Quarterly Report for Quarter Ending December 31, 2024 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include but are not limited to those discussed below and elsewhere in this Quarterly Report. Our unaudited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Forward-Looking Statements

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

As used in this quarterly report, the terms "we," "us," "our," or "the Company," mean Arculus System Co., Ltd., unless otherwise indicated.

All dollar amounts refer to US dollars unless otherwise indicated.

Overview

Arculus System Co., Ltd. (the "Company," "we," "our," or "us") is a development-stage company incorporated on October 4, 2019, in the State of Nevada under the name Azzurro Solutions Corp. and established a fiscal year end of September. On February 20, 2025, we changed our name to arculus system, and, on March 5, 2025, we amended and restated our articles of incorporation and changed our name to Arculus System Co., Ltd. and authorized 75,000,000 preferred shares. Subsequent to the change of control, our new management and majority shareholders have changed our business to deliver a robust suite of Electronic Design Automation (EDA) tools and integrated circuit (IC) design services.

We now specialize in the development of high-performance chip design front-end development software tools and solutions. As a developer in the EDA field, we are dedicated to pioneering breakthroughs aimed at assisting IC chip design enterprises in addressing the formidable challenges and critical issues encountered during innovation and development processes, and intend to become a trusted key partner in the industry.

Our flagship EDA tool is the Architecture Compiler, which represents our most advanced technology. This powerful solution simplifies SoC architecture design by optimizing software and hardware co-design, seamlessly integrating components, and enhancing overall performance. With the Architecture Compiler, we enable customers to build efficient and robust IC designs, laying a solid foundation for success.

We have developed iPROfiler, an advanced SoC performance analysis tool driven by artificial intelligence and designed for SoC. iPROfiler plays a crucial role in facilitating collaboration and comprehensive analysis among SoC design teams, software teams, and hardware teams. By leveraging its capabilities, customers can unleash the full potential of their SoC designs, achieving exceptional performance and functionality. It also serves as an important sign-off tool, ensuring smooth coordination between front-end and back-end design teams.

Customers are at the core of everything we do, and we strive to build strong partnerships by deeply understanding their goals and challenges. With our extensive experience and the powerful capabilities of our EDA tools, we prepared to tackle the most demanding and intricate problems brought about by IC design.

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Our products will include high-quality system-on-chip (SoC) design capabilities such as intellectual property (IP) design, optimization, integration, and verification, enabling customers to accelerate development cycles and achieve efficient commercial outcomes.

As of the date of this filing, we have not commenced principal revenue-generating operations and have generated limited revenues since inception. Our operations have been limited to organizational activities, administrative functions, and preparation for future service offerings.

As of December 31, 2024, we had an accumulated deficit of $211,031. Our financial statements have been prepared assuming that we will continue as a going concern. We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

Results of Operation

For the three months ended December 31, 2024 compared to the three months ended December 31, 2023

		Three months ended December 31, 2024				Three months ended December 31, 2023
Revenues		$	-			$	-
Cost of goods sold			-				-
Operating Expenses		$	30,417			$	8,776
Net Loss		$	(30,417	)		$	(8,776	)

Revenue

We did not incur any revenues for the three months ended December 31, 2024 or December 31, 2023.

Cost of Goods Sold

We did not incur any cost of goods sold for the three months ended December 31, 2024 or December 31, 2023.

Operating Expenses and Net Loss

Operating expenses increased $21,641, or 246.60%, to $30,417 for the three months ended December 31, 2024 compared to $8,776 for the three months ended December 31, 2023. The increase is due to general and administrative expenses and professional fees incurred related to corporate overhead, and financial and administrative contracted services, such as legal and accounting. Our net loss consisted solely of our operating expenses.

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Liquidity and Capital Resources

As of December 31, 2024, we had current assets of $18,197 and a working capital deficit of $121,677, consisting primarily of accounts payable, accrued payroll and payroll taxes and related party advances. We have relied primarily on short-term, non-interest-bearing, related party advances to fund our operations.

Our financial statements have been prepared assuming that we will continue as a going concern. We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

Our total assets were $18,197 for the quarter ended December 31, 2024, compared to $3,145 for the quarter ended December 31, 2023.

Our current and total liabilities were $139,874 for the quarter ended December 31, 2024, compared to $94,405 for the quarter ended December 31, 2023.

Our stockholders' deficit was $211,031 for the quarter ended December 31, 2024, compared to $180,614 for the quarter ended December 31, 2023.

Cash Flows from Operating Activities

Net cash used in operating activities increased $26,272, or 302.81%, to $34,948 for the quarter ended December 31, 2024, compared to $8,676 for the quarter ended December 31, 2023. The increase in cash used was primarily due to an increase in net loss of $21,641, offset by $100 in depreciation and amortization expense, and $4,531 in accounts payable and accrued liabilities.

Cash Flows from Investing Activities

There were no cash flows used in investing activities for the quarter ended December 31, 2024 or December 31, 2023.

Cash Flows from Financing Activities

Cash flows provided by financing activities increased $37,650, or 304.86%, to $50,000 for the quarter ended December 31, 2024, compared to $12,350 for the quarter ended December 31, 2023, which consisted of related party advances.

Going Concern

Our financial statements have been prepared assuming we will continue as a going concern. As disclosed in Note 2 to our financial statements, we had an accumulated deficit of $211,031 as of December 31, 2024, and limited operations, which raise substantial doubt about our ability to continue as a going concern. Our continued existence is dependent upon our ability to obtain additional funding and implement a business plan that generates sustainable revenues.

Off-Balance Sheet Arrangements

As of the date of this Quarterly Report, 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 are material to investors.

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Plan of Operation and Funding

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.

Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses, and related disclosures. The Company's significant accounting policies are described in Note 3 to the financial statements. Management considers the following policies to be critical because they involve significant judgments and assumptions, and because different assumptions could materially affect the Company's financial condition or results of operations.

Going Concern

The Company assesses its ability to continue as a going concern in accordance with ASC 205-40. In assessing going concern, management evaluates conditions and events that raise substantial doubt about the Company's ability to meet its obligations as they become due within one year after the date that the financial statements are issued. As of December 31, 2024, the Company had not yet established an ongoing source of revenue and had incurred operating losses since inception. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's evaluation of these conditions and plans to mitigate them involve significant judgment. Management believes that without at least $500,000 in additional capital, we will not be able to implement our business plan or achieve commercial viability in the next 12 months.

Use of Estimates

The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. These estimates also affect the reported amounts of expenses during the reporting period. Significant areas requiring the use of management estimates and judgments include, but are not limited to, assessing the recoverability of assets, evaluating the need for impairment, and estimating income tax valuation allowances. Actual results could differ materially from those estimates.

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Fair Value of Financial Instruments

The Company measures certain financial instruments at fair value in accordance with ASC 820, "Fair Value Measurement." The carrying value of cash and related party advances approximates fair value due to their short-term nature. Management's determination of fair value includes assumptions based on market data and may require judgment in the absence of observable inputs.

Income Taxes and Deferred Tax Assets

The Company accounts for income taxes using the liability method under ASC 740. Deferred tax assets are recognized for temporary differences between financial statement and tax bases of assets and liabilities. A valuation allowance is established when it is more likely than not that all or part of a deferred tax asset will not be realized. Determining the amount of valuation allowance requires significant judgment in estimating future taxable income, applicable tax strategies, and the expected timing of reversals of temporary differences.

Material Commitments

None.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment during the next twelve months.