UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C.
 
 FORM
10-QSB
 
 (Mark
      One)x
                Quarterly
      Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934For
      the quarter ended March 31, 2007; oro
                Transition
      report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934
 
 Commission
file number 0-21555
 
 AMASYS
CORPORATION
 (Exact Name of Registrant 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 office)
 
 Issuer’s
telephone number, including area code: (703)
797-8111
 
 Check
whether the Registrant (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  o
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes o  No x
 
 The
Company knows of no trading in its Common Stock since its
inception.  As of March 31, 2007, there were 1,775,880 shares of stock
held by non-affiliates.
 
 As of
March 31, 2007, 4,669,210 shares of the Common Stock of the Registrant were
outstanding.
 
 Transitional
Small Business Disclosure Format (check one):
 Yes o   No x
 
 
  AMASYS
CORPORATION
 TABLE OF
CONTENTS
 
 
 Page
      No.Part
      I
                Financial
      Information:Item
      1.
                Financial
      Statements
                1Balance
      Sheet
                1as
      of March 31, 2007 (unaudited)Statements
      of Operations
                2for
      the Three and Nine Months EndedMarch
      31, 2007 and 2006 andCumulative
      From Entering Development Stage (October 1, 2006)to
      March 31, 2007 (unaudited)Statements
      of Cash Flows
                3for
      the Nine Months EndedMarch
      31, 2007 and 2006 andCumulative
      From Entering Development Stage (October 1, 2006)to
      March 31, 2007  (unaudited)Notes
      to Financial Statements
                4Item
      2.
                Management’s
      Discussion and Analysis
                7or
      Plan of OperationsItem
      3.
                Controls
      and Procedures
                14Part
      II
                Other
      Information:Item
      1.
                Legal
      Proceedings
                15Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                15Item
      3.
                Defaults
      Upon Senior Securities
                15Item
      4.
                Submission
      of Matters to a Vote of Security Holders
                15Item
      5.
                Other
      Information
                15Item
      6.
                Exhibits
      and Reports on Form 8-K
                15SIGNATURES
                
                16Certifications
      of Chief Executive Officer and Chief Financial Officer
                
                17
  
  PART
I
 
 Item
1.       Financial Statements
 
 AMASYS
Corporation
 (A
Development Stage Company)
 Balance
Sheet
 (Unaudited)
 
 
 March
      31, 2007AssetsCurrent
      assets:Cash
      and cash equivalents
                
                $
                3,976Prepaid
      expenses
                
                
                4,000Total
      current assets
                
                
                7,976Total
      assets
                
                $
                7,976Liabilities
      and Stockholders’ DeficitCurrent
      liabilities:Accounts
      payable and accrued expenses
                
                $
                19,646Accounts
      payable, related party
                
                
                5,023Total
      current liabilities
                
                
                24,669Stockholders’
      deficit:Common
      stock, $0.01 par value; 20,000,000 shares authorized; 4,669,210 shares
      issued and outstanding
                
                
                46,692Additional
      paid-in capital
                
                
                359,893Retained
      deficit (including $(16,668) loss accumulated   from
      entering development stage)
                
                
                (423,278
                )Total
      stockholders’ deficit
                
                
                (16,693
                )Total
      liabilities and stockholders’ deficit
                
                $
                7,976
 
 
 See
accompanying notes.
  1
  AMASYS
Corporation
 (A
Development Stage Company)
 Statements
of Operations
 (Unaudited)
 
 
 Three
      Months Ended
                  March
      31,
                
                
                Nine
      Months Ended
                  March
      31,
                
                
                Cumulative
                  From
      Entering Development
                  Stage
                  October
      1, 20062007
                
                
                2006
                
                
                2007
                
                
                2006Operating
      costs and expenses:Professional
      services
                
                $
                5,764
                
                
                $
                66,972
                
                
                $
                69,485
                
                
                $
                164,383
                
                
                $
                19,350General
      and administrative
                
                
                7,988
                
                
                
                4,353
                
                
                
                13,186
                
                
                
                19,018
                
                
                
                9,911Interest
      expense
                
                
                141
                
                
                
                -0-
                
                
                
                141
                
                
                
                -0-
                
                
                
                141Total
      operating costs and expenses
                
                
                13,893
                
                
                
                71,325
                
                
                
                82,812
                
                
                
                183,401
                
                
                
                29,402Other
      income (expense):Gain
      on sale of short-term  investment
                
                
                —
                
                
                
                8,625
                
                
                
                26,905
                
                
                
                52,666
                
                
                
                12,733Interest
      income
                
                
                —
                
                
                
                44,489
                
                
                
                43,409
                
                
                
                133,467
                
                
                
                1Equity
      in (losses) earnings of Comtex
                
                
                —
                
                
                
                (19,690
                )
                
                
                9,127
                
                
                
                (38,683
                )
                
                
                —Loss
      on derivative asset
                
                
                —
                
                
                
                (117,267
                )
                
                
                (419,907
                )
                
                
                (59,636
                )
                
                
                —Total
      other (expense) income
                
                
                —
                
                
                
                (83,843
                )
                
                
                (340,466
                )
                
                
                87,813
                
                
                
                12,734Loss
      before income taxes
                
                
                (13,893
                )
                
                
                (155,168
                )
                
                
                (423,278
                )
                
                
                (95,588
                )
                
                
                (16,668
                )Provision
      for income taxes
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —Net
      loss
                
                $
                (13,893
                )
                
                $
                (155,168
                )
                
                $
                (423,278
                )
                
                $
                (95,588
                )
                
                $
                (16,668
                )Loss
      per share (Note 3):Basic
                
                $
                (0.00
                )
                
                $
                (0.08
                )
                
                $
                (0.11
                )
                
                $
                (0.08
                )Diluted
                
                $
                (0.00
                )
                
                $
                (0.08
                )
                
                $
                (0.11
                )
                
                $
                (0.08
                )Weighted
      average number of shares:Basic
                
                
                4,669,210
                
                
                
                2,207,350
                
                
                
                3,822,380
                
                
                
                2,207,350Diluted
                
                
                4,669,210
                
                
                
                2,207,350
                
                
                
                3,822,380
                
                
                
                2,207,350
 
 
 See
accompanying notes.
  2
  AMASYS
Corporation
 (A
Development Stage Company)
 Statements
of Cash Flows
 (Unaudited)
  Nine
      Months Ended March 31,
                  
                  
                  Cumulative
                    From
      Entering
                    Development
                    Stage2007
                  
                  
                  2006
                  
                  
                  October
      1, 2006Operating
      activities:Net
      loss
                  
                  $
                  (423,278
                  )
                  
                  $
                  (95,588
                  )
                  
                  
                  
                  $
                  (16,668
                  )Adjustments
      to reconcile net (loss) income to net cash used in operating
      activities:Amortization
      of note receivable discount
                  
                  
                  (21,949
                  )
                  
                  
                  (69,195
                  )
                  
                  
                  
                  
                  —Loss
      on derivative asset
                  
                  
                  419,907
                  
                  
                  
                  59,636
                  
                  
                  
                  
                  
                  —Gain
      on sale of short-term investment
                  
                  
                  (26,905
                  )
                  
                  
                  (52,666
                  )
                  
                  
                  
                  
                  (12,733
                  )Equity
      in (earnings) losses
                  
                  
                  (9,127
                  )
                  
                  
                  38,683
                  
                  
                  
                  
                  
                  —Changes
      in operating assets and liabilities:Accounts
      receivable and prepaid expenses
                  
                  
                  (4,000
                  )
                  
                  
                  —
                  
                  
                  
                  
                  
                  (4,000
                  )Accounts
      payable and accrued expenses
                  
                  
                  (14,347
                  )
                  
                  
                  55,575
                  
                  
                  
                  
                  
                  (14,963
                  )Accounts
      payable, related party
                  
                  
                  5,023
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  5,023Net
      cash used in operating activities
                  
                  
                  (74,676
                  )
                  
                  
                  (63,555
                  )
                  
                  
                  
                  
                  (43,341
                  )Investing
      activities:Proceeds
      from sale of short-term investment
                  
                  
                  63,532
                  
                  
                  
                  76,267
                  
                  
                  
                  
                  
                  40,568Net
      cash provided by investing activities
                  
                  
                  63,532
                  
                  
                  
                  76,267
                  
                  
                  
                  
                  
                  40,568Financing
      activities:Proceeds
      from issuance of common stock
                  
                  
                  3,500
                  
                  
                  
                  —
                  
                  
                  
                  
                  
                  3,500Net
      cash provided by financing activities
                  
                  
                  3,500
                  
                  
                  
                  —
                  
                  
                  
                  
                  
                  3,500Net
      (decrease) increase in cash
                  
                  
                  (7,644
                  )
                  
                  
                  12,712
                  
                  
                  
                  
                  
                  727Cash
      at beginning of period
                  
                  
                  11,620
                  
                  
                  
                  1,024
                  
                  
                  
                  
                  
                  3,249Cash
      at end of period
                  
                  $
                  3,976
                  
                  
                  $
                  13,736
                  
                  
                  
                  
                  $
                  3,976
  See
accompanying notes.
  3
  1.           Basis
of Presentation
 
 The
accompanying interim financial statements of AMASYS Corporation (the “Company”
or “AMASYS”) are unaudited, but in the opinion of management reflect all
adjustments necessary for a fair presentation of the results for such
periods.  The results of operations for any interim period are not
necessarily indicative of results for the full year.  These financial
statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company’s Annual Report on Form 10-KSB for the
fiscal year ended June 30, 2006 filed with the Securities and Exchange
Commission on October 9, 2007.
 
 Development
stage activities
 
 Since the
Company redeemed and converted all of its outstanding Series A Preferred Stock
the end of September 2006, starting October 1, 2006 the Company has not
conducted any business operations. All of the Company's operating results and
cash flows reported in the accompanying financial statements from its inception
are considered to be those related to development stage activities and represent
the 'cumulative from inception' amounts from its development stage activities
required to be reported pursuant to Statements of Financial Accounting Standards
(SFAS) No. 7, Development Stage Enterprises.
 
 2.           Stock
Based Compensation
 
 SFAS No.
123 (“SFAS 123”), Accounting
for Stock-Based Compensation, requires that companies either recognize
compensation expense for grants of stock options and other equity instruments
based on fair value, or provide pro forma disclosure of net income (loss) and
net income (loss) per share in the notes to the financial
statements.  SFAS No. 148 (“SFAS 148”), Accounting for Stock-Based
Compensation-Transition and Disclosure, amends SFAS 123.  SFAS
148 provides alternative methods of transition for a voluntary change to the
fair value-based method of accounting for stock-based employee compensation and
amends the disclosure requirements of SFAS 123 to require disclosures in both
the annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results.
 
 No
compensation cost has been recognized under SFAS 123 for the Company’s employee
stock option plan.  Due to the fact that options granted in 1996 were
immediately exercisable, net income (loss) is the same under SFAS 123 and APB 25
for the three months ended March 31, 2007 and 2006.  On November 15,
2006, C.W. Gilluly, the president of the Company, exercised his options to
purchase 350,000 restricted shares (out of a total of 900,000 options
outstanding) and the Company issued 350,000 restricted shares to him. The
remaining 550,000 options expired on November 16, 2006.
 
 In
December 2004, the FASB issued SFAS No. 123R, (SFAS 123R), Share-Based Payment, amending
SFAS 123 to require companies to record as expense the fair value of
equity-based compensation, including stock options, over the applicable vesting
period.  SFAS 123R also requires more extensive disclosures concerning
stock options than required under current standards.  The new rule
applies to option grants made after adoption, as well as options that have not
vested at the date of adoption.  SFAS 123R became effective no later
than interim and annual periods beginning after December 15, 2005 for small
business issuers.  The adoption of SFAS 123R did not have a
significant effect on the Company’s financial statements as its stock options
are fully vested.
  4
  On
November 15, 2006, C.W. Gilluly, the president of the Company, exercised his
options to purchase 350,000 restricted shares (out of a total of 900,000 options
outstanding) and the Company issued 350,000 restricted shares to him. The
remaining 550,000 options expired on November 16, 2006.
 
 3.           Earnings
(Loss) Per Share
 
 The
following table sets forth the computation of basic and diluted earnings loss
per share:
 
 Three
      Months Ended
                  March
      31,
                
                
                Nine
      Months Ended
                  March
      31,2007
                
                
                2006
                
                
                2007
                
                
                2006Numerator:Net  loss
                
                $
                (13,893
                )
                
                $
                (155,168
                )
                
                $
                (423,278
                )
                
                $
                (95,588
                )Preferred
      stock dividends
                
                
                —
                
                
                
                (24,500
                )
                
                
                —
                
                
                
                (73,500
                )Numerator
      for basic earnings per share
                
                
                (13,893
                )
                
                
                (179,668
                )
                
                
                (423,278
                )
                
                
                (169,088
                )Effect
      of dilutive securities
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —Numerator
      for dilutive earnings per share
                
                $
                (13,893
                )
                
                $
                (179,668
                )
                
                $
                (423,278
                )
                
                $
                (169,088
                )Denominator:Denominator
      for basic earnings per share-weighted average shares
                
                
                4,669,210
                
                
                
                2,207,350
                
                
                
                3,822,380
                
                
                
                2,207,350Effect
      of dilutive securities:Convertible
      preferred stock
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —Denominator
      for diluted earnings per share
                
                
                4,669,210
                
                
                
                2,207,350
                
                
                
                3,822,380
                
                
                
                2,207,350Basic  loss
      per share
                
                $
                (0.00
                )
                
                $
                (0.08
                )
                
                $
                (0.11
                )
                
                $
                (0.08
                )Diluted
      loss per share
                
                $
                (0.00
                )
                
                $
                (0.08
                )
                
                $
                (0.11
                )
                
                $
                (0.08
                )
 
 For
all periods presented, the 900,000 shares issuable upon the exercise of stock
options have been excluded from the computation since their effect was not
dilutive.
 
 4.           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.
  5
  5.              Comprehensive
Income (Loss)
 
 Comprehensive
income (loss) is defined as the change in equity of a business enterprise during
a period from nonowner sources.  The Company’s comprehensive income
(loss) includes unrealized gains (losses) on its short-term investment, as well
as reclassification adjustments resulting from gains on sales of short-term
investments that were realized and included in net income in the current
period.  In accordance with paragraphs 18 through 20 of SFAS 130,
these gains 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 and nine months ended March 31, 2007 and
2006, the Company reclassified realized gains and recognized net unrealized
(losses) gains on its short-term investments as follows:
 
 Three
      Months Ended
                  March
      31,
                
                
                Nine
      Months Ended
                  March
      31,2007
                
                
                2006
                
                
                2007
                
                
                2006Net
      (loss) income
                
                $
                (13,893
                )
                
                $
                (155,168
                )
                
                $
                (423,278
                )
                
                $
                (95,588
                )Other
      comprehensive income:Unrealized
      (loss) gain on short-term investment
                
                
                —
                
                
                
                (8,459
                )
                
                
                (10,868
                )
                
                
                (54,174
                )Less:  reclassification
      adjustment for gains included in net (loss) income
                
                
                —
                
                
                
                (8,625
                )
                
                
                (26,905
                )
                
                
                (52,665
                )Net
      unrealized (loss) gain on short-term investment
                
                
                —
                
                
                
                (17,084
                )
                
                
                (37,773
                )
                
                
                (106,839
                )Other
      comprehensive income
                
                
                —
                
                
                
                (17,084
                )
                
                
                (37,773
                )
                
                
                (106,839
                )Comprehensive
      (loss) income
                
                $
                (13,893
                )
                
                $
                (172,252
                )
                
                $
                (461,051
                )
                
                $
                (202,427
                )
 
 6.           Income
Taxes
 
 The Company has incurred sufficient net
operating loss carry forwards and the Company will not incur any income tax
expense for the nine months ended March 31, 2007.
 
 7.           Commitments
and Contingencies
 
 On September 26, 2006, AMASYS signed an
agreement to acquire all of the shares of common stock of World Mineral
Corporation, a Nevada corporation (WMC) from WMC shareholders in exchange for an
aggregate of 14,775,000 newly issued shares of AMASYS common
stock.  To date the transaction has not been completed.
  6
  8.           Subsequent
Events
 
 On May
24, 2007, the Company borrowed $10,000 from each of Private Capital Group, LLC
and C.W. Gilluly (collectively the “Lenders”) at the WSJ Prime rate plus 1.75%
maturing on or before December 31, 2007.  In accordance with the loan
conditions, the Company also   granted 1,000,000 shares of
restricted common stock to each of the Lenders and issued warrants to each of
the Lenders for an additional 1,000,000 shares of restricted common stock at an
exercise price of $0.01 per share as inducement to Lenders to make the
loan.  Private Capital Group, LLC is affiliated with World Mineral
Corporation, which signed the Agreement and Plan of Share Exchange by and among
AMASYS Corporation, World Mineral Corporation and the shareholders of World
Mineral Corporation, dated September 26, 2006.
 
 On
November 15, 2007, the Company executed a $15,000 note with C.W. Gilluly, its
president, pursuant to which C.W. Gilluly advanced the Company $15,000 at a rate
of 12% per annum.
 
 On
January 24, 2008, the Company 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, the Company executed a $15,000 note with C.W. Gilluly, its president,
pursuant to which C.W. Gilluly advanced the Company $15,000 at a rate of 12% per
annum.
 
 There are
6,669,210 shares of common stock outstanding at June 30, 2007.
 
 Item
      2.
                Management’s
      Discussion and Analysis or Plan of
Operation
 
 Company
History
 
 AMASYS
Corporation (“AMASYS” or the “Company”) 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.
 
 On July
2, 2001, the Company filed the following reports with the Securities and
Exchange Commission (the “SEC”):  Annual Report on Form 10-K for the
year ended June 30, 2000; the Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000; the Quarterly Report on Form 10-Q for the quarter
ended December 31, 2000; and the Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001.  Prior to these filings, the Company had not
filed reports with the SEC except for a Form 8-A, filed in October 1996, for
registration of its common and preferred shares of stock, and a Form 12B-25,
filed in December 1996, in which it disclosed that it was unable to file its
Form 10-Q for the quarter ended December 31, 1996 because of the difficulty
associated with the preparation of the Company’s initial financial statements as
successor to Infotech.  The Annual Report on Form 10-K for the year
ended June 30, 2002 was timely filed.  The Annual Report on Form 10-K
for the year ended June 30, 2003 was filed on November 7, 2003.  The
Quarterly Report on Form 10-QSB for the quarter ended December 31, 2003 was
filed on February 20, 2004 pursuant to a Form 12b-25 filed on February 17,
2004.  Subsequent Form 10-QSBs were timely filed.  The
Annual Report on Form 10-KSB for the year ended June 30, 2004 was filed on
October 7, 2004 pursuant to a Form 12b-25 filed on September 27,
2004.  The Annual Report on Form 10-KSB for the year ended June 30,
2005 was filed on September 28, 2005 and was amended on January 19,
2007.  All subsequent quarterly reports of the Company through the
December 31, 2006 reporting period have been filed with the SEC, and the Company
intends to file all subsequent quarterly reports with the SEC as soon as
possible.
 
 7
  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, the Company 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 December 31, 2006, the
Company no longer had an equity interest in either the common stock of Comtex or
the Note from Comtex.
 
 The Note
was convertible as follows:
 
 For
      the Quarter Ended March 31,2007
                
                
                2006Face
      value of Note
                
                $
                -0-
                
                
                $
                856,954Conversion
      price per share
                
                $
                -0-
                
                
                $
                0.95Number
      of shares into which the Note is convertible
                
                
                -0-
                
                
                
                902,057Comtex
      share price
                
                $
                0.21
                
                
                $
                0.19
 
 During
October 2006, the Company sold the remaining 21,000 shares of common stock of
publicly-held Analex, a defense contractor specializing in systems engineering
and developing innovativetechnical
intelligence solutions in support of U.S. national
security.  Therefore, at March 31, 2007, the Company no longer had an
equity interest in Analex.
 
 Subsequent
Events
 
 On May
24, 2007, the Company borrowed $10,000 from each of Private Capital Group, LLC
and C.W. Gilluly (collectively the “Lenders”) at the WSJ Prime rate plus 1.75%
maturing on or before December 31, 2007.  In accordance with the loan
conditions, the Company also   granted 1,000,000 shares of
restricted common stock to each of the Lenders and issued warrants to each of
the Lenders for an additional 1,000,000 shares of restricted common stock at an
exercise price of $0.01 per share as inducement to Lenders to make the
loan.  Private Capital Group, LLC is affiliated with World Mineral
Corporation, which signed the Agreement and Plan of Share Exchange by and among
AMASYS Corporation, World Mineral Corporation and the shareholders of World
Mineral Corporation, dated September 26, 2006.
 
 8
  On
November 15, 2007, the Company executed a $15,000 note with C.W. Gilluly, its
president, pursuant to which C.W. Gilluly advanced the Company $15,000 at a rate
of 12% per annum.
 
 On
January 24, 2008, the Company 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, the Company executed a $15,000 note with C.W. Gilluly, its president,
pursuant to which C.W. Gilluly advanced the Company $15,000 at a rate of 12% per
annum.
 
 There are
6,669,210 shares of common stock outstanding at June 30, 2007.
 
 Financial
Condition
 
 The following discussion and analysis
of our financial condition and results of operations should be read in
conjunction with our financial statements and related notes appearing elsewhere
in this report.  This discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions.  Actual
results may differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including but not limited to the
risks discussed in this report.
 
 Going
Concern Uncertainties
 
 As of the date of this quarterly
report, there is doubt regarding our ability to continue as a going concern as
we have not generated sufficient cash flow to fund our business operations and
loan commitments.  Our future success and viability, therefore, are
dependent upon our ability to generate capital financing.  The failure
to generate sufficient revenues or raise additional capital may have a material
and adverse effect upon the Company and our shareholders.
 
 
 Critical
Accounting Policies
 
 Our interim financial statements were
prepared in conformity with accounting principles generally accepted in the
United States.  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:
 
 9
  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.
 
 As discussed in Item 2 (Overview), the
company has a note receivable-related party from Comtex.  In August
2001, the Note was amended to include a provision that allows the Company to
convert all or a portion of the outstanding principal amount, plus accrued
interest, into common stock of Comtex.  In accordance with SFAS 133,
the Company has accounted for this conversion option as an embedded
derivative.  As a result, the conversion option is carried at fair
value determined using a Black-Scholes model with changes in the fair value
being recognized currently in earnings.
 
 For the
past eleven years, the Company has engaged the services of a CPA firm to prepare
the derivative valuation.  The procedures utilized to compute the
derivative asset evaluation using the Black-Scholes model were originally
established by a major, international accounting firm.  These
procedures have been consistently followed since inception.
 
 The fair value of the derivative
instrument is estimated at the end of the period, using the following
assumptions:
 
 For
      the Quarter Ended March 31,2007
                2006Risk-free
      rate of interest
                0%
                4%Expected
      dividend rate
                0%
                0%Expected
      life, in years
                -0-
                2.25Per
      share market price of Comtex stock
                $0.21
                $0.19Conversion
      factor
                $0.00
                $0.95Number
      of shares under option
                -0-
                902,057Black-Scholes
      option price per share
                $0.00
                $0.05Derivative
      asset value
                $0.00
                $45,103
  10
  As of March
31, 2007, the balance of the derivative asset was $-0-.  For the
quarter ended March 31, 2006, we recognized other (expense) of $(117,267) on the
derivative asset for losses in the fair value of the conversion
feature.
 
 Short-Term
Investment
 
 Under Statement of Financial Accounting
Standards No. 115, Accounting
for Certain Investments in Debt and Equity Securities, the Company has
classified its investment in Analex as an “available-for-sale”
security.  As a result, the investment is carried at fair value, with
unrealized gains and losses, net of tax, reported as a separate component of
stockholders’ equity.  Realized gains and losses on sales of
securities are included in earnings using the specific identification
method.
 
 During the nine months ended March 31,
2007 and 2006, the Company reclassified unrealized gains of $26,905 and $52,666
on the available-for-sale security included as a separate component of
stockholders’ equity to realized gains due to the sale of
securities.
 
 Investment in Common
Stock-Related Party
 
 At March 31, 2007 and 2006, we had a 0%
and 16% ownership interest in Comtex.  The Company evaluated the
applicability of the provisions of FASB Interpretation No. 46, Consolidation of Variable Interest
Entities, (“FIN 46”), to its equity investment in
Comtex.  Specifically, the Company has determined that Comtex is not a
variable interest entity because the requirements of paragraphs 4(h) and 5 are
not met:
 
 (1)
                AMASYS
      did not participate in the design or redesign of
  Comtex;
 (2)
                Comtex’s
      activities neither involve nor are conducted on behalf of
      AMASYS;
 (3)
                AMASYS’s
      equity and subordinated debt are less than half of the total of Comtex’s
      equity, subordinated debt and other subordinated financial support, based
      on the fair values of the interest in
Comtex;
 (4)
                Comtex’s
      activities are not primarily related to securitizations or other forms of
      asset-backed financing or single-lessee leasing
    arrangements.
 
 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 have significantly influenced the operations of
Comtex since (i) if we converted our Note 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 have a combined ownership interest in Comtex of
37%, (iv) our Chairman is the Chairman of Comtex.
 
 At June
30, 2006, the Company’s equity share of Comtex losses had exceeded the Company’s
basis in the investment in common stock – related party accounted for under
equity method accounting.  Additional losses in excess of basis were
accounted for as an adjustment to the basis of other investments in the investee
(note receivable from Comtex) held by the Company in accordance with EITF 98-13
“Accounting by an Equity
Method Investor for Investee Losses When the Investor Has Loans to and
Investments in Other Securities of the Investee.”  Subsequent
investee income has been recorded as adjustments to the adjusted basis of the
other investments in the reverse order of the application of the investor’s
share of the investee’s losses.
 
 11
  On
September 25, 2006, the Company 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 March 31, 2007, the
Company no longer had an equity interest in either the common stock of Comtex or
the Note from Comtex.  During the three and nine months ended March
31, 2006, we recognized other (expense) of $(19,690) and $(38,683) 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.
 
 Results of
Operations
 
 Comparison of the three
months ended March 31, 2007 to the three months ended March 31,
2006
 
 The Company had a net
loss of $(13,893) during the three months ended March 31, 2007 compared to net
loss of $(155,168) during the three months ended March 31, 2006. The decrease in
the net loss is explained below.
 
 Operating costs and
expenses.  Operating costs and expenses decreased $57,432 from
$71,325 at March 31, 2006 to $13,893 at March 31, 2007 due primarily to a
decrease in legal and other professional expenses.  Additionally, the
Company no longer pays the CEO/President nor the Secretary consulting fees since
the Company exchanged the equity investment in Comtex common stock and the note
receivable from Comtex for the AMASYS Series A Preferred stock.  A
further reduction of costs comes from the resignation of one member of the Board
of Directors.
 
 Other income
(expense):  During the three months ended March 31, 2007, the
Company recognized neither income nor other expense, having eliminated all
sources of Other Income (Expense) upon exchange of the Comtex common stock and
the Comtex Note for the Series A Preferred stock, and the final liquidation of
the investment in Analex stock to finance operations in previous
quarters.
  12
  Comparison of the nine
months ended March 31, 2007 to the nine months ended March 31,
2006
 
 The Company had a net loss of
$(423,278) during the nine months ended March 31, 2007 compared to net loss of
$(95,588) during the nine months ended March 31, 2006.  The increase
in net loss is explained below.
 
 Operating costs and
expenses.  Operating costs and expenses decreased by $100,589
to $82,812 during the nine months ended March 31, 2007 from $183,401 for the
same period in 2006 due primarily to decreases in legal fees and other
professional expenses.  During the nine months ended March 31, 2006,
the Company incurred large expenses related to the SEC review of previously
filed reports, a change in audit firms, administrative costs associated with
exploring the potential acquisition of WMC and redemption of the Series A
shareholders, coupled with increases in general office expenses to support those
efforts.  Those costs were not recurring in the same period ending
March 31, 2007.  Additionally, the Company no longer pays the
CEO/President nor the Secretary consulting fees since the Company exchanged the
equity investment in Comtex common stock and the note receivable from Comtex for
the AMASYS Series A Preferred stock.  A further reduction of costs
comes from the resignation of one member of the Board of Directors.
 
 Other income
(expense):  The decrease in operating costs and expenses was
offset by a substantial decrease in other income (expense) of $(428,279) to
$(340,466) during the nine months ended March 31, 2007 from $87,813 for the same
period in 2006.   This change was due primarily to increased
losses ($360,271) from the fair value of the conversion feature of the Comtex
Note during the first quarter for fiscal year 2007.  Additionally, as
a result of the exchange of the Comtex common stock and the Note for the AMASYS
Series A Preferred stock in September 2006, the Company no longer recognizes a
share of equity in the earnings of Comtex, nor the accretion of the discount on
the Note into income, nor does the Company receive interest income from the
Note.
 
 Liquidity and Capital
Resources
 
 The Company had net
working capital of $(16,693) at March 31, 2007.  The Company has had
minimal operating activity since commencing operations in 1996 and has not had
any other uses of funds.  However, the Company is not current on its
trade payables, including amounts owed to stockholders and continues to raise
monies from short-term loans from individuals.
 
 Cautionary
Statements Concerning Forward-Looking Statements
 
 Except for the historical information
contained herein, the matters discussed in this Form 10-QSB include
forward-looking statements within the meaning of Section 21E of the Securities
and Exchange Act of 1934.  These forward-looking statements may be
identified by reference to a future period or by use of forward-looking
terminology such as “anticipate”, “expect”, “could”, “may” or other words of a
similar nature.  Forward-looking statements, which the Company
believes to be reasonable and are made in good faith, are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those expressed in any forward-looking statement made by, or on behalf of,
the Company.
  13
  Item
3.                                Controls
and Procedures
 
 Under the supervision and with the
participation of our Chief Executive Officer/Chief Financial Officer, we
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-15 (e) and 15d-15(e) under the
Exchange Act) as of the end of the period covered by this
report.  Based upon that evaluation, the Chief Executive Officer/Chief
Financial Officer concluded that, our disclosure controls and procedures were
effective to ensure that information required to be disclosed in the reports
that the Company files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission’s rules and forms.
  14
  PART
II
 OTHER
INFORMATION
 
 Item
      1.
                Legal
      ProceedingsAMASYS
      has no outstanding, material legal proceedings.Item
      2.
                Unregistered
      Sales of Equity Securities and Use of ProceedsNone.Item
      3.
                Defaults
      Upon Senior SecuritiesNone.Item
      4.
                Submission
      of Matters to a Vote of Security HoldersNone.Item
      5.
                Other
      InformationNone.Item
      6.
                Exhibits
      and Reports on Form 8-KSeebelow.
  15
  SIGNATURES
 
 
 Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, there unto
duly authorized.
 
 Date:  July
23, 2008
 
 
 AMASYS
CORPORATION
 
 
 By:
                /s/ C.W.
      Gilluly,
      Ed.D.C.W.
      Gilluly, Ed.D.President
      and Chief Executive Officer(Principal
      Executive Officer andPrincipal
      Financial and Accounting Officer)