CAPSTONE FINANCIAL GROUP, INC. - FORM 10-Q

Attached files

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EX-32.1 - EX. 32.1 - CAPSTONE FINANCIAL GROUP, INC.	ex32-1.htm
EXCEL - IDEA: XBRL DOCUMENT - CAPSTONE FINANCIAL GROUP, INC.	Financial_Report.xls
EX-31.1 - EX. 31.1 - CAPSTONE FINANCIAL GROUP, INC.	ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-54905

CREATIVE APP SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

Nevada		46-0684479
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3965 Paula Street, La Mesa, CA		91941
(Address of principal executive offices)		(Zip Code)

(619) 699-9669

(Registrant’s telephone number, including area code)

Copies of Communications to:

Stoecklein Law Group, LLP

401 West A Street

Suite 1150

San Diego, CA 92101

(619) 704-1310

Fax (619) 704-1325

Indicate by check mark whether the issuer (1) 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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Ruble 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes x No ¨

The number of shares of Common Stock, $0.001 par value, outstanding on August 6, 2013 was 4,510,000 shares.

CREATIVE APP SOLUTIONS, INC.

QUARTERLY PERIOD ENDED JUNE 30, 2013

Index to Report on Form 10-Q

		Page No.
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4T.	Controls and Procedures	16

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	17

Item1A.	Risk Factors	17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17

Item 3.	Defaults Upon Senior Securities	18

Item 4.	Mine Safety Disclosures	18

Item 5.	Other Information	18

Item 6.	Exhibits	18

	Signatures	19

PART I – FINANCIAL INFORMATION

CREATIVE APP SOLUTIONS, INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS (unaudited)

	June 30,			December31,
	2013			2012
ASSETS

Current assets:
Cash	$	2,959		$	6,140
Total current assets		2,959			6,140

Total assets	$	2,959		$	6,140


LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Accounts payable	$	$449		$	300
Total current liabilities		449			300

Long term liabilities:
Accrued interest payable		2,812			501
Accrued interest payable - related party		580			283
Line of credit		92,200			35,000
Notes payable - related party		10,000			10,000
Total long term liabilities		105,592			45,784

Total liabilities		106,041			46,084

Stockholders' deficit:
Preferred stock, $0.001 par value, 10,000,000 shares
authorized, no and no shares issued and outstanding
as of June 30, 2013 and December 31, 2012, respectively		-			-
Common stock, $0.001 par value, 100,000,000 shares
authorized, 4,510,000 and 4,010,000 shares issued and outstanding
as of June 30, 2013 and December 31, 2012, respectively		4,510			4,010
Additional paid in capital		49,990			490
Deficit accumulated during development stage		(157,582	)		(44,444	)
Total stockholders' deficit		(103,082	)		(39,944	)

Total liabilities and stockholders' deficit	$	2,959		$	6,140





See Accompanying Notes to Financial Statements.

CREATIVE APP SOLUTIONS, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS (unaudited)

	For the			For the			Inception
	three months			six months			(July 10, 2012)
	ended			ended			to
	June 30,			June 30,			June 30,
	2013			2013			2013

Revenue	$	-		$	-		$	-

Operating expenses:
General and administrative		752			1,433			2,117
Professional fees		45,148			109,096			152,072
Total operating expenses		45,900			110,529			154,189

Other expenses:
Interest expense		1,333			2,311			2,812
Interest expense - related party		150			298			581
Total other expense		1,483			2,609			3,393

Net loss	$	(47,383	)	$	(113,138	)	$	(157,582	)


Weighted average number of common
shares outstanding - basic		4,510,000			4,358,066

Net loss per share - basic	$	(0.01	)	$	(0.03	)

See Accompanying Notes to Financial Statements.

CREATIVE APP SOLUTIONS, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS (unaudited)


	For the			Inception
	six months			(July 10, 2012)
	ended			to
	June 30,			June 30,
	2013			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(113,138	)	$	(157,582	)
Adjustments to reconcile net income
to net cash used in operating activities:
Stock issued for services		-			500
Changes in operating assets and liabilities:
Increase in accounts payable		149			449
Increase in accrued interest payable		2,311			2,812
Increase in accrued interest payable - related party		297			580

Net cash used in operating activities		(110,381	)		(153,241	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit		61,500			96,500
Repayments on line of credit		(4,300	)		(4,300	)
Proceeds from notes payable - related party		-			10,000
Proceeds from sale of common stock, net of offering costs		50,000			54,000

Net cash provided by financing activities		107,200			156,200

NET CHANGE IN CASH		(3,181	)		2,959

CASH AT BEGINNING OF PERIOD		6,140			-

CASH AT END OF PERIOD	$	2,959		$	2,959

SUPPLEMENTAL INFORMATION:
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-

NON-CASH FINANCING ACTIVITIES:
Stock issued for services	$	-		$	500




See Accompanying Notes to Financial Statements.

CREATIVE APP SOLUTIONS, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2012 and notes thereto included in the Company’s 10-K annual report. The Company follows the same accounting policies in the preparation of interim reports.

Results of operations for the interim period are not indicative of annual results.

Organization

The Company was incorporated on July 10, 2012 (Date of Inception) under the laws of the State of Nevada, as Creative App Solutions, Inc.

The Company has not commenced significant operations and, in accordance with ASC Topic 915, the Company is considered a development stage company.

Nature of operations

The Company will design and sell mobile application for the Apple and Android platforms.

Cash and cash equivalents

For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.

Revenue Recognition

We recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is probable. As of June 30, 2013, the Company has not generated any revenue from operations.

The Company will record revenue when it is realizable and earned and the services have been rendered to the customers.

Advertising Costs

Advertising costs are anticipated to be expensed as incurred; however there were no advertising costs included in general and administrative expenses from Inception (July 10, 2012) to June 30, 2013.

Fair value of financial instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

CREATIVE APP SOLUTIONS, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair value of financial instruments (continued)

Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

Stock-based compensation

The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

Earnings per share

The Company follows ASC Topic 260 to account for the earnings per share. Basic earning per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation. As of June 30, 2013, there were no dilutive common shares outstanding.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.

CREATIVE APP SOLUTIONS, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent pronouncements

The Company has evaluated the recent accounting pronouncements through July 2013 and believes that none of them will have a material effect on the company’s financial statements.

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in the development stage and, accordingly, has not yet generated revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start up costs and expenses. As a result, the Company incurred accumulated net losses from Inception (July 10, 2012) through the period ended June 30, 2013 of ($157,582). In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing.

The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

NOTE 3 – LINE OF CREDIT

On July 15, 2012, the Company executed a revolving credit line with third party for up to $200,000. The unsecured line of credit bears interest at 6% per annum with principal and interest due on July 16, 2015. As of June 30, 2013, an amount of $92,200 has been used for general corporate purposes with a remaining balance of $107,800 available. As of June 30, 2013, the balance of accrued interest was $2,812.

Interest expense for the three months ended June 30, 2013 was $1,333. Interest expense for the six months ended June 30, 2013 was $2,311.

NOTE 4 – NOTES PAYABLE – RELATED PARTY

On July 12, 2012, the Company executed a promissory note with a related third party for $10,000. The unsecured loan bears interest at 6% per annum with principal and interest due on July 13, 2015. As of June 30, 2013, the balance of accrued interest was $580.

Interest expense – related party for the three months ended June 30, 2013 was $150. Interest expense – related party for the six months ended June 30, 2013 was $298.

CREATIVE APP SOLUTIONS, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 5 – STOCKHOLDERS’ DEFICIT

The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock and 10,000,000 shares of its $0.001 par value preferred stock.

Common Stock

On February 25, 2013, the Company issued a total of 500,000 shares of common stock for cash totaling $50,000.

On April 16, 2013, the Company issued 50,000 shares of common stock to a former officer of the Company for services to be rendered valued at $5,000. On June 6, 2013, the Company cancelled 50,000 shares of common stock due to non-performance of services and the individual was terminated.

NOTE 6 – WARRANTS AND OPTIONS

As of June 30, 2013, there were no warrants or options outstanding to acquire any additional shares of common stock.

NOTE 7 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date the financial statements are issued and noted that there are no material subsequent events to disclose.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. You should, however, consult further disclosures we make in future filings of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

·	our current lack of working capital;

·	inability to raise additional financing;

·	the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;

·	deterioration in general or regional economic conditions;

·	adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

·	inability to efficiently manage our operations;

·	inability to achieve future sales levels or other operating results; and

·	the unavailability of funds for capital expenditures.

For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Item 1A. Risk Factors” in this document.

Throughout this Quarterly Report references to “we”, “our”, “us”, “Creative”, “the Company”, and similar terms refer to Creative App Solutions, Inc.

AVAILABLE INFORMATION

We file annual, quarterly and other reports and other information with the SEC. You can read these SEC filings and reports over the Internet at the SEC's website at www.sec.gov or on our website at www. creativeapps.biz. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330 for further information on the operations of the public reference facilities. We will provide a copy of our annual report to security holders, including audited financial statements, at no charge upon receipt to of a written request to us at Creative App Solutions, Inc., 3965 Paula Street, La Mesa, CA, 91941.

OVERVIEW AND OUTLOOK

Business Development

Creative App Solutions, Inc. is a development stage company incorporated in the State of Nevada in July of 2012. We were formed to engage in the business of designing and selling mobile applications for the Apple® and Android® platforms. To date, our business activities have been limited to completing the registration of our common stock on Form S-1, maintaining our reporting requirements, and to raising capital through our registered offering for the furtherance of our proposed business plan. We must raise capital to support our ongoing existence while we attempt to develop our business. We cannot assure you that we will be able to complete additional financing successfully and failure to do so would result in business failure and a complete loss of any investment made into the Company.

We have designed a website which will be a primary source of information for the general public of the nature of our business. Additionally, we have begun our initial writing, design and programming of our first mobile app. During our initial month of formation we concentrated our energies on analyzing the viability of our business plan, and establishing our business model, including researching the items needed to secure a trademark and develop relationships with mobile app retailers. Our president, Mr. Faught, has assisted and completed the design of the Company’s initial logo. We do not presently have a market-ready product, and we currently do not have any customers. As such, we have generated no revenues.

We are attempting to build Creative a successful designer of mobile app for smart phones and other mobile devices. In order to generate revenues during the next twelve months, we must:

1. Maintain our website – We believe that the internet is a great marketing tool not only for providing information on our Company, but also for providing current information on our upcoming apps as well as industry related information regarding new technology and device updates. We have developed our preliminary website, and are in the process of developing a more advanced site where we can provide a more detailed section regarding proprietary app designs and features.

2. Develop and implement a product development timeline – We will require the implementation of a detailed timeline to ensure we produce a marketable mobile application. These key areas will need to be addressed to assist in the assurance of Creative’s success:

·	efficient design and programming writing;

·	extensive Beta testing through friends and family network, or eventually through current users;

·	timely and useful downloadable updates;

·	marketable launch through third party retailer or through our website.

3. Develop and implement a marketing plan – Our planned revenue streams will require an extensive list of contacts to allow for the marketing of our mobile apps. Awareness of the revenue potential we will be able to deliver through our app sales, will be delivered through the implementation of a number of marketing initiatives including search engine optimization, website completion, hosted video demonstrations, third party service contacts, tradeshow attendance, as well as blogging and other forms of social media which are driven by technology and mobile flexibility. These efforts and the resulting awareness will be key drivers behind the success of our revenue producing operations.

On January 10, 2013, our Registration Statement on Form S-1 was declared effective, registering 500,000 common shares at a value of $0.10 per share.

On February 25, 2013, we completed our initial public offering through the sale of 500,000 shares of common stock, resulting in gross proceeds of $50,000.

On April 9, 2013, we received notice from our market maker that we were assigned the symbol “CAPP” to initiate trading on the Over-the-Counter Quotation Board (OTC:QB).

On April 16, 2013, the Board of Directors unanimously appointed Ms. Norma Casillas to serve as the Secretary and Treasurer of the Company.

On June 6, 2013, the Board of Directors terminated Ms. Norma Casillas from her position as Secretary of the Registrant, effective immediately. Additionally, on this date, the Board of Directors approved the cancelation of 50,000 shares of common stock issued to Ms. Casillas as compensation for her services due to her failure to perform and act as an effective Secretary.

On June 6, 2013, the Board of Directors unanimously appointed Mr. Matthew Lane as Secretary of the Company, effectively filling the vacancy left by his predecessor.

OUR BUSINESS

Creative has created a business plan built upon designing and selling mobile apps for smart phones and other mobile platforms such as tablets. We are striving to design and develop applications which will not only improve workforce productivity, but as is the case with our initial app, NewtCenter™, provide educational based apps focusing on agriculture and horticulture.

NewtCenter™ is an agriculture/horticulture program for Windows, Mac, iOS, Android and Windows Mobile operating systems. This application is database driven using an online Cloud database for active live syncing for the user’s data and accounts. The application’s general focus is to enable farmers, gardeners, and even students to easily study, track, log and even take pictures to track the results of varying nutrient, environmental combinations and conditions. This will therefore allow for long term review and a better long term success rate for agriculturists and horticulturists by utilizing the combination of data collected and reviewing the NewtCenter™ datasheets that were created.

Market and Revenue Generation

In order to generate revenues during the next twelve months, we must:

1. Develop and implement a marketing plan – Creative’s planned revenue streams will require establishing a web presence and improved visibility within the public and private sectors. A major key factor in the Company’s success will be the building of third party relationships within the mobile technology industry.

2. Develop and implement a comprehensive consumer information website – For the foreseeable future, the Company’s website (www.creativeapps.biz) will be a primary asset and a potential key source of revenue generation, as well as Company information. Currently, management is formulating its plan on how best to employ its resources to expand and improve the site. We are working to add to the functionality of the site including: announcements of new apps, updates on our future app development, updates on mobile technology, and blogs focused on the mobile app market and desires of end-users. Additionally, we need to optimize the site for search engine rank, as well as renew the look and feel of the site to coincide with our objectives for the Creative App Solutions brand. We have not yet recognized revenues from the website nor is there any indication that we ever will recognize direct revenues from our website. We do not presently have a market-ready product, nor do we have any customers; thus have generated no revenues. Our operations, to date, have been devoted primarily to startup and development activities, which include the following:

·	Formation of the Company;

·	Development of Company logo;

·	Development of our business plan;

·	Preparation for Application for a Trademark;

·	Launching of our preliminary website; and

·	Begin the design and development of our initial mobile application.

Competition

There are many companies who compete directly with our products and services. These companies may already have an established market in our industry. Most of these companies have significantly greater financial and other resources than us and have been developing their products and services longer than we have been developing ours. Additionally, there are not significant barriers to entry in our industry and new companies may be created that will compete with us and other, more established companies who do not now directly compete with us, may choose to enter our markets and compete with us in the future.

Intellectual Property

At this time our only intellectual property is the source code which is being written to run our first application. We will rely on a combination of trade secret and copyright laws, restrictions on disclosure, to protect it and any other intellectual property rights which may develop during the time of and upon completion of our initial source code. However, we intend to file a trademark application for our logo Creative App Solutions and our first app NewtCenter™.

Government Regulation

Our activities are not currently subject to any particular regulations by governmental agencies other than those routinely imposed on corporate businesses. However, we cannot predict the impact of future regulations on us.

Employees

We are a development stage company and as of June 30, 2013 have only two part-time employees, Ryan Faught, who is our President and sole Director, and Matthew Lane, who is our Secretary and Treasurer. As of June 30, 2013 they devoted approximately 15-20 hours a week to Creative App Solutions.

Going Concern

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. As of June 30, 2013 the Company had an accumulated deficit of $157,582. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

The Company is currently contemplating an offering of its equity or debt securities to finance continuing operations. There are no agreements or arrangements currently in place or under negotiation to obtain such financing, and there are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations.

RESULTS OF OPERATIONS

Results of Operations for the Three Months Ended June 30, 2013

In the three months ended June 30, 2013, we did not generate any revenues.

Operating expenses during the three months ended June 30, 2013 were $45,900, $45,148 of which was professional fees associated with legal and accounting expenses and the remaining $752 was related to general and administrative costs. In comparison, operating expenses from inception (July 10, 2012) to December 31, 2012 were $43,660, of which $42,976 was in professional fees and the remaining $684 was related to general and administrative costs. The increase in professional fees is due to increased legal and accounting work.

Results of Operations for the Six Months Ended June 30, 2013

In the six months ended June 30, 2013, we did not generate any revenues.

Operating expenses during the six months ended June 30, 2013 were $110,529, $109,096 of which was professional fees associated with legal and accounting expenses and the remaining $1,433 was related to general and administrative costs. In comparison, operating expenses from inception (July 10, 2012) to June 31, 2013 were $154,189 of which $152,072 was in professional fees and the remaining $2,117 was related to general and administrative costs. The increase in professional fees is due to increased legal and accounting work.

Liquidity and Capital Resources

As of June 30, 2013, we had $2,959 in cash. Since inception, we have financed our cash flow requirements through issuance of common stock. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending receipt sales from our mobile apps. In addition we have secured a line of credit with E. Venture Resources, Inc., for up to $200,000. As of June 30, 2013, we have utilized $92,200 of the $200,000. The terms of the line of credit provide for an interest rate of 6% per annum with all accrued balances due and payable on July 16, 2015. Additionally, Ryan Faught loaned $10,000 to the Company. The loan from Mr. Faught bears interest at 6% per annum and is due on July 13, 2015. In the future we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital.

Even though we intend to begin generating revenues, we can make no assurances and therefore we may incur operating losses in the next twelve months. Our limited operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving business model, advancement of technology and the management of growth. To address these risks, we must, among other things, continue our development of relevant applications, stay abreast of mobile app trends, as well as implement and successfully execute our business and marketing strategy. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

The following table summarizes total current assets, total current liabilities and working capital at June 30, 2013 compared to December 31, 2012.

					Increase / (Decrease)
	June 30, 2013		December 31, 2012		$		%

Current Assets	$	2,959	$	6,140	$	(3,181)		(51.8)	%

Current Liabilities	$	449	$	300	$	149		(49.66)	%

Working Capital (deficit)	$	2,510	$	5,840	$	(3,330)		(57.02)	%

Liquidity is a measure of a company’s ability to meet potential cash requirements. We have historically met our capital requirements through the issuance of stock and by borrowings. In the future, we anticipate we will be able to provide the necessary liquidity needed from the revenues generated from operations but there is no assurance that this will happen.

Since inception, we have financed our cash flow requirements through issuance of common stock, and lines of credit. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations. Additionally we anticipate obtaining additional financing to fund operations through additional common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital.

We anticipate that we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks, we must, among other things, develop a customer base, develop our marketing strategy, continually develop and upgrade our website, provide, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

Operating activities

Net cash used in operating activities was $110,381 for the period ended June 30, 2013, as compared to $42,860 used in operating activities from inception (July 10, 2012) to December 31, 2012. The increase in net cash used in operating activities was primarily due to an increase in professional fees, as a result of increased legal work.

Investing activities

Net cash used in investing activities was $0 for the period ended June 30, 2013 as compared to $0 used in investing activities from inception (July 10, 2012) to December 31, 2012.

Financing activities

Net cash provided by financing activities for the period ended June 30, 2013 was $107,200, as compared to $49,000 from inception (July 10, 2012) to December 31, 20123. The increase of net cash provided by financing activities was mainly attributable to capital provided through previously executed line of credit.

On July 12, 2012, the Company executed a promissory note with Ryan Faught. The unsecured loan is due upon on July 13, 2015 and bears interest at 6%. As of June 30, 2013, we have utilized $10,000 of the $10,000.

We believe that cash flow from operations will not meet our present and near-term cash needs and thus we will require additional cash resources, including the sale of equity or debt securities, to meet our planned capital expenditures and working capital requirements for the next 12 months. We will require additional cash resources due to changed business conditions, finalization and launch of our website, implementation of our strategy to expand our sales and marketing initiatives, increase brand and services awareness. If our own financial resources and then current cash-flows from operations are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to expand our business operations and could harm our overall business prospects.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

This item is not applicable as we are currently considered a smaller reporting company.

Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Principal Executive Officer and Chief Financial Officer, Ryan Faught, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the period covered by this Report. Based on that evaluation, it was concluded that our disclosure controls and procedures are designed to operate at a reasonable assurance level which is effective in providing reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not a party to any material legal proceedings.

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On April 17, 2013, in connection with the appointment of Ms. Casillas, we issued 50,000 shares of our common stock as compensation for her services as the Secretary and Treasurer of the Company. The 50,000 shares were issued at a value of $0.10, for a total value of $5,000.

On June 6, 2013, in connection with the termination of Ms. Casillas, the Board of Directors approved the cancelation of 50,000 shares of common stock issued to Ms. Casillas as compensation for her services due to her failure to perform and act as an effective Secretary.

We believe that the issuance and sale of the above securities were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2), Regulation D and/or Regulation S. The securities were issued directly by us and did not involve a public offering or general solicitation. The recipient of the securities was afforded an opportunity for effective access to files and records of our company that contained the relevant information needed to make her investment decision, including our financial statements and 34 Act reports. We reasonably believed that the recipient, immediately prior to issuing the securities, had such knowledge and experience in our financial and business matters that she was capable of evaluating the merits and risks of its investment. The recipient had the opportunity to speak with our management on several occasions prior to her investment decision. There were no commissions paid on the issuance and sale of the shares.

Use of Proceeds

On October 17, 2012, we filed a Registration Statement with the Securities and Exchange Commission wherein we registered 500,000 shares of our common stock. Our Registration Statement became effective on January 10, 2013. On February 25, 2013, we completed our offering for 500,000 shares of our common stock, resulting in gross proceeds of $50,000. The common stock sold in our initial public offering to 40 investors was issued on February 25, 2013.

The amount of expenses incurred in connection with the issuance and distribution of the securities as of the date of this report was $50,000, of which $43,877 was professional fees, $4,300 was for loan repayment, and the remaining $1,823 was general and administrative.

Issuer Purchases of Equity Securities.

We did not repurchase any of our equity securities from the time of our inception through the period ended June 30, 2013.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit No.		Description

31.1		Certification of Principal Executive Officer & Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certifications of Principal Executive Officer & Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase

101.DEF*		XBRL Taxonomy Extension Definition Linkbase

101.LAB*		XBRL Taxonomy Extension Label Linkbase

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase

*XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURE

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.

	CREATIVE APP SOLUTIONS, INC.


Date: August 8, 2013	By:	/S/ Ryan Faught
		Ryan Faught
		President
		(Principal Executive Officer and duly authorized signatory)

CAPSTONE FINANCIAL GROUP, INC. - FORM 10-Q - August 8, 2013

Attached files

CAPSTONE FINANCIAL GROUP, INC. Reports