Quarterly Report for Quarter Ending June 30, 2025 (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.

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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.

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 June 30, 2025, we had an accumulated deficit of $345,481. 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 June 30, 2025 compared to the three months ended June 30, 2024

		Three months ended June 30, 2025				Three months ended June 30, 2024				Nine months ended June 30, 2025				Nine months ended June 30, 2024
Revenues		$	-			$	-			$	-			$	-
Cost of goods sold			-				-				-				-
Operating Expenses
Net Loss			(103,049	)			(4,785	)			(164,867	)			(19,634	)

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Three Months Ended June 30, 2025

Revenue

We did not incur any revenues for the three months ended June 30, 2025 or June 30, 2024.

Cost of Goods Sold

We did not incur any cost of goods sold for the three months ended June 30, 2025 or June 30, 2024.

Operating Expenses and Net Loss

Operating expenses increased $98,264, or 2054%, to $103,049 for the three months ended June 30, 2025 compared to $4,785 for the three months ended June 30, 2024. 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.

Nine Months Ended June 30, 2025

Revenue

We did not incur any revenues for the nine months ended June 30, 2025 or June 30, 2024.

Cost of Goods Sold

We did not incur any cost of goods sold for the nine months ended June 30, 2025 or June 30, 2024.

Operating Expenses and Net Loss

Operating expenses increased $147,066, or 826%, to $164,867 for the nine months ended June 30, 2025 compared to $17,801 for the nine months ended June 30, 2024. 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.

Liquidity and Capital Resources

As of June 30, 2025, we had current assets of $2,310 and a working capital deficit of $256,127, 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. We believe we will require $500,000 in working capital to cover our operating expenses over the next twelve months.

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 $2,310 for the quarter ended June 30, 2025, compared to $3,145 for the quarter ended September 30, 2024.

Our current and total liabilities were $258,437 for the quarter ended June 30, 2025, compared to $94,405 for the quarter ended September 30, 2024.

Our stockholders' deficit was $256,127 for the quarter ended June 30, 2025, compared to $91,260 for the quarter ended September 30, 2024.

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Cash Flows from Operating Activities

Net cash used in operating activities increased $103,929, or 800%, to $116,915 for the nine months ended June 30, 2025, compared to $12,986 for the nine months ended June 30, 2024. The increase in cash used was primarily due to an increase in net loss of $164,867, offset by $0 in depreciation and amortization expense, and $47,952 in accounts payable and accrued liabilities.

Cash Flows from Investing Activities

There were no cash flows used in investing activities for the quarter ended June 30, 2025 or June 30, 2024.

Cash Flows from Financing Activities

Cash flows provided by financing activities increased $98,730, or 569%, to $116,080 for the nine months ended June 30, 2025, compared to $17,350 for the nine months ended June 30, 2024, 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 $345,481 as of June 30, 2025, 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.

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. We believe that we will require $500,000 in working capital to fund our needs over the next twelve months.

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.

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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

Management evaluates our ability to continue as a going concern in accordance with ASC 205-40. This requires judgment in assessing projected cash flows, anticipated financing, and timing of expenditures. The estimate is significant because we have limited cash and no revenues, and small changes in the assumptions about fundraising success or operating expenses can materially affect whether we are able to continue operations. We prepare short- and medium-term cash flow forecasts, review the status of financing options, and evaluate our historical burn rates when making this judgment. As of June 30, 2025, we have not yet established an ongoing source of revenue and have incurred operating losses since inception. These factors raise substantial doubt about the Company's ability to continue as a going concern. 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 preparation of financial statements requires estimates such as the timing and collectability of liabilities, valuation allowances for deferred tax assets, and accruals for expenses. These estimates are significant because we have limited historical operating data and rely heavily on management's assumptions. For example, accrued payroll and related taxes are based on management's assessment of services performed and statutory obligations. Management evaluates these estimates by comparing them with subsequent actual results, consulting with legal and tax advisors, and updating assumptions quarterly.

Fair Value of Financial Instruments

The Company measures certain financial instruments at fair value in accordance with ASC 820, "Fair Value Measurement." Because we have limited assets and liabilities, most financial instruments are carried at cost. However, related party advances are payable on demand and have no stated interest rate. We determine their fair value by considering the short-term nature of the obligations and the lack of market interest, concluding that carrying value approximates fair value. This judgment is significant because, if more formal debt terms were applied (e.g., interest-bearing notes), reported liabilities and expenses could differ materially.

Income Taxes and Deferred Tax Assets

Management evaluates the realizability of deferred tax assets arising from net operating losses. These judgments are significant because recognition depends on our ability to generate future taxable income, which is uncertain given our development stage. Management establishes a full valuation allowance because it is more likely than not that the deferred tax assets will not be realized. Each quarter, management reviews updated forecasts and industry developments to reassess this allowance.

Material Commitments

None.

Purchase of Significant Equipment

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