AMERICAN POWER CORP. - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - AMERICAN POWER CORP.	Financial_Report.xls
EX-31.1 - EXHIBIT 31.1 - AMERICAN POWER CORP.	exh31_1.htm
EX-31.2 - EXHIBIT 31.2 - AMERICAN POWER CORP.	exh31_2.htm
EX-32.2 - EXHIBIT 32.2 - AMERICAN POWER CORP.	exh32_2.htm
EX-32.1 - EXHIBIT 32.1 - AMERICAN POWER CORP.	exh32_1.htm

U.S. Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 31, 2012

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

For the Transition Period From ____to _____

Commission File Number 000-53683

Nevada (State or other jurisdiction of incorporation or organization)	27-4429450 (I.R.S. employer identification number)
16 Market Square Center 1400 16th Street Suite 400 Denver, CO 80202 Tel: 720.932.8389 Fax: 720.932.8189 (Address of principal executive offices and zip code) Copies to: Davis Graham & Stubbs LLP 1550 Seventeenth Street, Suite 500 Denver, CO 80202 Phone: (303) 892-7344 Fax: (303) 893-1379

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 Data File 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 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 definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)
Accelerated filer	o
Smaller reporting company	x

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

Yes [ ] No [X]

Number of shares of common stock outstanding as of February 14, 2013: 102,512,909

PART I	Page No.

Item 1. Financial Statements	2

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3. Quantitative and Qualitative Disclosures About Market Risk	14

Item 4. Controls and Procedures	14

PART II
Item 1. Legal Proceedings	15

Item 1A. Risk Factors	15

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	15

Item 3. Defaults Upon Senior Securities	15

Item 4. Mine Safety Disclosures	15

Item 5. Other Information	15

Item 6. Exhibits	15

ITEM 1. FINANCIAL STATEMENTS

INDEX TO AMERICAN POWER CORP. FINANCIAL STATEMENTS

AMERICAN POWER CORPORATION	PAGE

Balance Sheets	4

Statements of Operations	5

Statements of Cash Flows	6

Notes to Financial Statements	7

AMERICAN POWER CORP.

(An Exploration Stage Company)

FINANCIAL STATEMENTS

AMERICAN POWER CORP.
(An Exploration Stage Company)
BALANCE SHEETS
(Unaudited)

	December 31, 2012			September 30, 2012
ASSETS
CURRENT ASSETS
Cash	$	1,497		$	-
Prepaids and deposit		5,966			9,020
TOTAL CURRENT ASSETS		7,463			9,020

LONG-TERM ASSETS
Mineral property		2,670,500			2,670,500
Reclamation bond		125,108			125,108
Equipment - net		2,164			1,978
Website - net		14,128			16,562
TOTAL LONG-TERM ASSETS		2,811,900			2,814,148
TOTAL ASSETS	$	2,819,363		$	2,823,168

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Bank overdraft	$	-		$	423
Accounts payable and accrued liabilities		247,809			248,957
Promissory notes, current portion		2,200,000			1,600,000
TOTAL CURRENT LIABILITIES		2,447,809			1,849,380

LONG-TERM LIABILITIES
Promissory notes, net of current portion, net of debt discount of $148,037 ($217,998 – September 30, 2012)		551,963			1,082,002
TOTAL LONG-TERM LIABILITIES		551,963			1,082,002
TOTAL LIABILITIES		2,995,312			2,931,382

STOCKHOLDERS’ DEFICIT
Capital stock
Authorized
500,000,000 shares of common stock, $0.001 par value,
Issued and outstanding
102,512,909 shares of common stock (101,247,086 September 30, 2012)		102,513			101,247
Additional paid-in capital		4,447,978			4,349,244
Stock payable		44,333			18,333
Accumulated deficit during the exploration stage		(4,775,233	)		(4,577,038	)
TOTAL STOCKHOLDERS’ DEFICIT		(180,409	)		(108,214	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	2,819,363		$	2,823,168

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

AMERICAN POWER CORP.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)

	Three months Ended December 31,						Cumulative results (August 7, 2007) from inception
	2012			2011			December 31, 2012
REVENUES

Revenues	$	-		$	-		$	-
Total revenues		-			-			-

EXPENSES

Office and general		12,181			40,255			654,247
Management fees		38,500			80,000			1,276,497
Professional fees		39,732			47,778			423,391
Gain on debt forgiveness		-			-			(8,000	)
Exploration costs		5,688			214,985			895,192
Total expenses		(96,101	)		(383,018	)		(3,241,327	)

OTHER EXPENSES
Interest expense		(102,094	)		(78,813	)		(987,967	)
Loss on extinguishment of debt		-			-			(470,869	)
Total other expenses		(102,094	)		(78,813	)		(1,458,836	)

NET LOSS	$	(198,195	)	$	(461,831	)	$	(4,700,163	)

BASIC LOSS PER COMMON SHARE	$	(0.00	)	$	(0.01	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC		102,471,632			93,670,217


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

AMERICAN POWER CORP.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)

	Three months ended December 31,						Cumulative results from inception (August 7, 2007) to
	2012			2011			December 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(198,195	)	$	(461,831	)	$	(4,700,163	)
Adjustment to reconcile net loss to net cash
used in operating activities
Depreciation and amortization		2,771			2,744			28,134
Stock-based compensation		26,000			42,500			1,129,836
Accretion of debt discount		69,961			78,813			922,004
Gain on forgiveness of debt		-			-			(8,000	)
Loss on forgiveness of debt		-			-			470,869
Change in current assets and liabilities:
(Increase) decrease in prepaid expenses		3,054			7,541			(5,966	)
(Decrease) increase in accounts payable and accrued liabilities		(1,148	)		(6,325	)		255,808
NET CASH USED IN OPERATING ACTIVITIES		(97,557	)		(336,558	)		(1,907,478	)

CASH FLOWS FROM INVESTING ACTIVITIES
Website		-			-			(38,945	)
Equipment		(523	)		-			(5,480	)
Mineral property		-			-			(350,000	)
Reclamation bond		-			(32,232	)		(125,108	)
NET CASH USED IN INVESTING ACTIVITIES		(523	)		(32,232	)		(519,533	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank overdraft		(423	)		-			-
Proceeds from sale of common stock		100,000			-			2,812,310
Loans from related party		-			-			16,198
Proceeds from notes payable		-			-			200,000
Payment on promissory note		-			-			(600,000	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		99,577			-			2,428,508

NET INCREASE (DECREASE) IN CASH		1,497			(368,790	)		1,497
CASH, BEGINNING OF PERIOD		-			629,857			-
CASH, END OF PERIOD	$	1,497		$	261,067		$	1,497
Supplemental disclosure of cash flow information:
Interest paid in cash	$	31,250		$	-		$	62,500
Taxes paid in cash	$	-		$	-		$	-
Non-cash investing and financing activities:
Common stock payable for property acquisition	$	-		$	-		$	115,000
Promissory notes issued for property	$	-		$	-		$	2,405,500
Forgiveness of debt by former director	$	-		$	-		$	16,198
Common stock issued to satisfy common stock payable	$	-		$	867,500		$	1,973,910
Conversion of debt totalling $208,603, (including interest of $8,603) for common stock	$	-		$	-		$	464,610


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

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2012

(Unaudited)

NOTE 1 –FINANCIAL STATEMENTS

Pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q, the financial statements, footnote disclosures and other information normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. The financial statements contained in this report are unaudited but, in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments necessary for a fair presentation of the financial statements. The results of operations for any interim period are not necessarily indicative of results for the full year. The balance sheet at September 30, 2012 has been derived from the audited financial statements at that date. These interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America. The accompanying interim financial statements should be read in conjunction with the financial statements and notes there to included in the Annual Report on the Form 10-K for the year ended September 30, 2012.

NOTE 2 – GOING CONCERN

The Company’s financial statements as of December 31, 2012 have been prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. For the three months ended December 31, 2012, and from inception (August 7, 2007) to December 31, 2012, the Company had a net loss of $198,195 and $4,700,163, respectively. Accumulated deficit from inception (August 7, 2007) to December 31, 2012 is $4,775,233 and includes accumulated net loss and the effects of the 340 for 1 stock split effective April 30, 2010 resulting in a difference of $75,070.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Stock-based Compensation

The Company recognizes stock-based compensation in accordance with ASC Topic 718 “Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values.

For non-employee stock-based compensation, the Company has adopted ASC Topic 505 “Equity-Based Payments to Non-Employees”, which requires stock-based compensation related to non-employees to be accounted for based on the fair value of the related stock or options or the fair value of the services on the grant date, whichever is more readily determinable in accordance with ASC Topic 505.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

Use of Estimates and Assumptions

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Net Loss per Share

Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive loss per share reflects the potential dilution of securities that could share in the losses of the Company. Because the Company does not have any potentially dilutive securities, the accompanying presentation is only of basic loss per share.

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2012

(Unaudited)

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued)

Fair Value of Financial Instruments

The carrying amounts of the financial instruments, including cash and cash equivalents, accounts payable, and accrued liabilities, approximate fair value due to the short maturities of these financial instruments. The notes payable are also considered financial instruments whose carrying amounts approximate fair values.

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS AFFECTING THE COMPANY

There have been no recent accounting pronouncements or changes in accounting pronouncements that impacted the first quarter of fiscal 2013, or which are expected to impact future periods, which were not already adopted and disclosed in prior periods.

NOTE 5 – COAL AND OTHER MINERAL PROPERTIES

The Company entered into a series of agreements to acquire all the mineral, oil and gas rights of a mineral property located in Judith Basin County, Montana for total consideration of $2,670,500.

Coal Agreement and Amendments

On March 31, 2010, the Company, Future Gas Holdings, Ltd. (“Future Gas”) and JBM Energy Company, LLC (“JBM”) entered into an Assignment of Coal Agreement (“Assignment”) to transfer and assign all the rights and obligations of Future Gas to the Company to purchase all coal mineral rights owned by JBM under a Coal Buy and Sell Agreement (“Coal Agreement”) dated February 4, 2010. Pursuant to the Assignment and Coal Agreement, the Company paid in cash $150,000 to JBM and signed a 5% promissory note with a face value of $1,750,000 (“Coal Promissory Note”) to JBM. During the first 2 years, the note carried no interest. On July 9, 2010 and January 9, 2011 cash payments of $200,000 and $200,000, respectively, were paid towards Coal Promissory Note. An additional amount of $100,000 was to be paid 90 days following the completion of the Reserve Study and Mining Plan, to be no later than April 9, 2012. Interest only payments on the $1,250,000 balance were to be made quarterly during the third and fourth years, starting July 9, 2012. Starting July 9, 2014, the principal balance of $1,250,000 was to be paid in 8 equal quarterly installments, plus accrued interest on the unpaid principal balance to date of each principal payment.

On March 26, 2012, the Company entered into an Amended and Restated Coal Buy Sell Agreement (the “Coal Amendment”), by and between the Company and JBM, amending and restating the terms of the Coal Agreement, dated as of February 4, 2010, by and between JBM and Future Gas, which Coal Agreement was subsequently assigned by Future Gas to the Company as described above.

The Coal Amendment extended the date upon which the Company must complete a reserve study and mine feasibility study from April 9, 2012 to April 9, 2013. The Coal Amendment also provided that the Company’s payment of $100,000 to JBM that was previously due 90 days following the completion of the mining and reserve study and to be no later than April 9, 2012 would be due on the earlier of (i) sixty (60) days following the effective date of the registration statement (the "Registration Statement") with respect to the Standby Equity Distribution Agreement (the “SEDA”), dated as of February 17, 2012, by and between the Company and YA Global Master SPV Ltd. [which was subsequently amended and restated] or (ii) December 9, 2012, and delayed the first interest payment due under the Coal Agreement until July 9, 2012. Finally, the Company’s payment obligations under the Coal Amendment are evidenced by an amended and restated promissory note of the Company in favor of JBM, dated as of March 26, 2012, with a current principal balance of $1,350,000, an interest rate of 5% per annum and monthly payments of $100,000 plus accrued interest commencing on April 9, 2013 (the “Amended Coal Promissory Note”). The Amended Coal Promissory Note replaces the Coal Promissory Note, dated as of April 9, 2010, by the Company in favor of JBM.

On December 11, 2012, the Company entered into a Second Amended and Restated Promissory Note (the “Amended JBM Note”) in connection with that certain Amended and Restated Coal Buy and Sell Agreement (the “Coal Agreement”) dated as of March 26, 2012, by and between the Company and JBM Energy Company, LLC (“JBM”). The Amended JBM Note replaces the Amended and Restated Promissory Note with JBM Energy dated March 26, 2012 to provide that the next payment of $100,000 due to JBM will now be due upon the earlier of (i) sixty (60) days following the effective date of the Registration Statement and (ii) March 9, 2013, instead of December 9, 2012 as previously provided.

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2012

(Unaudited)

NOTE 5 – COAL AND OTHER MINERAL PROPERTIES - (continued)

The Amended Coal Promissory Note to facilitate the agreements is contracted at an interest rate substantially below market rates for similar types of coal properties. Accordingly, the Company imputed a discount of $186,392 at a market interest rate of approximately 15% in accordance FASB ASC 835,”Interest”. Should the Company make all necessary payments as indicated, up until December 9, 2012 and completes the reserve study and mining plan as anticipated in the agreement, but defaults on the $1,250,000 balance, the coal property will be returned to JBM and the Company will receive a 40% equity interest in JBM and the $1,250,000 balance will be cancelled. Otherwise, if the Company defaults on Amended Coal Promissory Note, JBM at its option may terminate the agreement and or initiate action for any other remedy under the law. At December 31, 2012, Amended Coal Promissory Note is presented net of unamortized debt discount of $76,114 ( September 30, 2012 - $108,223). The Company has made total interest payments of $31,250 as of December 31, 2012 on the Amended Coal Promissory Note.

Under the Coal Amendment, JBM will be paid a royalty of $0.25 per ton on all coal when and as mined from the coal property.

Mineral Agreement and Amendments

On April 9, 2010, the Company, Future Gas and Russell B. Pace, Jr. (“Pace”) entered into an Assignment and Assumption of Mineral Agreement (“Mineral Agreement”) to transfer and assign all the rights and obligations of Future Gas to the Company to purchase all mineral rights (except coal), oil and gas rights owned by Pace under a Mineral Buy and Sell Agreement dated February 4, 2010. Pursuant to the Mineral Buy and Sell Agreement, the Company issued 1,000,000 shares of its common stock valued at $50,000 ($0.05 per share), signed a 5% promissory note with a face value of $1,950,000 (“Mineral Promissory Note”). On October 9, 2010 and April 9, 2011 cash payments of $200,000 and $200,000, respectively, was paid towards Mineral Promissory Note. Additional amounts of $100,000 and $200,000 were to be paid 90 days and 180 days, respectively, following the completion of the reserve study and mining plan, to be no later than April 9, 2012. An interest only payment on the $1,250,000 balance was to be paid quarterly during the third and fourth years, starting July 9, 2012. Starting, July 9, 2014, the principal balance of $1,250,000 were to be paid in 8 equal quarterly installments, plus accrued interest on the unpaid principal balance to date of each principal payment.

On April 9, 2010, the Company agreed to issue 300,000 common shares of common stock valued at $15,000 ($0.05 per share), to the parties involved in the Assignment of Coal Agreement and Assignment and Assumption of Mineral Agreement as introduction and assignment compensation. The shares were issued on August 27, 2010.

Furthermore, the Company issued 1,000,000 shares of its common stock valued at $50,000 ($0.05 per share) to Future Gas for the assignment of such agreements

On March 26, 2012, the Company entered into an Amended and Restated Mineral Buy Sell Agreement (the “Mineral Amendment”), by and between the Company and Pace, amending and restating the terms the Mineral Agreement, dated as of February 4, 2010, by and between Pace and Future Gas, which Mineral Agreement was subsequently assigned by Future Gas as described above.

The Mineral Amendment delayed the Company’s payment of $100,000 to Pace until the earlier of (i) sixty (60) days following the effective date of the Registration Statement or (ii) December 9, 2012, and delayed the first interest payment due under the Mineral Agreement until July 9, 2012. An additional $200,000 will be payable to Pace upon the earlier of (i) ninety (90) days following the effective date of the Registration Statement or (ii) December 9, 2012. The $100,000 and $200,000 amounts were to be previously paid 90 days and 180 days, respectively, following the completion of the reserve study and mining plan, to be no later than April 9, 2012. Finally, the Company’s payment obligations under the Mineral Agreement are evidenced by an amended and restated promissory note of the Company in favor of Pace, dated as of March 26, 2012, with a current principal balance of $1,550,000, an interest rate of 5% per annum and monthly payments of $100,000 plus accrued interest commencing on April 9, 2013 (the “Amended Mineral Promissory Note”). The Amended Mineral Promissory Note replaces the Mineral Promissory Note, dated as of April 9, 2010, by the Company in favor of Pace.

Also on December 11, 2012, the Company entered into a Second Amended and Restated Promissory Note (the “Amended Pace Note”) in connection with that certain Amended and Restated Mineral Buy and Sell Agreement (the “Mineral Agreement”) dated as of March 26, 2012, by and between the Company and Russell B. Pace, Jr. (“Pace”). The Amended Pace Note replaces the Amended and Restated Promissory Note with Pace dated March 26, 2012 to provide that the next payment of $100,000 due to Pace will now be due upon the earlier of (i) sixty (60) days following the effective date of the Registration Statement and (ii) March 9, 2013, instead of December 9, 2012 as previously provided. The Amended Pace Note also provides that the next payment of $200,000 due to Pace will now be due upon the earlier of (i) ninety (90) days following the effective date of the Registration Statement and (ii) March 9, 2013, instead of December 9, 2012 as previously provided.

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2012

(Unaudited)

NOTE 5 – COAL AND OTHER MINERAL PROPERTIES (continued)

The Amended Mineral Promissory Note to facilitate the agreements is contracted at an interest rate substantially below market rates for similar types of mineral, oil and gas properties. Accordingly, the Company imputed a discount of $200,363 at a market interest rate of approximately 15% in accordance FASB ASC 835, “Interest”. If the Company defaults on Amended Mineral Promissory Note, Pace at his option may terminate the agreement and or initiate action for any other remedy under the law. At December 31, 2012, Amended Mineral Promissory Note is presented net of unamortized debt discount of $71,923 (September 30, 2012 - $109,775). The Company has made total interest payments of $31,250 as of December 31, 2012 on the Amended Mineral Promissory Note.

Under the Mineral Buy Sell Agreement, Pace is due a royalty equal to 20% of all royalties and other payments received by the Company as a result of any lease of the mineral property conveyed and 20% of all net cash proceeds and/or other consideration received by the Company from the sale or disposal of the mineral, oil and gas property.

Consulting Agreement

Pursuant to a Consulting Agreement dated as of February 4, 2010 between Pace and Future Gas assigned to the Company on March 31, 2010, Pace agreed to provide consulting services to Future Gas concerning the coal property conveyed to Future Gas by JBM in the Coal Buy and Sell Agreement, and other minerals conveyed to Future Gas by Pace in the Mineral Buy and Sell Agreement. Future Gas agreed to pay Pace $5,000 on the first day of the month following the closing date of the Coal Buy and Sell Agreement and on the first day of each following month for a period of one year subject to the option of Pace to extend this Consulting Agreement for two successive one year terms. Pace's rights to further compensation under this Consulting agreement will terminate upon termination of the Coal Buy and Sell Agreement by either party as authorized under said Coal Buy and Sell Agreement. Pace agreed to make himself available to perform consulting services for Future Gas for 5 days during each paid month. Future Gas had the option to require Pace to perform consulting services for an additional 5 days during each paid month for an additional $1,000 per each additional day. If Future Gas required more than 10 days per paid month, Pace had the option to decline or if accepted, Future Gas agreed to pay Pace $500 per each additional day. The Consulting Agreement is for services received by the Company after the purchase of the mineral property and is accounted for as an expense in the statements of operations. On December 11, 2012, the Company agreed to give Pace the right and option to extend the Consulting Agreement for an additional one (1) year term from and after April 9, 2013.

NOTE 6 - CAPITAL STOCK

Share Capital

The Company’s capitalization is 500,000,000 shares of common stock with a par value of $0.001 per share. No preferred shares have been authorized or issued.

On October 3, 2012, the Company entered into a Private Placement Subscription for Non U.S. Subscribers with Black Sands Holdings, Inc., to subscribe to and purchase 1,265,823 units valued at $0.079 per unit for an aggregate purchase price of $100,000. Each unit consists of one share of the Company’s common stock and one warrant. Each warrant entitles the holder to purchase one additional share of the Company’s common stock at an exercise price of $0.119 for a period of three years.

During the quarter ended December 31, 2012, the Company recorded $26,000 for stock-based compensation payable related to 250,000 shares of common stock earned by Mr. Alvaro Valencia, CEO and Director of the Company. On October 31, 2011, under the Independent Consultant Agreement between the Company and the CEO, 250,000 shares of common stock vested and were valued based on the closing price of our shares of common stock on October 31, 2011. At September 30, 2012 and December 31, 2012, 166,667 shares of common stock were recorded in stock payable on the balance sheet at an estimated value based on the closing price of our shares of common stock at September 30, 2012 and December 31, 2012, respectively.

Warrants

The following is a summary of the common stock warrants granted, forfeited or expired and exercised.

		Weighted Average Exercise
	Warrants	Price Per Shares
Outstanding – September 30, 2011	4,282,153	$	0.70
Granted	3,333,334	$	0.14
Forfeited or expired	0	$	0.00
Exercised	0	$	0.00
Outstanding – September 30, 2012	7,615,487	$	0.45

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2012

(Unaudited)

NOTE 6 - CAPITAL STOCK (continued)

Warrants (continued)

Granted	1,265,823	$	0.12
Forfeited or expired	0	$	0.00
Exercised	0	$	0.00
Outstanding – December 31, 2012	8,881,310	$	0.40

As of December 31, 2012, the Company has the following warrants to purchase common stock outstanding:

Number of	Warrant Exercise	Warrant
Warrants Issued	Price Per Share	Expiration Date
595,238	$1.26	5-Oct-13
449,438	$1.34	25-Jan-14
510,204	$1.47	23-Feb-14
2,727,273	$0.33	9-Aug-14
1,666,667	$0.18	21-Feb-15
1,666,667	$0.09	20-Sep-15
1,265,823	$0.12	3-Oct-15
8,881,310

NOTE 7 – SUBSEQUENT EVENTS

On January 21, 2013, the Company received a refund of $121,508 for a full bond release on 16 drill holes and a partial bond release on 34 drill holes.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q and other reports filed by the Company from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan”, or the negative of these terms and similar expressions as they relate to Company or Company’s management identify forward-looking statements. Such statements reflect the current view of Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors (including the risks contained in the section of operations and results of operations, and any businesses that Company may acquire.) Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although Company believes that the expectations reflected in the forward-looking statements are reasonable, Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations, and prospects.

Overview

American Power Corp (which we refer to herein as the “Company”, “us” or “we”) was incorporated in the State of Nevada as a for-profit company on August 7, 2007. We are an exploration stage company whose intended business purpose is coal, oil and natural gas exploration, development and production. At the time of our incorporation, we were incorporated under the name “Teen Glow Makeup, Inc.” and our original business plan was to create a line of affordable teen makeup for girls. On November 20, 2009, Johannes Petersen acquired the majority of the shares of our issued and outstanding common stock in accordance with two stock purchases agreements by and between Mr. Petersen and Ms. Pamela Hutchinson, and Ms. Andrea Mizushima, respectively. On March 31, 2010, we changed our intended business purpose to that of coal, oil and natural gas exploration, development and production.

Our current primary business focus is to acquire, explore and develop coal, oil and gas exploration properties in the United States of North America, with a particular focus on the Rocky Mountain region. On March 30, 2010, our Board of Directors approved the proposal to change the Company’s name and to effect a 340 for 1 forward stock split. The Certificate of Change for the forward stock split was filed with and approved by the Nevada Secretary of State on April 28, 2010. Also on April 28, 2010, Articles of Amendment were filed and approved with the Nevada Secretary of State to change the name of the Corporation to American Power Corp. The Articles of Amendment also changed the authorized amount of capital stock to Five Hundred Million (500,000,000) shares of Common Stock, par value $0.001.

Business Description and Plan of Operation

Our plan of operation is to acquire and explore mineral properties and prospects in order to ascertain whether they possess economic quantities of coal and/or hydrocarbons in accordance with available funds. There can be no assurance that an economic coal and/or hydrocarbon reserve exists on any of the exploration prospects we acquire until appropriate exploration work is completed.

Coal, oil and gas exploration is typically conducted in phases. Each subsequent phase of exploration work is recommended by a geologist based on the results from the most recent phase of exploration. We have yet to acquire exploration properties, upon which we will commence the initial phase of exploration. We have acquired an assignment of certain contractual rights in coal and minerals located in Judith Basin County, Montana, collectively described as the “Pace Coal Project”, however these rights are speculative in nature and additional exploration work is required to determine their value. In that regard, an exploration drilling program consisting of three phases has been planned for the Pace Coal Project this year. Once we have completed each phase of the exploration drilling program, we will make a decision as to whether or not we proceed with the development of the Pace Coal Project based upon the analysis of the results of that program. Even if we complete our proposed exploration program on the Pace Coal Project or on other properties that we acquire in the future, and we are successful in identifying the presence of coal and/or hydrocarbons, we will have to spend substantial funds on further drilling, engineering studies, environmental and mine feasibility studies before we will know if we have a commercially viable coal, oil and gas deposit or reserve.

“In light of our current financial condition, we are also exploring other potential strategic alternatives, including joint venture arrangements or the sale of the PACE Coal Property, and are considering retaining an investment banker to assist us with this process.”

Results of Operations for the Three Months ended December 31, 2012 and 2011

Revenues

The Company has yet to generate any revenues.

Expenses

Three months ended December 31, 2012 compared to the three months ended December 31, 2011

We had a net loss of $198,195 for the three months ended December 31, 2012, which was an improvement of $263,636 from the net loss of $461,831 for the three months ended December 31, 2011. This decrease in net loss in the current period is primarily the result of a decrease in exploration costs of $209,297 and management fees expense of $41,500.

Interest expense of $102,094 for the three months ended December 31, 2012, as compared to interest expense of $78,813 for the three months ended December 31, 2011, for accretion related to debt discount recorded on the promissory notes.

Liquidity and Capital Resources

Our balance sheet as of December 31, 2012, reflects current assets of $7,463 which includes cash of $1,497. Our deficit in working capital at December 31, 2012 is $2,440,346.

	December 31, 2012			September 30, 2012
Current assets	$	7,463		$	9,020
Current liabilities		2,447,809			1,849,380
Working capital (deficit)	$	(2,440,346	)	$	(1,840,360	)

Operating Activities

Net cash flows used in operating activities were $97,557 and $336,558 for the three months ended December 31, 2012 and 2011, respectively. Negative cash flows from operating activities are primarily attributable to a net loss of $198,195 and $461,831 for the three months ended December 31, 2012 and 2011, respectively.

Investing Activities

Net cash flows used in investing activities were $523 and $32,232 for the three months ended December 31, 2012 and 2011, respectively. Negative cash flows for the three months ended December 31, 2012 was due to the purchase of computer equipment in the amount of $523.

Financing Activities

Net cash flows provided by financing activities were $99,577 and $0 for the three months ended December 31, 2012 and 2011, respectively. During three months ended December 31, 2012 we issued units comprising shares of our common stock for total proceeds of $100,000.

	Three months ended December 31,
	2012			2011
Net Cash Used in Operating Activities	$	(97,557	)	$	(336,558	)
Net Cash Used in Investing Activities		(523	)		(32,232	)
Net Cash Provided by Financing Activities		99,577			-
Net Increase (Decrease) in Cash	$	1,497		$	(368,790	)

On December 11, 2012, the Company entered into a Second Amended and Restated Promissory Note (the “Amended JBM Note”) in connection with that certain Amended and Restated Coal Buy and Sell Agreement (the “Coal Agreement”) dated as of March 26, 2012, by and between the Company and JBM Energy Company, LLC (“JBM”). The Amended JBM Note replaces the Amended and Restated Promissory Note with JBM Energy dated March 26, 2012 to provide that the next payment of $100,000 due to JBM will now be due upon the earlier of (i) sixty (60) days following the effective date of the registration statement on Form S-1 (the "Registration Statement") which the Company has filed with respect to that certain Amended and Restated Standby Equity Distribution Agreement dated as of June 13, 2012 by and between the Company and YA Global Master SPV Ltd. (the “Amended SEDA”) and (ii) March 9, 2013, instead of December 9, 2012 as previously provided.

While we expect to use issuances of Common Stock pursuant to the SEDA once it is available and engage in further financings with Black Sands to obtain additional working capital, we will require additional funding to execute our business plan, including the continuation of the PACE Coal Project. Our plan is to obtain such additional resources by obtaining capital from management and significant shareholders sufficient to meet our minimal operating expenses and to seek additional equity and/or debt financing. However, we cannot provide assurances that we will be successful in accomplishing any of these plans. Our failure to secure additional funding to implement our business plan will significantly affect our ability to continue operations. We do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months.

Off-Balance Sheet Arrangements

As of December 31, 2012, we had no existing off-balance sheet arrangements, as defined under SEC rules.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required by smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized and reported within the specified time periods. Our Chief Executive Officer and its Chief Financial Officer (collectively, the “Certifying Officers”) are responsible for maintaining our disclosure controls and procedures. The controls and procedures established by us are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

As of December 31, 2012, the Certifying Officers evaluated the effectiveness of our disclosure controls and procedures. Based on the evaluation, the Certifying Officers concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure.

The Certifying Officers have also concluded that there was no change in our internal controls over financial reporting identified in connection with the evaluation that occurred during our fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.

No director, officer, or affiliate of the issuer and no owner of record or beneficiary of more than 5% of the securities of the issuer, or any security holder is a party adverse to the small business issuer or has a material interest adverse to the small business issuer.

ITEM 1A. RISK FACTORS

The information to be reported under this item has not changed since the previously filed 10K, for the year ended September 30, 2012.

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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

None

ITEM 5. OTHER INFORMATION

We do not have any other information to report.

ITEM 6. EXHIBITS

31.1 CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2 CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1 CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2 CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

* Filed herewith

SIGNATURES

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


	AMERICAN POWER CORPORATION (Registrant)

Date: February 19, 2013	By:	/s/ Alvaro Valencia
		Alvaro Valencia Chief Executive Officer, President and Director


Date: February 19, 2013	By:	/s/ Johannes Petersen
		Johannes Petersen Chief Financial Officer, Secretary, and Director

Attached files

AMERICAN POWER CORP. Reports

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