UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE QUARTERLY PERIOD ENDED February 28, 2018

 

Commission file number 333-207100

 

CAPSTONE SYSTEMS INC.

(Exact name of registrant as specified in its charter)

 

Nevada

(State or other jurisdiction of incorporation or organization)

 

Yun Gu Hui, International Financial Center

42nd FL, Hangzhou Str 1, Qinhuai District

Nanjing, Jiangsu Province, China

(Address of principal executive offices, including zip code)

 

025-57625882

(Telephone number, including area code)

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES x NO o

 

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 o

 

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

 

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x
		Emerging growth company	☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 5,085,000 shares as of April 24, 2018

 

ITEM 1. FINANCIAL STATEMENTS

 

CAPSTONE SYSTEMS, INC.

REVIEWED FINANCIAL STATEMENTS

FOR THE YEAR AND NINE MONTHS ENDED MAY 31, 2017 AND

FEBRUARY 28, 2018

 

INDEX TO FINANCIAL STATEMENTS

TABLE OF CONTENTS

 

		Page No.
Report of Independent Registered Public Accounting Firm			3
Balance Sheets			4
Statements of Operations			5
Statements of Cash Flows			6
Notes to Financial Statements		7 – 12

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of Capstone Systems Inc.

 

Results of Review of Interim Financial Information

 

We have reviewed the condensed balance sheet of Capstone Systems Inc. (the “Company”) as of February 28, 2018, and the related condensed statements of income and comprehensive income for the three-month and nine-month period ended February 28, 2018, and condensed statements of cash flows for the nine-month period then ended, and the related notes (collectively referred to as the interim financial statements). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Review Results

 

These interim financial statements are the responsibility of the Company’s management. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

 

San Mateo, CA April 22, 2018

WWC, Professional Corporation Certified Public Accountants

 

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CAPSTONE SYSTEMS, INC.

UNAUDITED CONDENSED BALANCE SHEETS

AS OF MAY 31, 2017 AND FEBRUARY 28, 2018

 

		February 28,				May 31,
		2018				2017
						(Audited)
ASSETS
Current assets
Cash		$	-			$	4,295
Total current assets			-				4,295
Fixed assets, net			-				6,026
Total assets		$	-			$	10,321
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current liabilities
Accounts payable & accrued liabilities		$	5,500			$	-
Loan payable - related party			-				100
Due to related party			23,957
Income tax payable			-				2,089
Total liabilities			29,457				2,189
Commitments and Contingencies
Stockholders’ deficiency
Common stock, $0.001 par value, 75,000,000 shares authorized, 5,085,000 shares issued and outstanding, respectively			5,085				5,085
Additional paid-in capital			35,781				42,315
Accumulated deficit			(70,323	)			(39,268	)
Total stockholders’ deficiency			(29,457	)			8,132
Total liabilities and stockholders’ deficiency		$	-			$	10,321

 

See accompanying notes to financial statements.

 

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 CAPSTONE SYSTEMS, INC.

UNAUDITED CONDENSED STATEMENT OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED FEBRUARY 28, 2018 AND 2017

 

		For the				For the				For the				For the
		Three Months Ended				Three Months Ended				Nine Months Ended				Nine Months Ended
		February 28, 2018				February 28, 2017				February 28, 2018				February 28, 2017
REVENUES
Sales:
Sales		$	-			$	72,722			$	30,258			$	143,897
Total Income			-				72,722				30,258				143,897
Cost of Goods Sold:
Purchases		$	-			$	53,045			$	29,549			$	118,018
Total Cost of Goods Sold			-				53,045				29,549				118,018
Gross Profit			-				19,677				709				25,879
Operating Expenses:
General and administrative		$	23,457			$	2,426			$	33,852			$	22,568
Product Development			-				-				-				43,429
Total Expenses			23,457				2,426				33,852				65,997
Other Income/(Expense):
Other Income			-				-				2,089				-
Income Before Income Tax		$	(23,457	)		$	17,251			$	(31,055	)		$	(40,118	)
Provision for Income Tax		$	-			$	-			$	-			$	-
Net Income or (Loss) for the year			(23,457	)			17,251				(31,055	)			(40,118	)
Net gain (loss) per share:
Basic and diluted		$	(0.001	)		$	0.0034			$	(0.001	)		$	(0.0079	)
Weighted average number of shares outstanding:
Basic and diluted			5,085,000				5,085,000				5,085,000				5,085,000

 

See accompanying notes to financial statements.

 

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CAPSTONE SYSTEMS, INC.

UNAUDITED CONDENSED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED FEBRUARY 28, 2018 AND 2017

 

		2018				2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)		$	(31,055	)		$	(40,118	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			-				200
Deferred Cost of Goods Sold			-				34,801
Unearned Revenue			-				(38,205	)
Increase in accrued liabilities			2,803				-
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES		$	(28,252	)		$	(43,322	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property			-				-
NET CASH (USED IN) INVESTING ACTIVITIES			-				-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock			-				43,400
Due to related party			23,957
NET CASH PROVIDED BY FINANCING ACTIVITIES			23,957				43,400
NET (DECREASE)/INCREASE IN CASH		$	(4,295	)		$	78
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD		$	4,295			$	223
CASH AND CASH EQUIVALENTS – ENDING OF PERIOD		$	-			$	301
NON-CASH FINANCING ACTIVITIES
Reduction in additional paid in capital as a result of assignment of assets and liabilities to former shareholder			6,534				-

 

See accompanying notes to financial statements.

 

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CAPSTONE SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED FEBRUARY 28, 2018 AND 2017

 

NOTE 1 – Organization and Basis of Presentation

 

Capstone Systems Inc. (the “Company”) is a for profit corporation established under the Corporation Laws of the State of Nevada on April 1, 2015. The address of our business office is 25/F, First Trade Building, 985 Dong Fang Road, Pudong Xinqu, Shanghai, China, 200000. We maintain our statutory registered agent’s office at 525 Swallow Cove, Boulder City, NV 89005. We plan to expand our business in the wholesale distribution of kitchen cabinets in the USA. The Company is subject to all risks inherent to the establishment of a start-up business enterprise.

 

Our financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars. All transactions including purchases, sales and current financing is in U.S. dollars. The Company’s fiscal year-end is May 31st.

 

NOTE 2 – Significant Accounting Policies and Recent Accounting Pronouncements

 

Interim Financial Statements

 

The accompanying unaudited financial statements have been prepared in accordance with Regulation S-X and do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim period(s), and to make the financial statements not misleading, have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim period(s) are not necessarily indicative of operations for a full year.

 

Condensed Financial Statements

 

Certain information and footnote disclosures normally included in the condensed financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s May 31, 2017 audited financial statements as filed in the most recent Form 10-K. The results of operations for the period ended February 28, 2018 are not necessarily indicative of the operating results for the full year.

 

Use of Estimates and Assumptions

 

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 revenues and expenses during the period. Actual results could differ from those estimates.

 

Due to the limited level of operations, the Company has not had to make material assumptions or estimates other than the assumption that the Company is a going concern.

 

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CAPSTONE SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED FEBRUARY 28, 2018 AND 2017

         

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

 

Fair Value of Financial Instruments

 

ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of February 28, 2018.

 

The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.

 

Basic and Diluted Loss Per Share

 

The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal.

 

Revenue Recognition

 

The Company’s office is currently based in Shanghai, PRC, but we utilize the U.S. dollar as our functional currency.

 

The company follows the guidelines of ASC 605-15 for revenue recognition. Revenue is recognized when all the following conditions have been met:

 

	1.	Pervasive evidence of an arrangement exists: an order has been placed and the customer has prepaid for the product;
	2.	Delivery has occurred or services have been rendered: the product has been shipped from either the Company or one of our suppliers; the product has been delivered and signed for by the customer as evidenced by the shipping company.
	3.	Seller’s price to the buyer is fixed or determinable: the price is fixed at the time of the order and the customer has prepaid prior to shipping; and
	4.	Collectability is reasonable assured: the customer has prepaid for the product prior to shipping.

 

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CAPSTONE SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED FEBRUARY 28, 2018 AND 2017

   

Customers are allowed to return the products within 30 days for exchange or refund if defects in manufacturing are identified. Prior to the expiration of the 30 day exchange or refund period the cash received is recorded as unrecognized revenue.

 

Deferred revenue and deferred cost of goods sold result from transactions where the Company has accepted prepayment for the product but all revenue recognition criteria have not yet been met, such as shipped product from the supplier has not arrived at the client for delivery. Deferred cost of goods sold related to deferred product revenues includes direct product costs. Once all revenue recognition criteria have been met, the deferred revenues and associated cost of goods sold are recognized.

 

Advertising

 

Advertising expenses for the nine months periods ended February 28, 2018 and 2017 were $0 and $0, respectively.

 

Recent Accounting Pronouncements

 

There were various accounting standards and interpretations issued recently. As of February 28, 2018, none of these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of the Company.

 

NOTE 3 – Going Concern

 

The accompanying financial statements and notes have been prepared assuming that the Company will continue as a going concern.

 

For the period from inception to February 28, 2018, the Company had a net loss of $70,323. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to generate sufficient revenues to operate profitably or raise additional capital through debt financing and/or through sales of common stock.

 

Management has funded operations from sales and through the proceeds from an offering pursuant to a Registration Statement on Form S-1 or private placements of restricted securities or the issuance of stock in lieu of cash for payment of services until such a time as profitable operations are achieved. Directors and related parties may from time to lend funds to the Company to fund operations. There are no written agreements in place for such funding or issuance of securities and there can be no assurance that such will be available in the future. Management believes that this plan provides an opportunity for the Company to continue as a going concern.

 

The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.

 

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CAPSTONE SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED FEBRUARY 28, 2018 AND 2017

 

NOTE 4 – Debt

 

In April 2015, the former director and president of the Company made the initial deposit to the Company’s bank account in the amount $100, which was being carried as a loan payable. The loan was non-interest bearing, unsecured and due upon demand.

 

On September 19, 2017, the former shareholder, Mr. Jure Perko, entered into an assignment agreement with the Company whereby all assets were transferred to him, and liabilities were assumed by him, and the net difference were treated as a reduction in additional paid in capital. As a result, the Company is no longer liable for the payable to related party.

 

NOTE 5 – Capital Stock

 

The Company has 75,000,000 shares of common stock with a par value of $0.001 per share.

 

On May 11, 2015 the Company issued 4,000,000 shares of common stock for a purchase price of $0.001 per share to its sole director. The Company received aggregate gross proceeds of $4,000.

 

In May 2016, the Company, pursuant to a Registration Statement on Form S-1, sold 1,085,000 shares to 31 independent shareholders for total proceeds of $43,400.

 

As of February 28, 2018, there were no outstanding stock options or warrants.

 

NOTE 6 – Income Taxes

 

We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

 

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CAPSTONE SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED FEBRUARY 28, 2018 AND 2017

   

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

 

Our effective tax rate for fiscal year 2018 will be 21%, which we expect to be fairly consistent in the near term. Our tax rate may also be affected by discrete items that may occur in any given year, but are not consistent from year to year. Income taxes are calculated and accrued for U.S. taxes only. We are not required to pay corporate taxes in Slovenia until our 3^rd year in business.

 

The Company over accrued $2,089 in Income Taxes Payable for the year ended May 31, 2015. The Company has reversed the over accrual during the nine months ended February 28, 2018.

 

NOTE 7 – Fixed Assets

 

In April 2015, the Company purchased for $6,515 a small office located at 242 Dolenjska cesta, Ljubljana, Slovenia, 10001. The Company utilizes the space as a primary office. The price of the building was $4,000 and the land was $2,515.

 

Fixed assets are stated at cost. The Company utilizes straight-line depreciation over the estimated useful life of the asset.

 

Buildings – 15 years

Office Equipment – 7 years

 

Depreciation expense for the building for the years ended May 31, 2017 and 2016 was $0 and $133, respectively.

 

On September 19, 2017, the former shareholder, Mr. Jure Perko, entered into an assignment agreement with the Company whereby all assets were transferred to him, and liabilities were assumed by him. Accordingly, the Company has waived its rights and title to aforementioned fixed assets.

 

NOTE 8 – Related Party Transactions

 

The Company has a related party transaction involving the Company’s director. The nature and details of the transaction are described in Note 4 and Note 5.

 

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CAPSTONE SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED FEBRUARY 28, 2018 AND 2017

  

 NOTE 9 – Concentration Risk

   

The Company had only one customer and the Company ordered from only one vendor. As we grow we expect to increase the number of customers and vendors we have, however; at this time there is a risk to the company if we lose either our customer or vendor.

 

NOTE 10 – Research and Development

 

All expenses related to our brand are recorded as Research and Development expenses in accordance with GAAP and are expensed as incurred.

 

NOTE 11 – Subsequent Events

 

On March 28, 2018, the Company filed an amendment to its annual report on Form 10-K for the year ended May 31, 2016 to include the sale of equity securities.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking states are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or out predictions.

 

General

 

Our financial statements are stated in United States dollars ($US) and are prepared in accordance with United States Generally Accepted Accounting Principles.

 

In this report, unless otherwise specified, all references to “common stock” refer to the common shares in our capital stock.

 

As used in this quarterly report, the terms “we”, “us”, “our”, “Capstone” and “Capstone Systems” mean Capstone Systems Inc., unless the context clearly requires otherwise.

 

Results of Operations

 

We are still in our development stage and have no revenues to date.

 

Three months ended February 28, 2018 and February 28, 2017

 

We have no revenue for the three months ended February 28, 2018. We incurred $23,457 in general and administrative expenses for the same period. We generated a net loss of $23,457 for the three months ended February 28, 2018.

 

In comparison, we generated $72,722 in revenue for the three months ended February 28, 2017. We incurred $53,045 in cost of goods sold and incurred $2,426 in general and administrative expenses resulting in a net profit of $17,251 for the three months ended February 28, 2017.

 

Nine months ended February 28, 2018 and February 28, 2017

 

We generated $30,258 in revenue for the nine months ended February 28, 2018. We incurred $29,549 in cost of goods sold and incurred $33,852 in general and administrative expenses. We generated a net loss of $31,055 for the nine months ended February 28, 2018.

 

In comparison, we generated $143,897 in revenue for the nine months ended February 28, 2017. We incurred $118,018 in cost of goods sold, $22,568 in general and administrative expenses and $43,429 in product development for the same period, resulting in a net loss of $40,118 for the nine months ended February 28, 2017.

 

Cash Flows from Operating Activities

 

For the nine months ended February 28, 2018, net cash flows used in operating activities was $(28,252) compared to $(43,322) for February 28, 2017.

 

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Cash Flows from Investing Activities

 

We neither used nor generated cash from investing activities for the nine months ended February 28, 2018 and February 28, 2017. 

 

Cash Flows from Financing Activities

 

We generated cash from financing activities of $29,957 for the nine months ended February 28, 2018 compared to $43,400 as of February 28, 2017.

 

During June 2016 the Company, pursuant to a Registration Statement on Form S-1, sold 1,085,000 shares to 31 independent shareholders for total proceeds of $43,400.

 

As of February 28, 2018, the Company had 5,085,000 shares of common stock issued and outstanding.

 

Liquidity and Capital Resources

 

At February 28, 2018, the Company had nil in cash, total assets of nil and there were outstanding liabilities of $29,457. Our director has agreed, verbally, to continue to loan the company funds for operating expenses in a limited scenario, but he has no legal obligation to do so.

 

Off-Balance Sheet Arrangements

 

We do 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 DISCLOSURES ABOUT MATERIAL RISKS 

    

Smaller reporting companies are not required to provide the information required by this item.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

Management maintains “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of February 28, 2018.

 

Based on that evaluation, management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

 

Changes in Internal Controls over Financial Reporting

 

As of the end of the period covered by this report, there have been no changes in the internal controls over financial reporting during the quarter ended February 28, 2018, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting subsequent to the date of management’s last evaluation.

 

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PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS 

  

We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. 

 

ITEM 1A. RISK FACTORS 

 

We are a smaller reporting company and therefore, we are not required to provide information required by this Item of Form 10-Q.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. 

  

None.

 

ITEM 3. DEFAULT UPON SENIOR SECRIUTIES 

  

None. 

 

ITEM 4. MINE SAFETY DISCLOSURES 

  

Not applicable.

 

ITEM 5. OTHER INFORMATION 

  

None.

 

ITEM 6. EXHIBITS.

 

The following exhibits are included with this quarterly filing. Those marked with an asterisk and required to be filed hereunder, are incorporated by reference and can be found in their entirety in our Registration Statement on Form S-1, filed under SEC File Number 333-207100, at the SEC website at www.sec.gov:

 

Exhibit No.		Description
31.1		Sec. 302 Certification of Principal Executive Officer
31.2		Sec. 302 Certification of Principal Financial Officer
32.1		Sec. 906 Certification of Principal Executive Officer
32.2		Sec. 906 Certification of Principal Financial Officer
101		Interactive data files pursuant to Rule 405 of Regulation S-T

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	CAPSTONE SYSTEMS INC.
	By:	/s/ Xu Jiyuan
	Name:	Xu Jiyuan
	Title:	President, Treasurer and Secretary
		(Principal Executive, Financial and Accounting Officer)

 

In accordance with the requirements of the Securities Act of 1933, this report was signed by the following persons in the capacities and on the dates stated.

 

Signature		Title		Date
/s/ Xu Jiyuan		President, Treasurer, Secretary and Director		April 24, 2018
Xu Jiyuan		(Principal Executive, Financial and Accounting Officer)

      

 

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