        statements. Further, any forward-looking statement speaks only as of the
        date on
        which such statement is made, and we undertake no obligation to update any
        forward-looking statement to reflect events or circumstances after the date
        on
        which such statement is made or to reflect the occurrence of unanticipated
        events or circumstances. Consequently, no forward-looking statement can be
        guaranteed.
 
 New
        factors emerge from time to time, and it is not possible for us to predict
        all
        such factors. Further, we cannot assess the impact of each such factor on
        our
        results of operations or the extent to which any factor, or combination of
        factors, may cause actual results to differ materially from those contained
        in
        any forward-looking statements.
 
 Introduction
 
 We
        were
        incorporated on September 21, 2004 under the laws of the State of Pennsylvania
        to engage in the business of buying, selling, renting, and improving real
        estate. We are an early stage company and currently own 100% of the common
        stock
        of School Street 2nd
        Corp.,
        which, in turn, owns property in central downtown Chicopee, Massachusetts
        at 192
        School Street. Specifically, we own a two-story building that consists of
        four
        units and generates revenue by rentals on units. We had four leases, of which
        three expired in May 2006. The expired leases are now considered month-to-month
        leases. We plan to continue in this line of business for the foreseeable
        future.
        Our executive offices are located at 191 Chestnut Street in Springfield,
        Massachusetts 01103. Our telephone number is (413) 734-3116. We are currently
        authorized to issue 50,000,000 shares of common stock. We currently have
        15,793,933 shares of common stock issued and outstanding.
 
 Our
        business plan is to buy more investment properties, which we believe have
        good
        cash flows or good cash flow potential, plus a favorable estimated resale
        value.
        We plan to lease our properties primarily to residential tenants. We plan
        to
        make limited improvements to our properties (on a case by case basis, if
        commercially reasonable), so that we can increase occupancy, improve cash
        flows,
        and enhance potential resale value.
 
 THE
        BUILDING AT 192 SCHOOL STREET
 
 On
        September 21, 2004, we acquired 100% of the common stock of School Street
        2nd
        Corp., which in turn, owns 100% of a two-story apartment house, with four
        units
        in central downtown Chicopee, Massachusetts at 192 School Street, which the
        board of directors had identified as an acceptable business opportunity.
        We are
        obligated to a secured commercial mortgage to an unrelated party for $185,000
        in
        order to obtain the property. As of December 31, 2006, the mortgage had been
        paid down to an aggregate of $169,900.
 
 We
        have
        contracted with Lessard Property Management, Inc. to manage the leases on
        our
        behalf. Their contract fee for doing so is 8% of the collected rent, or $150
        per
        project, whichever is greater. Mr. Bennett originally arranged the management
        agreement with Lessard when he owned the property, and that agreement was
        renewed from time to time with Lessard. The agreement between Lessard and
        Bennett is a month to month agreement which is automatically renewed but
        can be
        terminated by either party with one months notice. The agreement with Lessard
        remains in Mr. Bennett’s name, as Lessard required his personal guarantee. Mr.
        Bennett has assigned the rights in this agreement to us, though there is
        no
        written agreement. However, since Mr. Bennett owns roughly 80% of our company,
        we believe the assignment will continue.
  OVERVIEW
        OF OUR MARKET AREA
 
 The
        city
        of Chicopee lies on the outskirts of the Springfield, Massachusetts urban
        area,
        located in the Pioneer Valley near the intersection of U.S. Interstates 90
        (the
        Massachusetts Turnpike) and 91.  Interstate 90 is the major east-west
        highway crossing Massachusetts. Interstate 91 is the major north-south highway
        that runs directly through the heart of New England. Chicopee is located
        approximately 90 miles west of Boston, Massachusetts, 70 miles southeast
        of
        Albany, New York and 30 miles north of Hartford, Connecticut. Chicopee is
        located in Hampden County, Massachusetts, whose estimated 2006 population
        was
        460,805.
 
 The
        economy in our primary market area enjoys the presence of large employers
        such
        as the University of Massachusetts, Baystate Medical Center, Mass Mutual
        Life
        Insurance Company, Big Y Foods, Inc., Friendly Ice Cream Corporation, Old
        Colony
        Envelope, Hamilton Standard, Pratt and Whitney and Strathmore Paper Company.
        Other employment and economic activity is provided by financial institutions,
        eight other colleges and universities, seven other hospitals and a variety
        of
        wholesale and retail trade businesses.
 
 Respected
        national economists have given mixed opinions about the market for multi-family
        rentals in 2006. However, according to Moody's, Economy.com and Fiserv Lending
        Solutions, Springfield MA is expected to see slight gains of 0.8%, while
        the
        rest of the state is expected to see significant losses as high as
        -3.0%.
 
 Recent
        local developments, such as the proposed New Haven-Hartford-Springfield commuter
        rail line, have brought improvements to the local economy. According to the
        NAI
        2006 Global Market Report, although there will be some slowdown in the real
        estate market in Western Massachusetts, it is expected that the Springfield,
        Massachusetts area will not see a dramatic drop in market prices like many
        of
        the costal regions of the state.
 
 The
        City
        of Chicopee Assessor's Office reported 2,579 multi-family units in 2006 and
        the
        Pioneer Valley Planning Commission's SOCDS Building Permits Database shows
        an
        increase of 120% in permits for multi-family structures in Springfield from
        2002
        to 2006.
 
 These
        market factors form the setting in which we plan to execute our business
        model.
 
 7
 Table
            of Contents
  OUR
        PLAN
        TO ACQUIRE OTHER RENTAL PROPERTIES
 
 Our
        business plan is to buy more rental properties that we believe are undervalued,
        compared to their cash flows and estimated resale value. Our strategy is
        to
        identify rental properties with a favorable purchase price relative to their
        market value, as well as positive cash flow. We plan to buy properties primarily
        leased to residential tenants. We are prepared to make some improvements
        to our
        properties (on a case by case basis, if commercially reasonable), so that
        we can
        increase occupancy, improve cash flows, and enhance potential resale value.
        However, given our current financial condition, we will most likely seek
        properties in the Springfield, Massachusetts area for the next 12
        months.  However, after that time, we also plan to explore the
        possibility of acquiring additional properties in other areas of Western
        Massachusetts and possibly North Carolina.
 
 Our
        success will be dependent upon implementing our plan of operations and the
        risks
        associated with our business plans. We operate primarily in the Springfield,
        Massachusetts area. We plan to strengthen our position in these markets.
        We plan
        to expand our operations through our acquisition and improvement of real
        estate.
 
 We
        presently own one two-story apartment house, with four units in Chicopee,
        Massachusetts, via our wholly-owned subsidiary, School Street 2nd
        Corp.
        We anticipate that we will begin to locate and negotiate for the purchase
        of
        additional properties during the first quarter of 2008. We hope to acquire
        additional real estate in the next 12 months, and to utilize the rental proceeds
        of those properties to pay our operating costs for that period; however,
        there
        are no assurances that this revenue will be sufficient to cover our operating
        costs. Accordingly, if our revenues are not sufficient, we will rely upon
        capital infusions from our director Duane Bennett; however, there are no
        assurances that Mr. Bennett will have sufficient funds to provide such capital
        infusions. He has made no assurance of the minimum or maximum capital amounts
        he
        could provide.
  PROPERTY
        LOCATION PROCEDURES
 
 We
        plan
        to conduct a preliminary analysis that consists of:
 
 v
              Reviewing
                  real estate sales information provided by local board of realtors
                  associations and our review of the census tract increases. The
                  information
                  that we may obtain that would weigh in favor or our proceeding
                  with a
                  property acquisition would be:
 o
              High
                  volume of real estate sales within the specific
                  area
 o
              New
                  schools and major commercial developments in the
                  area
 o
              Improved
                  state and city roads in the area
  The
        information that we may obtain that would weigh against our proceeding with
        a
        property acquisition would be:
  o
              Hazardous
                  waste in the area
 o
              Crime
                  rates in the area that are higher than the national average (per
                  100,000
                  people, based on 2005 FBI Uniform Crime Reports, released Sept.
                  2006)
 o
              Vacancy
                  rates of 10% or more in the area
 
 The
        data
        that we analyze to determine whether to purchase properties are:
 
 v
              Demographic
                  data that suggests increased demand in a specific area. The data
                  that
                  would weigh in favor of our proceeding with a purchase would
                  be:
 o
              Continued
                  economic development in the area, such as a major corporation moving
                  into
                  the area creating new jobs and increasing residential housing
                  demand.
 o
              Increase
                  in the population’s median income levels of 5 – 10% per year for a certain
                  area.
 o
              Lower
                  than the national average of violent and property crimes in the
                  area (per
                  100,000 people, based on 2005 FBI Uniform Crime Reports, released
                  Sept.
                  2006)
 
 v
              Demographic
                  data that would weigh against a purchase would
                  be:
 o
              Migration
                  of industrial companies outside the
                  area.
 o
              Decrease
                  of 10% or more in median income
                  levels
 o
              Violent
                  and property crime rates in the area that are higher than the national
                  average (per 100,000 people, based on 2005 FBI Uniform Crime Reports,
                  released Sept. 2006)
 
 In
        order
        to determine and evaluate the fastest growing areas, we will obtain reports
        from
        sources such as the Pioneer Valley Planning Commission, Western Massachusetts
        Economic Development Council, Massachusetts Alliance for Economic Development,
        and University of Massachusetts Donahue Institute's Economic and Public Policy
        Research unit. Most of the reports available through these organizations
        are
        free of charge and will provide detailed information that we will then study
        to
        determine the areas with good growth rates.
  We
        will
        also rely on statistics provided by the U.S. Census Bureau to obtain information
        pertaining to population shifts and number of total people in a specific
        area.
        In addition, we plan to utilize economic, housing and population data available
        from such sources as the Massachusetts Office of Economic Development and
        Massachusetts Institute for Social and Economic Research to further assess
        the
        best areas in which to purchase property.
  DETAILED
        MARKET AND FINANCIAL ANALYSIS
  Our
        president will perform detailed market and financial analysis regarding each
        property we decide to review for purchase to determine whether the specific
        location is appropriate for acquisition and development. That detailed
        information will include the following:
 
 v
              Number
                  of properties on the market.
 v
              Number
                  of properties sold in the past 12
                  months.
 v
              Sales
                  prices asked per property.
 v
              Sales
                  price sold per property.
 v
              Total
                  square footage and acreage per
                  property
 v
              Total
                  number of units per property.
 v
              Total
                  number of pending closings per
                  property.
 
 8
 Table
            of Contents
  PURCHASE
        PROCEDURES
  Once
        we
        have located a property that we may want to purchase, if it is not currently
        listed for sale, we will ascertain whether the owner is willing to sell the
        property*.
        We then negotiate a purchase price and ask
        the following questions of the prospective seller and/or obtain answers from
        third parties:
 
 v
              When
                  does the owner want to sell and close? Favorable conditions we
                  look for
                  regarding this factor are:
 o
              The
                  seller is willing and able to sell within a six-month
                  period.
 o
              Typically,
                  the timing and motivation of sellers to enter into contract to
                  sell may
                  include several factors such as: estate planning, gifts to family,
                  age,
                  health and other personal factors.
 
 v
              How
                  much will the owner sell the land for? Favorable conditions we
                  will look
                  for regarding this factor are:
 o
              The
                  price is below market value. We determine market value through
                  appraisals
                  and comparable sales reports in the
                  area.
 o
              With
                  respect to price, we would also consider value trends, such as
                  historical
                  yearly increases in property values
 
 v
              Are
                  there any defects on the title?  Favorable conditions we will
                  look for regarding this factor are:
 o
              No
                  liens and/or encumbrances.
 o
              The
                  buyer is able to deliver a clean title within the time we would
                  like to
                  close.
 
 v
              Does
                  the landowner have title insurance on the property? Favorable conditions
                  we will look for regarding this factor
                  are:
 o
              The
                  landowner has title insurance on the
                  property.
 o
              The
                  landowner is able to secure title insurance on the
                  property.
 o
              We
                  would be able to obtain title insurance on the purchased
                  property.
 
 We
        will
        obtain the following documents from the seller during our due diligence on
        the
        property:
  v
              General
                  maps;
 v
              Environmental
                  reports
 v
              Copies
                  of existing zoning maps and
                  regulations;
 v
              Conduct
                  land inspection procedures;
 v
              Proposed
                  zoning regulations;
 v
              Deeds;
 v
              Title
                  insurance; and
 v
              Tax
                  bills.
 
 We
        then
        verify the accuracy of these documents and determine how the information
        contained in the documents impacts the property that we are considering to
        purchase.
 
 COMPETITIVE
        BUSINESS CONDITIONS
  We
        face
        significant competition both in acquiring rental properties and in attracting
        renters. Our primary market area of residential multi-family unit rentals
        is
        highly competitive, and we face direct competition from a significant number
        of
        multi-family unit landlords, many with a local, state-wide or regional presence
        and, in some cases, a national presence. Many of these landlords are
        significantly larger and have greater financial resources than we do. Our
        competition for renters comes from newer built apartment complexes as well
        as
        older apartment buildings.
  In
        addition, we face significant competition from home builders and land
        developers, because many renters have moved out of the rental market into
        single-family homes due to recent mortgage interest rates, which have reached
        40-year lows in some cases. Nationally, there are over one hundred major
        land
        developers. Approximately 10% of these developers capture approximately 50%
        of
        the market for such developments. These developers have greater financial
        resources than we do and are better poised for market retention and expansion
        than we are. Specifically, our competition with national homebuilders is
        as
        follows:
 
 v
              Pulte
                  Homes;
 v
              Ryan
                  Homes;
 v
              Ryland
                  Homes;
 v
              John
                  Weiland Homes;
 v
              Cresent
                  Resources; and
 v
              Harris
                  Group
 
 Of
        the
        builders listed above, Pulte Homes is the only one that currently operates
        in
        Massachusetts.  All the other builders operate in various states on
        the East Coast and throughout the country.
 
 These
        national homebuilders purchase land or lots of vacant land parcels to build
        single-family homes, often in connection with nearby shopping centers and
        commercial buildings. The national homebuilders have substantial resources
        to
        enable them to build single-family homes for resale.
 
 These
        builders engage in single-family home development and have greater financial
        resources than we do. In addition, these companies have greater operational
        resources because they are able to perform a variety of development tasks
        themselves. These companies purchase vacant land tracts and perform all the
        work
        necessary to construct the homes, such as land clearing and road development
        and
        then build the homes themselves. In contrast, we do not have the financial
        or
        operational resources to perform these tasks. These national and local builders
        are better equipped to acquire tracts of land equipped with these capabilities
        due to their operational and financial superiority over us.
 
 We
        have
        no competitive advantages over any of the individuals and/or companies against
        whom we compete. We have significantly less capital, assets, revenues, employees
        and other resources than our local and/or national competition. There are
        no
        barriers to entry into this market.
 
 RESULTS
        OF
        OPERATIONS
 
 Revenues
        (for the three months ended March 31, 2008 and 2007).
 
 Revenues
        increased $75 or 1% to $7,500 for the three months endedMarch
        31, 2008, respectively, as
        compared with
        $7,425for the three monthsendedMarch
        31, 2007,
        respectively.Revenues consisted
        of
        rentals on residential rental properties. We had four leases, of which three
        expired in May 2006. The expired leases are now considered month-to-month
        leases.
 
 All
        sales
        transactions were with unrelated parties.
 
 Cost
        of Sales (for the three months ended March 31, 2008 and 2007).
 
 None.
 
 Expenses
        (for the three months ended March 31, 2008 and 2007).
 
 Operating
        expenses for the three months ended March 31, 2008 decreased $4,389 or 59%
        to
        $3,054. The decrease in expenses during this period was primarily attributable
        to decrease in general and administrative expenses that pertained to fewer
        repairs and maintenance which decreased in the first quarter of
        2008.
 
 We
        expect
        increases in expenses through the year 2008 as we move toward developing
        our
        business plan and registering our common stock. In addition, we expect cash
        outlays for professional fees to increase to around $20,000 per year for
        compliance with the reporting requirements of the Securities and Exchange
        Commission once our registration is deemed effective.
 
 We
        do not
        have any lease agreements for our principal office and do not currently have
        any
        employment agreements.
 
 9
 Table
            of Contents
  Income
        Taxes (for the three months ended March 31, 2008 and 2007).
 
 We
        had no
        provision for income taxes for the three months ended March 31, 2008 and
        2007,
        respectively, due to our net loss.
 
 If
        we
        incur losses, we may have a deferred tax asset. Deferred tax assets are reduced
        by a valuation allowance when, in the opinion of management, it is more likely
        than not that, some portion or all of the deferred tax asset will not be
        realized. Deferred tax assets and liabilities are adjusted for the effect
        of
        changes in tax laws and rates on the date of enactment. We do not currently
        have
        any net deferred tax assets.
  Income/Losses
        (for the three months ended March 31, 2008 and 2007).
 
 We
        had a
        net income (loss) of $1,467, or less than $.01 per common share for the
        three-month period ended March 31, 2008. This compares to a net loss of $(3,018)
        or less than $.01 per common share for the same period ended March 31, 2007.
        The
        increases in net income are attributable to the decrease in general and
        administrative expenses as mentioned above.
 
 Impact
        of Inflation.
 
 We
        believe that inflation has had a negligible effect on operations since
        inception. We believe that we can offset inflationary increases in the cost
        of
        operations by increasing sales and improving operating
        efficiencies.
 
 Liquidity
        and Capital Resources (for the three months ended March 31, 2008 and
        2007).
 
 Cash
        flows provided by (used in) operations were $1,397 and $(1,603) for the three
        months ended March 31, 2008 and 2007, respectively. These were mainly
        attributable to an increase and decrease in accounts payable and non-cash
        depreciation charges of $2,311 in both periods.
 
 Cash
        flows provided by (used in) financing activities were $(1,387) and $1,626
        for
        the three months ended March 31, 2008 and 2007, respectively. Cash flows
        used in
        these periods were due primarily to repayments on notes payable on our income
        producing rental property offset by the capital contributions in the current
        period from a shareholder.
 
 Overall,
        we have funded our cash needs from inception through March 31, 2008 with
        a
        series of equity and debt transactions, including those with related parties
        as
        described above. If we are unable to receive additional cash from our related
        parties, we may need to rely on financing from outside sources through debt
        or
        equity transactions. Our related parties are under no legal obligation to
        provide us with capital infusions. Failure to obtain such financing could
        have a
        material adverse effect on our operations and financial condition. This could
        include an inability to do sufficient advertising for the homes that we sell,
        which would make us less competitive in the marketplace. We could also find
        it
        more difficult to enter into strategic joint venture relationships with third
        parties. Finally, it would most likely delay the implementation of our business
        plan. An alternative plan of operation in the event of a failure to obtain
        financing would be to continue operations as currently configured, with the
        result being little, if any, projected growth. Another alternative would
        be to
        enter into a joint venture with another company that has working capital
        available, albeit on less favorable terms than had we obtained financing,
        for
        the development of our business plan.
 
 We
        had
        cash on hand of only $10 and a working capital deficit of $12,308 as of March
        31, 2008. Our current amount of cash in the bank is insufficient to fund
        our
        operations for the next twelve months. We will rely on the existence of revenue
        from our business, if any, and funding from outside sources; however, we
        have no
        current or projected capital reserves that will sustain our business for
        the
        next 12 months. Also, if the projected revenues fall short of needed capital
        we
        will not be able to sustain our capital needs for the next twelve months.
        We
        will then need to obtain additional capital through equity or debt financing
        to
        sustain operations for an additional year. A lack of significant revenues
        during
        the remainder of 2007 will significantly affect our cash position and make
        it
        necessary to raise additional funds through equity or debt financing. Our
        current level of operations would require capital of approximately $10,000
        to
        sustain operations through year 2007 and approximately $35,000 per year
        thereafter. Modifications to our business plans or additional property
        acquisitions may require additional capital for us to operate. There can
        be no
        assurance that additional capital will be available to us when needed or
        available on terms favorable to us.
 
 On
        a
        long-term basis, liquidity depends on continuation and expansion of operations,
        receipt of revenues, and additional infusions of capital and debt financing.
        We
        are considering launching a local advertising campaign. Our current capital
        and
        revenues are insufficient to fund such marketing. If we choose to launch
        such a
        campaign, we will require substantially more capital. If necessary, we will
        raise this capital through an additional stock offering. However, there can
        be
        no assurance that we will be able to obtain additional equity or debt financing
        in the future, if at all. If we are unable to raise additional capital, our
        growth potential will be adversely affected and we will have to significantly
        modify our plans. For example, if we unable to raise sufficient capital to
        develop our business plan, we may need to:
 
 -
        Seek
        projects of lesser value or that may be less profitable
 -
        Seek
        smaller projects, which are less capital intensive, in lieu of larger projects;
        or
 -
        Seek
        projects that are outside our geographical area to generate some revenue
        for
        us.
  Demand
        for our rental services will be dependent on, among other things, market
        acceptance of our services, the real estate market in general and general
        economic conditions, which are cyclical in nature. Inasmuch as a major portion
        of our activities is the receipt of rents from residential properties, our
        business operations may be adversely affected by our competitors and prolonged
        recession periods.
 
 Our
        success will depend upon implementing our plan of operations and the risks
        associated with our business plans. We operate a small real estate rental
        business in the Springfield, Massachusetts area. We plan to strengthen our
        position in this market. We also plan to expand our operations in the
        Springfield area, as well as identify possible investment properties in China
        through our strategic alliance with China World Trade.
 
 Going
        concern
 
 As
        shown
        in the accompanying consolidated financial statements, we have suffered
        recurring losses from operation to date. We have a net deficiency of $330,692
        as
        of March 31, 2008. These factors raise substantial doubt about our ability
        to
        continue as a going concern.
 
 Management's
        plans in regard to this matter are to raise equity capital and seek strategic
        relationships and alliances in order to increase revenues in an effort to
        generate positive cash flow. Additionally, we must continue to rely upon
        equity
        infusions from investors in order to improve liquidity and sustain operations.
        The consolidated financial statements do not include any adjustments that
        might
        result from the outcome of this uncertainty.
 
 10
 Table
            of Contents
  ITEM
        3.QUANTITATIVE AND
        QUALITATIVE DISCLOSURES ABOUT MARKETRISK
 
 The
        information to be reported under
        this item is not required of smaller reporting companies.
 
 ITEM
        4T. CONTROLS AND
        PROCEDURES.
  DISCLOSURE
                  CONTROLS AND
                  PROCEDURESOur
                  management, including our Principal Executive Officer and Principal
                  Financial Officer, has evaluated the design, operation, and effectiveness
                  of our disclosure controls and procedures pursuant to Rule 13a-15
                  under
                  the Securities Exchange Act of 1934 (the “Exchange Act”). There are
                  inherent limitations to the effectiveness of any system of disclosure
                  controls and procedures, including the possibility of human error
                  and the
                  circumvention or overriding of the controls and procedures. Accordingly,
                  even effective disclosure controls and procedures can only provide
                  reasonable assurance of achieving their control objectives. Based
                  upon the
                  evaluation performed by our management, including its Principal
                  Executive
                  Officer and Principal Financial Officer, it was determined that,
                  as of the
                  end of the period covered by this quarterly report, our disclosure
                  controls and procedures were effective to provide reasonable assurance
                  that information required to be disclosed in the reports filed
                  or
                  submitted pursuant to the Exchange Act is recorded, processed,
                  summarized,
                  and reported within the time periods specified in the rules and
                  forms of
                  the SEC, and that such information is accumulated and communicated
                  to our
                  management, including its Principal Executive Officer and Principal
                  Financial Officer, or persons performing similar functions, as
                  appropriate
                  to allow timely decisions regarding disclosures
  Changes
        in Internal Control
        Over Financial Reporting
 
 Our
        Principal Executive Officer and Principal Financial Officer have determined
        that, during the period covered by this quarterly report, there were no changes
        in our internal control over financial reporting that materially affected,
        or
        are reasonably likely to materially affect, our internal control over financial
        reporting. They have also concluded that there were no significant changes
        in
        our internal controls after the date of the evaluation.
 
 PART
        II.  OTHER
        INFORMATION
 
 Item
        1.      Legal Proceedings
 
 None.
 
 Item
        2.      Unregistered Sales of Equity Securities and Use
        of Proceeds
 
 None.
 
 Item
        3.      Defaults Upon Senior Securities
 
 None.
 
 Item
        4.      Submission of Matters to a Vote of Security Holders
 
 None.
 
 Item
        5.      Other Information
 
 None.
 
 Item
        6.      Exhibits and Reports on Form8-K
 
 31.1
CEO
        Certification Pursuant to Section 302
 31.2
        CFO Certification Pursuant to
        Section 302(included in
        Exhibit 31.1)
 32.1
CEO Certification
        Pursuant to Section
        906
 32.2
        CFO Certification Pursuant to
        Section 906(included in
        Exhibit 32.1)
 
 11
  SIGNATURES
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned, thereunto
        duly authorized.
  BLUESKY
                  SYSTEMS, CORP.
                (Registrant)Date:
                  May 15, 2008
              By:
              /s/
                Duane BennettDuane
                  Bennett
                President,
                  Chief Executive Officer, and
                Chief
                  Financial Officer