**U.S.
      Securities and Exchange Commission**


**Washington,
      D.C. 20549**









**FORM
      10-QSB**







**[X]           QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF
      1934**


****


**For
      the Quarterly
      Period Ended June 30, 2007**







**[
       ]            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 13, 2007:
      15,793,933














**INDEX
                TO FORM 10-QSB**Page
                No.**PART
                I**Item
                1.  Consolidated financial statementsConsolidated Balance Sheet - as of June 30, 2007 (Unaudited)
            3Consolidated
                Statements of Operations – Three and Six Months Ended June 30, 2007 and
                2006 (Unaudited)
            4Consolidated
                Statements of Cash Flows - Six Months Ended June 30, 2007 and 2006
                (Unaudited)
            5Notes to Consolidated financial
                statements (Unaudited)
            6Item
                2.  Management's Discussion and Analysis of Financial Condition And
                Results of Operations
            7-15Item
                3.Quantitative
                and Qualitative
                Disclosures on Market Risk
            15Item
                4.Controls and
                Procedures
            16**PART
                II**Item
                1.Legal Proceedings
            16Item
                2.Changes in
                Securities
            16Item
                3.Defaults Upon
                Senior Securities
            16Item
                4.Submission
                of Matters to a Vote
                of Security Holders
            16Item
                5.Other Information
            16Item
                6.Exhibits
            16








2
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          of Contents*




ITEM
      1.






**BLUESKY
                  SYSTEMS, CORP.****Consolidated
                  Balance Sheet*****At
                  June 30, 2007***Assets:Current
                assetsCash
              
              $
              3,304Accounts
                receivable
              
              
              3,176Total
                current assets
              
              
              6,480Fixed
                assetsProperty
                and equipment
              
              
              161,513Accumulated
                depreciation
              
              
              (23,559
              )Total
                fixed assets
              
              
              137,954Total
                  assets
              
              $
              144,434Liabilities
                  and Stockholders' DeficitCurrent
                liabilitiesAccounts
                payable and other current liabilities
              
              $
              10,337Current
                portion of mortgage payable
              
              
              7,897Total
                current liabilities
              
              
              18,234Long-term
                mortgage payable
              
              
              165,952Total
                liabilities
              
              
              184,186Stockholders'
                DeficitCommon
                stock, (50,000,000 shares authorized, 15,793,933 shares issuedand
                outstanding, par value $.001 per share)
              
              
              15,794Additional
                paid-in capital
              
              
              265,350Retained
                deficit
              
              
              (320,896
              )Total
                stockholders' deficit
              
              
              (39,752
              )Total
                  liabilities and stockholders' deficit
              
              $
              144,434The
                  accompanying notes are an integral part of these financial
                  statements




3
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          of Contents*




**BLUESKY
                  SYSTEMS, CORP.****Consolidated
                  Statements of Operations*****For
                  the Three and Six Months Ended June 30, 2007 and
                  2006***3
                  Months Ended
              
              
              3
                  Months Ended
              
              
              6
                  Months Ended
              
              
              6
                  Months Ended6/30/2007
              
              
              6/30/2006
              
              
              6/30/2007
              
              
              6/30/2006Rental
                  income
              
              
              $
              6,850
              
              
              $
              7,381
              
              
              $
              14,275
              
              
              $
              14,831Total
                  revenue
              
              
              
              6,850
              
              
              
              7,381
              
              
              
              14,275
              
              
              
              14,831Selling,
                  general and administrative expenses
              
              
              8,231
              
              
              
              4,502
              
              
              
              15,674
              
              
              
              12,164Net
                  ordinary loss
              
              
              
              (1,381
              )
              
              
              2,879
              
              
              
              (1,399
              )
              
              
              2,667Interest
                  expense
              
              
              
              (3,066
              )
              
              
              (3,264
              )
              
              
              (6,066
              )
              
              
              (7,097
              )Net
                  loss
              
              
              $
              (4,447
              )
              
              $
              (385
              )
              
              $
              (7,465
              )
              
              $
              (4,430
              )Net
                  loss per share, basic and fully diluted
              
              
              $
              
              *
              
              $
              
              *
              
              $
              
              *
              
              $
              
              *Weighted
                  Average Common Shares Outstanding
              
              
              15,793,933
              
              
              
              15,570,600
              
              
              
              15,793,933
              
              
              
              15,570,600*
                  =
                  Less than $.01 per share.The
                  accompanying notes are an integral part of these financial
                  statements






4
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          of Contents*




**BLUESKY
                  SYSTEMS, CORP.****Consolidated
                  Statement of Stockholders' Equity*****For
                  the Six Months Ended June 30, 2007***CommonStock
              
              
              
              
              
              Additional(Par
                  Value
              
              
              Common
              
              
              Paid
                  in
              
              
              Retained$
              .001
              )
              
              Shares
              
              
              Capital
              
              
              (Deficit)Balances,
                  January 1, 2007
              
              $
              15,794
              
              
              
              15,793,933
              
              
              $
              261,750
              
              
              $
              (313,431
              )Contribution
                  of capital from majority shareholder
              
              $
              -
              
              
              
              -
              
              
              $
              3,600
              
              
              $
              -Net
                  loss for the period
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              $
              (7,465
              )Balances,
                  June 30, 2007
              
              $
              15,794
              
              
              
              15,793,933
              
              
              $
              265,350
              
              
              $
              (320,896
              )The
                  accompanying notes are an integral part of these financial
                  statements




5
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          of Contents*




**BLUESKY
                  SYSTEMS, CORP.****Consolidated
                  Statements of Cash Flows*****For
                  the Six Months Ended June 30, 2007***6
                  Months Ended
              
              
              6
                  Months Ended6/30/2007
              
              
              6/30/2006CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  loss
              
              $
              (7,465
              )
              
              $
              (4,430
              )Adjustments
                  to reconcile net (loss) to net cashprovided
                  by operating activities:Depreciation
              
              
              4,622
              
              
              
              9,528(Increase)
                  decrease in operating assets:Accounts
                  receivable
              
              
              (1,909
              )
              
              
              (1,819
              )Increase
                  (decrease) in operating liabilities:Accounts
                  payable and other current liabilities
              
              
              8,361
              
              
              
              60NET
                  CASH PROVIDED BY OPERATING ACTIVITIES
              
              
              3,609
              
              
              
              3,339CASH
                  FLOWS FROM FINANCING ACTIVITIES:Contribution
                  of capital from majority shareholder
              
              
              3,600
              
              
              
              -Principal
                  repayments of long term debt
              
              
              (3,948
              )
              
              
              (3,377
              )NET
                  CASH (USED IN) FINANCING ACTIVITIES
              
              
              (348
              )
              
              
              (3,377
              )NET
                  INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              3,261
              
              
              
              (38
              )CASH
                  AND CASH EQUIVALENTS:Beginning
                  of period
              
              
              43
              
              
              
              1,895End
                  of period
              
              $
              3,304
              
              
              $
              1,857OTHER
                  SUPPLEMENTAL CASH FLOW DISCLOSURES:Cash
                  paid during the period for interest
              
              $
              6,066
              
              
              $
              7,097Cash
                  paid during the period for income taxes
              
              $
              -
              
              
              $
              -The
                  accompanying notes are an integral part of these financial
                  statements




6
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          of Contents*




BLUESKY
      SYSTEMS, CORP.


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


JUNE
      30,
      2007 (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, 2006.





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, 2007, and 2006, have been
      included. Readers of these consolidated financial statements should note that
      the interim results for the six month period ended June 30, 2007 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 System, 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%, Original amount $185,000. $173,849 balance at June
      30, 2007.




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 $320,896
      as
      of June 30, 2007. 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.




7
 *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-QSB. 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.




8
 *Table
          of Contents*





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.




9
 *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)




10
 *Table
          of Contents*




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.





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.




11
 *Table
          of Contents*




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.




12
 *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, 2007 and
      2006).**





Revenues
      decreased $531 or 7% to $6,850 for the three months ended June 30, 2007,
      respectively, as compared with $7,381 for the three months ended June 30, 2006,
      respectively. Revenues decreased $556 or 4% to $14,275 for the six months
      ended June 30, 2007, respectively, as compared with $14,831 for the six months
      ended June 30, 2006, respectively. Revenues consisted of rentals on residential
      rental properties. We had 4 leases, of which 3 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, 2007 and
      2006).**





None.





**Expenses
      (for the three and six months ended June 30, 2007 and
      2006).**





Operating
      expenses for the three months ended June 30, 2007 increased $3,729 or 83% to
      $8,231. Operating expenses for the six months ended June 30, 2007 increased
      $3,510 or 29% to $15,674. The increase in expenses during this period was
      primarily attributable to increase in general and administrative expenses that
      pertained to repairs and maintenance which increased from $840 in the prior
      year
      to $2,617 in the current year. Accounting also increased by $12,437 in the
      current year.





We
      expect
      increases in expenses through the year 2007 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 $40,000 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.




13
 *Table
          of Contents*




**Income
      Taxes (for the three and six months ended June 30, 2007 and
      2006).**





We
      had no
      provision for income taxes for the three and six months ended June 30, 2007
      and
      2006, 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, 2007 and
      2006).**





We
      had a
      net loss of $4,447, or less than $.01 per common share for the three-month
      period ended June 30, 2007. This compares to a net loss of $385, or less than
      $.01 per common share for the same period ended June 30, 2006. We had a net
      loss
      of $7,465, or less than $.01 per common share for the six-month period ended
      June 30, 2007. This compares to a net loss of $4,430, or less than $.01 per
      common share for the same period ended June 30, 2006. The increases in net
      losses are attributable to the increase 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 six months ended June 30, 2007 and
      2006).**





Cash
      flows provided by operations were $3,609 and $3,339 for the six months ended
      June 30, 2007 and 2006, respectively. These were mainly attributable to an
      increase in accounts payable and non-cash depreciation charges in both
      periods.





Cash
      flows used in financing activities were $348 and $3,377 for the six months
      ended
      June 30, 2007 and 2006, 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 June 30, 2007 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.




14
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          of Contents*





We
      had
      cash on hand of only $3,304 and a working capital deficit of $11,754 as of
      June
      30, 2007. 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. Our approximate offering expenses of $30,000
      in connection with this offering have already been paid.





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 $320,896 as of June 30, 2007.
      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.





ITEM
      3.QUANTITATIVE AND
      QUALITATIVE
      DISCLOSURES ABOUT MARKETRISK





We
      do not have any material risk with
      respect to changes in foreign currency exchange rates, commodities prices or
      interest rates. We do not believe that we have any other relevant market risk
      with respect to the categories intended to be discussed in this item of this
      report.





15
 *Table
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ITEM
      4.  CONTROLS AND PROCEDURES




We
      maintain disclosure controls and procedures designed to ensure that information
      required to be disclosed in reports filed under the Securities Exchange Act
      of
      1934 (“Exchange Act”) is recorded, processed, summarized and reported within the
      specified time periods. Our Chief Executive Officer and its Chief Financial
      Officer (collectively, the “Certifying Officers”) are responsible for
      maintaining our disclosure controls and procedures. The controls and procedures
      established by us are designed to provide reasonable assurance that information
      required to be disclosed by the issuer in the reports that it files or submits
      under the Exchange Act is recorded, processed, summarized and reported within
      the time periods specified in the Commission’s rules and forms.




As
      of the
      end of the period covered by this report, the Certifying Officers evaluated
      the
      effectiveness of our disclosure controls and procedures. Based on the
      evaluation, the Certifying Officers concluded that our disclosure controls
      and
      procedures were effective to provide reasonable assurance that information
      required to be disclosed by us in the reports that we file or submit under
      the
      Exchange Act is recorded, processed, summarized and reported, within the time
      periods specified in the applicable rules and forms, and that it is accumulated
      and communicated to our management, including the Certifying Officers, as
      appropriate to allow timely decisions regarding required
      disclosure.





PART
      II.  OTHER INFORMATION





Item
      1.      Legal Proceedings





None.





Item
      2.      Changes in Securities





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)





16
 *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 13, 2007
            By:
            /s/
                Karol KapinosKarol Kapinos
              President,
                  Chief Executive Officer, and
                Chief
                  Financial Officer







*
                We plan to
                evaluate properties not listed for sale because of the potential
                benefit
                of acquiring a property in a particular location at a lower cost
                by not
                having to pay realtor commissions or other costs and fees associated
                with
                purchasing properties only listed for sale with
                realtors.





17