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EX-10.4 - EXHIBIT 10.4 - AMERICAN CORDILLERA MINING Corpex10_4letterofintentapg.htm
EX-10.3 - EXHIBIT 10.3 - AMERICAN CORDILLERA MINING Corpex10_3noticeofintentapg.htm
EX-10.2 - EXHIBIT 10.2 - AMERICAN CORDILLERA MINING Corpex102_promissorynoteapg.htm
EX-10.8 - EXHIBIT 10.8 - AMERICAN CORDILLERA MINING Corpex108convertiblepromissoryno.htm
EX-10.5 - EXHIBIT 10.5 - AMERICAN CORDILLERA MINING Corpex10_5letterofintentamendmen.htm
EX-10.7 - EXHIBIT 10.7 - AMERICAN CORDILLERA MINING Corpex10_7letterofintentamendmen.htm
EX-10.6 - EXHIBIT 10.6 - AMERICAN CORDILLERA MINING Corpex10_6letterofintentamendmen.htm


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


[X]

Quarterly report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended September 30, 2011.

 

 

[   ]

Transition report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from _______ to _______.


000-50738

(Commission file number)


APD ANTIQUITIES, INC.

(Exact name of small business issuer as specified in its charter)


Nevada

91-1959986

(State or other jurisdiction

(IRS Employer

of incorporation or organization)

Identification No.)


1314 S. Grand Blvd, Ste. 2-250, Spokane, WA 99202

(Address of principal executive offices)


(509) 744-8590

(Registrant’s telephone number)


______________________________________

(Former name, former address and former fiscal year, if changed since last report)


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

Yes [X]  No [  ]


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

YES [X] NO [  ]


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


Large accelerated filer [  ]

Accelerated filer [  ] 

Non-accelerated filer [  ] 

Smaller reporting company [X]

(Do not check if a smaller reporting company)

 


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

Yes [X] No [  ]


As of May 21, 2012, there were 6,151,111 shares of the registrant’s common stock outstanding.


 





TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION

 

3

Item 1.

Financial Statements

 

3

Item 2.

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

 

11

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

16

Item 4.

Controls and Procedures

 

16

PART II – OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

 

16

Item 1A.

Risk Factors

 

16

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

16

Item 3.

Defaults Upon Senior Securities

 

16

Item 4.

Mine Safety Disclosure [Not Applicable]

 

17

Item 5.

Other Information

 

17

Item 6.

Exhibits

 

18

SIGNATURES

 

 

18




- 2 -




PART I – FINANCIAL INFORMATION


Item1. Financial Statements


APD ANTIQUITIES, INC.


INDEX TO FINANCIAL STATEMENTS

MARCH 31, 2012


Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011

4

  

 

Consolidated Statements of Operations for the Three Months Ended

 

March 31, 2012 and 2011

5

 

 

Consolidated Statements of Cash Flows for the Three Months Ended

 

March 31, 2012 and 2011

6

  

 

Notes to Financial Statements

7





- 3 -





APD ANTIQUITIES, INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2012

 

 

December 31, 2011

 

 

 

 

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

Cash

 

 

$

22,773 

 

$

15,040 

 

 

Northern Adventures Receivable

 

 

 

267,920 

 

 

230,417 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Current Assets

 

 

 

290,693 

 

 

245,457 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

$

290,693 

 

$

245,457 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

$

300 

 

$

4,191 

 

 

Accrued expenses

 

 

 

6,000 

 

 

6,000 

 

 

Accrued interest payable

 

 

 

18,670 

 

 

12,089 

 

 

Convertible notes payable

 

 

 

336,000 

 

 

331,000 

 

 

 

Total Current Liabilities

 

 

 

360,970 

 

 

353,280 

 

 

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Preferred stock, 5,000,000 shares authorized,

 

 

 

 

 

 

 

 

 

$0.001 par value; no shares issued and outstanding   

 

 

 

 

 

 

Common stock, 70,000,000 shares authorized, $0.001

 

 

 

 

 

 

 

 

 

par value;  6,151,111 and 4,731,111  shares issued

 

 

 

 

 

 

 

 

 

and outstanding, respectively

 

 

 

6,151 

 

 

4,731 

 

 

Additional paid-in capital

 

 

 

283,724 

 

 

214,144 

 

 

Accumulated deficit

 

 

 

(360,152)

 

 

(326,698)

 

 

 

Total Stockholder's Equity

 

 

 

(70,277)

 

 

(107,823)

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

290,693 

 

$

245,457 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements




- 4 -





APD ANTIQUITIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For The Three Months Ended

 

 

 

 

 

March 31, 2012

 

 

March 31, 2011

 

 

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

SALES

 

$

 

 $

2,500 

 

 

 

 

 

 

 

 

 

COST OF GOODS SOLD

 

 

 

 

2,500 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

Marketing

 

 

500 

 

 

 

Rent

 

 

900 

 

 

900 

 

General and administrative

 

 

2,084 

 

 

34 

 

Professional fees

 

 

28,392 

 

 

3,295 

 

 

TOTAL EXPENSES

 

 

31,876 

 

 

4,229 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(31,876)

 

 

(4,229)

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

Interest income

 

 

5,002 

 

 

 

Interest expense

 

 

(6,580)

 

 

 

 

TOTAL OTHER INCOME (EXPENSE)

 

 

(1,578)

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

(33,454)

 

 

(4,229)

 

 

 

 

 

 

 

 

 

INCOME TAXES

 

 

 

 

NET INCOME (LOSS)

 

$

(33,454)

 

 $

(4,229)

 

NET LOSS PER COMMON SHARE,

 

 

 

 

 

 

 

 

BASIC AND DILUTED

 

$

(0.01)

 

 $

 nil

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON STOCK

   SHARES OUTSTANDING, BASIC AND DILUTED

 

 

5,490,232 

 

 

4,128,889 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements




- 5 -





APD ANTIQUITIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For The Three Months Ended

 

 

 

 

 

 

March 31, 2012

 

 

March 31, 2011

 

 

 

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$

(33,454)

 

$

(4,229)

 

Adjustments to reconcile net loss

 

 

 

 

 

 

 

to net cash provided (used) by operating activities:

 

 

 

 

 

 

Decrease (increase) in inventory

 

 

 

2,500 

 

Decrease (increase) in interest receivable

 

(5,003)

 

 

365 

 

Increase (decrease) in accrued expenses

 

 

 

(11,670)

 

Increase (decrease) in accounts payable

 

(3,891)

 

 

900 

 

Increase (decrease) in interest payable

 

6,581 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

(35,767)

 

 

(12,134)

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Increase in receivable

 

(32,500)

 

 

Net cash used by investing activities

 

(32,500)

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from sale of common stock

 

71,000 

 

 

13,000 

 

Proceeds from convertible notes payable

 

25,000 

 

 

 

Payment of note payable

 

(20,000)

 

 

Net cash used by financing activities

 

76,000 

 

 

13,000 

 

 

 

 

 

 

 

 

 

 

Change in cash

 

 

7,733 

 

 

866 

 

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

15,040 

 

 

41 

 

 

 

 

 

 

 

 

 

 

Cash, end of period

$

22,773 

 

$

907 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW DISCLOSURES:

 

 

 

 

 

 

Interest paid

$

 

$

 

Income taxes paid

$

 

$

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements





- 6 -




APD ANTIQUITIES, INC.

Notes to the Consolidated Financial Statements

March 31, 2012



NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS


APD Antiquities, Inc. (hereinafter “APD” or “the Company”) was incorporated on July 23, 1996 under the laws of the State of Nevada for the purpose of acquiring, importing, marketing, and selling valuable antiquity and art items of Asian origin.  Examples of these items are such things as furniture, works of art, antiques, glass works, porcelain, statues, pottery, sculptures and other collectibles and collector items that have their origin in the Far East.  These collectibles and antiques were previously acquired through a variety of agents and wholesale distribution sources in Hong Kong and the Peoples Republic of China. Acquisitions will be made by agents of APD and as the result of direct buying trips and direct contact with wholesale companies located in several Asian countries.  The Company changed its name from APD International Corporation in August of 1999.  As of December 31, 2011, the company wrote off its remaining inventory and has discontinued its original business.


On May 7, 2011, the Company formed APD Metals, Inc. a wholly owned subsidiary corporation in the state of Nevada, with the intent of acquiring mining properties, existing mineral leases and options to purchase existing leases in the Northwest.   On May 8, 2012, the name of the subsidiary was changed from APD Metals, Inc. to AMCOR Exploration, Inc.  The Company entered into a Letter of Intent with an unrelated entity to acquire options to lease mineral properties at a future date (see NOTE 6).


The Company maintains its corporate office in Spokane, Washington. The Company is now searching for an acquisition target.  The Company’s fiscal year end is December 31.


NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


This summary of significant accounting policies of the Company is presented to assist in understanding the financial statements.  The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity.  

Basis of presentation

The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented.  Unaudited interim results are not necessarily indicative of the results for the full year.  These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended December 31, 2011 and notes thereto contained in the information as part of the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2012.


Net income (loss) per common share

Net income (loss) per common share is computed pursuant to paragraph of 260-10-45-10 of the FASB Accounting Standards Codification.  Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during each period.  Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period to reflect the potential dilution that could occur from common shares issuable through stock options and warrants.  There were no potentially dilutive shares outstanding as of March 31, 2012 or 2011.


Use of Estimates

The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts. At March 31,




- 7 -




2012, the Company had not participated in consignment or conditional sales; therefore, there are no unsettled transactions related to sales or cost of sales.


Recently Issued Accounting Pronouncements

Management has reviewed and does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.


Subsequent events

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events.  The Company will disclose the date through which subsequent events have been evaluated and that date is the date when the financial statements were issued.


NOTE 3 – GOING CONCERN


As reflected in the accompanying financial statements, the Company had an accumulated deficit of $360,152 at March 31, 2012 and had a net loss of $33,454 and net cash used in operating activities of $34,767 for the period ended March 31, 2012, respectively.


While the Company’s cash position may not be sufficient enough to support the Company’s daily operations.  Management intends to raise additional funds by way of a public or private offering.  Management believes that the actions presently being taken to further implement its business plan provide the opportunity for the Company to continue as a going concern.  While the Company believes in the viability of its strategy and in its ability to raise additional funds, there can be no assurances to that effect.  The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business.


The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


NOTE 4 – COMMITMENTS

Rental Agreement

The Company has a month-to-month rental agreement for office space in Spokane, Washington.  The monthly rent is $300.


NOTE 5 – NOTES PAYABLE


On April 7, 2012 APD Antiquities, Inc. entered into a definitive agreement with an accredited investor and executed February 17, 2012 a convertible promissory note relating to a loan in the amount of $25,000 at 8% interest per annum with a maturity date of August 15, 2012. This promissory note can be converted to shares of restricted common stock at $.05 per share at any time during the term of the promissory note.   


At March 31, 2012 a total of $18,670 of interest has been accrued on all outstanding convertible promissory notes between April 4, 2011 and March 31, 2012.


NOTE 6 – LETTER OF INTENT


On April 8, 2011, the Company entered into a non-binding Letter of Intent with Northern Adventures LLC. (“Northern”) related to securing an option to enter into a lease agreement related to two mineral properties located in the state of Montana.  The Letter of Intent was amended and the number of mineral properties or leases has, by mutual consent, been increased to nine properties.  


As part of the transaction with Northern, the Company has made several unsecured loans to Northern for the express purpose of securing additional mineral rights in the immediate area of the two mineral properties owned by Northern.


On January 5, 2012, a $15,000 unsecured loan was made to Northern Adventures, LLC.  The promissory note bears interest at 8% per annum and matures on June 30, 2012.


On January 21, 2012, a $17,500 unsecured loan was made to Northern Adventures, LLC.  The promissory note bears interest at 8% per annum and matures on June 30, 2012.

  




- 8 -




Aggregate loans due from Northern Adventures at March 31, 2012 are $255,000.


NOTE 7 – PREFERRED AND COMMON STOCK


The Company has 5,000,000 shares of preferred stock authorized and none issued.


On December 31, 2011, we sold 300,000 shares of common stock in a private placement to Martin Clemets for $15,000 ($0.05 per share).


On January 17, 2012, we sold 920,000 shares of common stock in a private placement to Manuel Graiwer, Louis Cornacchia, and Scott Nehring for $46,000 ($0.05 per share).


On March 29, 2012, we sold 500,000 shares of common stock in a private placement to Michael Coyne for $25,000 ($0.05 per share).


NOTE 8 – INCOME TAXES


The Company accounts for income taxes and the related accounts under the liability method.  Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and the income tax basis of assets and liabilities.  A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.


At March 31, 2012 and December 31, 2011 the Company had gross deferred tax assets calculated at the expected rate of 35% of approximately $125,700 and $114,300, respectively, principally arising from net operating loss carryforwards for income tax purposes.  As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the deferred tax asset, a valuation allowance of $125,700 and $114,300 has been established at March 31, 2012 and December 31, 2011, respectively.


The significant components of the Company’s net deferred tax asset (liabilities) at March 31, 2012 and December 31, 2011 are as follows:


March 31, 2012

        December 31, 2011


Net operating loss carryforwards

$   360,152

$   326,698


Gross deferred tax assets (liabilities):

Net Operating Loss

$   126,000

$   114,300

Valuation Allowance

    (126,000)

    (114,300)


Net Deferred tax asset (liability)

$             -

$             -


At March 31, 2012 and December 31, 2011, the Company has net operating loss carryforwards of approximately $360,000 and $327,000 respectively, which will expire in the years 2016 through 2033.  The net change in the allowance account was an increase of $11,700.


NOTE 9 – SUBSEQUENT EVENTS


The Company has evaluated all events that occur after the balance sheet date through the date when the financial statements were issued to determine if they must be reported.  The Management of the Company determined that there were the following reportable subsequent events to be disclosed.


On April 1, 2012, all lenders have agreed to extend the maturity dates of their promissory notes to June 30, 2012 and convert their promissory notes to common stock upon the occurrence of an acquisition or merger before June 30, 2012.  If no acquisition or merger takes place by June 30, 2012, the notes will be due in full.


On May 15, 2012, we entered into a definitive agreement with Dylan Underhill, an accredited unrelated individual, and executed a convertible promissory note relating to a loan in the amount of $11,000 at 8% interest with a maturity date of June 30, 2012.  This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.





- 9 -




On May 15, 2012, a $10,000 unsecured loan was made to Northern Adventures, LLC.  The promissory note bears interest at 8% per annum and matures on June 30, 2012.


On May 18, 2012, a $25,000 unsecured loan was made to Northern Adventures, LLC.  The promissory note bears interest at 8% per annum and matures on June 30, 2012.


On May 18, 2012, we entered into a definitive agreement with Marycliff Investment Corporation, an accredited unrelated corporation, and executed a convertible promissory note relating to a loan in the amount of $25,000 at 8% interest with a maturity date of June 30, 2012.   This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.




- 10 -





ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION


THE FOLLOWING PLAN OF OPERATIONS SECTION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ON PAGES 3 THROUGH 13 OF THIS QUARTERLY REPORT ON FORM 10-Q.  ALL STATEMENTS IN THIS QUARTERLY REPORT RELATED TO OUR CHANGING FINANCIAL OPERATIONS AND EXPECTED FUTURE OPERATIONAL PLANS CONSTITUTE FORWARD-LOOKING STATEMENTS. THE ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED OR EXPRESSED IN SUCH STATEMENTS.  FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE.


This discussion and analysis of our financial condition and results of operations are based on our financial statements that have been prepared under accounting principles generally accepted in the United States of America.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could materially differ from those estimates.  We have disclosed all significant accounting policies in Note 2 to the financial statements included in this Form 10-Q.


Plan of Operations


In its initial operational stage beginning with its commencement of operations in 1999, APD Antiquities, Inc. was an e-commerce based company which engaged in the business of acquiring and marketing antiques and collectible items, focusing our attention on high quality pieces from the Far East.  This business did not prove successful.  Our plan of operation for the coming year is to identify and acquire a favorable business opportunity through a merger or acquisition.


As an initial step to potentially redirect our business to the mineral exploration industry, on May 7, 2011, we formed APD Metals, Inc., a wholly owned subsidiary corporation in the state of Nevada.  APD Metals, Inc. was formed with the intent of acquiring mining properties in the Northwest United States and for the purpose of evaluating the feasibility of diversifying into the mineral exploration business.  As of this date, no properties or mineral leases have been acquired.  On May 8, 2012, the corporate name of our wholly owned subsidiary was changed from APD Metals, Inc. to AMCOR Exploration, Inc.


Loans Receivable.  On April 8, 2011, we entered into a non-binding Letter of Intent with Northern Adventures LLC, (“Northern”), an unrelated entity, pertaining to securing an option to enter into a lease agreement related to two mineral properties located in the state of Montana.  As part of the signing of the Letter of Intent with Northern, we made a one hundred twenty (120) day unsecured loan in the amount of $55,000 to Northern for the express purpose of securing additional mineral rights in the immediate area of the two mineral properties owned by Northern by locating, filing and recording approximately 55 unpatented mining claims at an average cost of $400 each.  The promissory note bears interest at 8% per annum.  Under the terms of the Letter of Intent, we agreed to loan Northern up to $200,000.  As of March 31, 2012, we have loaned Northern an aggregate principal amount of $255,000 pursuant to 11 promissory notes detailed below, exceeding the amount agreed upon in the Letter of Intent by 55,000.  All notes bear interest at 8% per annum as shown in the chart below.  As a consequence of protracted inclement weather which inhibited the proposed work defined in the Letter of Intent between APD and Northern executed on April 8, 2011, we agreed with Northern to amend the non-binding Letter of Intent on three occasions, August 5, 2011, December 30, 2011, March 30, 2012, with the last amendment extending the maturity date of all promissory notes with Northern (listed below) to June 30, 2012.




- 11 -





Loaned To

Date

Amount

Details

Northern Adventures LLC

4/4/2011

   $20,000

8% interest

Northern Adventures LLC

4/12/2011

   $35,000

8% interest

Northern Adventures LLC

5/3/2011

   $40,000

8% interest

Northern Adventures LLC

8/24/2011

   $40,000

8% interest

Northern Adventures LLC

9/8/2011

   $15,000

8% interest

Northern Adventures LLC

9/21/2011

   $20,000

8% interest

Northern Adventures LLC

10/10/2011

     $7,500

8% interest

Northern Adventures LLC

11/1/2011

   $20,000

8% interest

Northern Adventures LLC

11/15/2011

   $25,000

8% interest

Northern Adventures LLC

1/5/2012

   $15,000

8% interest

Northern Adventures LLC

1/21/2012

   $17,500

8% interest

 

Total

 $255,000

 


As of March 31, 2012, interest in the amount of $12,920 has accrued on the aggregated principal amount of $255,000 owed to us by Northern Adventures, LLC.


Loans Payable.  Between April 4, 2011 and March 31, 2012 we entered into loans pursuant to promissory notes convertible into shares of common stock at $0.05 per share for an aggregate principal amount of $375,000, each at an interest rate of 8% per annum, of which principal of $336,000 remains outstanding after payment of $39,000 during the quarter ended March 31, 2012 to one note holder.  The promissory notes are as follows:


On April 8, 2011, we executed a convertible promissory note with Marycliff Investment Corporation, an accredited unrelated corporation, relating to a loan in the amount of $50,000 at 8% interest per annum with an initial maturity date of January 3, 2012, which was extended to March 31, 2012 on December 31, 2011.  This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.  During the period ending March 31, 2012, a total of $20,000 was repaid on this promissory note.  As of March 31, 2012, total principal in the amount of $11,000 was still outstanding.  


On April 12, 2011, we entered into a definitive agreement with Vincent Valdez, an accredited unrelated individual, and executed a convertible promissory note relating to a loan in the amount of $50,000 at 8% interest with a maturity date of January 7, 2012 which was extended to March 31, 2012 on December 31, 2012.   This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.  


On April 30, 2011, we entered into a definitive agreement with Manuel Graiwer, an accredited unrelated individual, and executed a convertible promissory note relating to a loan in the amount of $50,000 at 8% interest with a maturity date of January 25, 2012 which was extended to March 31, 2012 on December 31, 2012.  This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.


On August 23, 2011, we entered into a definitive agreement with Manuel Graiwer, an accredited unrelated individual, and executed a convertible promissory note relating to a loan in the amount of $50,000 at 8% interest with a maturity date of December 31, 2011 which was extended to March 31, 2012 on December 31, 2012.  This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.


On September 6, 2011, we entered into a definitive agreement with Vincent Valdez, an accredited unrelated individual, and executed a convertible promissory note relating to a loan in the amount of $25,000 at 8% interest with a maturity date of January 14, 2012 which was extended to March 31, 2012 on December 31, 2012.  This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.


On September 20, 2011, we entered into a definitive agreement with Larry Johnson, an accredited unrelated individual, and executed a convertible promissory note relating to a loan in the amount of $25,000 at 8% interestwith a maturity date of December 31, 2011 which was extended to March 31, 2012 on December 31, 2012.  This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.




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On September 30, 2011, we entered into a definitive agreement with Manuel Graiwer, an accredited unrelated individual, and executed a convertible promissory note relating to a loan in the amount of $25,000 at 8% interest with an initial maturity date of December 31, 2011 which was extended to March 31, 2012 on December 31, 2012.  This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.


On November 2, 2011, we entered into a similar definitive agreement with Louis Cornacchia, an accredited unrelated individual, and executed a convertible promissory note relating to a loan in the amount of $25,000 at 8% interest with a maturity date of March 31, 2012. This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.  


On November 14, 2011, we entered into a similar definitive agreement with Livorno Latin American, an accredited unrelated corporation, and executed a convertible promissory note relating to a loan in the amount of $50, 000 at 8% interest with a maturity date of March 31, 2012. This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.  


On February 17, 2012, we entered into a similar definitive agreement with Joseph Edington IV, an accredited unrelated individual, and executed a convertible promissory note relating to a loan in the amount of $25,000 at 8% interest with a maturity date of March 31, 2012. This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.  


On April 1, 2012 all of the above note holders agreed to convert the principal and accrued interest of their promissory notes to common stock subject to APD acquiring the assets of Northern Adventures, Inc.  The conversion of the promissory notes are therefore on hold pending the consummation of an asset acquisition transaction between APD and Northern Adventures, Inc.  


At March 31, 2012, a total of $18,662 of interest had accrued on the convertible promissory notes with an aggregate principal amount of $336,000.


As of the date of this filing, we have not yet entered into any definitive agreements with Northern to acquire their mining assets, but we do have a non-binding Letter of Intent which may result in a possible change of control transaction, of which there is no assurance, at some future date.  In the event we reach a formal agreement with Northern, of which there is no assurance, we expect to attempt to raise additional funds to be used as operating capital with a view to funding one or more proposed mineral exploration programs.  If necessary, we may sell common stock to provide additional cash for future operations and development.


Results of Operations


Since APD was formed on July 23, 1996, it has earned minimal revenues and has incurred a net operating loss since its inception of $359,145 through March 31, 2012.  


Results of operations for the three months ended March 31, 2012, compared to the three months ended March 31, 2011 are as follows:


Net cash used in operating activities during the three months ended March 31, 2012 was $34,767 as compared to net cash used in operating activities during the three months ended March 31, 2011 of $12,134.  For the three months ended March 31, 2012, we reported a net loss of $32,446, gross revenues of $0, with a gross profit on sales of $0, compared to a net loss of $4,229, sales of $0, and a gross profit on sales of $2,500 during the three months ended March 31, 2011.  We incurred operating expenses of $30,876 in the three months ended March 31, 2012 and $4,229 in the three months ended March 31, 2011.  This is an increase of $26,647.  The major difference in the two periods was attributable to an increase in professional and consulting fees related to evaluating new business opportunities, specifically in the mineral exploration business, and due diligence related to a possible reorganization of the company.


Revenues


Total net revenues amounted to $0 for the three months ended March 31, 2012 compared to $0 for the corresponding period in the prior year.  This lack of revenue is attributed to the lack of time and focus of the president.  The capital restraints that we have experienced have not allowed inventory augmentation and diversification, implementation of




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our marketing strategy, etc.  Our cost of goods sold was $0 for the three months ended March 31, 2012, and was $2,500 for the three months ended March 31, 2011.


Operating Expenses


We incurred operating expenses of $31,876 in the three months ended March 31, 2012 and $4,229 in the three months ended March 31, 2011.  This is an increase of $27,647.  The major difference in the two periods was attributable to an increase in professional fees.


Net Income or Loss


For the three months ended March 31, 2012, we reported a net loss of $33,454 compared to a net loss of $4,229 for the corresponding period in the prior year, an increase in net loss of $29,225.  The net loss increase is primarily due to an increase in professional fees and interest expense.


Liquidity and Capital Resources


With respect to long term liquidity (periods in excess of one year), we are unable to reasonably project or otherwise make assumptions concerning future cash flows or amounts of funds that may be available to us.  With additional funding to carry on and support operations, management anticipates that our operating expenses would increase in the long-term as a result of an increase in sales and marketing activities, as well as general and administrative costs. Long-term liquidity is directly dependent upon either the future success of our business or our ability to identify and acquire a favorable business opportunity through merger or acquisition.  Without reasonable funding in the near future, we would attempt to enter into one or more business transactions that could involve a merger or sale of our company and/or the sale of some or all of its assets to protect our shareholders’ interest and investments.  No binding merger or acquisition agreements have been entered into at this time.


Our cash in the bank at March 31, 2012 was $22,773.  We do not have any available lines of credit.  Since inception we have financed our operations from private placements of equity securities and loans.  Between April 4, 2011 and March 31, 2012 we received loans for an aggregate principal amount of $375,000 as described above.  As of March 31, 2012, we have loaned Northern a total of $255,000 at 8% interest per annum pursuant a Letter of Intent as described above.  Our recent cash burn rate in our operations over year 2011 has been approximately $6,000 per month.  The cash burn rate has remained constant over the last quarter.  Given this recent rate of use of cash in our operations, we do not have sufficient capital to carry on operations past June 2012.  Our long term capital requirements and the adequacy of our available funds will depend on many factors, including the reporting company costs, public relations fees, and operating expenses, among others.  If we are unable to raise additional capital to repay loans, generate sufficient revenue, or receive further loans on an as needed basis, we will have to curtail or cease our operations.


We have had minimal operations and very limited revenues.  From inception to March 31, 2012, we have an accumulated deficit of $360,152.  For the three months ended March 31, 2012, we had a net loss of $33,454 and no revenues from sales.  At March 31, 2012, we had cash of $22,773, and receivables of $267,920, for total current assets of $290,693.  $255,000 of these assets are from notes receivable.  At March 31, 2012 our total liabilities were $360,970.  $336,000 of these liabilities are from convertible notes payable.  We have realized only minimal revenue from sales and had a net loss for the year ended December 31, 2011.  We believe that we could experience negative operating cash flow for the foreseeable future.  At March 31, 2012, we had outstanding debt of $336,000 from convertible loans as described in the Plan of Operations section above.  On April 1, 2012 all of the above note holders agreed to convert the principal and accrued interest of their promissory notes to common stock subject to APD acquiring the assets of Northern Adventures, Inc.  The conversion of the promissory notes are therefore on hold pending the consummation of an asset acquisition transaction between APD and Northern Adventures, Inc.  


If we decide not to proceed with our planned asset acquisition transaction with Northern Adventures, Inc. and Northern Adventures, LLC, under our Letter of Intent $145,000 of our loans will be treated as liquidated damages and will not be repaid leaving only principal of $110,000 plus accrued interest to be repaid.  There is no guarantee that Northern Adventures, LLC will be able to repay the principal and accrued interest of $17,920 that is owed to us and if our lenders do not convert their promissory notes to common shares in that circumstance, we will have to repay those lenders the aggregate principal amount and accrued interest of $354,662.  Even if Northern Adventures, LLC were to repay its notes in full, we would still owe our lenders at least $244,662.


Our existing cash position is not sufficient to support our operations.  Accordingly, we continue to examine a range of possible funding sources, including additional strategic alliances, additional equity or debt private placements, the




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sale of existing assets, as well as the possibility of entering into one or more business transactions that could involve a merger or sale of our company and/or the sale of some or all of its assets.  We do not currently have any contractual restrictions on our ability to incur debt.  Any such indebtedness could contain covenants that would restrict our operations.  There can be no assurance that additional financing will be available on terms favorable to us, or at all.  If equity or convertible debt securities are issued, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution and such securities may have rights, preferences or privileges senior to those of our common stock.  This effect is attributed to the fact that while additional shares of common stock are issued from our treasury, our earnings at that particular moment remain consistent and, therefore, the earnings per share decreases.  If we are unsuccessful in these efforts, we will be required to curtail our ongoing operations.  If we were unable to sufficiently curtail our costs in such a situation, we might be forced to seek protection of the courts through reorganization, bankruptcy or insolvency proceeding, or cease operations completely.


General


The only development costs incurred since inception are with respect to finding suitable products that offer us potential for revenues and profits, as we market these products through our website.


Our ability to achieve profitable operations is subject to the validity of our assumptions and risk factors within the industry and pertaining to us.


Our 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.  We use cash and cash equivalents as our primary measure of liquidity.  Except as discussed above, management is not aware of any other known trends, events, commitments, or uncertainties that will have a significant impact on liquidity.


Our inventory is periodically reviewed by management to determine if there has been any known auction or interdealer sales of similar antiques at reduced prices and to determine if a reduction in the inventory carrying value is needed.  Inventory is zero.


During the past two fiscal years, there has been no adverse impact from inflation.  However, in the event prices for antiques increase materially or the value of the dollar decreases against other currencies, the ability to acquire antiques, and, in turn, its ability to market such newly acquired antiques to its market, may be adversely affected. Thus, although the retail and wholesale values of existing inventory might be favorably affected by increasing prices, passing along such increases to customers could have an inhibiting effect on the overall business. Our management believes that tangible collectibles move inversely with financial assets over the long term. As a result, during times of greater inflationary expectations, tangible collectibles may actually be the beneficiary of greater interest.


Going Concern


Our independent public accountants have included explanatory paragraphs in their reports on our financial statements for the year ended December 31, 2011, which express substantial doubt about our ability to continue as a going concern.  As discussed in Note 3 of our financial statements, included with this 10-Q, we have suffered recurring losses from operations since inception and accumulated deficit that raises substantial doubt about its ability to continue as a going concern.


Critical Accounting Policies and Estimates


Revenue recognition: Sales are recognized as revenue when the amounts are contractually earned, fixed and determinable, and there is substantial probability of collection.  Revenues from retail sales are recognized at the time the products are delivered.


Although we do not provide a written warranty on its items sold, we will refund the purchase price paid to any customer in those instances when an item sold is proven to be non-authentic.  In a majority of instances, we receive a certificate of authenticity for documents (items) purchased from our vendors and are reasonably assured as to the provenance of its products.  Since inception, we have made no refunds for the sale of any non-authentic items nor has we received any claims or notice of prospective claims relating to such items.  Accordingly, we have not established a reserve against forgery or non-authenticity.





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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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Our accounting estimates principally concern the net reliability of its receivables and the marketability and value of its inventory.  Actual results could differ from those estimates.


Inventories: Inventories are accounted for using the specific identification method, and stated at the lower of cost or market, with market representing the lower of replacement cost or estimated net realizable value.  We have no insurance coverage on our inventory.


We had no inventory on consignment at March 31, 2012 or 2011.  In the future, if we consign inventory, it will retain title and will insure the inventory until the inventory is sold, returned, lost, stolen, damaged, or destroyed.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Not required


ITEM 4.  CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by our management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)).  Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.  Based on its evaluation, and in light of the previously-identified material weaknesses in internal control over financial reporting, as of December 31, 2011, described in the 2011 Annual Report on Form 10-K, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2012, our  disclosure controls and procedures were not effective.


Changes in Internal Control Over Financial Reporting


There has been no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  There has been no progress towards remediating our previously disclosed material weakness due to the lack of funding.





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PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS


The Registrant is not currently involved in any litigation.


ITEM 1A.  RISK FACTORS


We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


On January 17, 2012, we sold 920,000 shares of common stock in a private placement to Manuel Graiwer, Louis Cornacchia, and Scott Nehring, all accredited unrelated individuals, for $46,000 ($0.05 per share).


On March 29, 2012, we sold 500,000 shares of common stock in a private placement to Michael Coyne, an accredited unrelated individual, for $25,000.


In the private placement of the securities, APD is relying on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 for sales to “accredited investors” (as such term is defined in Rule 501 of Regulation D). Each purchaser has represented to us that they are an “accredited investor.” We believed that Section 4(2) was available because the offer and sale did not involve a public offering and there was not general solicitation or general advertising involved in the offer or sale and no fees were paid in connection with the transaction.


On May 15, 2012, we entered into a definitive agreement with Dylan Underhill, an accredited unrelated individual, and executed a convertible promissory note relating to a loan in the amount of $11,000 at 8% interest with a maturity date of June 30, 2012.  This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.


On May 18, 2012, we entered into a definitive agreement with Marycliff Investment Corporation, an accredited unrelated corporation, and executed a convertible promissory note relating to a loan in the amount of $25,000 at 8% interest with a maturity date of June 30, 2012.  This promissory note can be converted to shares of restricted common stock at $0.05 per share at any time during the term of the promissory note.


ITEM 4.  MINE SAFETY DISCLOSURE [NOT APPLICABLE]



ITEM 5.  OTHER INFORMATION


None




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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.



 

Exhibits

 

 

2.1

Acquisition Agreement and Plan of Merger between APD Antiquities, Inc. and GCJ, Inc. dated December 27, 2004 (Incorporated by reference to the corresponding exhibit to the Form 8-K previously filed by APD Antiquities, Inc. on December 30, 2004, File No. 000-50738) (the “December 30, 2004 Form 8-K”)

 

 

2.2

Articles of Merger (Nevada) dated December 29, 2004 (File No. 000-50738) (Incorporated by reference to exhibit 2.1 to the December 30, 2004 Form 8-K)

 

 

3.1

Articles of Incorporation*

 

 

3.2

By-Laws*

 

 

10.1

2001 Stock Option Plan (Incorporated by reference to Exhibit 10.1 to the December 31, 2008 Annual Report on Form 10-K) (File No. 000-50738)

 

 

10.2

Form of Promissory notes from Northern Adventures, LLC dated April 4, 2011, April, 12, 2011, May 3, 2011, August 24, 2011, September 8, 2011, September 21, 2011, October 10, 2011, November 3, 2011, November 15, 2011, January 5, 2012, January 21, 2012, May 15, 2012 and May 18, 2012

 

 

10.3

Form of Notice of Intent to Convert Debt to Shares of Restricted Common Stock

 

 

10.4

Letter of Intent between APD Antiquities, Inc. and Northern Adventures, LLC dated April 8, 2011

 

 

10.5

Form of Amended Letter of Intent between APD Antiquities, Inc. and Northern Adventures, LLC dated August 5, 2011

 

 

10.6

Form of Amended Letter of Intent between APD Antiquities, Inc. and Northern Adventures, LLC dated December 30, 2011

 

 

10.7

Form of Amended Letter of Intent between APD Antiquities, Inc. and Northern Adventures, LLC dated March 30, 2012

 

 

10.8

Form of 2012 Convertible Promissory Note

 

 

31.1

Section 302(a) CEO and Principal Financial Officer Certification

 

 

32.1

Section 1350 Certifications

 

 

* Incorporated by reference to the Registrant's Registration Statement on

Form 10SB12G filed on May 3, 2004, File No. 000-50738



SIGNATURES


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


APD ANTIQUITIES, INC.


BY:  /s/ Cindy K. Swank

Date: May 21, 2012

       Cindy K. Swank, President, Treasurer,

       CEO, Principal Financial Officer





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