CAPSTONE FINANCIAL GROUP, INC. - FORM 10-Q

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - CAPSTONE FINANCIAL GROUP, INC.	Financial_Report.xls
EX-31.1 - EX. 31.1 - CAPSTONE FINANCIAL GROUP, INC.	ex31-1.htm
EX-32.2 - EX. 32.2 - CAPSTONE FINANCIAL GROUP, INC.	ex32-2.htm
EX-10.2 - REVOLVING CREDIT GRID NOTE DATED SEPTEMBER 13, 2013 - CAPSTONE FINANCIAL GROUP, INC.	ex10-2.htm
EX-10.3 - AMENDMENT NO. 1 TO REVOLVING CREDIT GRID NOTE DATED SEPTEMBER 13, 2013 - DATED OCTOBER 7, 2013 - CAPSTONE FINANCIAL GROUP, INC.	ex10-3.htm
EX-31.2 - EX. 31.2 - CAPSTONE FINANCIAL GROUP, INC.	ex31-2.htm
EX-10.1 - REVOLVING CREDIT GRID NOTE DATED AUGUST 8, 2013 - CAPSTONE FINANCIAL GROUP, INC.	ex10-1.htm
EX-32.1 - EX. 32.1 - CAPSTONE FINANCIAL GROUP, INC.	ex32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended September 30, 2013

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

Commission file number 000-54905

CAPSTONE FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)

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

2600 Michelson Dr., Suite 700, Irvine CA		92612
(Address of principal executive offices)		(Zip Code)

(866) 798-4478

(Registrant’s telephone number, including area code)

Copies of Communications to:

Stoecklein Law Group, LLP

401 West A Street

Suite 1150

San Diego, CA 92101

(619) 704-1310

Fax (619) 704-1325

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

Yes x No ¨

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

Yes x No ¨

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

Large accelerated filer ¨	Accelerated filer ¨

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

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

Yes ¨ No x

The number of shares of Common Stock, $0.001 par value, outstanding on November 19, 2013 was 91,670,000 shares.

CAPSTONE FINANCIAL GROUP, INC.

QUARTERLY PERIOD ENDED SEPTEMBER 30, 2013

Index to Report on Form 10-Q

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

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

Item 4T.	Controls and Procedures	17

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	18

Item1A.	Risk Factors	18

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Securities	19

Item 4.	Mine Safety Disclosures	19

Item 5.	Other Information	19

Item 6.	Exhibits	20

	Signatures	21

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CAPSTONE FINANCIAL GROUP, INC.
(FORMERLY CREATIVE APP SOLUTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(unaudited)



	September 30,			December 31,
	2013			2012
ASSETS

Current assets:
Cash	$	45,566		$	6,140
Total current assets		45,566			6,140

Line of credit receivable - related party		370,000			-
Accrued interest receivable - related party		264			-

Total assets	$	415,830		$	6,140


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable	$	5,474		$	300
Total current liabilities		5,474			300

Long term liabilities:
Accrued interest payable		-			501
Accrued interest payable - related party		358			283
Line of credit payable		-			35,000
Line of credit payable - related party		154,443			-
Notes payable - related party		-			10,000
Total long term liabilities		154,801			45,784

Total liabilities		160,275			46,084

Stockholders' equity (deficit):
Preferred stock, $0.001 par value, 10,000,000 shares
authorized, no and no shares issued and outstanding
as of September 30, 2013 and December 31, 2012, respectively		-			-
Common stock, $0.001 par value, 2,000,000,000 shares
authorized, 91,670,000 and 80,200,000 shares issued and outstanding
as of September 30, 2013 and December 31, 2012, respectively		91,670			80,200
Additional paid in capital		271,032			(75,700	)
Deficit accumulated during development stage		(107,147	)		(44,444	)
Total stockholders' equity (deficit)		255,555			(39,944	)

Total liabilities and stockholders' equity (deficit)	$	415,830		$	6,140

See Accompanying Notes to Financial Statements.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

(unaudited)



	For the			For the			Inception			Inception
	three months			nine months			(July 10, 2012)			(July 10, 2012)
	ended			ended			ended			to
	September 30,			September 30,			September 30,			September 30,
	2013			2013			2012			2013

Revenue	$	121,627		$	121,627		$	-		$	121,627

Operating expenses:
General and administrative		12,689			14,122			597			14,806
Professional fees		52,636			161,732			10,800			204,708
Professional fee - related party		5,000			5,000			-			5,000
Total operating expenses		70,325			180,854			11,397			224,514

Other income (expense):
Interest income - related party		264			264			-			264
Interest expense		(652	)		(2,963	)		-			(3,464	)
Interest expense - related party		(479	)		(777	)		(132	)		(1,060	)
Total other expense		(867	)		(3,476	)		(132	)		(4,260	)

Net loss	$	50,435		$	(62,703	)	$	(11,529	)	$	(107,147	)


Weighted average number of comm
shares outstanding - basic		90,311,848			88,223,040			80,180,488

Net loss per share - basic	$	0.00		$	(0.00	)	$	(0.00	)

See Accompanying Notes to Financial Statements.

CAPSTONE FINANCIAL GROUP, INC.

(FORMERLY CREATIVE APP SOLUTIONS, INC.)

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

(unaudited)



	For the			Inception			Inception
	nine months			(July 10, 2012)			(July 10, 2012)
	ended			ended			to
	September 30,			September 30,			September 30,
	2013			2012			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(62,703	)	$	(11,529	)	$	(107,147	)
Adjustments to reconcile net income
to net cash used in operating activities:
Stock issued for services		-			500			500
Changes in operating assets and liabilities:
(Increase) in accrued interest receivable - related party		(264	)		-			(264	)
Increase in accounts payable		5,174			300			5,474
(Decrease) in accrued interest payable		(501	)		-			-
Increase in accrued interest payable - related party		777			132			1,060

Net cash used in operating activities		(57,517	)		(10,597	)		(100,377	)

CASH FLOWS FROM INVESTING ACTIVITIES
Payments for line of credit receivable - related party		(370,000	)		-			(370,000	)

Net cash used in investing activities		(370,000	)		-			(370,000	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit payable		61,500			-			96,500
Repayments on line of credit payable		(96,500	)		-			(96,500	)
Proceeds from line of credit - related party		154,443			-			154,443
Proceeds from notes payable - related party		3,500			10,000			13,500
Proceeds from sale of common stock, net of offering costs		344,000			4,000			348,000

Net cash provided by financing activities		466,943			14,000			515,943

NET CHANGE IN CASH		39,426			3,403			45,566

CASH AT BEGINNING OF PERIOD		6,140			-			-

CASH AT END OF PERIOD	$	45,566		$	3,403		$	45,566

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

NON-CASH FINANCING ACTIVITIES:
Stock issued for services	$	-		$	-		$	500
Forgiveness of debt - related party	$	14,202		$	-		$	14,202

See Accompanying Notes to Financial Statements.

CAPSTONE FINANCIAL GROUP, INC.

(FORMERLY CREATIVE APP SOLUTIONS, INC.)

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

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

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

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

Organization

The Company was incorporated on July 10, 2012 (Date of Inception) under the laws of the State of Nevada, as Creative App Solutions, Inc. On August 23, 2013, the Company amended its articles of incorporation and changed their name to Capstone Financial Group, Inc.

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

Nature of operations

The Company will design and sell mobile application for the Apple and Android platforms. During the three months ended September 30, 2013 the Company changed its business plan and plans to offer financial services and consulting to businesses and they rely heavily on an officer, director and shareholder who hold the proper licenses in order to conduct business.

Cash and cash equivalents

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

Revenue recognition

We recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is probable.

The Company will record revenue when it is realizable and earned and the services have been rendered to the customers. During the three months ended September 30, 2013, the Company recorded $121,627 in revenue related to financial services consulting and commissions that were assigned by an officer, director and shareholder of the Company. The assignment was necessary since the officer, director and shareholder holds the proper licenses in order to conduct business.

Advertising Costs

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

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair value of financial instruments

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

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

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

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

Stock-based compensation

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

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

CAPSTONE FINANCIAL GROUP, INC.

(FORMERLY CREATIVE APP SOLUTIONS, INC.)

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Earnings per share

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

Use of estimates

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

Concentration of revenue

During the three months ended September 30, 2013, there was $121,627 in revenue generated from one customer.

Recent pronouncements

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

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in the development stage and, accordingly, has not yet generated revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start up costs and expenses. As a result, the Company incurred accumulated net losses from Inception (July 10, 2012) through the period ended September 30, 2013 of ($107,147). In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing.

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

CAPSTONE FINANCIAL GROUP, INC.

(FORMERLY CREATIVE APP SOLUTIONS, INC.)

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 3 – LINE OF CREDIT RECEIVABLE – RELATED PARTY

On September 13, 2013, the Company executed a revolving credit line receivable with an entity owned and controlled by an officer, director and shareholder for up to $500,000. The unsecured line of credit bears interest at 2% per annum with principal and interest due on September 13, 2015. As of September 30, 2013, an amount of $370,000 was loaned to the related party with a remaining balance of $130,000 available. As of September 30, 2013, the balance of accrued interest was $264.

Interest expense for line of credit receivable – related party for the three months ended September 30, 2013 was $264. Interest expense for line of credit receivable – related party for the nine months ended September 30, 2013 was $264.

NOTE 4 – LINE OF CREDIT PAYABLE

On July 15, 2012, the Company executed a revolving credit line with third party for up to $200,000. The unsecured line of credit bears interest at 6% per annum with principal and interest due on July 16, 2015. As of September 30, 2013, an amount of $0 has been used for general corporate purposes with a remaining balance of $200,000 available. During the three months ended September 30, 2013, the Company repaid the entire balance of principal of $92,200 and accrued interest of $3,463. This line of credit is no longer available to the Company as of September 30, 2013. As of September 30, 2013, the balance of accrued interest was $0.

Interest expense for line of credit payable for the three months ended September 30, 2013 was $652. Interest expense for line of credit payable for the nine months ended September 30, 2013 was $2,963.

NOTE 5 – LINE OF CREDIT PAYABLE – RELATED PARTY

On August 8, 2013, the Company executed a revolving credit line with an entity owned and controlled by an officer, director and shareholder for up to $500,000. The unsecured line of credit bears interest at 2% per annum with principal and interest due on August 8, 2015. As of September 30, 2013, an amount of $154,443 has been used for general corporate purposes with a remaining balance of $345,557 available. As of September 30, 2013, the balance of accrued interest was $358.

Interest expense for the line of credit payable for the three months ended September 30, 2013 was $358. Interest expense for the line of credit payable for the nine months ended September 30, 2013 was $358.

NOTE 6 – NOTES PAYABLE – RELATED PARTY

On July 12, 2012, the Company executed a promissory note with a related party for $10,000. The unsecured loan bears interest at 6% per annum with principal and interest due on July 13, 2015. During the three months ended September 30, 2013, related party loaned an additional $3,500 to the Company with the same terms as the previous promissory note for $10,000. During the three months ended September 30, 2013, the related party forgave the entire balance of principal of $13,500 and accrued interest of $702. As of September 30, 2013, the balance of accrued interest was $0.

Interest expense – related party for notes payable – related party for the three months ended September 30, 2013 was $121. Interest expense – related party for notes payable – related party for the nine months ended June 30, 2013 was $419.

CAPSTONE FINANCIAL GROUP, INC.

(FORMERLY CREATIVE APP SOLUTIONS, INC.)

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 7 – STOCKHOLDERS’ EQUITY (DEFICIT)

The Company is authorized to issue 2,000,000,000 shares of its $0.001 par value common stock and 10,000,000 shares of its $0.001 par value preferred stock.

On September 6, 2013, the Company effected a 20-for-1 forward stock split of its $0.001 par value common stock and increased its authorized common stock to 2,000,000,000 shares.

All shares and per share amounts have been retroactively restated to reflect the split discussed above.

Common stock

On February 25, 2013, the Company issued a total of 10,000,000 shares of common stock for cash totaling $50,000.

On April 16, 2013, the Company issued 1,000,000 shares of common stock to a former officer of the Company for services to be rendered valued at $5,000. On June 6, 2013, the Company cancelled 1,000,000 shares of common stock due to non-performance of services and the individual was terminated.

During September 2013, the Company issued 1,470,000 shares of common stock for cash of $294,000.

NOTE 8 – WARRANTS AND OPTIONS

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

NOTE 9 – SUBSEQUENT EVENTS

During October 2013, the Company issued 2,255,000 shares of common stock for cash of $1,804,000.

During October 2013, the Company loaned a related party an additional $549,872 as part of the line of credit receivable – related party. The Company amended the revolving credit line receivable to increase the credit limit to $2,000,000 and rest of the terms remains the same.

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

FORWARD-LOOKING STATEMENTS

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

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

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

·	our current lack of working capital;

·	inability to raise additional financing;

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

·	deterioration in general or regional economic conditions;

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

·	inability to efficiently manage our operations;

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

·	the unavailability of funds for capital expenditures.

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

Throughout this Quarterly Report references to “we”, “our”, “us”, “Capstone”, “the Company”, and similar terms refer to Capstone Financial Group, Inc.

AVAILABLE INFORMATION

We file annual, quarterly and other reports and other information with the SEC. You can read these SEC filings and reports over the Internet at the SEC's website at www.sec.gov or on our website at www.capstonefinancialgroupinc.com. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330 for further information on the operations of the public reference facilities. We will provide a copy of our annual report to security holders, including audited financial statements, at no charge upon receipt to of a written request to us at Capstone Financial Group, Inc., 2600 Michelson Dr., Suite 700, Irvine, CA 92612.

OVERVIEW AND OUTLOOK

General Business Development

Capstone Financial Group, Inc. (the “Company”) is a development stage company which was incorporated in the State of Nevada in July of 2012 as Creative App Solutions, Inc. We were formed to design and sell mobile apps for smart phones and other mobile platforms such as tablets.

In an effort to substantiate stockholder value, we re-assessed our business plan, and have aggressively been seeking out other business opportunities. We have been in preliminary discussions with a private company interested in a potential merger. As of the date of this filing, there have been no definitive agreements reached with this company. If and when we enter into a definitive agreement with any company, we will file a current report on Form 8-K.

On August 26, 2013, we changed our name from Creative App Solutions, Inc. to Capstone Financial Group, Inc. The amendment occurred as a result of our stockholders approving the amendment at the 2013 Annual Meeting of Stockholders and a subsequent vote by the Board of Directors. The Certificate of Amendment is filed as exhibit 3(i)(a) to the Form 8-K filed on August 29, 2013.

On September 6, 2013, we effectuated a 20 to 1 forward split of the Company’s issued and unissued common stock as of September 23, 2013, the record date. Immediately after the forward split, the number of shares issued and outstanding increased to 90,200,000. The number of authorized shares increased from 100,000,000 to 2,000,000,000 common shares. The Certificate of Change is filed as exhibit 3(i)(c) to the Form 8-K filed on September 12, 2013.

Recent Change in Management

On August 6, 2013, the Board of Directors (“Board”) appointed Darin Pastor to serve as a member of the Board.

On August 26, 2013, Ryan Faught submitted his letter of resignation from his position as President, CEO, Treasurer, and Director of the Company. The resignation was accepted by the Company on August 26, 2013.

On August 26, 2013, Matthew Lane submitted his letter of resignation from his position as Secretary of the Company. The resignation was accepted by the Company on August 26, 2013.

On August 26, 2013, in connection with resignations of Ryan Faught and Matthew Lane, the Board unanimously appointed Darin Pastor to serve as the Chief Executive Officer (“CEO”), Secretary, Treasurer, and Chairman of the Company.

On August 26, 2013, in connection with resignations of Ryan Faught and Matthew Lane, the Board unanimously appointed George Schneider to serve as the President, Chief Investment Officer (“CIO”), and a Director of the Company.

On September 25, 2013, the Board unanimously appointed Halford W. Johnson as Chief Financial Officer (“CFO”) of the Company.

Change of Control

On September 6, 2013, Darin Pastor acquired control of the Company pursuant to a Common Stock Purchase Agreement (the “Pastor Agreement”) entered into by Mr. Ryan Faught (the “Seller”) and Mr. Darin Pastor (the “Purchaser”), providing for the purchase by Mr. Pastor from the Seller of 3,548,200 shares of Common Stock, par value $.001 (the “Common Stock”), representing 78.7% of the issued and outstanding shares of the Company for a purchase price of $1,774.10.

Additionally, pursuant to a Common Stock Purchase Agreement, dated September 6, 2013 (the “Schneider Agreement”) entered into by Mr. Ryan Faught (the “Seller”) and Mr. George Schneider (the “Purchaser”), providing for the purchase by Mr. Schneider from the Seller of 451,800 shares of Common Stock, par value $.001 (the “Common Stock”), representing 10% of the issued and outstanding shares of the Company for a purchase price of $225.90.

Business Overview

Capstone Financial Group, Inc. (“Capstone” or the “Company”) provides an array of products and services to a diverse group of clients and customers, including corporations, governments, financial institutions and individuals. Capstone’s executive management team consists of leaders who have more than 100 collective years of experience in wealth management and investment banking, with a superior level understanding of clean technology and industrial growth, capital raising services concerning municipal government interests, and private placements and public offerings of corporate debt and corporate equity.

Capstone intends to develop divisions within the Company that will provide small and lower middle market businesses with opportunities for optimal financing, growth, mergers and acquisitions and increased market share. Some of the divisions may include an Investment Banking division, a Clean Technology and Industrial Growth Group. These added divisions will enable Capstone to better advise and assist current and potential corporate clients. As of the date of this filing, these divisions have not been created.

On August 26, 2013, we entered into an Assignment, Assumption and Consent Agreement with Darin Pastor, our chief executive officer, wherein Mr. Pastor assigned the rights and obligations of the Engagement Agreement dated July 29, 2013 with Instant BioScan, LLC, an Arizona limited liability company (“IBS”), in exchange for the Company assuming the obligations of performance under the terms and conditions of the Engagement Agreement. The term of the Engagement Agreement shall be for a period of 270 days from the date of July 29, 2013. Pursuant to the Engagement Agreement we will act in the capacity of an independent contractor, as a financial advisor, investment banker and capital markets agent, where appropriate, in connection with: 1) assisting IBS as it would concern: (a) the refinement of its business plan, (b) the selection, sizing and structure of certain capital market financing alternatives and the securities associated with such financing alternatives, (c) the pre-money estimated valuations of IBS associated with certain capital market financing, (d) the marketing strategy, accounting firm selection, legal counsel selection and investor communications associated with its contemplated project and/or corporate level capital funding, and: 2) the placement by IBS of certain short-term loans, short-term lines or letters of credit and/or other types of short-term credit facilities in the amount of up to approximately $1,350,000. During the three months ended September 30, 2013, we have recorded $121,627 in revenue related to financial services consulting and commissions pursuant to the assignment of the Engagement Agreement.

Going Concern

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. As of September 30, 2013 the Company had an accumulated deficit of $107,147. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

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

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

RESULTS OF OPERATIONS

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

In the three months ended September 30, 2013, we generated $121,627 in revenues.

Operating expenses during the three months ended September 30, 2013 were $70,325, $57,636 of which was professional fees associated with legal and accounting expenses and the remaining $12,689 was related to general and administrative costs. In comparison, operating expenses from inception (July 10, 2012) to September 30, 2012 were $11,397, of which $10,800 was in professional fees and the remaining $597 was related to general and administrative costs. The increase in professional fees is due to increased legal and accounting work.

Results of Operations for the Nine Months Ended September 30, 2013

In the nine months ended September 30, 2013, we generated $121,627 in revenues.

Operating expenses during the nine months ended September 30, 2013 were $180,854, $166,732 of which was professional fees associated with legal and accounting expenses and the remaining $14,122 was related to general and administrative costs. In comparison, operating expenses from inception (July 10, 2012) to September 30, 2012 were $11,397 of which $10,800 was in professional fees and the remaining $597 was related to general and administrative costs. The increase in professional fees is due to increased legal and accounting work.

Liquidity and Capital Resources

As of September 30, 2013, we had $ 45,566 in cash. Since inception, we have financed our cash flow requirements through issuance of common stock. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations.

In addition, we have secured a line of credit with E. Venture Resources, Inc., for up to $200,000. As of September 30, 2013, we have utilized $92,200 of the $200,000. The terms of the line of credit provide for an interest rate of 6% per annum with all accrued balances due and payable on July 16, 2015. On August 13, 2013, this liability was paid off by the Company. This line of credit is no longer available to the Company.

Additionally, Ryan Faught loaned $10,000 to the Company. During the three months ended September 30, 2013, Mr. Faught loaned an additional $3,500 to the Company with the same terms. The loan from Mr. Faught bears interest at 6% per annum and is due on July 13, 2015. On August 26, 2013, Mr. Faught forgave $13,500 in debt with the Company plus accrued interest of $702.

On August 8, 2013, we executed a revolving credit grid note with a related party for up to $500,000. As of September 30, 2013, we have utilized $154,442.75 of the $500,000. The terms of the revolving credit grid note provide for an interest rate of 2% per annum with all accrued balances due and payable on August 8, 2013.

On September 13, 2013, we executed a revolving credit grid note receivable with a related party for up to $500,000. As of September 30, 2013, we have utilized $370,000 of the $500,000. The terms of the revolving credit grid note provide for an interest rate of 2% per annum with all accrued balances due and payable on September 13, 2015. On September 13, 2013, we amended the revolving credit grid note to increase the principal amount from $500,000 to $2,000,000. In October 16, 2013, we utilized an additional $549,872.

In the future we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital.

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

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

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

Current Assets	$	45,566	$	6,140	$	39,426		642	%

Current Liabilities	$	5,474	$	300	$	5,174		1,725	%

Working Capital (deficit)	$	40,092	$	5,840	$	34,252		587	%

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

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

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

Operating activities

Net cash used in operating activities was $57,517 for the period ended September 30, 2013, as compared to $10,597 used in operating activities from inception (July 10, 2012) to September 30, 2012. The increase in net cash used in operating activities was primarily due to an increase in professional fees, as a result of increased legal work.

Investing activities

Net cash used in investing activities was $370,000 for the period ended September 30, 2013 as compared to $0 used in investing activities from inception (July 10, 2012) to September 30, 2012. The increase is related to the revolving line of credit receivable with a related party.

Financing activities

Net cash provided by financing activities for the period ended September 30, 2013 was $466,943, as compared to $14,000 from inception (July 10, 2012) to September 30, 2012. The increase of net cash provided by financing activities was mainly attributable to capital raised through the sale of common stock and capital provided through a newly executed revolving credit grid note. There was a decrease due to the repayment of the revolving line of credit.

On July 12, 2012, the Company executed a promissory note with Ryan Faught. The unsecured loan is due upon on July 13, 2015 and bears interest at 6%. As of September 30, 2013, we have utilized $10,000 of the $10,000. During the three months ended September 30, 2013, Mr. Faught loaned an additional $3,500 with the same terms. On August 26, 2013, Mr. Faught forgave $13,500 in debt with the Company and accrued interest of $702.

On August 8, 2013, the Company executed a revolving credit grid note with a related party for up to $500,000. The unsecured line of credit bears interest at 2% per annum with principal and interest due on August 8, 2016. As of September 30, 2013, an amount of $154,442.75 has been used for general corporate purposes with a remaining balance of $345,557.25 available. As of September 30, 2013, the balance of accrued interest was $358.

On September 13, 2013, the Company executed a revolving credit grid note receivable with a related party for up to $500,000. The unsecured line of credit bears interest at 2% per annum with principal and interest due on September 13, 2015. As of September 30, 2013, an amount of $370,000 was loaned to the related party with a remaining balance of $130,000 available. As of September 30, 2013, the balance of accrued interest receivable was $264. During October 2013, the Company amended the revolving grid note to increase the credit limit to $2,000,000 and loaned an additional $548,912 to a related party.

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

Off-Balance Sheet Arrangements

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

Item 3. Quantitative and Qualitative Disclosure About Market Risk

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

Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Control Over Financial Reporting

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

Limitations on Effectiveness of Controls and Procedures

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

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not a party to any material legal proceedings.

Item 1A. Risk Factors.

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

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

Stock Issuances pursuant to Subscription Agreements

In September 2013, we sold 1,470,000 shares of common stock to a total of six accredited investors for a total purchase price of $294,000, all of which was paid in cash. The 1,470,000 shares of common stock were issued on September 30, 2013.

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

Subsequent Issuances

During October 2013, we sold 2,255,000 shares of common stock to a total of 22 accredited investors for a total purchase price of $1,804,000, all of which was paid in cash. The 2,255,000 shares of common stock have not been issued.

Use of Proceeds

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

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

Issuer Purchases of Equity Securities.

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

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit No.		Description

10.1		Revolving Credit Grid Note Dated August 8, 2013

10.2		Revolving Credit Grid Note Dated September 13, 2013

10.3		Amendment No. 1 to Revolving Credit Grid Note dated September 13, 2013 - Dated October 7, 2013

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

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

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

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

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase

101.DEF*		XBRL Taxonomy Extension Definition Linkbase

101.LAB*		XBRL Taxonomy Extension Label Linkbase

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase

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

SIGNATURE

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

	CAPSTONE FINANCIAL GROUP, INC.


Date: November 18, 2013	By:	/S/ Darin Pastor
		Darin Pastor
		CEO
		(Principal Executive Officer and duly authorized signatory)

Attached files

CAPSTONE FINANCIAL GROUP, INC. Reports

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