UNITED STATES

SECURITIES AND
EXCHANGE COMMISSION

Washington, DC 20549



FORM 10-QSB

QUARTERLY REPORT UNDER
SECTION 13 OR 15(f) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED JUNE 30, 2002



Commission file number
333-62588

Capstone International
Corporation

6966 Coach Lamp Drive

Chilliwack, B.C.

Canada V2R 2X6

604-819-2550



IRS TAX ID #
66-0349372



PART I: FINANCIAL
INFORMATION



Item 1. Financial
Statements:







CAPSTONE INTERNATIONAL
CORPORATION



(A DEVELOPMENT STAGE
COMPANY)



FINANCIAL STATEMENTS



JUNE 30, 2002 AND JUNE
30, 2001



TABLE OF CONTENTS



Page Number

|INDEPENDENT
      ACCOUNTANT'S REPORT . . . . . . . . . . . . . . . . . . . . . . . . . .
      . | 1                                                                           
|------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------
|                                                                                                  |                                                                             
|FINANCIAL STATEMENT                                                                               |                                                                             
|                                                                                                  |                                                                             
|                                                                                                  | Balance Sheets . .
      . . . . . . . . . . . . . . . . . . . . . . . . . .
|                                                                                                  |                                                                             
|                                                                                                  | Statements of
      Operations and Deficit                                  
|                                                                                                  |                                                                             
|                                                                                                  |                                                                             
|                                                                                                  | Statement of
      Changes in Stockholders' Equity . . . .                  
|                                                                                                  |                                                                             
|                                                                                                  | Statements of Cash
      Flows . . . . . . . . . . . . . . . . . . . .      
|                                                                                                  |                                                                             
|                                                                                                  | Notes to the
      Financial Statements . . . . . . . . . . . . . .         







|David E. Coffey                   | 3651 Lindell Road,
      Suite I, Las Vegas, NV 89103
|--------------------------------- | -----------------------------------------------------
|Certified Public
      Accountant |                                                      





INDEPENDENT ACCOUNTANT'S
REPORT





To the Board of
Directors and Stockholders

of Capstone
International Corporation

Surrey, BC. Canada



I have audited the
accompanying balance sheets of Capstone International Corporation (a development
stage company) as of June 30, 2002 and June 30, 2001 and the related statements
of operations, cash flows, and changes in stockholders' equity for the periods
then ended, as well as the cumulative period from November 16, 2000 (date of
inception) to June 30, 2002. These statements are the responsibility of Capstone
International Corporation's management. My responsibility is to express an
opinion on these financial statements based on my audit.



I conducted my audit in
accordance with generally accepted auditing standards. Those standards require
that I plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. I believe that my audit
provides a reasonable basis for my opinion.



In my opinion, the
accompanying financial statements present fairly, in all material respects, the
financial position of Capstone International Corporation as of June 30, 2002 and
June 30, 2001 and the results of operations, cash flows, and changes in
stockholders' equity for the periods then ended, as well as the cumulative
period from November 16, 2000, in conformity with generally accepted accounting
principles.



The accompanying
financial statements have been prepared assuming that the Company will continue
as a going concern.  The Company has not generated revenues from operations
which raises substantial doubt about its ability to continue as a going
concern.  The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.





David E. Coffey, C.P.A.

Las Vegas, Nevada

December, 2002





CAPSTONE INTERNATIONAL
CORPORATION

(A DEVELOPMENT STAGE
COMPANY)

BALANCE SHEETS





|                                                      |                                                  |                                  | June
      30, 2002 | June
      30, 2001
|----------------------------------------------------- | ------------------------------------------------ | -------------------------------- | ------------------- | -------------------
|ASSETS                                                |                                                  |                                  |                     |                    
|                                                      |                                                  |                                  |                     |                    
|Cash                                                  | $                                                | 0                                | $                   | 15,506             
|                                                      |                                                  |                                  |                     |                    
|                                                      | Total Assets                                     | $                                | 0                   | $                  
|                                                      |                                                  |                                  |                     |                    
|LIABILITIES &
      STOCKHOLDERS' EQUITY              |                                                  |                                  |                     |                    
|                                                      |                                                  |                                  |                     |                    
|Accounts payable                                      | $                                                | 11,852                           | $                   | 0                  
|Common stock sold
      subject to a rescission offer |                                                  | 6,354                            |                     | 0                  
|                                                      |                                                  |                                  |                     |                    
|                                                      | Total Liabilities                                |                                  | 18,206              |                    
|                                                      |                                                  |                                  |                     |                    
|Stockholders'
      Equity                            |                                                  |                                  |                     |                    
|                                                      | Common stock,
      authorized                   |                                  |                     |                    
|                                                      | 100,000,000 shares
      at $.001 par value      |                                  |                     |                    
|                                                      | 2,050,000 shares
      and 100,000 shares,       |                                  |                     |                    
|                                                      | respectively,
      issued and outstanding       |                                  | 2,050               |                    
|                                                      | Additional paid-in
      capital                 |                                  | 18,550              |                    
|                                                      | Deficit
      accumulated during the             |                                  |                     |                    
|                                                      | development stage                                |                                  | (38,806)            |                    
|                                                      |                                                  |                                  |                     |                    
|                                                      |                                                  | Total Stockholders'
      Equity |                     | (18,206)           
|                                                      |                                                  |                                  |                     |                    
|                                                      | Total Liabilities
      and Stockholders' Equity | $                                | 0                   | $                  









































The accompanying notes
are an integral part of

These financial
statements



-2-



CAPSTONE INTERNATIONAL
CORPORATION

(A DEVELOPMENT STAGE
COMPANY)

STATEMENTS OF OPERATIONS
AND DEFICIT

ACCUMULATED DURING THE
DEVELOPMENT STAGE

(With Cumulative Figures
>From Inception)





|                                                       |                            |           | Six months ending
      June 30, |         | >From
      Inception, Nov. 16, 2000 to June 30, 2002
|------------------------------------------------------ | -------------------------- | --------- | -------------------------------- | ------- | -----------------------------------------------------
|                                                       |                            |           | 2002                             |         | 2001                                                 
|Income                                                 | $                          | 0         | $                                | 0       | $                                                    
|                                                       |                            |           |                                  |         |                                                      
|Expenses                                               |                            |           |                                  |         |                                                      
|                                                       | Organizational
      costs |           | 0                                |         | 0                                                    
|                                                       | Professional fees          |           | 13,366                           |         | 4,026                                                
|                                                       | Fees                       |           | 0                                |         | 0                                                    
|                                                       | Office expenses            |           | 351                              |         | 0                                                    
|                                                       | Interest expense           |           | 167                              |         | 0                                                    
|                                                       |                            |           |                                  |         |                                                      
|Total expenses                                         |                            | 13,884    |                                  | 4,026   |                                                      
|                                                       |                            |           |                                  |         |                                                      
|Net loss                                               |                            | (13,884)  |                                  | (4,026) | $                                                    
|                                                       |                            |           |                                  |         |                                                      
|Retained earnings,
      beginning of period           |                            | (24,922)  |                                  | (968)   |                                                      
|                                                       |                            |           |                                  |         |                                                      
|Deficit
      accumulated during the development stage | $                          | (38,806)  |                                  | (4,994) |                                                      
|                                                       |                            |           |                                  |         |                                                      
|Earnings (loss)
      per share, assuming dilution:    |                            |           |                                  |         |                                                      
|Net Loss                                               | $                          | (0.01)    | $                                | (0.01)  | $                                                    
|                                                       |                            |           |                                  |         |                                                      
|Weighted average
      shares outstanding              |                            | 2,050,000 |                                  | 608,333 |                                                      













































The accompanying notes
are an integral part of

These financial
statements.



-3-



CAPSTONE INTERNATIONAL
CORPORATION

(A DEVELOPMENT STAGE
COMPANY)

STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY

FROM NOVEMBER 16, 2000
(Date of Inception) TO JUNE 30, 2002





|                                        | Common Stock |   | Additional
      Paid-in Capital |   | Deficit
      accumul- ated during the development stage |   | Total   
|--------------------------------------- | ------------ | - | -------------------------------- | - | -------------------------------------------------------- | - | --------
|                                        | Shares       |   | Amount                           |   |                                                          |  
|Balance, November
      16, 2000        | --           | $ | --                               | $ | --                                                       | $ | --      
|                                        |              |   |                                  |   |                                                          |   |         
|Issuance of common
      stock for cash |              |   |                                  |   |                                                          |   |         
|November 20, 2000                       | 100,000      |   | 100                              |   | 900                                                      |   | 0       
|                                        |              |   |                                  |   |                                                          |   |         
|Less net loss                           | 0            |   | 0                                |   | 0                                                        |   | (968)   
|                                        |              |   |                                  |   |                                                          |   |         
|Balance, December
      31, 2000        | 100,000      |   | 100                              |   | 900                                                      |   | (968)   
|                                        |              |   |                                  |   |                                                          |   |         
|Issuance of common
      stock for cash |              |   |                                  |   |                                                          |   |         
|May 9, 2001                             | 400,000      |   | 400                              |   | 3,600                                                    |   | 0       
|May 14, 2001                            | 700,000      |   | 700                              |   | 6,300                                                    |   | 0       
|June 14, 2001                           | 850,000      |   | 850                              |   | 7,650                                                    |   | 0       
|                                        |              |   |                                  |   |                                                          |   |         
|Currency
      translation adjustment   | 0            |   | 0                                |   | 100                                                      |   | 0       
|                                        |              |   |                                  |   |                                                          |   |         
|Less net loss                           | 0            |   | 0                                |   | 0                                                        |   | (23,954)
|                                        |              |   |                                  |   |                                                          |   |         
|Balance, December
      31, 2001        | 2,050,000    |   | 2,050                            |   | 18,550                                                   |   | (24,922)
|                                        |              |   |                                  |   |                                                          |   |         
|Less net loss                           | 0            |   | 0                                |   | 0                                                        |   | (13,884)
|                                        |              |   |                                  |   |                                                          |   |         
|Balance, June 30,
      2002            | 2,050,000    | $ | 2,050                            | $ | 18,550                                                   | $ | (38,805)



































The accompanying notes
are an integral part of

these financial
statements.



-4-



CAPSTONE INTERNATIONAL
CORPORATION

(A DEVELOPMENT STAGE
COMPANY)

STATEMENTS OF CASH FLOWS
(With Cumulative Figures From Inception)





|                                           |                                                       |                  |                                                 |         | Six months
      ending June 30, |          | From
      Inception, Nov. 16, 2000 to June 30, 2002
|------------------------------------------ | ----------------------------------------------------- | ---------------- | ----------------------------------------------- | ------- | -------------------------------- | -------- | ----------------------------------------------------
|                                           |                                                       |                  |                                                 |         | 2002                             |          | 2001                                                
|CASH FLOWS
      PROVIDED BY OPERATING     |                                                       |                  |                                                 |         |                                  |         
|ACTIVITIES                                 |                                                       |                  |                                                 |         |                                  |         
|Net Loss                                   | $                                                     | (13,884)         | $                                               | (4,026) | $                                | (38,806)
|Non-cash items
      included in net loss  |                                                       | 0                |                                                 | 0       |                                  | 0       
|Adjustments to
      reconcile net loss to |                                                       |                  |                                                 |         |                                  |         
|                                           | cash used by
      operating activity                 |                  |                                                 |         |                                  |          |                                                     
|                                           |                                                       | Accounts payable |                                                 | 11,123  |                                  | 0        |                                                     
|                                           |                                                       |                  |                                                 |         |                                  |          |                                                     
|                                           |                                                       |                  | NET CASH PROVIDED
      BY OPERATING ACTIVITIES |         | (2,761)                          |          | (4,026)                                             
|                                           |                                                       |                  |                                                 |         |                                  |          |                                                     
|CASH FLOWS FROM
      INVESTING ACTIVITIES |                                                       | 0                |                                                 |         |                                  | 0       
|                                           |                                                       |                  |                                                 |         |                                  |          |                                                     
|CASH FLOWS FROM
      FINANCING ACTIVITIES |                                                       |                  |                                                 |         |                                  |         
|                                           | Sale of common
      stock                            |                  | 0                                               |         | 1,950                            |          | 2,114                                               
|                                           | Paid-in capital                                       |                  | 0                                               |         | 17,650                           |          | 18,550                                              
|                                           | Common stock sold
      subject to a rescission offer |                  | 0                                               |         | 0                                |          | 6,354                                               
|                                           |                                                       |                  |                                                 |         |                                  |          |                                                     
|                                           |                                                       |                  | NET CASH PROVIDED
      BY FINANCING ACTIVITIES |         | 0                                |          | 19,500                                              
|                                           |                                                       |                  |                                                 |         |                                  |          |                                                     
|                                           |                                                       |                  | NET INCREASE IN
      CASH                      |         | (2,761)                          |          | 15,474                                              
|                                           |                                                       |                  |                                                 |         |                                  |          |                                                     
|CASH AT BEGINNING
      OF PERIOD          |                                                       | 2,761            |                                                 | 32      |                                  |         
|                                           |                                                       |                  |                                                 |         |                                  |          |                                                     
|                                           |                                                       |                  | CASH AT END OF
      PERIOD                     | $       | 0                                | $        | 15,506                                              









































The accompanying notes
are an integral part of

These financial
statements



-5-



CAPSTONE INTERNATIONAL
CORPORATION

(A DEVELOPMENT STAGE
COMPANY)

NOTES TO THE FINANCIAL
STATEMENTS

JUNE 30, 2002 AND JUNE
30, 2001



NOTE A SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES



> The Company was
>         incorporated on November 16, 2000 under the laws of the State of
>         Delaware. The business purpose of the Company is to acquire funeral
>         facilities and the selling of prepaid funeral programs.
>         
>         The Company will
>         adopt accounting policies and procedures based upon the nature of future
>         transactions.

NOTE B EARINGS (LOSS)
PER SHARE



> Basic EPS is
>         determined using net income divided by the weighted average shares
>         outstanding during the period. Diluted EPS is computed by dividing net
>         income by the weighted average shares outstanding, assuming all dilutive
>         potential common shares were issued. Since the Company has no common
>         shares that are potentially issuable, such as stock options, convertible
>         securities, or warrants, basic and diluted EPS are the same.

NOTE C COMMON STOCK
ISSUANCE



> On November 20,
>         2000 the Company sold 100,000 shares of its common stock at $.01 per
>         share for $1,000. On May 9, 2001 the Company sold 400,000 shares of its
>         common stock at $.01 per share for $4,000. On May 14, 2001 the Company
>         sold 700,000 shares of its common stock at $.01 per share for $7,000. On
>         June 14, 2001 the Company sold 850,000 shares of its common stock at
>         $.01 per share for $8,500. On November 14, 2001 the Company sold 63,536
>         shares of its common stock at $.10 per share for $6,354, subject to a
>         rescission offer which expired unexercised on July 15, 2002.

NOTE D GOING CONCERN



> The Company's
>         financial statements are prepared using generally accepted accounting
>         principles applicable to a going concern, which contemplates the
>         realization of assets and liquidation of liabilities in the normal
>         course of business. However, the Company has not generated any revenues
>         from its planned principal operations through June 30, 2002. Without
>         realization of additional capital, it would be unlikely for the Company
>         to continue as a going concern.
>         
>         
>         
>         
>         
>         
>         
>         
>         
>         
>         
>         
>         
>         -6-

Item 2: Management's
Discussion and Analysis:



Capstone plans to market
its insurance and annuity products differently from other sellers of the same
products. Capstone's plan is to market its products through the existing network
of general insurance and financial service brokers and agents. By using this
pre-existing network, Capstone will gain instant access to hundreds of fully
staffed and operational retail locations. This will lessen the financial
pressure on the Company, as there will be no need to license and train
employees, or to provide equipment, facilities and administrative support for a
large workforce.



During the past year
Capstone management has met with numerous insurance-underwriting firms in an
effort to secure insurance and annuity products to sell. At present the Company
has narrowed its list of likely candidates to two well-established American
companies. Both firms have been in the business of providing final needs
insurance and annuity products in the United States for many years. One of the
firms has been in business for over 25 years. Both firms are very interested in
gaining a presence in the Canadian market. Neither of the firms' products is
currently available in Canada.



The underwriting firms
are responsible for securing proper licensing from the appropriate Canadian
authorities. One of the firms with whom we are negotiating has secured the
necessary licenses for most Canadian jurisdictions, but is still waiting for
approval in British Columbia. The other firm has made the necessary enquiries
and advises us that licensing will be forthcoming as required. Capstone expects
to negotiate a final contract with an underwriter shortly after our company's
stock is approved for trading. The Company plans on confirming sales agency
agreements immediately after the underwriter has been selected.



Capstone has had ongoing
discussions with a number of general insurance brokers and agents for almost one
year. The firms with whom it met have indicated a definite interest in offering
the Capstone insurance and annuity products for sale. The Company continues to
meet with potential sellers on a regular basis. At the time of this filing
Capstone has not signed any contracts or agreements with sellers, as it would be
imprudent to do so until the Company has a contract in place with an
underwriter.



In addition to meeting
with potential underwriters, sales brokers and agents, Capstone has also done a
considerable amount of work developing training materials. A draft of the
materials has been completed and edited, and is ready to go to production. The
Company is waiting until an underwriter has been selected in case modifications
will be required to the materials. When the underwriter has been retained the
package will be reviewed by the Company's consultant and put into print.
Capstone anticipates having the materials ready for distribution to sales
brokers and agents as required.



Although Capstone has
not yet completed negotiations on a re-sellers agreement nor settled on a final
fee or commission structure with an underwriting firm, the Company believes it
can generate gross revenues of between seventeen percent (17%) to twenty-three
percent (23%) on the insurance policies and annuity contracts sold. The final
amount will depend upon the age of the policy/contract holder, whether it is an
insurance policy or an annuity and the payment terms.



During the first year of
operations, Capstone will concentrate its efforts exclusively on building its
business in British Columbia. As the Company gains experience, and develops
sufficient revenues from sales it will expand its business eastward across the
country. At this time, the Company has no plans to expand outside Canada



Item 3. Effectiveness of
the registrant's disclosure controls and procedures



Within the 90-day period
prior to the filing of this report, the Company carried out an evaluation of the
effectiveness of the Company's disclosure controls and procedures (as defined
by Rule 13a-14(c) under the Securities Exchange Act of 1934) under the
supervision and with the participation of the Company's chief executive
officer and chief financial officer. Based on and as of the date of such
evaluation, the aforementioned officers have concluded that the Company's
disclosure controls and procedures were effective.

The Company also
maintains a system of internal accounting controls that is designed to provide
assurance that assets are safeguarded and that transactions are executed in
accordance with management's authorization and properly recorded. This system
is continually reviewed and is augmented by written policies and procedures, the
careful selection and training of qualified personnel and an internal audit
program to monitor its effectiveness. During the first quarter of fiscal year
2003, there were no significant changes to this system of internal controls or
in other factors that could significantly affect those controls.



Item 6. Exhibits and
Reports on Form 8-K

Exhibits:



|Exhibit No. | Document                                                                                                                                                                         | Location        
|----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------
|3.1         | Articles of
      Incorporation                                                                                                                                                  | Previously Filed
|3.2         | Bylaws                                                                                                                                                                           | Previously Filed
|99.1        | Certification of
      the Chief Executive Officer of the Company pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Included        
|99.1        | Certification of
      the Chief Executive Officer of the Company pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002                                                | Included        



Reports on Form 8-K



None





SIGNATURES





In accordance with the
requirements of the Exchange Act, the registrant caused this amended report to
be signed on its behalf by the undersigned, thereunto duly authorized.



CAPSTONE INTERNATIONAL
CORPORATION



DATE: December 23, 2002





/s/ Darryl Mills

Darryl Mills

President and duly
authorized officer





CERTIFICATION PURSUANT
TO SECTION 302

OF THE SARBANES-OXLEY
ACT OF 2002





I, Darryl Mills, certify
that:



1. I have reviewed this
quarterly report on Form 10-QSB of Capstone International Corporation for the
quarter ended June 30, 2002;



2. Based on my
knowledge, this quarterly 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 quarterly report;



3. Based on my
knowledge, the financial statements, and other financial information included in
this quarterly 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 quarterly report.



4. The registrant's
other certifying offering officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure
controls and procedures 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
quarterly report is being prepared; b) evaluated the effectiveness of the
registrant's disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the "Evaluation
Date"); and c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;



5. The registrant's
other certifying officers and I have disclosed, based on our most recent
evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function): a) all
significant deficiencies in the design or operation of internal controls which
could adversely affect the registrant's ability to record, process, summarize
and report financial data and have identified for the registrant's auditors any
material weaknesses in internal controls; and b) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the registrant's internal controls; and



6. The registrant's
other certifying officers and I have indicated in this quarterly report whether
or not there were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.













Date: December 23, 2002





/s/ Darrl Mills

Darryl Mills

Chief Executive Officer