UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

     [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                    FOR THE FISCAL YEAR ENDED MARCH 31, 2007

   [_] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

        FOR THE TRANSITION PERIOD FROM ______________ TO________________

                           COMMISSION FILE NO. 0-15840

                              KINGSTON SYSTEMS INC.

                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

               DELAWARE                                14-1688816
       ---------------------                           ----------
    (STATE OR OTHER JURISDICTION                      (IRS EMPLOYER
  OF INCORPORATION OR ORGANIZATION)               IDENTIFICATION NUMBER)


                       8 MERRILL INDUSTRIAL DRIVE UNIT 12
                          HAMPTON, NEW HAMPSHIRE 03842
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                 (603) 758-1333
                           (ISSUER'S TELEPHONE NUMBER)

    Securities registered under Section 12(b) of the Securities Exchange Act
                   of 1934, as amended ("Exchange Act"): NONE.

               Title of each class name of each exchange on which
                     registered Securities registered under
                       Section 12(g) of the Exchange Act:

                    COMMON STOCK, PAR VALUE $0.01 PER SHARE.

Check whether the issuer (1) filed all reports required to be filed under
Section 13 or 15(d) of the Exchange Act, during the past 12 months (or for such
shorter period that the Issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. |X| Yes |_| No

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. |X| Yes |_| No

Check whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). |_| Yes |X| No

The Issuer's revenues for the fiscal year ended March 31, 2007 were $604,221.

The aggregate market value of the voting stock held by non-affiliates of the
Issuer, computed by reference to the price at which the stock was sold, or the
average bid and ask prices of such stock as of July 12, 2007, was $2,518,401.
Shares of common stock held by each executive officer and director, and by
certain persons who own 5% or more of the outstanding common stock, have been
excluded in that such persons may be deemed to be affiliates. This determination
of affiliate status is not necessarily a conclusive determination for other
purposes.

Number of shares outstanding of Issuer's common stock, $0.01 par value,
outstanding on July 12, 2007: 5,576,234


Documents Incorporated by Reference: Certificate of Incorporation, By-laws and
Code of Ethics.

Transitional Small Business Disclosure Format (Check one): Yes |_|; No |X|

<PAGE>





                                TABLE OF CONTENTS

                                                                         Page
                                     PART I                            Number(s)
                                                                       ---------

Item 1.  Description of Business                                          2-8
Item 2.  Description of Property                                           8
Item 3.  Legal Proceedings                                                 8
Item 4.  Submission of Matters to a Vote of Security Holders               8

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder                  8
         Matters
Item 6.  Management's Discussion and Analysis or Plan                    8-14
         of Operations
Item 7.  Consolidated Financial Statements                                14
Item 8A. Controls and Procedures                                          15

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance With Section 16(a) of the Exchange Act               16-17
Item 10. Executive Compensation                                           17
Item 11. Security Ownership of Certain Beneficial Owners and
         Management and Related Stockholder Matters                      17-18
Item 12. Certain Relationships and Related Transactions                   18
Item 13. Exhibits                                                         19
Item 14. Principal Accountant Fees and Services                           19

Signatures                                                                19


<PAGE>



                                Form 10-KSB Page 2


                                     PART I

ITEM 1. BUSINESS

Overview


Kingston Systems Inc. ("Kingston" or the "Company") was incorporated in 1983 and
re-incorporated in Delaware on January 12, 1987. The Company operated a
proprietary recovery system that reclaimed paper pulp and non-biodegradable
polyethylene from packaging material scrap. The Company sold the recovered fiber
as substitute for virgin wood pulp and the reclaimed polyethylene for use in
injection molding. The Company experienced some difficult and turbulent periods
and was dormant for an extended period, from its Securities and Exchange
Commission ("SEC") filing of a Form 10-Q for the three and nine month periods
ended December 31, 1988 until its filing of a Form 10-KSB for the year ended
March 31, 2005. In August of 2005, the Company acquired all of the issued and
outstanding common stock of Parallel Robotics Systems Corporation ("Robotics"),
making Robotics a wholly-owned subsidiary (see Item 5 and Note 2 to the
consolidated financial statements appearing elsewhere herein).

Description of the Parallel Robotics business and products

Robotics is a New Hampshire corporation headquartered in Hampton, New Hampshire.
Robotics was formed in February 2002 when Robotics obtained a licensing
agreement from Hexel Corporation (see Note 4 to the consolidated financial
statements appearing elsewhere herein) to utilize their intellectual property to
build parallel robots. Robotics is engaged in the development, manufacture and
marketing, directly or through collaborations with one or more third parties, of
proprietary materials handling and machine technology, and hardware and software
based upon such technology, which is generally referred to as hexapod
technology.

Robotics is engaged in the development of technology, consisting of software and
robotic hardware, which is based upon mathematical models. These models enable
the creation of machinery and integrated computer software, known as a hexapod,
that can, unlike any other apparatus presently available in the marketplace or,
to Robotics' knowledge, under development, handle, manipulate and machine
materials of all sizes (from microchips to airplane parts) at high speed and
with great precision, potentially resulting in significant efficiencies and cost
savings to a wide array of manufacturers. This level of speed and precision is
made possible by the models' ability to solve the problems of moving and
positioning objects quickly, precisely and in the presence of considerable
stresses and forces often associated with the manufacturing environment, along
the six axes of three-dimensional space (i.e. X, Y, Z, Yaw, Pitch and Roll), and
the technology's expected ability to translate those solutions into physical
reality. In contrast, other technology available in the marketplace offers only
a multi-step sequential process which, management believes, is considerably less
efficient and effective than Robotics' technology, which operates in parallel,
and not in sequential steps.

Hexapod robots are made up of six legs (or actuators) that cause the movements
of a motion platform to occur with respect to an immobile base. For the motion
platform to move, these legs are mounted into twelve joints (ball joints in the
Company's current machines) that allow the six legs to change the distance
between the two platforms. The six legs are generally arranged into three
triangular pairs, with the top end of the three triangles, where the two legs
are mounted next to each other, attached at the movable surface, i.e. the
working part of the robot. If the two legs next to each other are not attached
at a single joint, but to two separate joints, then there are 12 joints in the
robot, with six joints (i.e. three pairs) at the top and six joints at the
bottom (the Company uses ball joints for all of its current robots). The Company
refers to this as a "12 node" hexapod. If, on the other hand, the two legs next
to each other are attached to a single joint, then there would only be 9 nodes
in this machine, with three at the top and six at the bottom. These joints (both
single and paired) are also called "gimbals." The Company licenses patented
technology that includes a device that allows the two top legs in each pair on a
nine-node robot to share a single joint, called a "triangular gimbal" or a
"bi-ball" joint. The movement of the robot's top surface can be accomplished in
one of two ways in the Company's machines: the length of the legs can change
(i.e. this type of leg is called an "actuator" and is used in the "P" series);
or the bottom joints of each leg can be mounted on a carriage that rotates
around a circular base, thereby changing the distance between the bottom joints
(used in the "R" series).

Robotics' two different platforms (or models) use a programmable robotic device
and the same proprietary software. The P Series, which is a conventional
parallel mechanism where each of the six servo driven actuators, or legs,
changes in length to create motion, has until recently come in a large and small
size referred to as the P 1000 and P 2000, respectively. The Company has
recently shipped a new, larger unit named the P 3000 for use in the water jet
cutting industry. The R Series, which has rigid fixed length legs and derives
its movement from the precise servo-driven actuation of the lower tracks around
a fixed rotary track, also comes in two sizes which are referred to as the R
1000 and R 2000.

<PAGE>

                                Form 10-KSB Page 3

The P Series device provides precise positioning combined with an ability to
provide superior stiffness compared to conventional robots which typically have
only one arm. The main uses, for customers doing either testing or simulation,
are to provide motion using the Company's base for either repetitive motion
under heavy loads or 6 degrees of freedom testing (i.e. X, Y, Z, Yaw, Pitch and
Roll movements are all being tested), where force measurement is required and an
experiment cannot allow for a platform that will deflect. Examples of these uses
would include, but not be limited to: force feedback and repetitive motion on
footwear; positioning of medical devices for testing; and failure testing of new
products for the defense and oil industry.

For industrial applications, the P Series provides 6 degrees of freedom of
motion with superior accuracy and an ability to deal with variety or
inconsistencies in the parts, the environment, or the setup of the pieces.
Examples of these would include: finding light bulbs that are in various
locations and positioning them in a housing according to the orientation of the
filaments prior to laser welding; compensating for variation in the size and
taper of a water jet cutting stream, allowing for greater accuracy in the
process; and moving a plastic part under a laser tool to remove flash after
molding.

The R Series provides precise positioning combined with an ability to provide
superior stiffness, as compared to conventional "one armed" robots. In addition,
the R Series also has one rotary axis with the ability to provide a much greater
range of motion around this axis. The R Series product has the theoretical
ability to spin infinitely around its "yaw" axis, depending on how it is built.
(The P Series provides more X, Y & Z motions in a similar-sized package than the
R Series. Therefore this is an application-specific choice when the customer is
deciding which of these two robot types to purchase from the Company).

Much like the P Series, the R Series provides motion using its base for either
repetitive motion under heavy loads or 6 degrees of freedom testing where force
measurement is required (and experiments cannot allow for a platform that will
deflect). The ability to spin simulates, for example, the motion of an elbow or
knee, which requires motion in one axis. A company can develop an experiment
that will include an entire range of motion and still have the needed stiffness
to provide accurate results. Examples of these would include, but not be limited
to: force feedback and repetitive motion for prosthetics; and a motion base for
ride or flight simulation.

Robotics' success is heavily dependent upon proprietary technology. Robotics
relies on a combination of patent, trade secret, copyright and trademark law,
non-disclosure agreements and technical measures to protect its rights
pertaining to such products (Robotics co-owns patents on a Triangular Gimbal,
Patent No: US 6,240,799 B1 and Systems and Methods Employing a Rotary Track,
Patent No: US 6,196,081 B1 for machining and manufacturing, key components of
its robots). Such protection may not preclude competitors from developing
products with similar features. Robotics' success will depend in part on its
ability to obtain and defend United States and foreign patent protection for its
products and to preserve its trade secrets. In addition to seeking patent
protection, Robotics does (and will continue to) rely on contractual
arrangements and trade secrets to protect proprietary technology.

Robotics holds a non-exclusive license on patents for hexapod technology. This
license is irrevocable, for so long as Robotics continues to honor its payment
obligations. The Company will continue to seek patent protection as new products
are developed. Although patenting of Robotics' core technology is important,
Robotics' largest technological advantage continues to be the interrelationship
of this hardware with Robotics' proprietary software, which management believes
is unique and revolutionary. For example, the large spherical joints provide the
Company's products a much stiffer platform than the other hexapods. The Company
is the first to employ these types of joints in this type of robotic technology.
Also, they allow the Company's products to very accurately define where the
exact pivotal locations of the nodes are in relation to the software's
understanding of those points. To management's knowledge, the Company's
competitors use gimbals or universal joints that are not able to accurately
define the exact location of the nodes. Degree of accuracy is one of the most
critical selling points for the Company's type of robotics products.

Management believes that even if a competitor could also obtain a non-exclusive
license from the owners of Robotics' licensed technology, or otherwise lawfully
reproduce any of the Robotics' hardware devices, the absence of lawful access to
Robotics' proprietary software would make it extremely difficult or
prohibitively expensive to render any of such devices functional at levels of
performance comparable to those achieved by Robotics' devices. Management
believes that the hardware devices themselves are not readily susceptible to
duplication, and that the software is replete with subtleties that would be
difficult to develop independently. Management believes that most parties in the
market would conclude that it would be preferable simply to license Robotics'
technology on a consensual basis.

The software interface continues to evolve and yield refinements. Robotics has
chosen not to patent this interface, but to hold it as a "trade secret" (similar
to the formula for Coca-Cola). By patenting or copyrighting this product,
Robotics would reveal how it has accomplished many of its product advantages. By
protecting this information as a non-public trade secret, management believes
Robotics will more effectively create and preserve technical, financial and
timing barriers to replicating Robotics' technological innovations. Access to
the software source code is granted only to selected individuals. This code is
maintained in the corporate offices and off-site for redundancy. No source code
is made available to the Company's customers. Only executable application data
is distributed, with the exception of small amounts of user-accessible interface
modules. Copyright notices are included in the executables. This software is
co-owned with the Hexel Corporation, the corporation that previously developed
the robotic patents and licensed the robotic technology to Robotics.

<PAGE>

                                Form 10-KSB Page 4

Robotics is currently assembling its platforms at its Hampton, NH facilities.
These machines are manufactured and assembled with many standard parts and
components. In areas where specialty parts are required, Robotics identifies
three or more sources for creating these specialty parts. The purpose of three
sources is to avoid sole source urgent delivery issues, as well as to have the
standard purchasing practice of target pricing for best price and delivery from
qualified suppliers.

Robotics currently supports its machines with company-employed engineers. It is
anticipated that, over time, distributors will provide service support to
customers. Service will be performed on site and will include both hardware and
software assistance. As more products are sold, service will be outsourced to
existing firms that currently perform this service for today's machinery. As
Robotics licenses technology, it is anticipated that buyers would use their
existing service channels to maintain future products.

Research and development will continue to be a priority of Robotics, with the
aim of providing both standardized and custom advanced hardware and software
solutions to its customers in a wide variety of machine tooling, manufacturing
and other commercial settings (see Item 6, "Plan of Operations").

Markets and Business Strategy

The Company's Robotics subsidiary markets its products in a number of markets,
primarily the bio-medical, automotive assembly, defense, education and water-jet
markets. In the biomedical market, a number of companies and universities in the
United States, Canada and Germany use the Company's P and R Series equipment to
manipulate and simulate cadaver or prosthetic body parts for motion studies and
force feed back analysis. In the automotive market, Osram Sylvania uses the
Company's P Series robots in conjunction with a vision system to position light
bulbs in a high speed laser welding operation for their automotive line. In the
defense market, BAE Systems and Astronics, Inc. use the Company's P and R Series
products for testing functionality during rapid motion on some of their defense
related products. In the water-jet market, a customer named TSM Inc. uses one of
the Company's P Series units to remove the flashing from metal casings. Lastly,
in the educational market, MIT uses the Company's P Series product to provide
motion to test some of their new control schemes for damping vibration and
motion on conventional robots during travel.

The percentage of the Company's revenues derived from each of the aforementioned
markets for the year ended March 31, 2007 is as follows: Biomedical - 25.8%;
Automotive - 21.9%; Defense - 26.0%; Water-jet - 19.4%; and Educational - 5.7%.

Robotics' primary marketing medium is its small, experienced sales staff.
Robotics competes against established products that employ older technology and,
therefore, cannot perform the range of movement which the Robotics' products can
perform. In the machine tool market, the Company competes against 3 axis and 5
axis machines, as well as conventional robotics, which each have their
disadvantages in relation to the Company's products. Serial Link 3 Axis machines
are made by numerous companies such as Haas Automation, Inc., Fadal Machining
Centers, LLC and many others. These are price competitive machines, but are
limited in their ability to move in relation to linear motions of X, Y & Z. The
rotational axes (Yaw, Pitch & Roll) are ignored. Along with limited travel,
these products are built for specialized applications like milling or other
machining tasks and, unlike the Robotics' unit, these three axis machines cannot
also do laser or water jet cutting with essentially the same machine. Also, due
to the nature of a serial link system, the customer's application has to be
placed very specifically in relation to the manufacturer's equipment. If these
serial link systems are used as the manufacturer has intended, then the customer
is able to efficiently and effectively utilize the manufacturer's equipment. If
the application is not conventional in the way intended by the manufacturer, it
is extremely costly and difficult for the customer to integrate their
application into the serial link equipment.

Serial Link 5 Axis products are also made by numerous companies such as Mori
Sieki, DMG and Cincinnati Milacron. These products are very expensive and,
although they provide for two of the rotations, they do not possess the ability
to provide a sixth degree of freedom. Some of these are configured to provide
Pitch and Yaw and some Pitch and Roll. All of the Company's robotics devices
provide all three rotations-Yaw, Pitch and Roll. Similar to the 3 axis
offerings, these devices are very difficult to integrate or program into the
wide variety of tasks that are outside the scope of the specific applications
these devices were built to perform.

Conventional (anthropomorphic) robots are made by numerous companies such as
Fanuc Robotics, ABB, and Motoman, as well as many others. These products provide
a wide range of capabilities, are usually priced competitively but, for some of
the more capable offerings, are very expensive. However, this type of product is
not able to compete with the Company's product in terms of stiffness. This
limitation virtually eliminates its ability to compete in the manufacturing
applications that require accuracy and speed under a varying load. Along with
their deficiencies in stiffness and limited range of movement, these products
are usually intended to move a tool through a specified work space. A customer
who wishes to move their product or switch between moving the product and a tool
has a very difficult time utilizing this equipment.

These technological advantages give Robotics a significant competitive advantage
in the marketplace. In the future, Robotics may adopt a strategy of pursuing the
licensing of Robotics' core technology to strategic alliance partners. By
establishing such strategic relationships and leveraging the manufacturing and
marketing strengths of such strategic partners, Robotics hopes to gain greater
recognition.

<PAGE>

                                Form 10-KSB Page 5

Robotics intends to focus on the biomedical markets. Management believes that
there are no other products available in this market that can effectively
perform 6 axis simultaneous movement of an end attachment or positioning
platform with the same degree of reliability, repeatability and accuracy.
Ongoing projects in which Robotics is also currently involved include further
penetrating the automotive parts assembly markets, as well as precise
positioning for defense related applications and contractors. Robotics will
continue to identify, develop and deliver other innovative and cost-efficient
machine hardware and software enhancements, adaptations and customized solutions
utilizing its proprietary hexapod technology.

Robotics has two major revenue sources: 1. assembling and selling two standard
products (the R and P Series machines) and; 2. creating custom "engineered to
order" products where customers are willing to pay for the engineering and
development costs. The engineered to order products are usually variations of
the R and P series devices, but can also be custom devices for a customer
interested in utilizing the Company's engineering expertise. The percentage of
revenue from the R and P Series machines for the year ended March 31, 2007 was
53.3%. The percentage of revenue from engineered to order products for that same
period was 46.7%.

Although Robotics has chosen to develop these two platforms as its initial
hexapod applications, its core technology allows the development of many
different types of hexapods. In addition, each of the two platforms are scalable
over a very wide range of applications with the smallest standard unit in use
approximately the size of a basketball and with the largest approximately the
size of a large refrigerator. Robotics' technology is valuable in a wide variety
of industries. Management believes that the technology can be used to develop
very large machines capable of performing operations on structures such as
aircraft, or much smaller machines for use in such industries as silicon wafer
handling and testing. Due to the complex mathematical problems inherent in
developing the software to effectively operate a hexapod, management believes
that no other existing or aspiring hexapod or machine tool manufacturer
has achieved workable solutions to such mathematical problems and translated
such solutions into viable hexapod software.

While Robotics will most likely continue to manufacture and market biomedical
testing machines, Robotics also intends to adopt a strategy of pursuing the
licensing of its core technology to strategic alliance partners. These partners
may manufacture and distribute entire machines, or Robotics may elect to provide
only the core components. This is a strategy comparable to that of Intel
Corporation, whereby Intel manufactures the chips used in most IBM compatible
personal computers. Much like the "Intel Inside" concept, Robotics hopes to be
the provider of 6 degree of freedom robots to various applications. By
establishing such strategic relationships and leveraging the manufacturing and
marketing strengths of such strategic partners, Robotics hopes to gain greater
recognition. At this time, Robotics has no strategic partnerships.

Customers

Through its Robotics subsidiary, the Company sold robots to 4 major customers
for the year ended March 31, 2007. The sales to those customers accounted for
approximately 85% of the period's total sales. The companies are in the
water-jet, automotive, biomedical and defense industries. Those customers are:
TSM Inc., Osram Sylvania, University of Calgary and Astronics Advanced
Electronics. As a note, manufacturers that use the Company's robots are
Osram-Sylvania, (manufacture automotive light bulbs), Adidas and TSM (water-jet
cutting in a machine shop environment).

The Company is not dependent upon these customers for future sales, in that it
is unlikely that any customer in these markets (i.e. primarily research and
development applications) will place a succession of repeat orders.
Occasionally, one of these types of customers will buy a second or third
machine, but significant additional purchases are unlikely. There are no robot
order contracts in production with any of these customers at this time. There is
an order from Jet Edge (related to a customer of Jet Edge in the defense
industry) that was received and went into production during the first quarter of
the Company's 2008 fiscal year.

In addition to the sale of robots, Robotics also receives revenue from the
service of existing systems. For the year ended March 31, 2007, the Company
derived 2.9% of its revenue from service of existing systems and 97.1% of its
revenue from sales of its robotic products.

Competition

Robotics' products compete against established products that employ older
technology. While Robotics is not aware of any products that incorporate
technology which is equivalent to that of Robotics' products, it is conceivable
that, in the future, other competitors could develop products based on different
technology that does not infringe on Robotics' patent or other rights, and that
may provide capabilities similar or superior to Robotics' products.

<PAGE>



                                Form 10-KSB Page 6

In the hexapod market, there are two companies producing products that compete
in similar markets to Robotics. One company from Japan, Fanuc Robotics, has a
product similar to Robotics' P 2000 product, called the F200IB, and a German
company named PI Instruments, produces a product similar to Robotics' P 1000
product. In regard to the F200IB, the Robotics' product is able to publish and
achieve accuracies and forces not offered by the Japanese manufacturer. In
regard to the German product, the Robotics' device offers a larger range of
motion in a similar work space. In both cases, Robotics is competitive from a
pricing standpoint and able to offer customization that competitors are unlikely
able to offer.

Along with hexapod manufacturers, Robotics frequently competes against
traditional robot manufacturers. Robotics offers a robot that is much more
accurate than these traditional robotic devices. Due to the mechanical
advantages of Robotics' equipment over these standard devices, it is unlikely
that they will be able to compete with the Robotics' devices in terms of
accuracy or stiffness.

Although the size of the hexapod robotic market is not known, it is likely that
PI Instruments and Fanuc Robotics are selling more robots than Robotics per
year. Robotics is likely third in this market. However, Robotics believes that
its product provides for capabilities previously not available from any hexapod
manufacturers in its targeted markets. The Company is seeking to introduce its
products to potential customers that are not aware that there is a product that
can provide a better solution. The Company's initial efforts are focused on
introducing the products to the various industries' "Early Adapters". The
Company then intends to expand its service and sales capability to meet the
demands of the mainstream market. The three targets the Company is focused on
are as follows:

     o    Custom or Flexible Manufacturing

     The Company provides an accurate and stiff motion platform that can be
     easily integrated to move a tool or a platform under a stationary tool.
     This product can be sized to fit a particular application and its accuracy,
     stiffness and cost can be scaled based on the application. By giving this
     type of flexibility to developers introducing new products, the Company can
     greatly decrease their time to market and the cost of integration.
     Currently this is a multi-billion dollar industry and the Company's product
     will allow for new players to enter the markets with competitive or
     improved products. An example of this would be the P 3000 Water-Jet Cutter
     "Hex-a-Jet" that Robotics helped introduce in 2006.

     o    Biomedical Testing

     Previous to the Company's product, most of the testing in this market was
     either done on theoretical or mathematical models or using devices that,
     due to their lack of stiffness or range of motion, provided a less than
     realistic model for testing, rendering their results suspect. The Company's
     product allows researchers to perform real life tests to prove or model
     their experiments and achieve the verification needed to prove their
     theories or perform life cycle testing. Currently, the Company believes
     that this is one of the fastest growing markets for new equipment.

     o    Simulation

     The Company offers a unique simulator in its R 2000 platform. This patented
     device allows the person to spin as well as experience acceleration and
     inertia in their virtual experience. Along with its ability to provide
     extra motion, the Company's product also provides a very low cost and
     compact platform for testing. Currently, many of the airline companies'
     pilot training schools and military organizations employ simulators for
     training. Comparatively, the Company's device will be a very low cost, easy
     to integrate positioner for applications that require extensive training on
     a flight simulator, but don't warrant the cost of the multi-million dollar
     systems employed today.

Suppliers

Robotics relies on outside suppliers for substantially all of its parts,
components, and manufacturing supplies. While Robotics has deliberately followed
a policy of designing products with "off-the-shelf" components which are
available from a number of suppliers, there can be no assurance that Robotics'
existing suppliers will be able to meet all of Robotics' needs on terms
favorable or acceptable to Robotics. Currently, the Company does not have any
material contracts for the future purchase of parts or materials for inventory.

Robotics' products use a small amount of custom components that are critical to
the performance of its products. Next Move Controllers and MEI Controllers are
both plug-in cards for PC's which allow the Robotics' robots to process the math
and control each of the 6 axes in a coordinated fashion. Two suppliers are used
and the Robotics' product is tested and developed for both. Another control
manufacturer (of which there are several) could be used, but the process for
porting to a new card is a significant effort. This is because each original
equipment manufacturer's motion control system has to be evaluated both in terms
of the availability of a very wide range of physical movements on the mechanical
side, as well as the software effort on the Company's part to add the third or
fourth control system to the Company's existing control software system. This
software effort also includes the job of building-in proprietary software
movements the Company's customers have typically come to expect in the Company's
systems. The Company is continuously evaluating alternative systems and the
Company is in the process of expanding robot controls from two manufacturers to
three. These cards are both supplied by Target Electronic Supply Inc., a local
electronics and electro-mechanical components distributor.

<PAGE>

                                Form 10-KSB Page 7

E-Drive Actuators are provided by a manufacturer who Robotics has taught to make
the actuators for the precise P Series machines. To date, the best result
Robotics has achieved has been with their product. That does not preclude
Robotics from developing an additional supplier in the future, should that be
necessary. The E-Drive legs are provided by Automation Solutions Inc., a local
distributor of these types of equipment. Robotics has used two other leg
manufacturers for its less precise applications. The suppliers of these legs are
Tolo-Matic Inc. and Ultra-Motion LLC.

Lastly, there is a manufacturer that produces the ring gear with an integrated
guide rail which is used for guiding the movable tracks on the R Series robot.
To date, Robotics has single sourced this activity because its source's standard
product fits the Robotics application perfectly. The name of this supplier is
the Bishop-Wisecarver Company. However, if this product becomes scarce or too
expensive, Robotics could purchase the gear and the rail system separately from
a number of manufacturers.

Research and Development

Over the last two years, Robotics has spent approximately $195,712 on research
and development, primarily on engineering salaries and compensation.
Additionally, Robotics employs four engineers, whose time is spent primarily on
modifications requested by customers to Robotics' standard products.

One area of research and development on which Robotics is focused is perfecting
the software and hardware capabilities of the R Series line for Robotics'
bio-medical opportunities. The main focus has been implementing a dual encoder
set-up on the motors to allow for precise motion under heavy and varied load,
coupled with a software interface that allows communication directly with Math
Lab and the Lab View products (which are standard in this industry).

On the P Series line, Robotics has focused on improving the joint retaining
rings and sockets for improved accuracy, manufacturability and ease of assembly.

Robotics has continued to enhance its software product and capabilities. The
concentration has been focused on addressing the applications which customers
are bringing to Robotics' attention. Along with this, Robotics has continued to
monitor, track and release versions for bug fixes, as well as customer specific
applications.

Currently, Robotics has produced a special R 2000 machine for Holo-Dek Gaming,
Inc. With this machine, Robotics is working on the perfection of a package that
will allow Holo-Dek Gaming, Inc. to integrate the simulator platform with
different video games in its theaters for the amusement of its customers.
Robotics hopes to offer a similar product to companies working on flight
training for small aircraft.

There are other research and development projects that Robotics is
investigating, some resulting from customer requests.

Employees

The Company currently employs six people.

Government Regulations

The Company holds all licenses and permits necessary for the Company to operate
and meet applicable United States Environmental Protection Agency standards for
air and water discharge and Occupational Safety and Health Administration
standards. The Company does not do any manufacturing at its facility in Hampton,
New Hampshire (only assembly). The Company purchases all of the components for
its products from suppliers, therefore, the Company has suffered no costs or
effects as a result of environmental regulations.

Other

The audit firm of Hansen, Barnett & Maxwell, P.C., the Company's Independent
Registered Public Accounting Firm, has raised substantial doubt about the
Company's ability to continue as a going concern.

Recent Developments

The Company, through Robotics, has a relationship with a privately owned company
named Holo-Dek Gaming, Inc. ("Holo-Dek"). Ralph McKittrick, the CEO of Kingston,
is also the CEO of Holo-Dek (Ralph McKittrick is the largest shareholder,
directly or indirectly, of Kingston and the second largest shareholder of
Holo-Dek). Holo-Dek is a startup company that intends to open and operate a
number of theaters (two theaters are currently open) for video gamers. Robotics
and Holo-Dek share office facilities, a number of employees and certain
expenses. The Flood Trust (the "Trust"), a shareholder of the Company which has
and continues to provide loans to the Company necessary to keep it in business
(which loans aggregated $194,400 at March 31, 2007), is also a significant
lender of working capital to Holo-Dek (which has advanced $854,848 to the
Company as of March 31, 2007). The Company is considering acquiring Holo-Dek.
The Company views Holo-Dek as both an excellent prospect for purchasing a large
number of robotic machines from Robotics (to be used as motion simulators) and
as a


<PAGE>

                               Form 10-KSB Page 8

viable entry vehicle into the multi-billion dollar video game entertainment
market (source-Electronic Software Association), as a theater chain to be built
exclusively for the use of video gamers.

ITEM 2. PROPERTIES

The Company owned no real property during the periods ended March 31, 2007 and
March 31, 2006.

Robotics has a lease obligation for office space and an assembly/research and
development facility in Hampton, New Hampshire. The lease was executed in 2002
and the term of the lease is for six years, ending March 31, 2008.

ITEM 3. LEGAL PROCEEDINGS

In April 1988, a judgment was entered against the Company in the amount of
$353,883. On April 6, 2006, the Company agreed to settle this judgment for a
payment of $100,000. On February 21, 2007 and March 6, 2007, the Company made
$50,000 payments and satisfactions of the judgment were filed shortly thereafter
(this settlement is discussed in Note 5 to the consolidated financial statements
appearing elsewhere herein). The Company filed a Form 8-K - Current Report on
March 9, 2007 regarding this transaction. The Company's current liabilities
balance at March 31, 2006 reflected the $353,883 judgment principal, plus
accrued interest of $638,123. As of March 31, 2007, the judgment was removed
from current liabilities and the impact of the settlement reflected in the
Company's statement of operations.

There are no pending legal proceedings against the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted for shareholders' vote during the 2007 and 2006
fiscal years.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of July 12, 2007, the majority and controlling shareholders of the Company
were the following:

<TABLE>
<CAPTION>

Name                       Shares             Comments
----                       ------             --------
<S>                          <C>                <C>
Kingston Associates          105,902          Limited Partnership 60% controlled by Ralph McKittrick,
                                              CEO of Kingston Systems
Ralph McKittrick              32,453
Thor Corporation           2,332,133          Thor Corporation is 100% controlled by Ralph McKittrick
Flood Trust                  612,251          See Note 2 to the Company's consolidated financial statements
                                              appearing elsewhere herein
All others                 2,518,401
                           ---------

Total                      5,601,140
                           =========
</TABLE>

On August 18, 2005, Kingston acquired 100% of the issued and outstanding common
stock of Robotics for one dollar, as a result of which acquisition Robotics
became a wholly-owned subsidiary of Kingston. In addition, an Exchange Agreement
was signed between Kingston, Robotics and the Trust. The Trust, as payee, was
issued a promissory note (the "Note") by Robotics. The Trust acquired shares in
Kingston by assigning to Kingston, as consideration, its rights as payee under
the Note, in exchange for 612,251 newly issued shares of Kingston's common stock
(the shares were physically issued in June, 2006). Kingston, as the new payee
under the Note, then cancelled the Note, and any obligations of Robotics under
the Note.

Currently, the Company's common stock is publicly traded on the pink sheets.
The Company's stock symbol is KSYT.

The Company currently has no compensation plans or employee benefit plans.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

General

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere in this
report. In addition, at March 31, 2007, the Company's auditors, Hansen, Barnett
& Maxwell, the Company's Independent Registered Public Accounting Firm, raised
substantial doubt about the Company's ability to continue as a going concern. As
previously mentioned, the Company was inactive from 1988 until its acquisition
of Robotics in August, 2005.

The Company's fiscal year is from April 1 through March 31.

<PAGE>

                                Form 10-KSB Page 9

Critical Accounting Policies

The Company's discussion and analysis of its financial condition and results of
operations is based upon Kingston's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these consolidated financial statements
requires the use of estimates that affect the reported amounts of assets,
liabilities and expenses. The Company evaluates its estimates on an ongoing
basis, including estimates for income tax assets and liabilities and the
impairment of the value of investments. The Company bases its estimates on
historical experience and on actual information and assumptions that are
believed to be reasonable under the circumstances at that time. Actual results
may differ from these estimates under different assumptions or conditions. The
Company believes that the following critical accounting policies affect its more
significant estimates used in the preparation of its consolidated financial
statements:

o Accounting for Income Taxes - The Company records a full valuation allowance
against the deferred tax benefit for net operating losses ("NOL") generated,
since in management's opinion, the net operating losses do not meet the more
likely than not criteria for future realization.

o Impairment of Investments - The Company reviews estimates of the value of its
investments each reporting period and will record an impairment loss to the
extent that management believes that there has been an impairment to the
carrying value.

o Inventory Valuation - Inventory is stated at the lower of cost (first-in,
first-out) or market. Market value is estimated based upon assumptions made
about future demand and market conditions. If the Company determines that the
actual market value is less than the carrying value of the inventory, the
Company will make an adjustment to reduce the value of the inventory.

Overview

Management's plan of operations for the next twelve months is to seek to expand
Robotics' business, increasing revenue volume and improving operating margins,
in order to reduce, and eventually eliminate, its historical net losses. There
are current activities that are critical to successfully achieving that plan.
The Company is working to sell a new robot application, consisting of a
hexapod-mounted water jet cutter, into markets that have been previously
untapped for robot sales. Another new product in production is a simulator,
which can be used in the video game theater business. This is an application
where the Company has identified an opportunity to become a significant supplier
of robots to Holo-Dek, which will use those robots if they succeed in
building-out their video gaming centers. The Company has been considering
acquiring Holo-Dek as part of its business expansion plan.

The Company is also evaluating its cost structure in order to minimize cost of
sales for each robot sale. A good portion of that cost reduction is expected to
come from cost savings related to volume purchases of fabrications and purchased
parts. An additional component of cost reduction may result from research and
development, as the Company continues to focus on standardization, in order to
reduce or eliminate non-recurring engineering and design costs, and to develop
new applications and additional markets for existing robot designs.

The Company is currently dependent upon working capital loans that originate
primarily from the Flood Trust through its investments and loans to Holo-Dek
which, in turn, are provided to the Company to fund research and development and
to offset the Company's operating income deficit. Although the Trust has proven
to be a reliable source of funds in the past, there is no guarantee that the
Trust will continue to provide funding, or that other sources will be available
during the next twelve months.

Plan of Operations

As discussed in Item 1 and below in the Management's Discussion and Analysis,
Kingston was a dormant company from 1988 until, in August of 2005, Kingston
acquired Robotics in an attempt to revive itself (see Note 2 to the consolidated
financials statements appearing herein elsewhere). Robotics' business, although
not yet profitable or cash flow self-sufficient, presents opportunities for
expansion. Robotics' robot products are unique in the industry and more
technologically advanced than competitor products. Additionally, Robotics has a
relationship with Holo-Dek, a startup gaming business, which could provide
another market for Robotics' products (see Item 1, "Recent Developments"). The
Company views Holo-Dek as both an excellent prospect for purchasing a large
number of robotic machines from Robotics (to be used as motion simulators) and
as a viable entry vehicle into the multi-billion dollar video game entertainment
market (source-Electronic Software Association), as a theater chain to be built
exclusively for the use of video gamers.

Ongoing research and development is a priority of the Company, with the aim of
providing both standardized and custom advanced hardware and software solutions
to its customers in a wide variety of machine tooling, manufacturing and other
commercial settings. Currently the Company is planning three different arenas
for research and development efforts. First, the Company will continue to work
on the software algorithms to improve upon the actuators purchased from
manufacturing partners. This will allow the Company's machines to achieve
greater accuracy and allow the Company to purchase lower cost components from a
larger group of vendors. Second, the Company is planning to use its R Series
platform as a simulator for both the small aircraft flight industry, as well as
an interactive ride for video game entertainment. The research and development
effort will seek to create the tools necessary for game developers and flight
schools to integrate their current or future software products with the
Company's simulator. Third, the Company plans to develop a standard, in-house
actuator that can be used for low cost applications.

<PAGE>

                               Form 10-KSB Page 10

The Company's head of sales is focused on selling robots into a number of
industries. In the Company's existing markets, such as universities (using the
Company's robots for bio-medical research) and in the automotive industry (using
the Company's robots for parts assembly), the Company is approaching existing
customers for additional orders and exploring opportunities to sell products to
other such universities and automotive companies. The Company's P 3000 Water-Jet
Cutter is a new product, (the water jet cutter is an accurate and rapid metal
cutting device that, when coupled with the Company's robot, can perform multi
axis cutting, which is currently rare for flash removal in the casting
industry), being direct-marketed at this time primarily to the automotive, heavy
equipment, and defense industries and to the metal casting companies serving
those industries. Robotics has produced a special R 2000 machine for Holo-Dek
Gaming. With this machine, Robotics is working on the perfection of a package
that will allow Holo-Dek to integrate its robotic simulator platform with
different video games for amusement and educational training. Robotics also
intends to pursue channel sales through machine tool integrators and
distributors.

The Company currently uses its head of sales, its web site and business contacts
to market its products. The Company plans to develop more extensive use of print
advertising and substantially increase the display of its products at numerous
industry tradeshows and conferences once improved sales provides additional
funding.

In regards to the Company's Robotics business, given the current sales volumes,
the Company does not expect to acquire or dispose of any significant amount of
capital assets, nor does it expect to significantly expand or contract its
current number of employees. The Company does anticipate that if a number of the
above noted opportunities are realized, it will have to expand resources. Until
sales improve, the Company is reliant upon working capital advances from
Holo-Dek (through the Flood Trust's investments in Holo-Dek) to maintain its
liquidity and continue operations. The Company intends to expand its accounts
receivable funding contracts to include new loan programs that will give it the
ability to finance purchase orders.

The Company's business plans call for sales to improve significantly during the
twelve month period ending March 31, 2008, when compared to the year-ended March
31, 2007. The costs of goods sold percentage of revenue associated with those
sales is planned to be at or better than the Company's percentage for the year
ended March 31, 2007. The Company does not know that the orders generating those
sales will ever be realized. The Company may also find that the cost of
materials and services to produce the future orders envisioned in the plan will
exceed the estimates now in the plan. As a result of both of these
uncertainties, the estimated future sales could be lower than planned and the
estimated future costs higher than planned, or both - perhaps by a significant
amounts.

Although there has been a stable funding base for Robotics through the Trust and
other sources of capital, along with revenue from the sales of its robots,
management believes that it is necessary to obtain additional capital
investment, through either the public or private markets, in order to allow the
Company to expand its robotics business, invest in strategic opportunities,
achieve overall profitability and provide cash flow self-sufficiency. Management
is striving to obtain additional funding, but there can be no assurance that
management will succeed in a timely fashion. If additional funding is not
obtained, the Company may need to curtail operations (the Company is, has been,
and is currently reliant upon the Flood Trust for the majority of its working
capital financing).

Results of Operations

Summary

Kingston was incorporated in 1983 and re-incorporated in Delaware in 1987. The
Company operated a proprietary recovery system that reclaimed paper pulp and
non-biodegradable polyethylene from packaging material scrap. The Company sold
the recovered fiber as substitute for virgin wood pulp and the reclaimed
polyethylene for use in injection molding. The Company experienced some
difficult and turbulent periods and was dormant for an extended period, from its
SEC filing of a Form 10-Q for the three and nine month periods ended December
31, 1988 until its filing of a Form 10-KSB for the year ended March 31, 2005.
Subsequent to that date, the Company has made an acquisition, which is discussed
in detail in Note 2 to the Company's consolidated financial statements contained
elsewhere herein. On August 18, 2005, Kingston acquired 100% of the issued and
outstanding common stock of Robotics. Thus, Robotics became a wholly-owned
subsidiary of Kingston. Robotics financials are included in the subsequent
discussion from August 18, 2005 forward.

The Year Ended March 31, 2007 as compared to the year ended March 31, 2006

Revenues for the 2007 fiscal year were $604,221, reflecting solely the revenues
of Robotics. During the period, the Company completed four major projects and
recognized $486,053 in sales for those projects. The Company had an additional
$100,195 in revenues for smaller projects and $17,973 in revenues from
repairs/maintenance and service contract revenue amortization. Revenues for the
2006 fiscal year were $630,575, reflecting solely the revenues of Robotics.
During the period, the Company completed three major projects and recognized
$566,517 in sales for those projects. The Company had an additional $64,058 in
revenues from repairs/maintenance, frame sales and service contract revenue
amortization.

The Company categorizes all pre-shipment progress payments from the customers on
the balance sheet as "deferred revenue" (combined with service contract revenue
amortization on the Company's balance sheet, which was $24,582 as of March 31,
2007). Upon shipment of the robot, the Company releases those liabilities to
revenue, along with the related cost of sales. As of March 31, 2007, that
liability was $0.

<PAGE>

                               Form 10-KSB Page 11

Cost of sales was $473,021 and $389,759 for the 2007 and 2006 fiscal years,
respectively, which reflects costs related to the Robotics sales orders shipped
in that period, of which $347,349 and $317,102 was for materials used in the
production of the robots. The remainder was primarily labor used to produce the
robots. The increase in the cost of sales year over year, as a percentage of
revenue, was primarily due to additional engineering salary costs and, to a
lesser degree, increased cost of production materials.

The Company capitalizes direct material, direct labor and overhead costs that
apply to Robotics' customer orders in progress. That inventory is reclassified
to cost of sales at the time the product is completed or shipped. As of March
31, 2007 and 2006, the Company's inventory was $89,391 and $291,391,
respectively, which reflects $66,128 and $263,015 of customer order related
inventory. The March 31, 2007 order related inventory is comprised of
capitalized labor related to the development of a robot for Holo-Dek and parts
purchased for a potential order that was not realized (those parts will be used
for future orders).

Selling expenses for the 2007 and 2006 fiscal years reflect solely the expenses
of Robotics. The Company's expense was $83,903 and $23,797 in the 2007 and 2006
fiscal years, respectively, which was comprised primarily of salaries related to
the selling of Robotics' products. The increase over the prior year period was
primarily due to an increase in resources to improve sales.

General and administrative expenses were $537,540 and $186,465 in the 2007 and
2006 fiscal years, respectively. That amount consisted primarily of professional
fees (legal, audit, accounting and shareholder relations) of $150,017 and
$18,210, engineering related expenses of $137,072 and $82,046, $90,355 and
$32,289 of other payroll related expenses, rent and utility expenses of $55,473
and $21,803 and insurance expenses of $45,682 and $11,136, respectively. The
increase over the prior year period was primarily due to a number of situations.
Professional fees increased over the prior year primarily due to the addition of
a shareholder relations professional and audit/legal/consulting fees related to
the Company's numerous filings with the SEC. Engineering related expenses
increased over the prior year primarily due to salaries for additional staff to
support the Company's planned expansion. Other payroll related expenses
increased over the prior year primarily due to the addition of staff in
purchasing and accounting.

Research and development expenses were $145,104 and $50,608 for the 2007 and
2006 fiscal years, respectively. Those costs were primarily engineering salary
costs related to the continuing development of Robotics' products.

During the 2006 fiscal year, the Company had a goodwill impairment charge of
$1,787,431 related to the purchase of Robotics by the Company. That transaction
is discussed in detail in Note 2 to the consolidated financial statements
appearing herein elsewhere.

Other income (expense) was $858,594 and $(36,911) for the years ended March 31,
2007 and 2006, respectively. Interest expense for the 2007 and 2006 fiscal years
was $62,845 and $36,911, respectively. In both fiscal 2007 and 2006, the
interest expense was primarily related to the judgment payable and, to a lesser
degree, the loan payable, related party (Flood Trust) and the notes payable,
related parties (Flood Trust and George Coupe), reflected in the Company's March
31, 2007 and 2006 balance sheets. The Company had a gain from the settlement of
a judgment payable of $921,439 in its 2007 fiscal year. The gain was recorded by
eliminating the $353,883 principle and $667,556 accrued interest at the date of
the settlement, less a $100,000 cash payment. The settlement of the judgment is
discussed in more detail in Item 3 and Footnote 5 to the notes to the
consolidated financial statements appearing elsewhere herein.

The Company's income for the 2007 fiscal year was $223,247. This was comprised
of a $635,347 loss from operations and $62,845 in interest expense, offset by
the gain on settlement of the judgment of $921,439, discussed above. The net
resulted in an earnings per share income of $0.04. The Company's loss for the
2006 fiscal year was $1,844,396 (primarily due to the expense of $1,787,431 for
the impairment of goodwill), which resulted in an earnings per share loss of
$0.34

Liquidity and Capital Resources

In 2006, the cash flows reflect the acquisition of the assets and liabilities of
Robotics (see Note 2 to the consolidated financial statements appearing
elsewhere herein).

On an ongoing basis, the Company's primary needs for liquidity and capital
resources are for the funding of salaries and other administrative expenses
related to the management of the Company, for payment of the cost of products
sold and inventory (if these expenditures are not covered by customer
pre-shipment deposits) and, to a lesser degree, for research and development. As
discussed previously, the Company had no activity from 1988 through August 18,
2005. At that time, Kingston acquired 100% of the issued and outstanding common
stock of Robotics. Thus, Robotics became a wholly-owned subsidiary of Kingston.
This transaction has been accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" using
the purchase method of accounting. The fair value of net assets acquired was
$49,321, which was offset by equity issued in lieu of cash of $1,836,752,
resulting in the recording of the excess of cost over the fair value of acquired
net assets (goodwill) of $1,787,431. Subsequent to the acquisition, the Company
immediately evaluated the goodwill for impairment and determined that it was
impaired. The total amount of goodwill was charged to the Company's statements
of operations.

<PAGE>

                               Form 10-KSB Page 12

During fiscal 2007, net cash used by operations was $638,367, compared with
$292,444 in the prior year period (fiscal 2007 excludes the impact of the
settlement of a judgment payable, discussed in more detail in the Summary above,
in Item 3 and in Footnote 5 to the notes to the consolidated financial
statements appearing elsewhere herein). The cash used was primarily a result of
the Company's loss from operations, discussed above, along with a reduction in
accounts payable and deferred revenue, as a result of a reduction in orders in
the fiscal fourth quarter. This was partially offset by a reduction in
inventory, also due to the reduction in orders. In fiscal 2006, the use of funds
was primarily due to increases in inventory and accounts receivable, along with
a reduction in deferred revenue and accruals, partially offset by cash from
accounts payable. With the exception of the change in accruals, those cash flows
were consistent with the Company's fulfillment of three significant orders
during the year, and the purchase of inventory for current projects. The
reduction in accruals was primarily related to payments for professional
services.

Net cash used by investing activities was $17,895 for the 2007 fiscal year. The
use of funds was for the purchase of equipment and software. In fiscal 2006, the
source of funds was $161,402. This source of funds reflects the repayment of a
receivable from Holo-Dek and cash acquired in the Robotics acquisition,
partially offset by an increase in the software development asset.

Cash provided by financing activities for fiscal 2007 was $678,734. The source
of cash was due to working capital loans from Holo-Dek, partially offset by the
cash payment made to settle a judgment payable (see the Summary above, Item 3
and Note 5 to the consolidated financial statements appearing elsewhere herein).
The source of cash in 2006 was $150,764. This source of funds was also primarily
from working capital loans from Holo-Dek. In November, 2006 the Company
negotiated the terms of sale for segments of the Company's accounts receivable
(see Note 1 to the Company's consolidated financial statements appearing
elsewhere herein).

Regarding working capital loans from Holo-Dek, until October 31, 2004, the Trust
invested directly into Robotics, with the funding being in the form of debt that
was converted to stock. The debt and accumulated interest totaled $1,836,752 as
of October 31, 2004. As of October 31, 2004, the accrual of interest on the debt
was temporarily delayed until October 31, 2005, at which time interest accrued
at the rate of 8% per year. Interest accrued from October 31, 2005 until June,
2006, when the debt was converted to stock. After October 31, 2004, the Trust
invested into Holo-Dek which in turn funded Robotics on an as needed basis,
through the working capital advance account, which loans aggregated $854,848 at
March 31, 2007 and $62,549 at March 31, 2006, (the terms of those advances are:
it is a demand note payable July 1, 2008. Subsequent to that date, the note will
bear an annual interest rate of 8.0%) and a short-term $100,000 loan from the
Trust (this loan was made in March of 2006 and is payable on demand on or after
March 17, 2007, at the discretion of the Trust. The loan bears an annual
interest rate of 8.0%). These relationships are discussed in Note 2 to the
consolidated financial statements included elsewhere herein.

The Company's cash and cash equivalents of $42,194 as of March 31, 2007, along
with potential future sales revenue, is not presently sufficient to support
current levels of operations for the next twelve months and it is therefore
necessary for the Company to continue to seek additional financing. Such
financing has been obtained in the past from the Trust and other sources of
capital, along with the sale of the Company's robots. The Company is focusing
its funding efforts on increasing its level of sales of robotic products. In the
interim, the Company anticipates subsidizing its losses with working capital
advances from Holo-Dek (Holo-Dek is funded by the Trust).

Given the aforementioned discussion, there is no assurance that the level of
funding ultimately received by the Company will be sufficient to sustain the
Company's future operations. Should that occur, the Company may need to curtail
its operations.

Off Balance Sheet Arrangements

As of March 31, 2007 and 2006, the Company had no off balance sheet arrangements
with any parties.

Legal Contingencies

The Company may be subject to proceedings, lawsuits and other claims, including
proceedings under laws and government regulations related to the environment,
labor, product liability and other matters. The Company is required to assess
the likelihood of any adverse judgments or outcomes to these matters, as well as
potential ranges of probable losses. A determination of the amount of reserves
required, if any, for these contingencies is based on a careful analysis of each
individual issue with the assistance of outside legal counsel. The required
reserves may change in the future due to new developments in each matter or
changes in approach such as a change in settlement strategy in dealing with
these matters. At March 31, 2007 there are no outstanding legal proceedings, nor
are there any reserves established.

<PAGE>

                               Form 10-KSB Page 13

Recent Accounting Pronouncements

In February 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 155, which is an
amendment of SFAS Nos. 133 and 140. This statement; a) permits fair value
remeasurement for any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation, b) clarifies which
interest-only strip and principal-only strip are not subject to the requirements
of SFAS No. 133, c) establishes a requirement to evaluate interests in
securitized financial assets to identify interests that are freestanding
derivatives or that are hybrid financial instruments that contain an embedded
derivative requiring bifurcation, d) clarifies that concentrations of credit
risk in the form of subordination are not embedded derivatives, e) amends SFAS
No. 140 to eliminate the prohibition on a qualifying special-purpose entity from
holding a derivative financial instrument that pertains to a beneficial interest
other than another derivative financial instrument. This statement is effective
for financial statements for fiscal years beginning after September 15, 2006.
Earlier adoption of this statement is permitted as of the beginning of an
entity's fiscal year, provided the entity has not yet issued any financial
statements for that fiscal year. The adoption of this standard is not expected
to have a material impact on the Company's consolidated financial statements.

In March 2006, the FASB issued SFAS No. 156, which amends SFAS No. 140. This
statement establishes, among other things, the accounting for all separately
recognized servicing assets and servicing liabilities. This statement amends
SFAS No. 140 to require that all separately recognized servicing assets and
servicing liabilities be initially measured at fair value, if practicable. This
statement permits, but does not require, the subsequent measurement of
separately recognized servicing assets and servicing liabilities at fair value.
An entity that uses derivative instruments to mitigate the risks inherent in
servicing assets and servicing liabilities is required to account for those
derivative instruments at fair value. Under this statement, an entity can elect
subsequent fair value measurement to account for its separately recognized
servicing assets and servicing liabilities. By electing that option, an entity
may simplify its accounting because this statement permits income statement
recognition of the potential offsetting changes in fair value of those servicing
assets and servicing liabilities and derivative instruments in the same
accounting period. This statement is effective for financial statements for
fiscal years beginning after September 15, 2006. Earlier adoption of this
statement is permitted as of the beginning of an entity's fiscal year, provided
the entity has not yet issued any financial statements for that fiscal year.
Management believes that adoption of this standard will not have a material
impact on the Company's consolidated financial statements.

In June 2006, the FASB issued FASB Interpretation No. 48 "Accounting for
Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109." This
interpretation clarifies the accounting for uncertainty in income taxes
recognized in an enterprise's financial statements in accordance with FASB No.
109 "Accounting for Income taxes." This interpretation is effective for the
fiscal years beginning after December 15, 2006. Management does not anticipate
this Statement will impact the consolidated financial position or consolidated
results of operations and cash flows of the Company

In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements."
This Statement defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles ("GAAP"), and expands
disclosures about fair value measurements. This Statement applies under other
accounting pronouncements that require or permit fair value measurements, the
Board having previously concluded in those accounting pronouncements that fair
value is the relevant measurement attribute. This Statement is effective for
financial statements issued for the fiscal years beginning after November 15,
2007. The Company is evaluating the effect of this statement.

In September 2006, the FASB issued Statement No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans," an amendment of FASB
Statements No. 87, 88, 106, and 132(R). This Statement improves financial
reporting by requiring an employer to recognize the overfunded or underfunded
status of a defined benefit postretirement plan (other than a multiemployer
plan) as an asset or liability in its statement of financial position and to
recognize changes in that funded status in the year in which the changes occur
through comprehensive income of a business entity or changes in unrestricted net
assets of a not-for-profit organization. This Statement is effective for
employers with publicly traded equity securities. Those employers are required
to initially recognize the funded status of a defined benefit postretirement
plan and to provide the required disclosures as of the end of the fiscal year
ending after December 15, 2006. Management believes this Statement has no
material impact on the Company's consolidated financial position or consolidated
results of operations and cash flows.

In September 2006, the SEC staff issued Staff Accounting Bulletin ("SAB") Topic
1N, "Financial Statements - Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial Statements" ( SAB 108).
The SEC staff is providing guidance on how prior year misstatements should be
taken into consideration when quantifying misstatements in current year
financial statements for purposes of determining whether the current year's
financial statements are materially misstated and should be restated. SAB 108 is
effective for fiscal years ending after November 15, 2006. The Company does not
believe SAB 108 has a material impact on its results of operations, financial
condition and cash flows.

In September 2006, the Emerging Issues Task Force ("EITF") issued EITF Abstracts
Issue No. 06-3 (EITF 06-3). The EITF is providing guidance on how taxes
collected from customers and remitted to Governmental Authorities should be
presented in the income statements. EITF 06-3 is effective for interim and
annual periods beginning after December 15, 2006. EITF 06-3 does not have an
impact on the Company's results of operations, financial condition and cash
flows.

<PAGE>

                               Form 10-KSB Page 14

In February 2007, the FASB issued Statement No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities--Including an amendment of FASB
Statement No. 115." This Statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The objective is to
improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. This Statement is expected to expand the use of fair value
measurement, which is consistent with the Board's long-term measurement
objectives for accounting for financial instruments. This Statement is effective
for financial statements issued for the fiscal years beginning after November
15, 2007. The Company is evaluating the effect of this statement.

Forward Looking Statements

The Company is including the following cautionary statement in this Annual
Report on Form 10-KSB. Forward-looking statements include statements concerning
plans, objectives, goals, strategies, future events or performance and
underlying assumptions and other statements which are other than statements of
historical facts. Certain statements contained herein are forward-looking
statements and accordingly involve risks and uncertainties which could cause
actual results or outcomes to differ materially from those expressed in the
forward-looking statements. The Company's expectations, beliefs and projections
are expressed in good faith and are believed by the Company to have a reasonable
basis, including without limitation, management's examination of historical
operating trends, data contained in the Company's records and other data
available from third parties, but there can be no assurance that management's
expectation, beliefs or projections will result or be achieved or accomplished.
In addition to other factors and matters discussed elsewhere herein, the
following are important factors that, in the view of the Company, could cause
actual results to differ materially from those discussed in the forward-looking
statements: the Company's losses from period to period; the Company's current
dependence on a limited number of key suppliers and investors; the Company's
ability to successfully market and sell its products in view of changing trends,
acceptance of products and other factors affecting market conditions;
technological advances by the Company's competitors; capital needs to fund
operations and development programs; delays in the manufacture of new and
existing products by the Company or third party contractors; the loss of any key
employees; the outcome of any litigations; changes in governmental regulations;
and availability of capital on terms satisfactory to the Company. The Company
disclaims any obligation to update any forward-looking statements to reflect
events or circumstances after the date hereof.

ITEM 7. FINANCIAL STATEMENTS

The Financial Statements are included after the Exhibit Index.


                              KINGSTON SYSTEMS INC.
                                      INDEX

                                                                    Page Number
                                                                      ------
Report of Independent Registered Public Accounting Firm                 21
Consolidated Balance Sheets as of
March 31, 2007 and March 31, 2006                                       22
Consolidated Statements of Operations for the Years Ended
March 31, 2007 and March 31, 2006                                       23
Consolidated Statements of Stockholders' Equity (Deficit)
for the years ended March 31, 2007 and March 31, 2006                   24
Consolidated Statements of Cash Flows for the Years Ended
March 31, 2007 and March 31, 2006                                       25
Notes to the Consolidated Financial Statements                        26-35

<PAGE>

                               Form 10-KSB Page 15

ITEM 8A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure that
information required to be disclosed in the Company's reports filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded,
processed, summarized, and reported within the required time periods, and that
such information is accumulated and communicated to the Company's management,
including the Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow for timely decisions regarding disclosure.

As required by Rule 13a-15 under the Exchange Act, the Company has completed an
evaluation, under the supervision and with the participation of management,
including the Chief Executive Officer and Principal Financial Officer, of the
effectiveness and the design and operation of the Company's disclosure controls
and procedures as of March 31, 2007. Based upon this evaluation, management,
including the Chief Executive Officer and Principal Financial Officer, have
concluded that the Company's disclosure controls and procedures were effective
as of March 31, 2007 to ensure that material information relating to the Company
are recorded, processed, summarized and reported within the time periods in
which this Annual Report has been prepared. Management has concluded that the
consolidated financial statements included in this Form 10-KSB present fairly,
in all material respects, the results of the Company's operations and its
financial position for the periods presented, in conformity with generally
accepted accounting principles.


Changes in Internal Control over Financial Reporting

The Company's Principal Executive Officer and Principal Financial Officer have
concluded that there were no significant changes in the Company's internal
controls or in other factors that could significantly affect these controls for
the year ended March 31, 2007, the date of their most recent evaluation of such
controls, and that there were no significant deficiencies or material weaknesses
in the Company's internal controls.

Section 404 Assessment. Section 404 of the Sarbanes-Oxley Act of 2002 requires
management's annual review and evaluation of the Company's internal controls,
and an attestation of the effectiveness of these controls by the Company's
independent registered public accountants, beginning with the Company's Form
10-KSB for the fiscal year ending on March 31, 2009. The Company plans to
dedicate significant resources, including management time and effort, in
connection with the Company's Section 404 assessment. The evaluation of the
Company's internal controls will be conducted under the direction of its senior
management.

Limitations on Effectiveness of Controls. A system of controls, however well
designed and operated, can provide only reasonable, and not absolute, assurance
that the system will meet its objectives. The design of a control system is
based, in part, upon the benefits of the control system relative to its costs.
Control systems can be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of the control. In
addition, over time, controls may become inadequate because of changes in
conditions, or the degree of compliance with the policies or procedures may
deteriorate. In addition, the design of any control system is based in part upon
assumptions about the likelihood of future events.

<PAGE>

                               Form 10-KSB Page 16

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT.

Directors and Executive Officers

As of July 12, 2007, the Directors and executive officers of the Company are
presented below.

     NAME                            AGE    TITLE

     Ralph E. McKittrick             57     Chairman, CEO, and Director

     George J. Coupe                 66     Chief Financial Officer and Director

     James W. Byrne                  50     Director

The principal occupations and brief summary of the background of each Director
and executive officer of Kingston during the past five years is as follows:

Ralph E. McKittrick - Founder/CEO, and Chairman of the Board of Directors since
January 1987

Ralph McKittrick is the founder, Chairman of the Board and Chief Executive
Officer of the Company. Mr. McKittrick's term is to serve until the next annual
meeting or to the next consent of the majority of the shareholders (in lieu of a
meeting). In 2004, he co-founded Holo-Dek and he has been the CEO of Holo-Dek
since its founding. Before founding Holo-Dek, Mr. McKittrick co-founded Cargo
Force, Inc. in 2003 and he has also been the CEO of Cargo Force since its
founding. Cargo Force is a commercial airlift/airfreight startup company whose
mission is to support US industry, especially the heavy manufacturers. Before
founding Cargo Force, Mr. McKittrick was a consultant to CNC Systems, Inc. from
December 15, 1999 to November 15, 2002, where he helped turn around this machine
tool distributor in Maine.

George J. Coupe - Chief Financial Officer and Director since March 2006

George Coupe is the Chief Financial Officer of the Company. Mr. Coupe's term is
to serve until the next annual meeting or to the next consent of the majority of
the shareholders (in lieu of a meeting). In 2004, he co-founded Holo-Dek and has
been the President of Holo-Dek since its founding. Mr. Coupe founded Robotics in
2002 and he has also been the President of Robotics since its founding. Prior to
founding Robotics, and beginning with his departure from Ford Finance Staff in
1975, Mr. Coupe was engaged in turning around companies in financial difficulty,
typically either as the CFO or as a financial control consultant. Mr. Coupe also
was one of the founders at two startup companies during this period. In May of
2001, Mr. Coupe was hired by Renaissance Design, Inc., a company in the contract
engineering and manufacturing industry ("RDI"). Mr. Coupe was hired by RDI
because of his reputation for saving companies and because RDI was contemplating
bankruptcy. Mr. Coupe was unable to save RDI and they ceased operations on
February 8, 2002. A few months later, RDI filed for bankruptcy. Prior to joining
Renaissance Design, Inc., Mr. Coupe was a financial consultant (from to March
15, 2000 to May 15, 2001) and before that he was the CFO of Northland Tool,
Inc., (from January 1, 1995 to March 15, 2000) a spindle repair company.

James W. Byrne - Director since May 1989

Mr. Byrne is a member of the Company's Board of Directors and is the operations
manager for Holo-Dek Gaming, Inc., a position he has held since March 31, 2004.
Mr. Byrne's term is to serve until the next annual meeting or to the next
consent of the majority of the shareholders (in lieu of a meeting). Prior to
joining the Company and Holo-Dek, Mr. Byrne spent 27 months renovating his 18th
century home in New Hampshire. Prior to this he was the Director of Engineering
for Advanced Digital Internet ("ADI") from July 17, 1998 to August 1, 2002. ADI
provided internet service to high-end multi-dwelling units in Manhattan. Mr.
Byrne's specialty was designing the infrastructure and overseeing the
installation of each system.

There are no significant (critical) employees of the Company, other than the
directors and officers noted above.

Audit Committee Financial Expert

The Company does not currently have independent directors. The Company intends
to establish independent directors, along with an Audit and Compensation
Committee, in its 2008 fiscal year.

<PAGE>

                               Form 10-KSB Page 17

Compensation of Directors

Directors who are employees of the Company are not paid any other fees or
additional compensation for services as members of the Company's Board of
Directors or any committee thereof.

Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and any person who owns more than 10% of the
Company's common stock (the "Reporting Persons") to file with the Securities and
Exchange Commission reports of ownership and reports of changes in ownership of
the Company's common stock. Under Securities and Exchange Commission rules, the
Company receives copies of all Section 16(a) forms that these Reporting Persons
file. The Company has determined that all stockholders required to file are in
compliance with Section 16(a).

Code of Ethics

The Company has adopted a Code of Ethics within the meaning of Item 406(b) of
Regulation S-B. This Code of Ethics applies to the Company's principal executive
officer, the Company's principal financial officer and principal accounting
officer, as well as all other employees, and is incorporated by reference. If
the Company makes substantive amendments to this Code of Ethics or grants any
waiver, including any implicit waiver, the Company will disclose the nature of
such amendment or waiver on the Company's website or in a report on Form 8-K
within five days of such amendment or waiver.

The Company's code of ethics is posted on its website www.kingstonsystems.com.

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth the aggregate cash compensation paid by the
Company to: (i) its Chief Executive Officer, Chairman; and (ii) its most highly
compensated officers whose cash compensation exceeded $100,000 for services
performed during the year ended March 31, 2007.

<TABLE>
<CAPTION>

                                                                            Non-equity     Nonqualified
                                                                            Incentive      Deferred
Name and Principal                                   Stock       Option     Plan Com-      Compensation  All other
Position            Year   Salary ($)  Bonus ($)   Awards ($)   Awards ($)  pensation ($)  Earnings ($)  Compensation ($)   Total $
------------------  ----   ----------  --------    ----------   ---------   ------------   ------------  ----------------   --------
<S>                 <C>        <C>        <C>           <C>         <C>           <C>            <C>           <C>             <C>
Ralph McKittrick,   2007       0          0             0           0             0              0             0               0
CEO                 2006       0          0             0           0             0              0             0               0
                    2005       0          0             0           0             0              0             0               0
</TABLE>

The Company does not currently have a policy regarding compensation for serving
on the Board of Directors.

The Company does not have any employment agreements.

The Company does not have any annuity, retirement, pension or deferred
compensation plan or other arrangements under which an executive officer is
entitled to participate without similar participation by other employees.

The Company does not currently have a stock option plan.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

As of July 12, 2007, there were 5,601,140 shares of common stock issued and
5,576,234 shares of common stock outstanding.

The following table sets forth certain information as of March 31, 2007,
regarding each person known by the Company to be the beneficial owner of more
than 5% of the outstanding shares of our common stock, each director, and named
executive officer of the Company, and all officers and directors as a group:

<TABLE>
<CAPTION>

                                                                        Amount and Nature
                                                                        of Beneficial
                                                                        Ownership of              Percentage of
Name/Address of Beneficial                Position with                 Common Stock              Securities (1)
Owner*                                       Company                       (1)
----------------------------------------------------------------------------------------------------------------
<S>                                       <C>                            <C>                           <C>
Ralph E. McKittrick (2)                   Chairman, CEO                  2,470,488                     44.1 %
James W. Byrne                            Director                       0                             0.0%
George J. Coupe                           Chief Financial Officer        0                             0.0%
Flood Trust (3)                           N/A                            612,251                       10.9%
All executive officers and Directors as a                                2,470,488                     44.1%
group (3 people)

</TABLE>


<PAGE>

                               Form 10-KSB Page 18

* Address of all holders is c/o Kingston Systems, Inc., 8 Merrill Industrial
Drive, Unit 12, Hampton, NH 03842.

(1) Pursuant to the rules of the Securities and Exchange Commission, a person is
deemed to "beneficially own" shares of common stock over which the person has or
shares investment or voting power, or has the right to acquire such power within
60 days. The percentage of common stock owned is calculated based on the number
of shares of common stock outstanding, plus, in the case of each person, the
number of shares of common stock issuable only to such person upon the exercise
of options or warrants and the conversion of convertible debt securities.
(2) The ownership noted is comprised of the following: Thor Corporation owns
2,332,133 shares of common stock and is 100% controlled by Ralph McKittrick, CEO
of Kingston; Kingston Associates owns 105,902 shares of common stock and is a
Limited Partnership, 60% controlled by Ralph McKittrick and; Ralph McKittrick
owns 32,453 shares of common stock.

(3) Mr. Larry Flood has sole control over the shares held by the Flood Trust.
The 612,251 shares were physically issued in June, 2006.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As of March 31, 2007, the Company was involved in the following related party
transactions:

o The Company has certain credit card advances from George Coupe, President of
Robotics, in the amount of $72,128. These advances are for the financing of
operations and certain capital asset purchases. These advances consist of the
balances on personal credit cards of George Coupe that were and are being used
exclusively for the Company's expenditures. The monthly payments on these cards
include all of the monthly interest being charged by the credit card company and
a portion of the "principal." The interest rates being paid to the credit card
companies vary between 4.9% and 17.2%. The average interest rate paid was 11.3%
for the period from April 1, 2006 through March 31, 2007.

o The Company has an additional note payable to George Coupe in the amount of
$200 principal. This demand note was issued in 2002 as part of the initial
capitalization of Robotics and is due March 31, 2011. The note is non-interest
bearing through April 1, 2006. Subsequent to that date, the note bears interest
at the rate of 8.0% per year (accrued interest of $16 as of March 31, 2007).
This note is reflected in notes payable, related parties on the Company's
balance sheet.

o The Company has a debt payable to Ralph McKittrick in the amount of $46,300
for unpaid wages prior to December 31, 1988. The debt is non-interest bearing.
The amount of the debt has not changed since it was incurred.

o The Company, through its Robotics subsidiary, has a relationship with
Holo-Dek. Ralph McKittrick, the CEO of Kingston, is also the CEO of Holo-Dek
(Ralph McKittrick is the largest shareholder, directly or indirectly, in
Kingston and the second largest shareholder in Holo-Dek). Robotics and Holo-Dek
share office facilities, a number of employees and certain expenses. The Trust,
an investor in Kingston and Robotics, is also a significant lender of working
capital to Holo-Dek. As of March 31, 2007, Holo-Dek has provided working capital
advances to Kingston in the amount of $854,848, shown in current liabilities on
the Company's balance sheet. Up until October 31, 2004, the Trust invested
directly into Robotics, with the funding being in the form of debt that was
converted to stock. The debt and accumulated interest totaled $1,836,752 as of
October 31, 2004. As of October 31, 2004, the accrual of interest on the debt
was temporarily delayed until October 31, 2005, at which time interest accrued
at the rate of 8% per year. Interest accrued from October 31, 2005 until June,
2006, when the debt (including accrued interest) was converted to stock. After
October 31, 2004, the Trust invested into Holo-Dek, which in turn funded
Robotics on an as needed basis, through the working capital advance account (The
terms of those advances are: it is a demand note payable March 31, 2008.
Subsequent to that date, the note will bear an annual interest rate of 8.0%).

o The Company's Robotics subsidiary is the named owner on a number of credit
cards used by Holo-Dek. As of March 31, 2007, the balances on those credit cards
totaled $60,378 and are recorded as a related party asset and credit card
liability on the Company's balance sheets. Additionally, there is approximately
$98,000 of total credit limit available on all Robotics credit cards, whether
used by Robotics or Holo-Dek.

o The Company has a licensing and royalty agreement in connection with the
co-ownership of certain technology. The Hexel Corporation ("Hexel") originally
developed the robotics technology. That corporation is still in existence,
however, with limited operations. There are two current employees of Robotics
who are stockholders in Hexel. In addition, a major stockholder in the Company
also owns a minor interest in Hexel. Hexel has licensed the use of all
intellectual property to Robotics. Under the agreement, Robotics is required to
pay to Hexel by March 31, 2008, 2% of gross sales, less shipping, tax, and other
customary costs normally born by the seller, on products sold which incorporate
that certain licensed software and intellectual property (the payment date was
extended by Hexel). Any enhancements/developments by Robotics to the robot
technology, including software, are co-owned with Hexel through the licensing
agreement. At March 31, 2007 and 2006, $23,291 and $14,135 was owed to Hexel
with $9,156 and $7,951 recorded as an expense during the years ended March 31,
2007 and 2006, respectively.

o The Company has a related party note and loan payable to the Trust, discussed
in Note 5 to the consolidated financials statement appearing elsewhere herein,
and the Company is the lessee on three related party capital leases, discussed
in Note 9 to the consolidated financial statements contained elsewhere herein.

<PAGE>

                               Form 10-KSB Page 19

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

All references to the Company's Forms 8-K, 10-QSB and 10-KSB include
reference to File No. 0-15840.

                         (a) Exhibits
                                                                         Page
                         Exhibit No.             Document               Number
                         -----------             --------               ------

3.1            The Certificate of Incorporation of the Registrant,
               filed as Exhibit 3(a) to Registrant's Registration
               Statement on Form S-1 (File No. 33-12019), filed on
               February 17, 1987, as amended by Amendment Nos. 1,2 and
               3 filed on March 25, April 3 and April 7, 1987,
               respectively (the "S-1 Registration Statement"), is
               incorporated herein by reference.

3.2            The By-Laws of the Registrant, filed as Exhibit 3(b) to
               the Registrant's S-1 Registration Statement, is
               incorporated herein by reference.

14             The Code of Ethics of the Registrant, filed as Exhibit
               14 to the Registrant's March 31, 2005 Form 10-KSB, is
               incorporated herein by reference.

15             Triangular Gimbal, Patent No: US 6,240,799 B1 and
               Systems and Methods Employing a Rotary Track, Patent
               No: US 6,196,081 B1, incorporated herein by reference.

21*            List of Company's subsidiaries                             36

31.1, 31.2*    Rule 13a-14(a)/15d-14(a) Certification                   37-38

32.1, 32.2*    Section 1350 - Certification                             39-40


* Filed herewith

(b) Reports on Form 8-K:

The Company filed Current Reports on Form 8-K on August 18, 2005, November 17,
2006 and March 9, 2007.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

        As of March 31,                        2007                     2006
                                             --------                 --------

        Audit Fees                           $ 63,346                 $ 35,881
        Audit Related Fees                         --                       --
        Tax Fees                                   --                       --
        Other Fees                                 --                       --
                                             --------                 --------
        Total Fees                           $ 63,346                 $ 35,881
                                             ========                 ========



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 16th day of
July, 2007.

                              KINGSTON SYSTEMS INC.

                           By: /s/ Ralph E. McKittrick
                               ------------------------------------------
                               Ralph E. McKittrick
                               Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed by the following persons in the capacities and on
the dates indicated.

            Signature                           Title                  Date

 /s/ Ralph E. McKittrick    Chairman, Chief Executive Officer,
 -----------------------    Principal Executive                   July 16, 2007
 Ralph E. McKittrick

 /s/ George J. Coupe
 -----------------------    Chief Financial Officer               July 16, 2007
 George J. Coupe

 /s/ James W. Byrne
 -----------------------    Director                              July 16, 2007
 James W. Byrne


<PAGE>


                               Form 10-KSB Page 20


                              KINGSTON SYSTEMS INC.



                                                                           Page
                                                                          Number
                                                                          ------

Report of Independent Registered Public Accounting Firm                     21

Consolidated Balance Sheets as of March 31, 2007 and
March 31, 2006                                                              22

Consolidated Statements of Operations for the Years Ended
March 31, 2007 and March 31, 2006                                           23

Consolidated Statements of Stockholders' Equity (Deficit)
for the Period from April 1, 2004 to March 31, 2007                         24

Consolidated Statements of Cash Flows for the Years Ended
March 31, 2007 and March 31, 2006                                           25

Notes to the Consolidated Financial Statements                            26-35



<PAGE>


                               Form 10-KSB Page 21


                         Hansen, Barnett & Maxwell, P.C.
                           A Professional Corporation
                          CERTIFIED PUBLIC ACCOUNTANTS
                                       AND
                              BUSINESS CONSULTANTS
                            5 Triad Center, Suite 750
                          Salt Lake City, UT 84180-1128
                              Phone: (801) 532-2200
                               Fax: (801) 532-7944
                                 www.hbmcpas.com



        REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Kingston Systems Inc.
Hampton, New Hampshire

We have audited the consolidated balance sheets of Kingston Systems Inc. and
subsidiary, as of March 31, 2007 and 2006, and the related consolidated
statements of operations, stockholders' deficit and cash flows for the years
then ended. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Kingston Systems Inc. and subsidiary as of March 31, 2007 and 2006, and the
results of its operations and its cash flows for the years then ended, in
conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has incurred
losses and has current ratio deficits. As discussed in Note 1 to the
consolidated financial statements, there is substantial doubt about the
Company's ability to continue as a going concern. Management's plans concerning
these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

                                                 HANSEN, BARNETT & MAXWELL, P.C.

Salt Lake City, Utah
July 12, 2007


<PAGE>
                               Form 10-KSB Page 22

                              KINGSTON SYSTEMS INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                      March 31, 2007             March 31, 2006
                                                                                      --------------             --------------
<S>                                                                                        <C>                       <C>
                                            ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                                                  $ 42,194                  $ 19,722
Accounts receivable                                                                         110,749                   138,542
Inventory                                                                                    89,391                   291,391
Related party leases, current portion                                                        25,841                    13,636
Related party receivable                                                                     60,378                         -
Other current assets                                                                          5,444                     2,692
                                                                                        -----------               -----------
TOTAL CURRENT ASSETS                                                                        333,997                   465,983

OTHER ASSETS:
Property and equipment, net of accumulated depreciation of $16,202                           40,598                    25,946
  and $6,221 as of March 31, 2007 and 2006, respectively
Software, net of accumulated amortization of $2,315 and $1,098                               17,559                       834
  as of March 31, 2007 and 2006, respectively
Software development costs, net of accumulated amortization of $29,006                      126,681                   145,986
  and $9,701 as of March 31, 2007 and 2006, respectively
Security deposits                                                                            12,000                    12,000
Related party leases, non-current portion                                                    31,956                    38,500
                                                                                        -----------               -----------
TOTAL ASSETS                                                                              $ 562,791                 $ 689,249
                                                                                       ============              ============
                              LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable                                                                           $ 41,613                 $ 149,511
Related party advances                                                                      854,848                    62,549
Accrued expenses                                                                             63,964                    42,737
Deferred revenue                                                                             24,582                   179,480
Capitalized lease obligations, current portion                                               36,048                    16,520
Credit card advances, related party                                                          72,128                    80,263
Credit card liability                                                                        60,378                         -
Note payable, including accrued interest of $336,611                                              -                 1,836,752
Judgment payable, including accrued interest of $638,123
  as of March 31, 2006                                                                            -                   992,006
Wages payable, related party                                                                 46,300                    46,300
Notes payable, related parties, current portion including accrued interest
  of $6,416 and $0 as of March 31, 2007 and 2006, respectively                               38,616                    16,200
Loan payable, Flood Trust, related party, including accrued interest of $8,000
  and $0 as of March 31, 2007 and 2006, respectively                                        108,000                   100,000
                                                                                        -----------               -----------
TOTAL CURRENT LIABILITIES                                                                 1,346,477                 3,522,318

LONG TERM LIABILITIES:
Note payable, related party, non-current portion                                             48,000                    64,000
Capitalized lease obligations, non-current portion                                           59,168                    53,784
                                                                                        -----------               -----------
TOTAL LIABILITIES                                                                         1,453,645                 3,640,102
                                                                                        -----------               -----------
SHAREHOLDERS' DEFICIT:
Common stock:
$0.01 par value; 10,000,000 shares authorized; 5,601,140 shares and 4,988,889
  shares issued and 5,576,234 and 4,963,983 shares outstanding as of March 31, 2007
  and 2006, respectively.                                                                    56,012                    49,889
Additional paid-in capital                                                               11,838,230                10,007,601
Accumulated deficit                                                                     (12,744,340)              (12,967,587)
Treasury stock at cost; 24,906 shares                                                       (40,756)                  (40,756)
                                                                                        -----------               -----------
Total shareholders' deficit                                                                (890,854)               (2,950,853)
                                                                                        -----------               -----------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                                               $ 562,791                 $ 689,249
                                                                                        ===========               ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>
                               Form 10-KSB Page 23

                              KINGSTON SYSTEMS INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                         THE YEARS ENDED
                                                          ----------------------------------------------
                                                             March 31, 2007           March 31, 2006
                                                          ---------------------   ----------------------
<S>                                                                <C>                     <C>
Revenue                                                         $    604,221            $    630,575
Cost of sales                                                        473,021                 389,759
                                                                ------------            ------------
Gross profit                                                         131,200                 240,816
                                                                ------------            ------------
Operating expense:
Selling                                                               83,903                  23,797
General and administrative                                           537,540                 186,465
Research and development                                             145,104                  50,608
Goodwill impairment                                                        -               1,787,431
                                                                ------------            ------------
Total operating expense                                              766,547               2,048,301
                                                                ------------            ------------
Operating loss                                                      (635,347)             (1,807,485)
                                                                ------------            ------------
Other income (expense):
Gain on settlement of judgment payable                               921,439                       -
Interest expense and financing fees                                  (62,845)                (36,911)
                                                                ------------            ------------
Total other income (expense)                                         858,594                 (36,911)
                                                                ------------            ------------

Net income (loss) before provision
for income taxes                                                     223,247              (1,844,396)

Provision for income taxes                                                 -                       -

                                                                ------------            ------------
Net income (loss)                                               $    223,247            $ (1,844,396)
                                                                ============            ============
Basic and diluted income (loss)
per share                                                       $       0.04            $      (0.34)
                                                                ------------            ------------
Weighted-average number of
common shares outstanding                                          5,576,234               5,367,981
                                                                ============            ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>


                               Form 10-KSB Page 24


                              KINGSTON SYSTEMS INC.
            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
               FOR THE PERIOD FROM APRIL 1, 2005 TO MARCH 31, 2007

<TABLE>
<CAPTION>

                                      Common Stock        Additional                                  Total
                                  --------------------     Paid-in     Treasury     Accumulated    Shareholders'
                                    Shares     Amount      Capital      Stock         Deficit         Deficit
                                  ----------  --------   -----------   ---------   -------------   ------------
<S>                               <C>        <C>        <C>           <C>         <C>             <C>
  Balance at
  March 31, 2005                   4,988,889  $ 49,889   $10,007,601   $(40,756)   $(11,123,191)   $(1,106,457)

  Net loss for the year                   --        --            --         --      (1,844,396)    (1,844,396)

  Balance at                      ----------  --------   -----------   ---------   -------------   ------------
  March 31, 2006                   4,988,889    49,889    10,007,601    (40,756)    (12,967,587)   $(2,950,853)

  Shares issued                      612,251     6,123     1,830,629         --              --      1,836,752

  Net income for the year                 --        --            --         --         223,247        223,247

  Balance at                      ----------  --------   -----------   ---------   -------------   ------------
  March 31, 2007                   5,601,140  $ 56,012   $11,838,230   $(40,756)   $(12,744,340)   $  (890,854)
                                  ==========  ========   ===========   =========   =============   ============
</TABLE>



The accompanying notes are an integral part of these consolidated financial
statements.



<PAGE>

                               Form 10-KSB Page 25

                             KINGSTON SYSTEMS INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                          THE YEARS ENDED
                                                                     -------------------------------------------------------
                                                                         March 31, 2007                  March 31, 2006
                                                                     -----------------------         -----------------------
<S>                                                                          <C>                          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                          $   223,247                    $(1,844,396)
Adjustments to reconcile net income (loss) to net cash
 from operating activities:
  Depreciation and amortization                                                 30,504                         17,020
  Gain on judgment payable, including accrued interest                        (921,439)                             -
Changes in assets and liabilities:
   Impairment of goodwill                                                            -                      1,787,431
   Accounts receivable                                                          27,793                       (106,423)
   Inventory                                                                   202,000                       (153,370)
   Accounts payable                                                           (107,899)                       143,919
   Other current assets                                                         (2,752)                        (1,894)
   Deferred revenue                                                           (154,897)                       (90,103)
   Accrued expenses                                                             21,227                        (76,477)
   Accrued interest on loans payable                                            43,849                         31,849
                                                                           -----------                    -----------
NET CASH FROM OPERATING ACTIVITIES                                            (638,367)                      (292,444)
                                                                           -----------                    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired in acquisition of Robotics                                             -                         38,988
Purchases of equipment and software                                            (17,895)                        (1,290)
Repayment of note receivable, related party                                          -                        151,013
Software development                                                                 -                        (27,309)
                                                                           -----------                    -----------
NET CASH FROM INVESTING ACTIVITIES                                             (17,895)                       161,402
                                                                           -----------                    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Related party working capital advances                                       2,433,889                         62,548
Payment of related party advances                                           (1,656,185)                             -
Payments on credit card advances, related party                                 (8,135)                       (10,909)
Proceeds from capital lease obligation                                          14,848                           (875)
Payments on capital lease                                                       (5,683)                             -
Payment made upon settlement of judgment                                      (100,000)                             -
Loan payable, Flood Trust                                                            -                        100,000
                                                                           -----------                    -----------
NET CASH FROM FINANCING ACTIVITIES                                             678,734                        150,764
                                                                           -----------                    -----------
Net increase in cash                                                            22,472                         19,722
Cash and cash equivalents, beginning                                            19,722                              -
                                                                           -----------                    -----------
Cash and cash equivalents, ending                                          $    42,194                    $    19,722
                                                                           ===========                    ===========
Supplemental disclosure of cash flow information:

Non-cash investing and financing activities:
Shares issued in acquisition of Robotics, net of cash acquired             $ 1,797,754                    $         -
Capital lease for equipment                                                     24,681                         18,819
Reclassification of software development costs to inventory                          -                         40,506
Assumption of credit card liability from related party                          60,378                              -
Assumption of capital lease from related party                                   9,386                         52,136
Reduction in capital lease liability from related party                        (18,573)                             -

Cash paid for interest                                                     $    13,798                    $     5,069
Cash paid for income taxes                                                           -                              -

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


<PAGE>


                               Form 10-KSB Page 26

                              KINGSTON SYSTEMS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2007 AND 2006

NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization, Acquisitions and Mergers and Controlling Shareholder -- Kingston
Systems Inc. ("Kingston" or the "Company") was incorporated in 1983 and
reincorporated in Delaware on January 12, 1987. The Company operated a
proprietary recovery system that reclaimed paper pulp and non-biodegradable
polyethylene from packaging material scrap. The Company sold the recovered fiber
as substitute for virgin wood pulp and the reclaimed polyethylene for use in
injection molding. The Company experienced some difficult and turbulent periods
and was dormant for an extended period, from its Securities and Exchange
Commission ("SEC") filing of a Form 10-Q for the three and nine month periods
ended December 31, 1988 until its filing of a Form 10-KSB for the year ended
March 31, 2005 (with the exception of expenses accrued for professional services
and interest accrued on a judgment payable). On August 18, 2005, Kingston
acquired 100% of the issued and outstanding common stock of Robotics. Thus,
Robotics became a wholly-owned subsidiary of Kingston. Robotics is in the
business of manufacturing robotic machinery and it has been an operating company
since February 11, 2002.

The majority and controlling shareholders of the Company are the following:

<TABLE>
<CAPTION>

  Name                       Shares             Comments
  ----                       ------             --------
<S>                            <C>              <C>
  Kingston Associates          105,902          Limited Partnership 60% controlled by Ralph McKittrick,
                                                CEO of Kingston Systems
  Ralph McKittrick              32,453
  Thor Corporation           2,332,133          Thor Corporation is 100% controlled by Ralph McKittrick
  Flood Trust                  612,251          See Note 2
  All others                 2,518,401
                             ---------
  Total                      5,601,140
                             =========
</TABLE>

Nature of Business -- The Company's revenue generating subsidiary, Robotics, is
in the business of building robots, called rotopods and hexapods. These robots
are similar to the type of apparatus used to move flight simulators. The robots
allow movement in all planes of motion and are primarily purchased by companies
for product development and testing, although some robots are used in
manufacturing. A significant component of the robot package is the customized
software program that operates the robot's motions. On average, it takes three
to six months to build a robot. Although many of the components of a robot are
standard from contract to contract, each contract typically requires certain
modifications to the standard product. Robotics sells its products
internationally.

Basis of Presentation -- The consolidated financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP").
The Company's fiscal year is from April 1 through March 31.

Consolidation -- Intercompany accounts and transactions have been eliminated in
consolidation.

Use of Estimates -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Revenue Recognition -- The Company categorizes all pre-shipment progress
payments from the customers and service agreement revenues as "deferred revenue"
on the balance sheet. Upon shipment of the robot, the Company releases the
prepayment liabilities to revenue, along with the related cost of sales. The
Company recognizes any deferred service agreement revenue over the life of the
agreement. Costs are recognized as incurred.

<PAGE>

                               Form 10-KSB Page 27

                              KINGSTON SYSTEMS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Business Condition -- The accompanying consolidated financial statements have
been prepared on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. As
shown in the consolidated financial statements for the year ended March 31,
2007, the Company incurred an operating loss of $635,347 and has a working
capital deficit of $1,012,480. The losses from operations and the working
capital deficit raise substantial doubt about the Company's ability to continue
as a going concern for a reasonable period of time. The consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of recorded assets or the amount and classification of
liabilities which might be necessary should the Company be unable to continue as
a going concern. The Company's continuation as a going concern is dependent upon
its ability to generate sufficient cash flows to meet its obligations on a
timely basis, to obtain additional financing as may be required (the Company is,
has been, and is currently, reliant upon a single major investor, the Flood
Trust, for the majority of its working capital financing), and ultimately to
attain successful operations for an extended period of time. Should the Company
not succeed in its pursuit of equity financing, debt financing, or significant
sales improvements, the Company may not be able to continue as a going concern
and may need to curtail operations.

Cash and Cash Equivalents -- Cash equivalents include highly liquid, short-term
investments with original maturities of three months or less, readily
convertible to known amounts of cash.

Accounts Receivable -- Accounts receivable are recorded at the invoiced amount.
An allowance for doubtful accounts would be the Company's best estimate of the
amount of probable credit losses in the Company's existing accounts receivable.
Management regularly analyzes accounts receivable, including any historical
write-off experience, customer creditworthiness and current economic trends to
determine a need, if any, for an allowance for doubtful accounts. As of March
31, 2007, management has determined that no allowance for doubtful accounts is
necessary.

In November, 2006 the Company negotiated the terms of sale for segments of the
Company's accounts receivable to LSQ Funding Group, L.C. ("LSQ") located in
Orlando, Florida. On November 13, 2006, the first factoring transaction
concluded, resulting in the Company's receipt of $48,500 as an initial payment,
in accordance with the factoring agreement. The terms include the provisions
that the initial payment to the Company will be approximately 80% of the
approved receivables purchased and that the Company will receive the balance of
20% of the total receivable, less applicable finance fees of 2% of the
receivable balance factored and additional administrative fees, when the
customer pays the total receivable to LSQ. The agreement with LSQ potentially
could provide the Company up to $300,000 in funding and the agreement is for one
year, renewing annually automatically. The Company is required, under the terms
of the agreement, to repurchase accounts receivable, in certain specified
circumstances, which have been sold under the agreement. The Company does not
anticipate the need to repurchase any accounts receivable it may sell under this
agreement. The Company filed a Form 8-K on November 17, 2006 concerning this
factoring arrangement. As of March 31, 2007, the Company had factoring
transactions totaling $184,000 and has received $123,000 of that amount, less
applicable fees of $5,200 (shown as a component of interest expense in the
Company's statement of operations).

Inventory -- Inventory is stated at the lower of cost (first-in, first-out) or
market. Market value is estimated based upon assumptions made about future
demand and market conditions. If the Company determines that the actual market
value differs from the carrying value of the inventory, the Company will make an
adjustment to reduce the value of the inventory. At March 31, 2007, inventory
consisted of work in process materials, capitalized labor and spare parts (at
the time a robot is completed, the product is shipped-the Company does not have
finished goods inventory). Those amounts were:

       Inventory as of:             March 31, 2007    March 31, 2006
                                    --------------    --------------
       Work in Process                 $ 26,414          $191,941
       Capitalized Labor                 40,526            71,074
       Spare Parts                       22,451            28,376
                                       --------          --------
       Total                           $ 89,391          $291,391

Property and Equipment -- Assets are recorded at cost and depreciation is
computed using the straight-line method over the assets' estimated useful lives,
which range from three to seven years. Expenditures for maintenance, repairs,
and renewals are charged to expense as incurred. Expenditures for major renewals
and betterments, that extend the useful lives of existing equipment, are
capitalized and depreciated. On retirement or disposition of property and
equipment, the cost and accumulated depreciation are removed and any resulting
gain or loss is recognized in the statement of operations. Depreciation expense
for the years ended March 31, 2007 and 2006 was $9,981 and $6,221, respectively.
As of March 31, 2007 and 2006, the Company's property and equipment amounts
were:

<PAGE>
                               Form 10-KSB Page 28

                              KINGSTON SYSTEMS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Property and Equipment as of:   March 31, 2007    March 31, 2006
                                         --------------    --------------
         Vehicles                           $  5,558          $  5,558
         Computer Equipment                   13,415             4,972
         Machinery and Equipment              37,828            21,638
                                             --------          --------
         Subtotal                           $ 56,800          $ 32,167
         Less accumulated depreciation       (16,202)           (6,221)
                                            --------          --------
         Net Book Value                     $ 40,598          $ 25,946

Software - Software is composed of engineering and administrative software.
Software is recorded at cost and amortization is computed using the
straight-line method over the software's estimated useful life, which is three
years. On retirement or disposition of software, the cost and accumulated
amortization are removed and any resulting gain or loss is recognized in the
statement of operations. Amortization expense for the years ended March 31, 2007
and 2006 was $1,218 and 1,098, respectively.

Long-lived assets -- Long-lived assets are reviewed for impairment when
situations arise that indicate the asset could be impaired. Recoverability of
assets to be held and used is measured by comparison of the carrying amount of
an asset to future net cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be recognized is
measured by the amount that the carrying amount of the assets exceeds the fair
value of the assets. Assets to be disposed of are reported at the lower of the
carrying amount or the fair value less costs to sell.

Income Taxes - The Company records income taxes using the asset and liability
method. Deferred income tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective income
tax carrying amount, and operating loss and tax credit carry forwards. The
Company's consolidated financial statements contain certain deferred tax assets
which have arisen primarily as a result of operating losses incurred since March
1988 (the Company had a period of dormancy between March 1988 and its SEC filing
for the year ended March 31, 2005), as well as other temporary differences
between book and tax accounting. Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes," requires the establishment of a valuation allowance to reflect
the likelihood of realization of deferred tax assets.

Significant management judgment is required in determining the provision for
income taxes, deferred tax assets and liabilities and any valuation allowance
recorded against net deferred tax assets. The Company evaluates the weight of
all available evidence to determine whether it is more likely than not that some
portion or all of the deferred income tax assets will not be realized in the
future. Management considered the recent historical operating losses and the
inherent uncertainty in the extent and timing of future profitability in
determining the appropriate valuation allowance. Based upon this assessment, the
Company recorded approximately $832,000 of valuation allowance against net
deferred tax assets of $832,000 through March 31, 2007. The decision to record
the valuation allowance required significant judgment, including estimating the
various factors impacting future taxable income. Footnote 8 to the financial
statements calculates an income tax provision of zero. The table identifies that
there are tax loss carry-forwards caused by losses dating back between 15 and 20
years. The Company determined that, more likely than not, it will not be
profitable enough in the coming years to utilize the loss carry-forwards, and as
a result, has recorded a valuation allowance equal to the net deferred tax
asset. Had the Company not recorded this allowance, the Company would have
reported materially different results. If the realization of all deferred tax
assets in the future is considered more likely than not, a decrease in the
valuation allowance would be made, resulting in an increase to the net carrying
value of deferred tax assets and increase net income in the period of such
determination by approximately $832,000. The amount of the deferred tax asset
considered realizable is based on significant estimates, and it is at least
reasonably possible that changes in these estimates in the near term could
materially affect the Company's financial condition and results of operations.
The Company's effective tax rate may vary from period to period based on changes
in estimated taxable income or loss, changes to the valuation allowance, changes
to federal, state or foreign tax laws, future expansion into areas with varying
country, state, and local income tax rates and deductibility of certain costs
and expenses by jurisdiction.

In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes, an interpretation of FASB Statement No. 109 ("FIN 48")", which
provides criteria for the recognition, measurement, presentation and disclosure
of uncertain tax positions. A tax benefit from an uncertain position may be
recognized only if it is "more likely than not" that the position is sustainable
based on its technical merits. The provisions of FIN 48 are effective for fiscal
years beginning after December 15, 2006. The Company does not expect that FIN 48
will have a material effect on its consolidated financial condition or results
of operations.

Research and Product Development Costs -- The Company is focusing its research
and development on perfecting the software and hardware capabilities of the R
Series line, improving the joint retaining rings and sockets on the P Series
line, and exploring other uses for its products. The Company expenses research
and product development costs as incurred.

Net Income (Loss) Per Share -- Basic earnings (loss) per share is calculated by
dividing the income or loss available to common shareholders by the
weighted-average number of common shares outstanding during each period. Diluted
earnings (loss) per share is identical to basic earnings (loss) per share, as
the Company has no dilutive securities at this time.

<PAGE>

                               Form 10-KSB Page 29

                              KINGSTON SYSTEMS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Values of Financial Instruments -- The carrying amounts reported in the
balance sheets for accounts receivables and debt obligations approximate their
fair values. The following methods and assumptions were used by the Company in
estimating other fair values:

     o    Cash and cash equivalents - The carrying amount reported in the
          balance sheet approximates fair value due to the short maturity of
          these instruments.
     o    Related party receivable - The carrying amount reported in the balance
          sheet approximates fair value as the average interest rate on this
          receivable (credit card advances) approximates current interest rates
          on similar receivables.
     o    Notes and loans payable - The carrying amount reported in the balance
          sheet approximates fair value as the interest rates approximate
          current interest rates on similar notes/loans.

Intangible Assets -- The Company has an intangible asset, identified as
"Software development" reflected on its consolidated balance sheets. This
robotic software is a long-term asset and is the Company-built control system
software for operating the machines that Robotics has been manufacturing and
selling, and continues to sell to various industries. The amortization periods
for the software development asset have been determined to be five and ten
years. The five year amortization period applies to the portion of the asset
that was developed to support additional generic motion control systems. The ten
year amortization period applies to the portion of the asset that was developed
as additions to the core application programming, essential to the basic
operation of the robot.

The carrying value of the software development asset is compared to its net
realizable value at each balance sheet date, with any impairment recognized
immediately. No material changes to management's net realizable value estimate
occurred in the period ended March 31, 2007.

Shipping Costs -- Costs to ship products to customers are charged to operations
as incurred. During the years ended March 31, 2007 and March 31, 2006, the
Company recognized shipping costs of $11,378 and $4,799, respectively, in cost
of sales.

Recent Accounting Pronouncements

In February 2006, the FASB issued SFAS No. 155, which is an amendment of SFAS
Nos. 133 and 140. This statement; a) permits fair value re-measurement for any
hybrid financial instrument that contains an embedded derivative that otherwise
would require bifurcation, b) clarifies which interest-only strip and
principal-only strip are not subject to the requirements of SFAS No. 133, c)
establishes a requirement to evaluate interests in securitized financial assets
to identify interests that are freestanding derivatives or that are hybrid
financial instruments that contain an embedded derivative requiring bifurcation,
d) clarifies that concentrations of credit risk in the form of subordination are
not embedded derivatives, e) amends SFAS No. 140 to eliminate the prohibition on
a qualifying special-purpose entity from holding a derivative financial
instrument that pertains to a beneficial interest other than another derivative
financial instrument. This statement is effective for financial statements for
fiscal years beginning after September 15, 2006. Earlier adoption of this
statement is permitted as of the beginning of an entity's fiscal year, provided
the entity has not yet issued any financial statements for that fiscal year. The
Company is evaluating this Statement but does not expect it to have a material
impact on the Company's consolidated financial statements.

In March 2006, the FASB issued SFAS No. 156, which amends SFAS No. 140. This
statement establishes, among other things, the accounting for all separately
recognized servicing assets and servicing liabilities. This statement amends
SFAS No. 140 to require that all separately recognized servicing assets and
servicing liabilities be initially measured at fair value, if practicable. This
statement permits, but does not require, the subsequent measurement of
separately recognized servicing assets and servicing liabilities at fair value.
An entity that uses derivative instruments to mitigate the risks inherent in
servicing assets and servicing liabilities is required to account for those
derivative instruments at fair value. Under this statement, an entity can elect
subsequent fair value measurement to account for its separately recognized
servicing assets and servicing liabilities. By electing that option, an entity
may simplify its accounting because this statement permits income statement
recognition of the potential offsetting changes in fair value of those servicing
assets and servicing liabilities and derivative instruments in the same
accounting period. This statement is effective for financial statements for
fiscal years beginning after September 15, 2006. Earlier adoption of this
statement is permitted as of the beginning of an entity's fiscal year, provided
the entity has not yet issued any financial statements for that fiscal year. The
Company is evaluating this Statement but does not expect it to have a material
impact on the Company's consolidated financial statements.

In June 2006, the FASB issued FASB Interpretation No. 48 "Accounting for
Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109." This
interpretation clarifies the accounting for uncertainty in income taxes
recognized in an enterprise's financial statements in accordance with FASB No.
109 "Accounting for Income taxes." This interpretation is effective for the
fiscal years beginning after December 15, 2006. The Company is evaluating this
Statement but does not expect it to have a material impact on the Company's
consolidated financial statements.

<PAGE>

                               Form 10-KSB Page 30

                              KINGSTON SYSTEMS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements."
This Statement defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles ("GAAP"), and expands
disclosures about fair value measurements. This Statement applies under other
accounting pronouncements that require or permit fair value measurements, the
Board having previously concluded in those accounting pronouncements that fair
value is the relevant measurement attribute. This Statement is effective for
financial statements issued for the fiscal years beginning after November 15,
2007. The Company is evaluating this Statement but does not expect it to have a
material impact on the Company's consolidated financial statements.

In September 2006, the SEC staff issued Staff Accounting Bulletin ("SAB") Topic
1N, "Financial Statements - Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial Statements" ( SAB 108).
The SEC staff is providing guidance on how prior year misstatements should be
taken into consideration when quantifying misstatements in current year
financial statements for purposes of determining whether the current year's
financial statements are materially misstated and should be restated. SAB 108 is
effective for fiscal years ending after November 15, 2006. The Company does not
believe implementing SAB 108 had a material impact on the Company's consolidated
financial statements.

In February 2007, the FASB issued Statement No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities--Including an amendment of FASB
Statement No. 115." This Statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The objective is to
improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. This Statement is expected to expand the use of fair value
measurement, which is consistent with the Board's long-term measurement
objectives for accounting for financial instruments. This Statement is effective
for financial statements issued for the fiscal years beginning after November
15, 2007. The Company is evaluating this Statement but does not expect it to
have a material impact on the Company's consolidated financial statements.

NOTE 2 -- ACQUISITION OF PARALLEL ROBOTICS SYSTEMS

On August 18, 2005, the Company acquired all of the issued and outstanding
common stock of Robotics for $1.00 (Robotics had issued no stock at that time
and one share of common stock was issued to Kingston to effect the acquisition),
making Robotics a wholly-owned subsidiary. At the time of the acquisition,
Robotics was indebted to the Flood Trust (the "Trust") in the amount of
$1,836,752, so the total purchase price for Robotics was $1,836,753. Shortly
after the acquisition, an Exchange Agreement was signed between Kingston,
Robotics and the Trust, pursuant to which the Trust was issued a $1,836,752
promissory note (the "Note") by Robotics. The Trust then assigned to Kingston
its rights as payee under the Note in exchange for Kingston's agreement to issue
612,251 shares of Kingston's common stock to the Trust. Kingston, as the new
payee under the Note, then cancelled the Note. The shares were issued in June,
2006 (shown as issuable as of March 31, 2006 and included in earnings per share
calculations) and the Company's obligation in the amount of $1,836,752 to the
Trust was deemed to be the total outstanding indebtedness until that time.

This transaction has been accounted for in accordance with SFAS No. 141,
"Business Combinations," using the purchase method of accounting. The Company
has evaluated the preliminary fair values of the assets acquired and liabilities
assumed as of the date of acquisition. The purchase of Robotics resulted in the
recording of the excess of cost over the fair value of acquired net assets
(goodwill) of $1,787,431 (see detail below). Subsequent to the acquisition, the
Company immediately evaluated the goodwill for impairment and determined that it
was impaired (the Company could not establish a basis for the goodwill, given
the historical performance of Robotics).

<PAGE>


                               Form 10-KSB Page 31

                              KINGSTON SYSTEMS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



  Acquisition of Robotics:
  Fair value of assets acquired:
     Cash                                                      $       38,988
     Accounts receivable                                               32,119
     Note receivable, related party                                   151,013
     Inventory                                                         97,495
     Other assets (1)                                                 181,700
     Property, equipment and software, net                             13,767
                                                               --------------
  Total fair value of assets acquired                          $      515,082
                                                               --------------

  Fair value of liabilities assumed:
     Accounts payable                                          $        5,591
     Loan payable, related party                                       91,172
     Deferred revenue                                                 269,583
     Other liabilities (2)                                             19,215
     Notes payable                                                     80,200
                                                               --------------
  Total fair value of liabilities assumed                      $      465,761
                                                               --------------

  Fair value of net assets acquired                            $       49,321
                                                               ==============

  Equity issued in lieu of cash
                                                                    1,836,752
  Acquisition costs
                                                                           --
  Goodwill-excess of cost over fair value of
   acquired net assets                                              1,787,431
  Impairment of goodwill                                       $   (1,787,431)


(1) Comprised of a software development asset valued at $168,903 (the fair value
of the software development asset encompasses the value of the Company's
licenses and underlying patents and trade secrets), a security deposit of
$12,000 and $797 of employee advances.
(2) Comprised of payroll and tax liabilities of $10,113, $6,184 of liability to
the Hexel Corporation for software licensing and $2,918 for an outstanding auto
loan.

NOTE 3 -- PRO-FORMA RESULTS OF OPERATIONS

The following table sets forth the Company's results of operations for the
fiscal year ended March 31, 2006, identifying the impact of the acquisition of
Robotics, as if it had taken place on April 1, 2005.


  Pro-forma Income Statements            Fiscal Year Ended
                                         March 31, 2006
                                         -----------------
  Revenue                                $        641,586
  Cost of sales                                   409,637
                                         ----------------
  Gross profit                                    231,949
  Expense                                         377,629
  Other expense                                    40,040
                                         ----------------
  Net loss                               $       (185,720)
                                         ================
  Basic and diluted loss per share       $          (0.03)
  Weighted-average common shares                5,576,234
  outstanding


<PAGE>

                               Form 10-KSB Page 32

                              KINGSTON SYSTEMS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 -- RELATED PARTY TRANSACTIONS

As of March 31, 2007, the Company was involved in the following related party
transactions:

o The Company has credit card advances, related party, in current liabilities on
its March 31, 2007 and 2006 balance sheets. Those advances are from George
Coupe, President of Robotics. Those advances are for the financing of operations
and certain capital asset purchases. Those advances consist of the balances on
personal credit cards of George Coupe that were and are being used exclusively
for the Company's expenditures. The monthly payments on these cards include all
of the monthly interest being charged by the credit card company and a portion
of the "principal." The interest rates being paid to the credit card companies
vary between 4.9% and 17.2%. The average interest rate paid was 11.3% for the
period from April 1, 2006 through March 31, 2007.

o The Company has a note payable, related party, to George Coupe in the amount
of $200. This demand note was issued in 2002 as part of the initial
capitalization of Robotics and is due March 31, 2011. The note was non-interest
bearing through April 1, 2006. Subsequent to that date, the note bears interest
at the rate of 8.0% per year (accrued interest of $16 as of March 31, 2007).

o The Company has a note payable, related party, non-interest bearing to Ralph
McKittrick in the amount of $46,300 for unpaid wages prior to December 31, 1988.
The amount of the debt has not changed since it was incurred. It is reflected in
current liabilities on the Company's balance sheet.

o The Company, through its Robotics subsidiary, has a relationship with a
privately owned company named Holo-Dek. Ralph McKittrick, the CEO of Kingston,
is also the CEO of Holo-Dek (Ralph McKittrick is the largest shareholder,
directly or indirectly, in Kingston and the second largest shareholder in
Holo-Dek). Robotics and Holo-Dek share office facilities, a number of employees
and certain expenses. The Trust, an investor in Kingston and Robotics, is also a
significant lender of working capital to Holo-Dek. Until October 31, 2004, the
Trust invested directly into Robotics, with the funding being in the form of
debt that was converted to stock. The debt and accumulated interest totaled
$1,836,752 as of October 31, 2004. As of October 31, 2004, the accrual of
interest on the debt was temporarily delayed until October 31, 2005, at which
time interest accrued at the rate of 8% per year. Interest accrued from October
31, 2005 until June, 2006, when the debt (including accrued interest) was
converted to stock. After October 31, 2004, the Trust invested into Holo-Dek,
which in turn funded Robotics on an as needed basis through the working capital
advance account, which loans aggregated $854,848 at March 31, 2007 and $62,549
at March 31, 2006 (shown in current liabilities on the Company's balance
sheets). The terms of those advances are: it is a demand note payable March 31,
2008. Subsequent to that date, the note will bear an annual interest rate of
8.0%.

o The Company has a licensing and royalty agreement in connection with the
co-ownership of certain technology. The Hexel Corporation ("Hexel") originally
developed the robotics technology. That corporation is still in existence,
however, with limited operations. Two current employees of Robotics are
stockholders in Hexel. In addition, a major stockholder in the Company also owns
a minor interest in Hexel. Hexel has licensed the use of all intellectual
property to Robotics. Under the agreement, Robotics is required to pay to Hexel
by March 31, 2008, 2% of gross sales, less shipping, tax, and other customary
costs normally born by the seller, on products sold which incorporate that
certain licensed software and intellectual property (the payment date was
extended by Hexel). Any enhancements/developments by Robotics to the robot
technology, including software, are co-owned with Hexel through the licensing
agreement. At March 31, 2007 and 2006, $23,291 and $14,133 was owed to Hexel,
respectively, with $9,156 and $7,951 recorded as an expense during the year
ended March 31, 2007 and 2006, respectively.

o The Company's Robotics subsidiary is the named owner on a number of credit
cards used by Holo-Dek. As of March 31, 2007, the balances on those credit cards
totaled $60,378 and are recorded as a related party asset and credit card
liability on the Company's balance sheets. Additionally, there is approximately
$98,000 of total credit limit available on all Robotics credit cards, whether
used by Robotics or Holo-Dek.

o The Company has a related party note and loan payable to the Trust, discussed
in Note 5, and the Company is the lessee on three related party capital leases,
discussed in Note 9.

NOTE 5 -- JUDGMENT, NOTE AND LOAN PAYABLE

In April 1988, a judgment was entered against the Company in the amount of
$353,883. On April 6, 2006, the Company agreed to settle this judgment for a
payment of $100,000. On February 21, 2007 and March 6, 2007, the Company made
$50,000 payments and satisfactions of the judgment were filed shortly
thereafter. The Company filed a Form 8-K - Current Report on March 9, 2007
regarding this transaction. The Company's current liabilities balance at March
31, 2006 reflected the $353,883 judgment principal, plus accrued interest of
$638,123. As of March 31, 2007, the judgment was removed from current
liabilities and a $921,439 debt forgiveness gain, resulting from the settlement
of the judgment, was reflected in the Company's statement of operations.

<PAGE>

                               Form 10-KSB Page 33

                              KINGSTON SYSTEMS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has a note payable to the Trust for $80,000 principle and $6,400
accrued interest. Of that amount, $38,400 is a current liability and $48,000 is
a long-term liability on the Company's March 31, 2007 balance sheet. This note
was issued in 2002 as part of the initial capitalization of Robotics and
requires yearly principle payments of $16,000 through March 31, 2011. The note
was non-interest bearing through April 1, 2006, and now bears interest at the
rate of 8.0% per year (unpaid interest will be compounded). The Company has not
yet made a payment on this note.

The Company has a loan payable to the Trust in the amount of $100,000 principle
and $8,000 accrued interest, shown in current liabilities on the Company's
balance sheet. This loan was made in March of 2006 and is payable on demand on
or after September 10, 2006, at the discretion of the Trust. The loan bears an
annual interest rate of 8.0%. There has been no demand for payment by the Trust
and no payments have been made by the Company.

As of March 31, 2006, the Company had a note payable to the Trust in the amount
of $1,836,752, comprised of $1,500,141 principal and $336,611 of accrued
interest. This note was payable upon demand. As of October, 2004, the accrual of
interest on the note was temporarily delayed until October 31, 2005. Beginning
that month, interest accrued at the rate of 8% per year. Interest accrued from
October 31, 2005 until June, 2006, when the debt (including accrued interest)
was converted to stock. This note is shown in current liabilities on the
Company's March 31, 2006 balance sheet.

See Note 9 regarding the Company's capital lease obligations.

NOTE 6 -- INTANGIBLE ASSETS

The Company has an intangible asset, identified as "Software development"
reflected on its consolidated balance sheets. This robotic software is a
long-term asset and is the Robotics-built control system software for operating
the machines that Robotics has been manufacturing and selling, and continues to
sell to various industries. The software is used to drive the motion simulation
robots that have been sold for bio medical research, positioning system robots
for automotive production and motion testing robots for oil pipelines. An
analysis of the new robotic capability or features that each new software
project supports is conducted after the software project is completed and after
the new capability is tested functionally in the robot. The results of this
analysis are used to determine the expected life of the software for this new
capability in terms of future revenues, and with a view toward not overstating
this asset at any time over its useful life on a reasonable and consistent
basis. This software is co-owned with the Hexel Corporation (see Note 4), the
corporation that patented the robotic technology and licensed the robotic
technology to Robotics. The carrying value of this software development asset is
compared to its net realizable value at each balance sheet date, with any
impairment recognized immediately. No material changes to management's net
realizable value estimate occurred in the year ended March 31, 2007 and
management believes that the value of the software is not impaired at March 31,
2007. The amortization periods for the software development asset have been
determined to be five and ten years. The five year amortization period applies
to the portion of the asset that was developed to support additional generic
motion control systems. The ten year amortization period applies to the portion
of the asset that was developed as additions to the core application
programming, essential to the basic operation of the robot. Amortization expense
for the years ended March 31, 2007 and 2006 was $19,305 and $9,701,
respectively.

The following is the anticipated amortization expense for the next five years
for the software development asset as of March 31, 2007:

                     For the year
                    ended March 31,         Amortization Expense
                    ---------------         --------------------
                    2008                          $19,305
                    2009                          $19,305
                    2010                          $19,305
                    2011                          $15,620
                    2012                          $11,832
                    Thereafter                    $41,314

NOTE 7 -- SHAREHOLDERS' DEFICIT

At March 31, 2007, the Company had 5,601,140 shares of common stock issued and
5,576,234 shares of common stock outstanding. At March 31, 2006, the Company had
4,988,889 shares of common stock issued and 4,963,983 shares of common stock
outstanding (at March 31, 2006, there were 612,251 shares issuable-see Note 2).
At March 31, 2007 and 2006, there were 10,000,000 shares authorized with a par
value of $0.01. At March 31, 2007 and 2006, the Company had $11,838,230 and
$10,007,601 in additional paid-in capital and an accumulated deficit of
$12,744,340 and $12,967,587, respectively. At March 31, 2007 and 2006, the
Company had 24,906 shares of treasury stock, stated at a cost of$40,756.

<PAGE>

                               Form 10-KSB Page 34

                              KINGSTON SYSTEMS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 -- INCOME TAXES

The Company had net operating loss ("NOL") carry-forwards up to March 1988 when
it last filed with the SEC before an extended period of dormancy (the next
filing with the SEC was for the year ended March 31, 2005). The Company has had
net operating losses since March 1988. These net operating losses expire after
15 years for losses incurred through March 1997 and 20 years for losses incurred
beginning with the March 1998 year-end. Control of Robotics changed with the
acquisition by the Company. In accordance with the internal revenue code, the
accumulated losses of Robotics incurred prior to the Company's acquisition is
limited to an annual amount of approximately $79,531 and a total limit of
approximately $1,590,627 over a 20-year period. As of March 31, 2007, the
Company had consolidated net operating loss carry-forwards for federal income
tax reporting purposes of approximately $2,206,584 which, if unused, will expire
between 2008 through 2026.

The deferred tax asset and the provision for income taxes for the years ended
March 31, 2007 and 2006 were:

For the years ended March 31,                       2007               2006
------------------------------------------------------------------------------

Deferred tax assets - operating loss
  carry-forwards                            $     874,699        $     958,831
Deferred tax liability-software
  development costs                         $     (42,257)             (45,282)
Valuation allowance                              (832,442)            (913,549)
------------------------------------------------------------------------------
Net Deferred Tax Asset                      $          --        $          --
==============================================================================

For the years ended March 31,                       2007                2006
------------------------------------------------------------------------------
Tax at federal statutory rate (34%)         $      76,701        $    (627,095)
Operating losses of Robotics acquired                  --             (581,739)
Non-deductible expenses                               298              708,023
Expiration of NOL carry-forward                        --               12,615
State tax benefit                                  12,656             (103,471)
Change in valuation allowance                     (89,655)             591,667
------------------------------------------------------------------------------
Provision for Income Taxes                  $          --        $          --
==============================================================================

NOTE 9 -- COMMITMENTS AND CONTINGENCIES

Operating Lease
The Company's Robotics subsidiary has a lease for office space and an
assembly/research and development facility in Hampton, New Hampshire, which is
accounted for as an operating lease. The term of the lease is for six years,
ending March 31, 2008. The lease includes a base rent and common
area/maintenance payment. The payment for the fiscal year 2007-2008 is expected
to be $161,950. As discussed in Note 4, Robotics shares office space with
Holo-Dek. The costs of leasing the facility in Hampton, New Hampshire are
allocated between the two companies based upon average square footage
utilization. Total lease expense for Robotics for the years ended March 31, 2007
and 2006 was $33,876 and $33,133, respectively.

Capital Leases
The Company has executed capital leases for manufacturing equipment and software
in the amount of $44,447. As of March 31, 2007, accumulated depreciation and
amortization on the equipment was $4,922 and the net book value was $39,525. The
following are the expected minimum lease payments for the next five years:

  Year Ending March 31,                              Capital Lease
  ---------------------                              -------------
  2008                                                  $16,372
  2009                                                   16,372
  2010                                                   13,701
  2011                                                    2,762
  2012                                                        -
                                                        -------
  Total                                                 $49,207
  Less: Interest Included                               (11,789)
                                                        -------
  Total Obligations under Capital Lease                 $37,418
  Current Portion Due                                   (10,207)
                                                        -------
  Long-Term Portion                                     $27,211

<PAGE>

                               Form 10-KSB Page 35

                              KINGSTON SYSTEMS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's Robotics subsidiary is the named lessee on three leases used to
acquire equipment for Holo-Dek (see Note 4). The Company has ultimate
responsibility to make all payments regarding the leases. A total of $81,505 of
equipment was acquired. The leases are shown on the Company's balance sheet as a
related party lease asset and a capitalized lease obligation. The following are
the expected minimum lease payments for the next five years.

         Year Ending March 31,                  Capital Leases
         ---------------------                  --------------
         2008                                         $34,171
         2009                                          23,536
         2010                                           8,234
         2011                                           6,353
         2012                                               -
                                                      --------
         Total                                        $72,294
         Less: Interest Included                      (14,496)
                                                      --------
         Total Obligation under Capital Leases        $57,798
         Current Portion Due                          (25,841)
                                                      --------
         Long-Term Portion                            $31,957

The total of Robotics and Holo-Dek leases (for which Robotics is the named
lessee) current portion due is $36,048, shown as capitalized lease obligations,
current portion on the Company's consolidated balance sheet. The total of
Robotics and Holo-Dek leases (for which Robotics is the named lessee) long-term
portion due is $59,168, shown as capitalized lease obligations, non-current
portion on the Company's consolidated balance sheet.

NOTE 10 - CONCENTRATIONS

Through its Robotics subsidiary, the Company sold robots to 4 major customers
for the year ended March 31, 2007. The sales to those customers accounted for
approximately 85% of the period's total sales. The companies are in the
water-jet, automotive, biomedical and defense industries. Those customers are:
TSM Inc., Osram Sylvania, University of Calgary and Astronics Advanced
Electronics. As a note, manufacturers that use the Company's robots are
Osram-Sylvania, (manufacture automotive light bulbs), Adidas and TSM (water-jet
cutting in a machine shop environment).

The Company is currently, and has been in the past, reliant upon a single major
investor, the Flood Trust, for the majority of its working capital needs (see
Notes 4 and 5).