U.S.
Securities and Exchange Commission
 Washington,
D.C. 20549
  
 
 FORM
10-Q/A
 Amandment No. 1
  
 [X]           QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF
1934
 
 For the Quarterly Period Ended June 30,
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 August 17, 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
  
  
  INDEX
      TO FORM 10-QPage
      No.PART
      IItem
      1.  Consolidated Financial Statements
                3-6Consolidated Balance Sheet - as of June 30, 2008 (Unaudited)
                3Consolidated
      Statements of Operations – Three and Six Months Ended June 30, 2008 and
      2007 (Unaudited)
                4Consolidated
      Statements of Cash Flows - Six Months Ended June 30, 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
                12Item 4T.Controls and Procedures
                12PART
      IIItem 1.Legal Proceedings
                12Item
      1A. Risk Factors
                12Item 2.  Unregistered Sales
      of Equity Securities and Use of Proceeds
                12Item 3.Defaults Upon Senior Securities
                12Item 4.Submission of Matters to a Vote
      of Security Holders
                12Item 5.Other Information
                12Item 6.Exhibitsand Reports on Form
      8-K
                12
 
 2
 Table of Contents
 
 ITEM
1.
  BLUESKY
      SYSTEMS, CORP.

                      Unaudited
      Consolidated Balance Sheets

                        At
      June 30, 2008Unaudited
                  
                  
                  AuditedAssets:
                  
                  6/30/2008
                  
                  
                  12/31/2007Current
      assetsCash
      - Unrestricted
                  
                  $
                  25
                  
                  
                  $
                  -Cash - restricted for security deposits
                  
                  
                  3,075
                  
                  
                  
                  -Total
      current assets
                  
                  
                  3,100
                  
                  
                  
                  -Fixed
      assetsProperty
      and equipment
                  
                  
                  161,513
                  
                  
                  
                  161,513Accumulated
      depreciation
                  
                  
                  (32,802
                  )
                  
                  
                  (28,180
                  )Total
      fixed assets
                  
                  
                  128,711
                  
                  
                  
                  133,333Total
      assets
                  
                  $
                  131,811
                  
                  
                  $
                  133,333Liabilities
      and Stockholders' DeficitCurrent liabilitiesAccounts payable and other current liabilities
                  
                  $
                  3,593
                  
                  
                  $
                  6,252Security
      deposits
                  
                  
                  3,075
                  
                  
                  
                  -Current portion of mortgage payable
                  
                  
                  8,447
                  
                  
                  
                  8,447Total
      current liabilities
                  
                  
                  15,115
                  
                  
                  
                  14,699Long-term mortgage payable
                  
                  
                  158,225
                  
                  
                  
                  162,449Total
      liabilities
                  
                  
                  173,340
                  
                  
                  
                  177,148Stockholders'
      DeficitCommon stock, (50,000,000 shares authorized, 15,793,933 shares
      issuedand outstanding, par value $.001 per share)
                  
                  
                  15,794
                  
                  
                  
                  15,794Additional paid-in capital
                  
                  
                  273,275
                  
                  
                  
                  272,550Retained
      deficit
                  
                  
                  (330,598
                  )
                  
                  
                  (332,159
                  )Total
      stockholders' deficit
                  
                  
                  (41,529
                  )
                  
                  
                  (43,815
                  )Total
      liabilities and stockholders' deficit
                  
                  $
                  131,811
                  
                  
                  $
                  133,333
  3
 Table of Contents
  BLUESKY
      SYSTEMS, CORP.Unaudited
      Consolidated Statements of OperationsFor
      the Three and Six Months Ended June 30, 2008 and 20073
      Months Ended
                  3
      Months Ended
                  
                  6
      Months Ended
                  
                  6
      Months Ended6/30/2008
                  
                  6/30/2007
                  
                  6/30/2008
                  
                  6/30/2007Rental
      income
                  
                  
                  
                  $                  7,500
                  
                  $                 6,850
                  
                  $               15,000
                  
                  $               14,275Total
      revenue
                  
                  
                  7,500
                  
                  6,850
                  
                  15,000
                  
                  14,275Selling,
      general and administrative expenses
                  
                  4,460
                  
                  8,231
                  
                  7,514
                  
                  15,674Net
      ordinary income (loss)
                  
                  
                  3,040
                  
                  (1,381)
                  
                  7,486
                  
                  (1,399)Interest
      expense
                  
                  
                  (2,946)
                  
                  (3,066)
                  
                  (5,925)
                  
                  (6,066)Net
      income (loss)
                  
                  
                  $                        94
                  
                  $                (4,447)
                  
                  $                 1,561
                  
                  $                (7,465)Net
      income (loss) per share, basic and fully diluted
                  
                  $                 
            *
                  
                  $              
             *
                  
                  $                    *
                  
                  $       
            
              *Weighted
      Average Common Shares Outstanding
                  
                  15,793,933
                  
                  15,793,933
                  
                  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.Unaudited
      Consolidated Statements of Cash FlowsFor
      the Six Months Ended June 30 2008 and 20076
      Months Ended
                  
                  
                  6
      Months Ended6/30/2008
                  
                  
                  6/30/2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income (loss)
                  
                  $
                  1,561
                  
                  
                  $
                  (7,465
                  )Adjustments
      to reconcile net income (loss) to net cashprovided
      by (used in) operating activities:Depreciation
                  
                  
                  4,622
                  
                  
                  
                  4,622(Increase)
      decrease in operating assets:Accounts
      receivable
                  
                  
                  -
                  
                  
                  
                  (1,909
                  )Increase
      (decrease) in operating liabilities:Accounts
      payable and other current liabilities
                  
                  
                  (2,659
                  )
                  
                  
                  8,361NET
      CASH PROVIDED BY OPERATING ACTIVITIES
                  
                  
                  3,524
                  
                  
                  
                  3,609CASH
      FLOWS FROM FINANCING ACTIVITIES:Contribution
      of capital from majority shareholder
                  
                  
                  725
                  
                  
                  
                  3,600Principal
      repayments of long term debt
                  
                  
                  (4,224
                  )
                  
                  
                  (3,948
                  )NET
      CASH  (USED IN) FINANCING ACTIVITIES
                  
                  
                  (3,499
                  )
                  
                  
                  (348
                  )NET
      INCREASE IN CASH AND CASH EQUIVALENTS
                  
                  
                  25
                  
                  
                  
                  3,261CASH
      AND CASH EQUIVALENTS:Beginning
      of period
                  
                  
                  -
                  
                  
                  
                  43End
      of period
                  
                  $
                  25
                  
                  
                  $
                  3,304OTHER
      SUPPLEMENTAL CASH FLOW DISCLOSURES:Cash
      paid during the period for interest
                  
                  $
                  5,925
                  
                  
                  $
                  6,066Cash
      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
 JUNE 30,
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) June 30, 2008, and 2007, have been
included. Readers of these consolidated financial statements should note that
the interim results for the three and six month periods ended June 30, 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. $166,672 balance at June 30,
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 $330,598 as
of June 30, 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.
 
 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.
 
 7
 Table of Contents
 
 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.
 
 9
 Table of Contents
  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 and six months ended June 30, 2008 and 2007).
 
 Revenues
increased $650 or 1% to $7,500 for the three months ended June 30, 2008,
respectively, as compared with $6,850 for the three months ended June 30, 2007,
respectively. Revenues increased $725 or 1% to $15,000 for the six months
ended June 30, 2008, respectively, as compared with $14,275 for the six months
ended June 30, 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 and six months ended June 30, 2008 and
2007).
 
 None.
 
 Expenses
(for the three and six months ended June 30, 2008 and 2007).
 
 Operating
expenses for the three months ended June 30, 2008 decreased $3,771 or 46% to
$4,460. 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 second quarter of
2008.
 
 Operating
expenses for the six months ended June 30, 2008 decreased $8,160 or 52% to
$7,514. 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 and second quarters 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.
  Income
Taxes (for the three and six months ended June 30, 2008 and 2007).
 
 We had no
provision for income taxes for the three and six months ended June 30, 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 and six months ended June 30, 2008 and 2007).
 
 We had a
net income (loss) of $94, or less than $.01 per common share for the three-month
period ended June 30, 2008. This compares to a net loss of $(4,447) or less than
$.01 per common share for the same period ended June 30, 2007. The increases in
net income are attributable to the decrease in general and administrative
expenses as mentioned above.
 
 We had a
net income (loss) of $1,561, or less than $.01 per common share for the
six-month period ended June 30, 2008. This compares to a net loss of $(7,465) or
less than $.01 per common share for the same period ended June 30, 2007. The
increases in net income are attributable to the decrease in general and
administrative expenses as mentioned above.
 
 10
 Table of Contents
  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 six months ended June 30, 2008 and
2007).
 
 Cash
flows provided by operations were $3,524 and $3,609 for the six months ended
June 30, 2008 and 2007, respectively. These were mainly attributable to an
increase and decrease in accounts payable and non-cash depreciation charges of
$4,622 in both periods.
 
 Cash
flows provided by (used in) financing activities were $(3,499) and $(348) for
the six months ended June 30, 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 both periods
from a shareholder.
 
 Overall,
we have funded our cash needs from inception through June 30, 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 $25 and a working capital deficit of $12,015 as of June 30,
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 $330,598 as
of June 30, 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.
 
 11
 Table of Contents
  ITEM
3.QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 The
information to be reported under this item is not required of smaller reporting
companies.
 
 ITEM 4T. CONTROLS AND
PROCEDURES.
  DISCLOSURE CONTROLS
      AND PROCEDURESOur
      management, including our Principal Executive Officer and Principal
      Financial Officer, has evaluated the design, operation, and effectiveness
      of our disclosure controls and procedures pursuant to Rule 13a-15 under
      the Securities Exchange Act of 1934 (the “Exchange Act”). There are
      inherent limitations to the effectiveness of any system of disclosure
      controls and procedures, including the possibility of human error and the
      circumvention or overriding of the controls and procedures. Accordingly,
      even effective disclosure controls and procedures can only provide
      reasonable assurance of achieving their control objectives. Based upon the
      evaluation performed by our management, including its Principal Executive
      Officer and Principal Financial Officer, it was determined that, as of the
      end of the period covered by this quarterly report, our disclosure
      controls and procedures were effective to provide reasonable assurance
      that information required to be disclosed in the reports filed or
      submitted pursuant to the Exchange Act is recorded, processed, summarized,
      and reported within the time periods specified in the rules and forms of
      the SEC, and that such information is accumulated and communicated to our
      management, including its Principal Executive Officer and Principal
      Financial Officer, or persons performing similar functions, as appropriate
      to allow timely decisions regarding disclosures
  Changes in Internal Control
Over Financial Reporting
 
 Our
Principal Executive Officer and Principal Financial Officer have determined
that, during the period covered by this quarterly report, there were no changes
in our internal control over financial reporting that materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting. They have also concluded that there were no significant changes in
our internal controls after the date of the evaluation.
 
 PART II.  OTHER
INFORMATION
 
 Item
1.      Legal Proceedings
 
 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)
 
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 Table of Contents
  SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
  BLUESKY
      SYSTEMS, CORP.
                  (Registrant)Date:
      August 22, 2008
                By:
                /s/
      Duane BennettDuane
      Bennett
                  President,
      Chief Executive Officer, and
                  Chief
      Financial Officer