SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q





ý
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF


THE
SECURITIES EXCHANGE ACT OF 1934





For
Quarterly Period Ended September 30, 2007





or





o
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF


THE
SECURITIES EXCHANGE ACT OF 1934





For
the transition period from
         
to





Commission
File Number 0-21555





AMASYS
CORPORATION


(Exact
name of registrant issuer as specified in its charter)





Delaware
            
            54-1812385(State
      or other jurisdiction of incorporation or
              organization)
            
            (I.R.S.
      Employer Identification No.)625 N. Washington Street, Suite
      301,
              Alexandria, Virginia
  22314(Address
      of principal executive offices, including zip code)Registrant’s
      phone number, including area code    (703)
      797-8111





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


YES o     NO
ý





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
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


Large
Accelerated Filer o
Accelerated Filer o
Non-accelerated Filer o Smaller reporting
company ý




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ý No o




Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.





Class
            
            Outstanding
      at October 8, 2008Common
      Stock, $.01 par value
            
            6,669,210
















AMASYS
CORPORATION





INDEX


Page
      No.PART I
            FINANCIAL
      INFORMATIONITEM 1.
            FINANCIAL
      STATEMENTS:Balance
      Sheets — September 30, 2007 (Unaudited) and June 30, 2007
            3Statements
      of  Operations (Unaudited) — Three months ended September 30,
      2007 and 2006 and the Period from entering Development Stage (October 1,
      2006) through September 30, 2007
            4Statements
      of Cash Flows (Unaudited) — Three months ended September 30, 2007 and 2006
      and the Period from entering Development Stage (October 1, 2006) through
      September 30, 2007
            5Supplemental
      Disclosure of Cash Flow Information – Three months ended September 30,
      2007 and 2006 and the Period from entering Development Stage (October 1,
      2006) through September 30, 2007
            6Notes
      to Financial Statements
            7-10ITEM
      2.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
            11-15ITEM 3.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            16ITEM 4.
            CONTROLS
      AND PROCEDURES
            16PART II
            OTHER
      INFORMATION
            16








-
2 -




PART I -
FINANCIAL INFORMATION





ITEM I — FINANCIAL
STATEMENTS





AMASYS
CORPORATION


(A
Development Stage Company)


BALANCE SHEETS







September
      30,
            
            
            June
      30,2007
            
            
            2007ASSETS
            
            (Unaudited)CURRENT
      ASSETSCash
            
            $
            452
            
            
            $
            7,862Prepaid
      expenses and other current assets
            
            
            —
            
            
            
            700TOTAL
      CURRENT ASSETS
            
            
            452
            
            
            
            8,562TOTAL
      ASSETS
            
            $
            452
            
            
            $
            8,562




LIABILITIES AND STOCKHOLDERS’
      DEFICITCURRENT
      LIABILITIES:Accounts
      payable and accrued expenses
            
            $
            15,835
            
            
            $
            6,585Accounts
      payable, related parties
            
            
            10,825
            
            
            
            8,023TOTAL
      CURRENT LIABILITIES
            
            
            26,660
            
            
            
            14,608LONG
      TERM LIABILITIES:Notes
      payable, related party
            
            
            20,701
            
            
            
            20,197TOTAL
      LIABILITIES
            
            
            47,361
            
            
            
            34,805COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS’
      DEFICIT:Preferred
      stock, $.01 par value, 1,000,000 shares authorized, no shares issued and
      outstanding at September 30, 2007 and June 30, 2007,
      respectively
            
            
            —
            
            
            
            —Common
      stock, $.01 par value, 20,000,000 shares authorized, 6,669,210 shares
      issued and outstanding at September 30, 2007 and June 30, 2007,
      respectively
            
            
            66,692
            
            
            
            66,692Additional
      paid in capital
            
            
            317,045
            
            
            
            317,045Accumulated
      deficit
            
            
            (430,646)
            
            
            
            (409,980)TOTAL
      STOCKHOLDERS’ DEFICIT
            
            
            (46,909)
            
            
            
            (26,243)TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
            
            $
            452
            
            
            $
            8,562







See
accompanying notes to the financial statements.





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3 -


AMASYS
CORPORATION


(A
Development Stage Company)


STATEMENTS
OF OPERATIONSS


(UNAUDITED)





Three
      Months Ended September 30,
            
            Period
      from entering Development Stage (October 1, 2006) through September 30,
      20072007
            
            2006REVENUES
            
            
            $                    
                         —
            
            $                      
                      
      —
            
            $            
                       
                       —COST
      OF SALES
            
            
            —
            
            —
            
            —GROSS
      PROFIT
            
            
            —
            
            —
            
            —OPERATING
      EXPENSESSelling,
      general and administrative expenses
            
            
            20,666
            
            53,411
            
            59,618Total
      operating expenses
            
            
            20,666
            
            53,411
            
            59,618LOSS
      FROM OPERATIONS
            
            
            (20,666)
            
            (53,411)
            
            (59,618)OTHER
      INCOME (EXPENSE)Interest
      income
            
            
            —
            
            43,408
            
            —Stock
      issued for loans
            
            
            —
            
            —
            
            (20,000)Gain
      on sale of short term investment
            
            
            —
            
            14,172
            
            12,734Equity
      in earnings of Comtex
            
            
            —
            
            9,127
            
            —Loss
      on derivative asset
            
            
            —
            
            (377,059)
            
            —Total
      other expense
            
            
            —
            
            (310,352)
            
            (7,266)NET
      LOSS APPLICABLE TO COMMON STOCKHOLDERS
            
            
            $
            (20,666)
            
            $
            (363,763)
            
            $                                 
           (66,884)NET
      LOSS PER SHARE OF COMMON STOCK — Basic and diluted
            
            
            $
            (0.00)
            
            $
            (0.08)WEIGHTED
      AVERAGE SHARES OUTSTANDING — Basic and diluted
            
            
            6,669,210
            
            4,319,210











See
accompanying notes to the financial statements.





-
4 -


AMASYS
CORPORATION


(A
Development Stage Company)


STATEMENTS OF CASH
FLOWS


(UNAUDITED)





Three
      Months Ended September 30,
            
            Period
      from entering Development Stage (October 1, 2006) through September 30,2007
            
            
            2006
            
            2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
            
            $
            (20,666)
            
            
            $
            (363,763)
            
            $                               
        (66,884)Adjustments
      to reconcile net loss to net cash used in operating
      activities:Stock
      issued for loans
            
            
            —
            
            
            
            —
            
            20,000Amortization
      on note receivable discount
            
            
            —
            
            
            
            (21,949)
            
            —Loss
      on derivative asset
            
            
            —
            
            
            
            377,059
            
            —Gain
      on sale of short term investment
            
            
            —
            
            
            
            (14,172)
            
            (12,734)Equity
      in earnings of Comtex
            
            
            —
            
            
            
            (9,127)
            
            —Changes
      in operating assets and liabilitiesPrepaid
      expenses and other current assets
            
            
            700
            
            
            
            —
            
            —Accounts
      payable, related party
            
            
            2,802
            
            
            
            —
            
            3,297Accounts
      payable and accrued expenses
            
            
            9,250
            
            
            
            617
            
            (11,049)Net
      cash used in operating activities
            
            
            (7,914)
            
            
            
            (31,335)
            
            (67,371)CASH
      FLOWS FROM INVESTING ACTIVITIES:Net
      proceeds from sale of short term investment
            
            
            —
            
            
            
            22,964
            
            40,570Net
      cash provided by investing activities
            
            
            —
            
            
            
            22,964
            
            40,570CASH
      FLOWS FROM FINANCING ACTIVITIES:Net
      proceeds from issuance of common stock
            
            
            —
            
            
            
            —
            
            3,500Net
      proceeds from notes payable, related party
            
            
            —
            
            
            
            —
            
            20,000Accrued
      interest on notes payable, related party
            
            
            504
            
            
            
            —
            
            504Net
      cash provided by financing activities
            
            
            504
            
            
            
            —
            
            24,004NET
      DECREASE IN CASH AND CASH EQUIVALENTS
            
            
            (7,410)
            
            
            
            (8,371)
            
            (2,797)CASH
      AND CASH EQUIVALENTS, Beginning of period
            
            
            7,862
            
            
            
            11,620
            
            3,249CASH
      AND CASH EQUIVALENTS, End of period
            
            $
            452
            
            
            $
            3,249
            
            $                             
              452











See
accompanying notes to the financial statements.





-
5 -


AMASYS
CORPORATION


(A
Development Stage Company)


STATEMENTS
OF CASH FLOWS


(UNAUDITED)








Three
      Months Ended September 30,
            Period
      from entering Development Stage (October 1, 2006) through September 30,
      20072007
            
            2006SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Cash
      received/(paid) during the period for:Interest
            
            $
            —
            
            
            $
            —
            $                     
            
                   —Income
      taxes
            
            $
            —
            
            
            $
            —
            $                                
               —SUPPLEMENTAL
      DISCLOSURE OF NON CASH TRANSACTIONS




On September 25, 2006, AMASYS
redeemed its Series A Preferred Stock in consideration of the outstanding
promissory note, its investment in common stock of Comtex News Network, Inc. and
the issuance of 2,111,860 shares of AMASYS Common stock.  The
following table illustrates the non-cash effect of the above
transaction.





Note
      receivable, net of discount of $148,478
            
            $
            703,412Issuance
      of 2,111,860 shares of common stock
            
            
            21,119Derivative
      asset
            
            
            42,848Retirement
      of preferred stock
            
            
            (1,960
            )Retained
      earnings
            
            
            (282,979
            )Paid
      in capital
            
            
            (482,440
            )$
            —





See
accompanying notes to the financial statements.


-
6 -


AMASYS
CORPORATION


(A
Development Stage Company)


NOTES TO FINANCIAL
STATEMENTS


(UNAUDITED)





NOTE
1.    SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES





Basis of Presentation—
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of
America.





The
unaudited financial statements have been prepared by us pursuant to the rules
and regulations of the Securities and Exchange Commission. The information
furnished herein reflects all adjustments (consisting of normal recurring
accruals and adjustments) which are, in the opinion of management, necessary to
fairly present the operating results for the respective periods. Certain
information and footnote disclosures normally present in annual financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been omitted pursuant to such rules and
regulations. These financial statements should be read in conjunction with the
audited financial statements and footnotes for the year ended June 30, 2007
included in our Annual Report on Form 10-KSB. The results of the
three month periods ended September 30, 2007 are not necessarily indicative
of the results to be expected for the full year ending June 30,
2008.





Going
Concern — The accompanying financial statements have been prepared
assuming that we will continue as a going concern.  We have suffered
recurring losses from operations since our inception and have an accumulated
deficit of $430,646 at September 30, 2007.  The financial statements
do not include any adjustments relating to the recoverability and classification
of recorded asset amounts or amounts and classifications of liabilities that
might be necessary should we be unable to continue our existence.





In addition, our recovery
is dependent upon future events, the outcome of which is
undetermined.  We intend to continue to attempt to raise additional
capital, but there can be no certainty that such efforts will be
successful.





Development Stage
Activities - Since we redeemed and converted all of its outstanding
Series A Preferred Stock the end of September 2006, starting October 1, 2006 we
have not conducted any business operations. All our operating results and cash
flows reported in the accompanying financial statements from October 1, 2006 are
considered to be those related to development stage activities and represent the
cumulative amounts from its development stage activities required to be reported
pursuant to Statements of Financial Accounting Standards (SFAS) No. 7,
Development Stage Enterprises.





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





Cash and Cash
Equivalents — We consider investments with original maturities of
90 days or less to be cash equivalents.





Income
Taxes —We record income taxes in accordance with the provisions of
Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting
for Income Taxes.”  The standard requires, among other provisions, an
asset and liability approach to recognize deferred tax liabilities and assets
for the expected future tax consequences of temporary differences between the
financial statement carrying amounts and tax basis of assets and
liabilities.  Valuation allowances are provided if, based upon the
weight of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized.


-
7 -





Stock-Based
Compensation— On July 1, 2006, we adopted SFAS No. 123 (revised 2004),
“Share-Based Payment,” (“SFAS 123(R)”) which was issued in December 2004. SFAS
123(R) revises SFAS No. 123, “Accounting for Stock Based Compensation,” and
supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and
its related interpretations. SFAS 123(R) requires recognition of the cost of
employee services received in exchange for an award of equity instruments in the
financial statements over the period the employee is required to perform the
services in exchange for the award. SFAS 123(R) also requires measurement of the
cost of employee services received in exchange for an award. SFAS 123(R) also
amends SFAS No. 95, “Statement of Cash Flows,” to require the excess tax
benefits be reported as financing cash inflows, rather than as a reduction of
taxes paid, which is included within operating cash flows.





SFAS 123(R) provides that
income tax effects of share-based payments are recognized in the financial
statements for those awards that will normally result in tax deduction under
existing law. Under current U.S. federal tax law, we would receive a
compensation expense deduction related to non-qualified stock options only when
those options are exercised and vested shares are received. Accordingly, the
financial statement recognition of compensation cost for non-qualified stock
options creates a deductible temporary difference which results in a deferred
tax asset and a corresponding deferred tax benefit in the income statement. We
do not recognize a tax benefit for compensation expense related to incentive
stock options unless the underlying shares are disposed in a disqualifying
disposition.





Net Income (Loss)
Per Share — We compute net loss per share in accordance with SFAS No.
128, “Earnings per Share,” and SEC Staff Accounting Bulletin No. 98 (“SAB 98”).
Under the provisions of SFAS No. 128 and SAB 98, basic and diluted net loss per
share is computed by dividing the net loss available to common stockholders for
the period by the weighted average number of shares of common stock outstanding
during the period.





Concentration of
Credit Risk — Financial instruments that potentially subject us to a
concentration of credit risk consist of cash.  We maintain our cash
with high credit quality financial institutions; at times, such balances with
any one financial institution may exceed FDIC insured limits.





Financial
Instruments — Our financial instruments consist of cash, accounts
payable, and notes payable.  The carrying values of cash, accounts
payable, and notes payable are representative of their fair values due to
their short-term maturities.








NOTE 2 – INVESTMENT IN COMMON STOCK – RELATED
PARTY





On September 25, 2006, AMASYS executed agreements
to redeem from the holders of its Preferred Stock, pro rata to their respective
ownership interests, 55,209 shares of AMASYS Series A Preferred Stock (the
“Series A”) in consideration for: (a) AMASYS’ entire interest in the outstanding
promissory note in favor of AMASYS made by Comtex News Network, Inc. (“Comtex”)
in the principal amount of $857,000; and (b) 2,153,437 shares of Comtex common
stock.  Pursuant to the agreement, the holders of the Series A
converted the balance of the Series A shares, together with any and all rights
to accrued but unpaid dividends thereon, into 2,111,860 shares of AMASYS Common
Stock.  Therefore, effective September 25, 2006, AMASYS no longer
owned the promissory note made by Comtex and AMASYS no longer held any shares of
Comtex common stock and therefore no longer had any ownership interest in
Comtex.





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8 -


NOTE
3 – NOTE PAYABLE RELATED PARTY





During
the year ended June 30, 2007, we received $10,000 from Private Capital Group,
L.L.C., a shareholder of the Company.  This note has an interest rate
of 10% per annum, is unsecured and had an original due date of December 31,
2007.  The note was extended with the same terms and a due date of
December 31, 2008.  As of September 30, 2007, accrued interest payable
totaled $351 and is due at maturity.  Accrued interest is included in
the notes payable, related parties balance.  As an inducement to make
the loan, we issued 1,000,000 shares of restricted common stock with a fair
market value of $10,000 (par value) and issued a warrant for an additional
1,000,000 shares of restricted common stock with an exercise price of $.01 per
share.  The warrants have a fair market value of $0.





During
the year ended June 30, 2007, we received $10,000 from Dr. C.W. Gilluly, our
Chairman of the Board, President and Chief Executive Officer.  This
note has an interest rate of 10% per annum, is unsecured and had an original due
date of December 31, 2007.  The note was extended with the same terms
and a due date of December 31, 2008.  As of September 30, 2007,
accrued interest payable totaled $350 and is due at maturity.  Accrued
interest is included in the notes payable, related parties
balance.  As an inducement to make the loan, we issued 1,000,000
shares of restricted common stock with a fair market value of $10,000 (par
value) and issued a warrant for an additional 1,000,000 shares of restricted
common stock with an exercise price of $.01 per share.  The warrants
have a fair market value of $0.





NOTE
4 – STOCK WARRANTS





During the year ended June 30, 2007, we
issued two warrants as part of an incentive for two notes payable, related
parties.  The warrants are for the purchase of 2,000,000 shares of
restricted common stock at an exercise price of $.01.  The warrants
have a fair market value of $-0- using the Black Scholes method of calculation
and the warrants expire in 2017.





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9 -


NOTE
5 – COMPREHENSIVE LOSS





Comprehensive
loss is defined as the change in equity of a business enterprise during a period
from non-owner sources.  The Company’s comprehensive loss includes
unrealized losses on its short-term investment.  In accordance with
paragraphs 18 through 20 of SFAS 130, these gains and losses had also been
included in Other Comprehensive Income as unrealized holding gains in the period
in which they arose.  These gains are, therefore, deducted from Other
Comprehensive Income to avoid including them twice.  During the three
months ended September 30, 2007 and 2006, we reclassified realized gains and
recognized net unrealized losses on our short-term investments as
follows:





Three
      Months Ended
              September
      30,2007
            
            
            2006Net
      loss
            
            $
            (20,666
            )
            
            $
            (363,763
            )Other
      comprehensive loss:Unrealized
      loss on short-term investment
            
            
            -
            
            
            
            (7,335
            )Less:  reclassification
      adjustment for gains included in net loss
            
            
            -
            
            
            
            (14,172
            )Net
      unrealized loss on short-term investment
            
            
            -
            
            
            
            (21,507
            )Other
      comprehensive loss
            
            
            -
            
            
            
            (21,507
            )Comprehensive
      loss
            
            $
            -
            
            
            $
            (385,270
            )





NOTE
6 – SUBSEQUENT EVENTS





On
November 15, 2007, we executed a $15,000 note with C.W. Gilluly, our Chairman,
President and CEO, pursuant to which C.W. Gilluly advanced the Company $15,000
at a rate of 12% per annum.





On
January 24, 2008, we executed a $5,000 note with Private Capital Group, LLC,
pursuant to which Private Capital Group, LLC advanced the Company $5,000 at a
rate of 12% per annum.





On June
23, 2008, we executed a $15,000 note with C.W. Gilluly, pursuant to which C.W.
Gilluly advanced us $15,000 at a rate of 12% per annum.





On
September 16, 2008, we executed a $25,000 note with C.W. Gilluly, pursuant to
which C.W. Gilluly advanced us $25,000 at a rate of 12% per annum.





-
10 -


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





The
information contained in this Form 10-Q is intended to update the information
contained in our Annual Report on Form 10-KSB for the year ended June 30, 2007
and presumes that readers have access to, and will have read, the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and
other information contained in such Form 10-KSB.  The following
discussion and analysis also should be read together with our financial
statements and the notes to the financial statements included elsewhere in this
Form 10-Q.





The
following discussion contains certain statements that may be deemed
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995.  Such statements appear in a number of
places in this Report, including, without limitation, “Management’s Discussion
and Analysis of Financial Condition and Results of Operations.”  These
statements are not guarantees of future performance and involve risks,
uncertainties and requirements that are difficult to predict or are beyond our
control.  Forward-looking statements speak only as of the date of this
quarterly report. You should not put undue reliance on any forward-looking
statements.  We strongly encourage investors to carefully read the
factors described in our Annual Report on Form 10-KSB for the year ended June
30, 2007 in the section entitled “Risk Factors” for a description of certain
risks that could, among other things, cause actual results to differ from these
forward-looking statements. We assume no responsibility to update the
forward-looking statements contained in this quarterly report on Form 10-Q. The
following should also be read in conjunction with the unaudited Financial
Statements and notes thereto that appear elsewhere in this report.





Company
History





AMASYS
Corporation (“AMASYS”, the “Company,” us, we or our) was incorporated in
Delaware in 1992, and in 1996 received all remaining assets of Infotechnology,
Inc. (“Infotech”), a Delaware company, following the completion of Infotech’s
Chapter 11 Bankruptcy reorganization, in accordance with an Assignment and
Assumption Agreement, dated October 11, 1996, and effective as of June 21,
1996.  As a result of a series of transactions during the 1980’s,
Infotech, then principally engaged in the information and communications
business, acquired equity interests in Comtex News Network, Inc. (“Comtex”) and
Analex Corporation (“Analex”), formerly known as Hadron,
Inc.   As of December 31, 2006 AMASYS no longer had an equity
interest in Comtex and no longer had an equity interest in Analex.




Overview




AMASYS is
the successor to Infotech, pursuant to Infotech’s bankruptcy
proceeding.  Until September 25, 2006, AMASYS’ primary assets were its
equity interest in and note receivable (the “Note”) from Comtex and an equity
interest in Analex.  AMASYS owned 16% of the outstanding equity of
Comtex, while the remainder was publicly owned.





On
September 25, 2006, we exchanged the equity investment in Comtex common stock
and the Note Receivable from Comtex of $856,954, for 55,209 shares of the AMASYS
Series A Preferred stock.  Therefore, at September 30, 2007, we no
longer had an equity interest in either the common stock of Comtex or the Note
from Comtex.





During
October 2006, we sold the remaining 21,000 shares of common stock of
publicly-held Analex, a defense contractor specializing in systems engineering
and developing innovative technical intelligence solutions in support of U.S.
national security.  Therefore, at September 30, 2007, we no longer had
an equity interest in Analex.





Since we
redeemed and converted all of the outstanding Series A Preferred Stock at the
end of September 2006, starting October 1, 2006 we have not conducted any
business operations.


-
11 -


Critical Accounting
Policies





Our interim financial statements were
prepared in conformity with U.S. generally accepted accounting
principles.  As such, management is required to make certain
estimates, judgments and assumptions that they believe are reasonable based upon
the information available.  These estimates and assumptions affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expense during the periods
presented.  The significant accounting policies which management
believes are the most critical to aid in fully understanding and evaluating our
reported financial results include the following:





Derivatives





SFAS 133 establishes accounting and
reporting standards for derivative instruments and requires that all derivatives
be recorded on the balance sheet at fair value.  Additionally, the
accounting for changes in fair value depends on whether the derivative
instrument is designated and qualifies as part of a hedging relationship and, if
so, the nature of the hedging activity.  Changes in the fair value of
derivatives that do not qualify for hedge treatment are recognized currently in
earnings.





We had a Note from Comtex and in August
2001, the Note was amended to include a provision that allows us to convert all
or a portion of the outstanding principal amount, plus accrued interest, into
common stock of Comtex.  In accordance with SFAS 133, we accounted for
this conversion option as an embedded derivative.  As a result, the
conversion option was being carried at fair value determined using a
Black-Scholes model with changes in the fair value being recognized currently in
earnings.  As previously reported, on September 25, 2006, we exchanged
the Note for shares of the AMASYS Series A Preferred stock. Therefore, as
of September 30, 2007, the balance of the derivative asset was
$-0-.





Investment
in Comtex





As previously reported, on September
25, 2006, we exchanged the equity investment in Comtex common for shares of the
AMASYS Series A Preferred stock.  Therefore, at September 30, 2007, we
no longer had an equity interest in the common stock of Comtex.  At
June 30, 2006, we had a 16% ownership interest in Comtex.  Since we
had the ability to significantly influence the operations of Comtex, we
accounted for our investment in Comtex under the equity method of
accounting.  We could significantly influence the operations of Comtex
since (i) if we converted our note receivable-related party into shares of
Comtex, we would have had a 21% ownership interest in Comtex, (ii) the Company
as well as our Chairman and CEO were Comtex’s largest individual shareholders,
(iii) the Company and our Chairman and CEO had a combined ownership interest in
Comtex of 37% and (iv) our Chairman is the Chairman of the Board of
Comtex.  During the year ended June 30, 2007, we recognized income of
$9,127 for our share of Comtex income and during the year ended June 30, 2006,
we recognized losses of $71,934 for our share of Comtex losses.





Valuation
of Deferred Tax Assets





We recognize deferred tax assets and
liabilities based on the difference between the financial statement and tax
bases of assets and liabilities.  We regularly review our deferred tax
assets for recoverability and establish a valuation allowance based on
historical taxable income, projected future taxable income and the expected
timing of the reversals of existing temporary differences.  Based upon
the level of historical taxable income and projections for future taxable income
over the periods in which the net operating loss carryforwards are available to
reduce income taxes payable, we have established a full valuation allowance
against the deferred tax assets.





We base
our estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. There can be no assurance that
actual results will not differ from these estimates.





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For the Quarters Ended
September 30, 2007 and 2006





Results
of Operations





Selling,
General and Administrative Expenses





Selling,
general and administrative expenses were $20,666 and $53,411 for the quarters
ended September 30, 2007 and 2006, respectively.  The decrease in
expenses in 2007 resulted mainly from reduced legal fees associated with reviews
of our various SEC filings.





Other
Income (Expense)





Other
income (expense) was $-0- and $(353,200) for the quarters ended September 30,
2007 and 2006, respectively, a decrease of $353,200.  The decrease is
primarily due to the change in fair value of the derivative asset at September
30, 2006.





Liquidity
and Capital Resources





Net cash used in operating activities
was $7,914 and $31,335 in the three months ended September 30, 2007 and 2006,
respectively.





Net cash provided by
investing activities was $-0- and 22,964 in the three months ended September 30,
2007 and 2006, respectively.  The decrease of $22,964 in cash provided
by investing activities was primarily due to the net proceeds from the sale of
short term investments.





We suffered recurring
losses from operations and have an accumulated deficit of $430,646 at September
30, 2007.  Currently, we are a non-operating public company. We seek
suitable candidates for a business combination with a private
company.  In the event we use all of our cash resources, C.W. Gilluly
has indicated the willingness to loan us funds at the prevailing market rate,
assuming we find a suitable candidate for a business combination, until such
business combination is consummated.  Even though this is Mr.
Gilluly's current intention, he has made no firm commitment and it is at his
sole discretion whether or not to fund us.  In the event Mr. Gilluly
does not fund us, we will not have the funds necessary to operate and will have
to dissolve.





Inflation and
Seasonality





Inflation
has not been material to us during the past five years. Seasonality has not been
material to us.








Off-Balance
Sheet Arrangements– We have no
off-balance sheet arrangements.





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Risk
Factors





The
following important factors, and the important factors described elsewhere in
this report or in our other filings with the SEC, could affect (and in some
cases have affected) our results and could cause our results to be materially
different from estimates or expectations.  Other risks and
uncertainties may also affect our results or operations
adversely.  The following and these other risks could materially and
adversely affect our business, operations, results or financial
condition.





We
have a history of net losses and may never achieve or maintain
profitability.





We have a
history of incurring losses from operations. As of September 30, 2007, we had an
accumulated deficit of $430,646.   We anticipate that our existing
cash and cash equivalents will be sufficient to fund our business needs. Our
ability to continue may prove more expensive than we currently anticipate and we
may incur significant additional costs and expenses.





We
are a non-operating company seeking a suitable transaction and may not find a
suitable candidate or transaction.





We are a
non-operating company.  If we are unable to consummate operations and
become profitable we will be forced to liquidate and dissolve which will take
three years to complete and may result in our distributing less cash to our
shareholders.  Additionally, we will be spending cash during the
winding down and may not have enough cash to distribute to our
shareholders.




We
will continue to incur claims, liabilities and expenses that will reduce the
amount available for distribution to stockholders.





Claims,
liabilities and expenses incurred while seeking a private company transaction or
any subsequent dissolution, such as legal, accounting and consulting fees and
miscellaneous office expenses, will reduce the amount of assets available for
future distribution to stockholders. If available cash and amounts received on
the sale of non-cash assets are not adequate to provide for our obligations,
liabilities, expenses and claims, we may not be able to distribute meaningful
cash, or any cash at all, to our stockholders.





We
will continue to incur the expenses of complying with public company reporting
requirements.




We have
an obligation to continue to comply with the applicable reporting requirements
of the Securities Exchange Act of 1934, as amended, even though compliance with
such reporting requirements is economically burdensome.





Our auditors have expressed a going
concern opinion.





Primarily
as a result of our recurring losses and our lack of liquidity, we received a
report from our independent auditors that includes an explanatory paragraph
describing the substantial uncertainty as to our ability to continue as a going
concern for the year ended June 30, 2007.




Any future sale
of a substantial number of shares of our common stock could depress the trading
price of our common stock.





Any
sale of a substantial number of shares of our common stock (or the prospect of
sales) may have the effect of depressing the trading price of our common stock.
In addition, these sales could lower our value.





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14 -


Our
stock price is likely to be highly volatile because of several factors,
including a limited public float.





The
market price of our stock is likely to be highly volatile because there has been
a relatively thin trading market for our stock, which causes trades of small
blocks of stock to have a significant impact on our stock price. You may not be
able to resell our common stock following periods of volatility because of the
market's adverse reaction to volatility.





Other
factors that could cause such volatility may include, among other
things:





·
            announcements
      concerning our strategy;





·
            litigation;
      and





·
            general
      market conditions.





Because
our common stock is considered a "penny stock" any investment in our common
stock is considered to be a high-risk investment and is subject to restrictions
on marketability.





Our
common stock is currently listed on the Pink Sheets and is considered a "penny
stock." The Pink Sheets is generally regarded as a less efficient trading market
than the NASDAQ Capital Market.





The SEC has adopted rules
that regulate broker-dealer practices in connection with transactions in "penny
stocks." Penny stocks generally are equity securities with a price of less than
$5.00 (other than securities registered on certain national securities exchanges
or quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system). The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from those rules, to deliver a
standardized risk disclosure document prepared by the SEC, which specifies
information about penny stocks and the nature and significance of risks of the
penny stock market. The broker-dealer also must provide the customer with bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and any salesperson in the transaction, and monthly account statements
indicating the market value of each penny stock held in the customer's account.
In addition, the penny stock rules require that, prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for our common stock.





Since our common stock is
subject to the regulations applicable to penny stocks, the market liquidity for
our common stock could be adversely affected because the regulations on penny
stocks could limit the ability of broker-dealers to sell our common stock and
thus your ability to sell our common stock in the secondary
market.  There is no assurance our common stock will be quoted on
NASDAQ or the NYSE or listed on any exchange, even if eligible.





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15 -


ITEM 3 – QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK





A smaller reporting company is
not required to provide the information required by this Item.





ITEM
4 - CONTROLS AND PROCEDURES





EVALUATION OF DISCLOSURE CONTROLS
AND PROCEDURES.  Our management, with the participation of our
president and our chief financial officer, carried out an evaluation of the
effectiveness of our "disclosure controls and procedures" (as defined in
the Securities Exchange Act of 1934 (the "Exchange Act") Rules 13a-15(e)
and 15-d-15(e)) as of the end of the period covered by this report (the
"Evaluation Date"). Based upon that evaluation, our president and our
chief financial officer concluded that, as of the Evaluation Date, our
disclosure controls and procedures are effective to ensure that information
required to be disclosed by us in the reports that we file or submit under
the Exchange Act (i) is recorded, processed, summarized and reported,
within the time periods specified in the SEC's rules and forms and (ii) is
accumulated and communicated to our management, including our president and
our chief financial officer, as appropriate to allow timely decisions
regarding required disclosure.




CHANGES IN INTERNAL CONTROL OVER
FINANCIAL REPORTING.  There were no changes in our
internal controls over financial reporting that occurred during the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.





PART
II - OTHER INFORMATION




ITEM
      6.
            
            Exhibits31
            Certification
      of President pursuant to Exchange Act Rule 13a-14 and 15d-14 as adopted
      pursuant to section 302 of the Sarbanes-Oxley Act of
  2002.32
            Certification
      of the Company’s Chief Executive Officer, pursuant to 18 U.S.C. Section
      1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.





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16 -





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.





AMASYS
      CORPORATIONDate:
      October 20, 2008
            /s/ 
      C.W. GillulyName:
      C.W. Gilluly, Ed.D.Title: President
      and Chief Executive Officer










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17 -











EXHIBIT
INDEX











Exhibit
            
            Description31
            
            Certification
      of President pursuant to Exchange Act Rule 13a-14 and 15d-14 as adopted
      pursuant to section 302 of the Sarbanes-Oxley Act of
  2002.32
            
            Certification
      of the Company’s Chief Executive Officer, pursuant to 18 U.S.C. Section
      1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.








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