10-Q

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 NOVEMBER 30, 2017

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)

25/F, First Trade Building, 985 Dong Fang Road, Pudong Xinqu, Shanghai, China, 200000

(Address of principal executive offices, including zip code)

(86) 021-61605313

(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 ¨

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 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	¨	Accelerated filer	¨
Non-accelerated filer	¨	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 ¨ 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 January 12, 2018

ITEM 1. FINANCIAL STATEMENTS

CAPSTONE SYSTEMS, INC.

(A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2017 AND 2016

INDEX TO FINANCIAL STATEMENTS

TABLE OF CONTENTS

	Page No.
Balance Sheet		3
Statement of Operations		4
Statement of Cash Flows		5
Notes to Financial Statements	6-10

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CAPSTONE SYSTEMS, INC.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEET

	Unaudited			Audited
	November 30, 2017			May 31, 2017
ASSETS
CURRENT ASSETS
Cash	$	-		$	4,295
TOTAL CURRENT ASSETS		-			4,295
FIXED ASSETS, NET		-			6,026
TOTAL ASSETS	$	-		$	10,321
LIABILITIES & STOCKHOLDERS’ DEFICIENCY
CURRENT LIABILITIES
Accounts payable & accrued liabilities	$	6,000		$	-
Loan Payable – Related Party		-			100
Income Taxes Payable		-			2,089
TOTAL LIABILITIES		6,000			2,189
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ DEFICIENCY
Common stock, ($0.01 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		(46,866	)		(39,268	)
Total Stockholders’ Equity		(6,000	)		8,132
Total Liabilities and Stockholders’ Deficiency	$	-		$	10,321

See notes to financial statements.

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CAPSTONE SYSTEMS, INC.

STATEMENT OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2017 AND 2016

-Unaudited-

	For the			For the			For the			For the
	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	November 30, 2017			November 30, 2016			November 30, 2017			November 30, 2016
REVENUES
Sales:
Sales	$	-		$	32,970		$	30,258		$	71,175
Total Income		-			32,970			30,258			71,175
Cost of Goods Sold:
Purchases	$	-		$	30,173		$	29,549		$	64,973
Total Cost of Goods Sold		-			30,173			29,549			64,973
Gross Profit		-			2,798			709			6,201
Operating Expenses:
General and administrative	$	8,250		$	17,546		$	10,395		$	20,142
Product Development		-			-			-			43,429
Total Expenses		8,250			17,546			10,395			63,571
Other Income/(Expense):
Other Income		2,089			-			2,089			-
Income Before Income Tax	$	(6,161	)	$	(14,748	)	$	(7,598	)	$	(57,370	)
Provision for Income Tax	$	-		$	-		$	-		$	-
Net Income or (Loss) for the year		(6,161	)		(14,748	)		(7,589	)		(57,370	)
Net gain (loss) per share:
Basic and diluted	$	(0.001	)	$	(0.0029	)	$	(0.001	)	$	(0.0113	)
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

4

CAPSTONE SYSTEMS, INC.

UNAUDITED CONDENSED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED NOVEMBER 30, 2017 AND 2016

	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$	(7,598	)	$	(57,370	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		-			133
Deferred Cost of Goods Sold		-			9,749
Unearned Revenue		-			4,508
Increase in accrued liabilities		3,303			-
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	$	(4,295	)	$	(42,980	)
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
NET CASH PROVIDED BY FINANCING ACTIVITIES		-			43,400
NET DECREASE IN CASH	$	(4,295	)	$	420
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD	$	4,295		$	223
CASH AND CASH EQUIVALENTS – ENDING OF PERIOD	$	-		$	643
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.

5

CAPSTONE SYSTEMS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2017 AND 2016

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 November 30, 2017 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.

6

CAPSTONE SYSTEMS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2017 AND 2016

NOTE 2 – Significant Accounting Policies and Recent Accounting Pronouncements - continued

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 November 30, 2017.

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 offices are currently based in Slovenia, 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.

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.

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CAPSTONE SYSTEMS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2017 AND 2016

NOTE 2 – Significant Accounting Policies and Recent Accounting Pronouncements - continued

Revenue Recognition (continued)

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 six months periods ended November 30, 2017 and 2016 were $0 and $0, respectively.

Recent Accounting Pronouncements

There were various accounting standards and interpretations issued recently. As of November 30, 2017, 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 November 30, 2017, the Company had a net loss of $46,866. 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.

8

CAPSTONE SYSTEMS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2017 AND 2016

NOTE 3 – Going Concern (continued)

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.

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 will transferred to him, and liabilities will be assumed by him, and the net difference will 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 November 30, 2017, 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.

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 2017 will be 35%, 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 six months ended November 30, 2017.

9

CAPSTONE SYSTEMS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2017 AND 2016

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 November 30, 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's sole officer and director is involved in other business activities and may in the future, become involved in other business opportunities as they become available.

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.

NOTE 9 – Concentration Risk

We currently have only one customer and have 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

The Company has evaluated events subsequent through the date these financial statements have been issued, January 12, 2018, to assess the need for potential recognition or disclosure in this report. Based upon this evaluation, it was determined that no subsequent events occurred, other than that noted above, that require recognition or disclosure in the financial statements.

10

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.

Company Overview

We are currently a development-stage company formed to sell kitchen sinks and kitchen cabinets in the USA.

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 November 30, 2017, the Company had accumulated a net loss of $46,866. 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.

We have 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. Our 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. We believe 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.

11

Results of Operations

Three months ended November 30, 2017 and 2016

We generated nil in revenue for the three months ended November 30, 2017. We incurred nil in cost of goods sold and incurred $8,250 in general and administrative expenses for the same period. We generated a net profit loss of $6,161 for the three months ended November 30, 2017.

In comparison, we generated $32,970 in revenue for the three months ended November 30, 2016. We incurred $30,173 in cost of goods sold and incurred $17,546 in general and administrative expenses and nil in product development resulting in a net loss of $14,748 for the three months ended November 30, 2016.

Cash Flows from Operating Activities

For the three months ended November 30, 2017, net cash flows used in operating activities was $4,295 compared to $42,980 for November 30, 2016.

Cash Flows from Investing Activities

We neither used nor generated cash from investing activities for the three months ended November 30, 2017 and 2016.

Cash Flows from Financing Activities

We generated no cash from investing activities for the three months ended November 30, 2017 compared to $43,400 as of November 30, 2016.

On May 11, 2015, we issued a total of 4,000,000 shares of restricted common stock to Jure Perko in consideration of $4,000.

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 November 30, 2017, the Company had 5,085,000 shares of common stock issued and outstanding.

12

Liquidity and Capital Resources

At November 30, 2017 the Company had nil in cash, total assets of nil and there were outstanding liabilities of $6,000. 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 November 30, 2017.

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 November 30, 2017, 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.

13

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.

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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

15

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.
Date: January 12, 2018	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	January 12, 2018
Xu Jiyuan	(Principal Executive, Financial and Accounting Officer)

 16

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Xu Jiyuan, certify that:

1. I have reviewed this report on Form 10-Q.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 12, 2018	By:	/s/ Xu Jiyuan
		Xu Jiyuan
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Xu Jiyuan, certify that:

1. I have reviewed this report on Form 10-Q.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 12, 2018	By:	/s/ Xu Jiyuan
		Xu Jiyuan
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Capstone Systems Inc. (the “Company”) on Form 10-Q for the period ending November 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Xu Jiyuan, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

IN WITNESS WHEREOF, the undersigned has executed this certification as of the 12^th day of January, 2018.

By:	/s/ Xu Jiyuan
	Xu Jiyuan
	President, Treasurer, Secretary and Director (Principal Executive, Financial and Accounting Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Capstone Systems Inc. (the “Company”) on Form 10-Q for the period ending November 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Xu Jiyuan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(3)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(4)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

IN WITNESS WHEREOF, the undersigned has executed this certification as of the 12^th day of January, 2018.

By:	/s/ Xu Jiyuan
	Xu Jiyuan
	Principal Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Nov. 30, 2017	Jan. 12, 2018
Document And Entity Information
Entity Registrant Name	CAPSTONE SYSTEMS INC.
Entity Central Index Key	0001651577
Document Type	10-Q
Document Period End Date	Nov. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--05-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,085,000
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2018

XML

BALANCE SHEET - USD ($)	Nov. 30, 2017	May 31, 2017
CURRENT ASSETS
Cash		$ 4,295
TOTAL CURRENT ASSETS		4,295
FIXED ASSETS, NET		6,026
TOTAL ASSETS		10,321
Current Liabilities:
Accounts payable & accrued liabilities	6,000
Loan Payable - Related Party		100
Income Taxes Payable		2,089
TOTAL LIABILITIES	6,000	2,189
STOCKHOLDERS' DEFICIENCY
Common stock, ($0.01 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	(46,866)	(39,268)
TOTAL STOCKHOLDERS' EQUITY	(6,000)	8,132
Total Liabilities and Stockholders' Deficiency		$ 10,321

XML

BALANCE SHEET (Parenthetical) - $ / shares	Nov. 30, 2017	May 31, 2017
STOCKHOLDERS' EQUITY
Common stock par value	$ 0.01	$ 0.01
Common stock shares authorized	75,000,000	75,000,000
Common stock shares issued	5,085,000	5,085,000
Common stock shares outstanding	5,085,000	5,085,000

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STATEMENT OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Nov. 30, 2017	Nov. 30, 2016	Nov. 30, 2017	Nov. 30, 2016
Sales:
Sales		$ 32,970	$ 30,258	$ 71,175
Total Income		32,970	30,258	71,175
Cost of Goods Sold:
Purchases		30,173	29,549	64,973
Total Cost of Goods Sold		30,173	29,549	64,973
Gross Profit		2,798	709	6,201
OPERATING EXPENSES:
General and administrative	8,250	17,546	10,395	20,142
Product Development				43,429
Total Expenses	8,250	17,546	10,395	63,571
Other Income/(Expense):
Other Income	2,089		2,089
Income Before Income Tax	(6,161)	(14,748)	(7,598)	(57,370)
Provision for Income Tax
Net Income or (Loss) for the year	$ (6,161)	$ (14,748)	$ (7,589)	$ (57,370)
Net gain (loss) per share: Basic and diluted	$ (0.001)	$ (0.0029)	$ (0.001)	$ (0.0113)
Weighted average number of shares outstanding: Basic and diluted	5,085,000	5,085,000	5,085,000	5,085,000

XML

UNAUDITED CONDENSED STATEMENT OF CASH FLOWS - USD ($)	6 Months Ended
	Nov. 30, 2017	Nov. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$ (7,589)	$ (57,370)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		133
Deferred Cost of Goods Sold		9,749
Unearned Revenue		4,508
Increase in accrued liabilities	3,303
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(4,295)	(42,980)
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
NET CASH PROVIDED BY FINANCING ACTIVITIES		43,400
NET DECREASE IN CASH	(4,295)	420
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	4,295	223
CASH AND CASH EQUIVALENTS - ENDING OF PERIOD		643
NON-CASH FINANCING ACTIVITIES
Reduction in additional paid in capital as a result of assignment of assets and liabilities to former shareholder	$ 6,534

XML

Organization and Basis of Presentation

6 Months Ended

Nov. 30, 2017

Notes to Financial Statements

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.

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Significant Accounting Policies and Recent Accounting Pronouncements

6 Months Ended

Nov. 30, 2017

Notes to Financial Statements

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 November 30, 2017 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.

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 November 30, 2017.

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 offices are currently based in Slovenia, 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.

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 six months periods ended November 30, 2017 and 2016 were $0 and $0, respectively.

Recent Accounting Pronouncements

There were various accounting standards and interpretations issued recently. As of November 30, 2017, none of these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of the Company.

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Going Concern

6 Months Ended

Nov. 30, 2017

Notes to Financial Statements

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 November 30, 2017, the Company had a net loss of $46,866. 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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Debt

6 Months Ended

Nov. 30, 2017

Notes to Financial Statements

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 will transferred to him, and liabilities will be assumed by him, and the net difference will treated as a reduction in additional paid in capital. As a result, the Company is no longer liable for the payable to related party.

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Capital Stock

6 Months Ended

Nov. 30, 2017

Notes to Financial Statements

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 November 30, 2017, there were no outstanding stock options or warrants.

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Income Taxes

6 Months Ended

Nov. 30, 2017

Notes to Financial Statements

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.

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 2017 will be 35%, 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 six months ended November 30, 2017.

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Fixed Assets

6 Months Ended

Nov. 30, 2017

Notes to Financial Statements

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 November 30, 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.

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Related Party Transactions

6 Months Ended

Nov. 30, 2017

Notes to Financial Statements

Note 8: Related Party Transactions

The Company's sole officer and director is involved in other business activities and may in the future, become involved in other business opportunities as they become available.

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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Concentration Risk

6 Months Ended

Nov. 30, 2017

Notes to Financial Statements

Note 9: Concentration Risk

We currently have only one customer and have 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.

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Research and Development

6 Months Ended

Nov. 30, 2017

Notes to Financial Statements

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.

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Subsequent Events

6 Months Ended

Nov. 30, 2017

Notes to Financial Statements

Note 11: Subsequent Events

The Company has evaluated events subsequent through the date these financial statements have been issued, January 12, 2018, to assess the need for potential recognition or disclosure in this report. Based upon this evaluation, it was determined that no subsequent events occurred, other than that noted above, that require recognition or disclosure in the financial statements.

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Significant Accounting Policies and Recent Accounting Pronouncements (Policies)

6 Months Ended

Nov. 30, 2017

Significant Accounting Policies And Recent Accounting Pronouncements Policies

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 November 30, 2017 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.

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 November 30, 2017.

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 offices are currently based in Slovenia, 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.

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 six months periods ended November 30, 2017 and 2016 were $0 and $0, respectively.

Recent Accounting Pronouncements

There were various accounting standards and interpretations issued recently. As of November 30, 2017, none of these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of the Company.

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Organization and Basis of Presentation (Details Narrative)	6 Months Ended
	Nov. 30, 2017
Organization And Basis Of Presentation Details Narrative
Entity Incorporation	Nevada
Entity incorporation date	Apr. 01, 2015

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Significant Accounting Policies and Recent Accounting Pronouncements (Details Narrative) - USD ($)	6 Months Ended
	Nov. 30, 2017	Nov. 30, 2016
Significant Accounting Policies And Recent Accounting Pronouncements Details Narrative
Advertising & Promotion

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Going Concern (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		32 Months Ended
	Nov. 30, 2017	Nov. 30, 2016	Nov. 30, 2017	Nov. 30, 2016	Nov. 30, 2017
Going Concern Details Narrative
Net Income (Loss)	$ (6,161)	$ (14,748)	$ (7,589)	$ (57,370)	$ (46,866)

XML

Debt (Details Narrative) - USD ($)	Nov. 30, 2017	May 31, 2017	Apr. 30, 2015
Loan Payable - Related Party		$ 100
Director and President [Member]
Loan Payable - Related Party			$ 100

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Capital Stock (Details Narrative)		6 Months Ended		12 Months Ended
	May 11, 2015 USD ($) $ / shares shares	Nov. 30, 2017 USD ($) $ / shares shares	Nov. 30, 2016 USD ($)	May 31, 2016 USD ($) Integer shares	May 31, 2017 $ / shares shares
Common stock par value | $ / shares		$ 0.01			$ 0.01
Common stock shares authorized		75,000,000			75,000,000
Common stock shares issued		5,085,000			5,085,000
Proceeds from issuance of common stock | $			$ 43,400
Director [Member]
Common stock shares issued	4,000,000
Shares issued, price per share | $ / shares	$ 0.001
Proceeds from issuance of common stock | $	$ 4,000
Independent Shareholders [Member]
Common stock shares issued				1,085,000
Proceeds from issuance of common stock | $				$ 43,400
Number of independent shareholders | Integer				31

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Income Taxes (Details Narrative) - USD ($)	6 Months Ended
	Nov. 30, 2017	May 31, 2017	May 31, 2015
Income Taxes Details Narrative
Effective income tax rate	35.00%
Income Taxes Payable		$ 2,089	$ 2,089

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Fixed Assets (Details Narrative) - USD ($)	1 Months Ended	6 Months Ended
	Apr. 30, 2015	Nov. 30, 2017	Nov. 30, 2016
Depreciation expense			$ 133
Purchase price of Building & Land	$ 6,515
Building [Member]
Estimated useful life of the asset		15 years
Depreciation expense		$ 0	$ 133
Purchase price of Building & Land	4,000
Land [Member]
Purchase price of Building & Land	$ 2,515
Office Equipment [Member]
Estimated useful life of the asset		7 years